Equitable Accumulator(SM)
A combination variable and fixed deferred annuity contract
PROSPECTUS DATED MAY 1, 1999
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing, or taking any other action
under your contract. Also, at the end of this prospectus you will find attached
the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain
important information about their Portfolios.
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WHAT IS THE EQUITABLE ACCUMULATOR?
Equitable Accumulator is a deferred annuity contract issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation
of retirement savings and for income. The contract offers income and death
benefit protection. It also offers a number of payout options. You invest to
accumulate value on a tax-deferred basis in one or more of our variable
investment options, fixed maturity options or the account for special dollar
cost averaging ("investment options").
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VARIABLE INVESTMENT OPTIONS
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o Alliance Money Market o Lazard Large Cap Value
o Alliance High Yield o Lazard Small Cap Value
o Alliance Common Stock o MFS Growth with Income
o Alliance Aggressive Stock o MFS Research
o Alliance Small Cap Growth o MFS Emerging Growth Companies
o EQ/Alliance Premier Growth o Morgan Stanley Emerging Markets Equity
o BT Equity 500 Index o EQ/Putnam Growth & Income Value
o BT Small Company Index o EQ/Putnam Investors Growth
o BT International Equity Index o EQ/Putnam International Equity
o Capital Guardian U.S. Equity
o Capital Guardian Research
o Capital Guardian International
o JPM Core Bond
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You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 49.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed interest
at guaranteed rates. It may be used for dollar cost averaging during your
contract's first year.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An individual retirement annuity ("IRA"), either traditional IRA or Roth
IRA.
We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible
Premium IRA." We also offer two versions of the Roth IRA: "Roth Conversion
IRA" and "Flexible Premium Roth IRA."
o An annuity which is an investment vehicle for a qualified defined
contribution or defined benefit plan ("QP").
o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") -
("Rollover TSA").
A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA,
Roth Conversion IRA, QP, or Rollover TSA contract. For Flexible Premium IRA or
Flexible Premium Roth IRA contracts, we require a contribution of $2,000 to
purchase a contract.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated May 1, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our
Processing Office or calling 1-800-789-7771. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be obtained
from the SEC's website at http://www.sec.gov. The table of contents for the SAI
appears at the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS 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.
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2 Contents of this prospectus
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Contents of this prospectus
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EQUITABLE ACCUMULATOR(SM)
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Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator at a glance -- key features 8
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FEE TABLE 11
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Examples 14
Condensed financial information 15
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1
CONTRACT FEATURES AND BENEFITS 16
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How you can purchase and contribute to your contract 16
Owner and annuitant requirements 20
How you can make your contributions 20
What are your investment options under the contract? 20
Portfolios of The Hudson River Trust 21
Portfolios of EQ Advisors Trust 21
Allocating your contributions 24
Our baseBUILDER option 26
Guaranteed minimum death benefit 28
Your right to cancel within a certain number of days 29
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2
DETERMINING YOUR CONTRACT'S VALUE 30
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Your account value 30
Your contract's value in the variable investment options 30
Your contract's value in the fixed maturity options 30
Your contract's value in the account for special dollar cost averaging 30
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"We," "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
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Contents of this prospectus 3
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3
TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 31
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Transferring your account value 31
Rebalancing your account value 31
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4
ACCESSING YOUR MONEY 32
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Withdrawing your account value 32
How withdrawals are taken from your account value 33
How withdrawals affect your guaranteed minimum
income benefit and guaranteed minimum death benefit 33
Loans under Rollover TSA contracts 34
Surrendering your contract to receive its cash value 35
When to expect payments 35
Choosing your annuity payout options 36
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5
CHARGES AND EXPENSES 39
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Charges that Equitable Life deducts 39
Charges that the trusts deduct 41
Group or sponsored arrangements 41
Other distribution arrangements 42
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6
PAYMENT OF DEATH BENEFIT 43
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Your beneficiary and payment of benefit 43
How death benefit payment is made 43
Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts 44
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7
TAX INFORMATION 45
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Overview 45
Transfers among investment options 45
Taxation of nonqualified annuities 45
Special rules for NQ contracts issued in Puerto Rico 46
Individual retirement arrangements ("IRAs") 47
Special rules for nonqualified contracts in qualified plans 57
Tax Sheltered Annuity contracts (TSAs) 57
Federal and state income tax withholding and
information reporting 62
Impact of taxes to Equitable Life 63
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8
MORE INFORMATION 64
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About our Separate Account No. 49 64
About The Hudson River Trust and EQ Advisors Trust 64
About our fixed maturity options 65
About the general account 67
About other methods of payment 67
Dates and prices at which contract events occur 68
About your voting rights 68
About our year 2000 progress 69
About legal proceedings 70
About our independent accountants 70
Transfers of ownership, collateral assignments, loans,
and borrowing 70
Distribution of the contracts 70
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9
INVESTMENT PERFORMANCE 72
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Benchmarks 72
Communicating performance data 81
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10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 83
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Appendices
I -- Condensed financial information A-1
II -- Purchase considerations for QP contracts B-1
III -- Market value adjustment example C-1
IV -- Guaranteed minimum death benefit example D-1
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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4 Index of key words and phrases
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Index of key words and phrases
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This index should help you locate more information on the terms used in this
prospectus.
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account for special dollar cost
averaging 24
account value 30
annuitant 16
baseBUILDER 26
beneficiary 43
benefit base 26
business day 68
cash value 30
conduit IRA 51
contract date 9
contract date anniversary 9
contract year 9
contributions to Roth IRAs 54
regular contributions 54
rollover contributions 55
conversion contributions 55
direct custodian-to-custodian
transfers 55
contributions to traditional IRAs 47
regular contributions 48
rollover contributions 50
direct custodian-to-custodian
transfers 50
ERISA 34
fixed maturity amount 22
fixed maturity options 22
Flexible Premium IRA cover
Flexible Premium Roth IRA cover
guaranteed minimum death benefit 28
guaranteed minimum income benefit 26
IRA 47
IRS 45
investment options 20
loan reserve account 35
market adjusted amount 23
market value adjustment 23
maturity value 23
NQ 45
participant 20
payout option 36
Portfolio cover
Processing Office 6
QP 57
rate to maturity 22
required beginning date 52
Rollover IRA cover
Rollover TSA cover
Roth Conversion IRA cover
Roth IRA 54
SAI cover
SEC cover
TOPS 6
TSA 57
traditional IRA 47
unit 30
variable investment options 20
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract or supplemental materials. Your registered representative can provide
further explanation about your contract.
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PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS
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fixed maturity options Guarantee Periods (Guaranteed Fixed
Interest Accounts in supplemental materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
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Who is Equitable Life? 5
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Who is Equitable Life?
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We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a wholly owned subsidiary of The Equitable
Companies Incorporated ("Equitable Companies"), whose majority shareholder is
AXA, a French holding company for an international group of insurance and
related financial services companies. As a majority shareholder, and under its
other arrangements with Equitable Life and Equitable Life's parent, AXA
exercises significant influence over the operations and capital structure of
Equitable Life and its parent. No company other than Equitable Life, however,
has any legal responsibility to pay amounts that Equitable Life owes under the
contract. During 1999, Equitable Companies plans to change its name to AXA
Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are licensed
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located
at 1290 Avenue of the Americas, New York, N.Y. 10104.
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6 Who is Equitable Life?
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HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
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FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
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Equitable Accumulator
P.O. Box 13014
Newark, NJ 07188-0014
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FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
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Equitable Accumulator
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
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FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
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Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
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FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
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Equitable Accumulator
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
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REPORTS WE PROVIDE:
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o written confirmation of financial transactions;
o statement of your contract values at the close of each calendar quarter
(four per year);
o annual statement of your contract values as of the close of the contract
year.
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TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM:
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TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling
toll-free 1-888-909-7770. Of course, for reasons beyond our control, the
service may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone
instructions and we will provide written confirmation of your transfers. We
will not be liable for following telephone instructions we reasonably believe
to be genuine.
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BY INTERNET:
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You can also access information about your contract on the
Internet. Please visit our website at http://www.equitable.com,
and click on EQAccess.
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Who is Equitable Life? 7
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CUSTOMER SERVICE REPRESENTATIVE:
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You may also use our toll-free number (1-800-789-7771) to speak with one of our
customer service representatives. Our customer service representatives are
available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our Processing
Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1) authorization for telephone transfers by your registered representative;
(2) conversion of a traditional IRA to a Roth Conversion IRA or Flexible
Premium Roth IRA contract;
(3) cancellation of your Roth Conversion IRA contract or Flexible Premium
Roth IRA and return to a Rollover IRA or Flexible Premium IRA contract;
(4) election of the automatic investment program;
(5) election of the rebalancing program;
(6) to obtain a PIN required for TOPS;
(7) requests for loans under Rollover TSA contracts;
(8) spousal consent for loans under Rollover TSA contracts;
(9) tax withholding election; and
(10) beneficiary continuation option election.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES
OF REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options;
(4) withdrawal requests;
(5) contract surrender; and
(6) requests to exercise your guaranteed minimum income benefit.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1) automatic investment program;
(2) general dollar cost averaging;
(3) rebalancing;
(4) special dollar cost averaging;
(5) substantially equal withdrawals;
(6) systematic withdrawals; and
(7) the date annuity payments are to begin.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
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8 Equitable Accumulator at a glance -- key features
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Equitable Accumulator at a glance -- key features
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PROFESSIONAL INVESTMENT Equitable Accumulator's variable investment options invest in 22 different Portfolios
MANAGEMENT managed by professional investment advisers.
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FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years.
OPTIONS
o Each fixed maturity option offers a guarantee of principal and interest rate if you hold
it to maturity.
o Principal guarantees.
-- If you make withdrawals or transfers from a fixed maturity option before maturity,
there will be a market value adjustment due to differences in interest rates. This
may increase or decrease any value that you have left in that fixed maturity option.
If you surrender your contract, a market value adjustment may also apply.
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ACCOUNT FOR SPECIAL DOLLAR Available for dollar cost averaging of your initial contribution.
COST AVERAGING
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TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you
contract make withdrawals from your contract or receive annuity
payments.
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o On transfers inside the No tax on transfers among investment options.
contract
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If you are buying a contract to fund a retirement plan that already provides tax deferral
under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so
for the contract's features and benefits other than tax deferral. In such situations, the
tax deferral of the contract does not provide additional benefits.
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BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum death
PROTECTION benefit. This optional feature provides income protection for you while the annuitant
lives, as well as a death benefit for the beneficiary should the annuitant die.
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CONTRIBUTION AMOUNTS o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts
o Initial minimum: $5,000
o Additional minimum: $1,000
$100 monthly, and $300 quarterly under our automatic
investment program (NQ contracts)
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o Flexible Premium IRA and Flexible Premium Roth IRA contracts
o Initial minimum: $2,000
o Additional minimum: $50 ($50 under our automatic investment program)
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Maximum investment limitations may apply.
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Equitable Accumulator at a glance -- key features 9
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ACCESS TO YOUR MONEY o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Loans under Rollover TSA contracts
o Contract surrender
You may incur a withdrawal charge for certain withdrawals. You may also incur income tax and a
tax penalty.
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PAYOUT ALTERNATIVES o Annuity payout options
o Income Manager(R) payout annuity options
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ADDITIONAL FEATURES o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually and
annually)
o Unlimited free transfers
o Waiver of withdrawal charge for disability, terminal illness or confinement to a nursing home
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FEES AND CHARGES o Daily charges on amounts invested in variable investment options for mortality and expense
risks and administrative charges at an annual rate of 1.35%.
o Annual 0.30% benefit base charge or the optional baseBUILDER benefit. The benefit base is
described under "Your guaranteed minimum income benefit under baseBUILDER." No additional
charge if you want a guaranteed minimum death benefit only.
o Under Flexible Premium IRA and Flexible Premium Roth IRA contracts, if your account value
at the end of the contract year is less than $25,000, we deduct an annual administrative
charge equal to $30 or during the first two contract years 2% of your account value, if less.
If your account value is $25,000 or more, we will not deduct the charge.
o No sales charge deducted at the time you make contributions.
o During the first seven contract years following a contribution, a charge will be deducted
from amounts that you withdraw that exceed 15% of your account value. We use the account
value on the most recent contract date anniversary to calculate the 15% amount available.
The charge begins at 7% in the first contract year following a contribution. It declines each
year to 1% in the seventh contract year. There is no withdrawal charge in the eighth and
later contract years following a contribution.
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The 12-month period beginning on your contract date and each 12-month period after that date
is a "contract year." The end of each 12-month period is your "contract date anniversary." The
"contract date" is the effective date of a contract. This usually is the business day we
receive your initial contribution. Your contract date will be shown in your contract.
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10 Equitable Accumulator at a glance -- key features
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FEES AND o We also deduct a charge for taxes such as premium taxes that may be imposed in your state.
CHARGES (CONTINUED) This charge is generally deducted from the amount applied to an annuity payout option.
o We generally deduct a $350 annuity administrative fee from amounts applied to purchase
certain life annuity payout options.
o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as
a percentage of the average daily net assets invested in each Portfolio. These expenses
include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25%
and other expenses.
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Annuitant issue ages NQ: 0-83
Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA, and Rollover TSA: 20-83
Flexible Premium IRA: 20-70
QP: 20-75
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THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF
THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
registered representative, or call us, if you have any questions.
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Fee table 11
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Fee table
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The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an administrative fee may apply when your annuity payments are to begin.
Each of the charges and expenses is more fully described under "Charges and
expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options and the account for special dollar cost averaging are
not covered by the fee table and examples. Generally, the only charges shown in
the table that are applicable to the fixed maturity options and the account for
special dollar cost averaging are the annual administrative charge and the
withdrawal charge. A market value adjustment (up or down) may apply as a result
of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
<TABLE>
<CAPTION>
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CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS
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<S> <C>
Mortality and expense risks (1) 1.10%
Administrative (2) 0.25%
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Total annual expenses 1.35%
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FLEXIBLE PREMIUM IRA AND FLEXIBLE PREMIUM ROTH IRA CONTRACTS ONLY: CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH
CONTRACT DATE ANNIVERSARY
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Maximum annual administrative charge
If your account value is less than $25,000 $30(3)
If your account value is $25,000 or more $ 0
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS
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WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted if you surrender your Contract
contract or make certain withdrawals. The withdrawal charge percentage we use is year
determined by the contract year in which you make the withdrawal or surrender your contract. 1 ................ 7.00%
For each contribution, we consider the contract year in which we receive that contribution 2 ................ 6.00
to be "contract year 1")(4) 3 ................ 5.00
4 ................ 4.00
5 ................ 3.00
6 ................ 2.00
7 ................ 1.00
8+ ............... 0.00
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT
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BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base.
Deducted annually on each contract date anniversary)(5)
0.30%
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12 Fee table
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THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
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<CAPTION>
TOTAL ANNUAL
INVESTMENT EXPENSES(6)
MANAGEMENT OTHER (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(6) EXPENSES LIMITATION)
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<S> <C> <C> <C> <C>
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Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62%
Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88%
Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64%
Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82%
Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20%
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EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
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OTHER TOTAL ANNUAL
INVESTMENT EXPENSES (8) EXPENSES(8)
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(6) LIMITATION) LIMITATION)
EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55%
BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75%
BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00%
Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95%
Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95%
Capital Guardian International(8) 0.75% 0.25% 0.20% 1.20%
JPM Core Bond(8) 0.45% 0.25% 0.10% 0.80%
Lazard Large Cap Value(8) 0.55% 0.25% 0.15% 0.95%
Lazard Small Cap Value(8) 0.80% 0.25% 0.15% 1.20%
MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85%
MFS Research(8) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85%
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% 0.15% 0.95%
EQ/Putnam International Equity(8) 0.70% 0.25% 0.25% 1.20%
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</TABLE>
Notes:
(1) A portion of this charge is for providing the guaranteed minimum death
benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
(3) For Flexible Premium IRA and Flexible Premium Roth IRA contracts, during
the first two contract years this charge is equal to the lesser of $30 or
2% of your account value. Thereafter, the charge is $30 for each contract
year.
(4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal
amount, and upon surrender of a contract.
(5) The benefit base is described under "Your guaranteed minimum income
benefit under baseBUILDER."
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Fee table 13
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(6) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ
Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The 12b-1 fee will not be increased for the life of the
contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth
Portfolio 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 equaling 1.20%. Absent the expense
limitation, the total annual expenses for 1998 for the Alliance Small Cap
Growth Portfolio would have been 1.21%.
(7) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The
maximum investment management and advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. See the
prospectus for The Hudson River Trust. The other direct operating
expenses will also fluctuate from year to year depending on actual
expenses.
(8) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF 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 average daily
net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier
Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index;
0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S.
Equity and Capital Guardian Research; 0.95% for Capital Guardian
International; 0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value;
0.95% for Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS
Research, and MFS Emerging Growth Companies; 1.50% for Morgan Stanley
Emerging Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70%
for EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity.
The expenses shown for the BT International Equity Index, BT Small
Company Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value
Portfolios reflect an increase effective on May 1, 1999. During 1999, EQF
plans to change its name to AXA Advisors, Inc.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for
BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard
Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research;
0.24% for MFS Emerging Growth Companies; 1.23% for Morgan Stanley Emerging
Markets Equity; 0.24% for EQ/Putnam Growth & Income Value; 0.29% for
EQ/Putnam Investors Growth; 0.51% for EQ/Putnam International Equity. For
the following Portfolios, the "Other Expenses" for 1999, absent the
expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance
Premier Growth; 0.74% for Capital Guardian U.S. Equity and Capital
Guardian Research; 1.03% for Capital Guardian International; 0.76% for
EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; 0.59% for MFS Growth with
Income. Initial seed capital was invested on December 31, 1998 for the MFS
Growth with Income Portfolio. The EQ/Alliance Premier Growth, Capital
Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian
International Portfolios commenced operations on May 1, 1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF 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.
<PAGE>
- --------------------------------------------------------------------------------
14 Fee table
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
The examples below show the expenses that a hypothetical contract owner (who has
purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract and
elected baseBUILDER) would pay in the two situations (surrender and
nonsurrender) illustrated. We assume that a $1,000 contribution is invested in
one of the variable investment options listed and a 5% annual return is earned
on the assets in that option.(1) The annual administrative charge is based on an
estimated $10,000 average account value at the end of the contract year and the
maximum charge of $30, so that the administrative charge per $1,000 is $3. Since
the annual administrative charge only applies under Flexible Premium IRA and
Flexible Premium Roth IRA contracts, the charges shown in the examples would be
lower for the NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA
contracts.
These examples should not be considered a representation of past or future
expenses for each option. 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.
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
----------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
Alliance Money Market $93.00 $126.88 $163.38 $287.23
Alliance High Yield $95.58 $134.62 $176.30 $312.98
Alliance Common Stock $93.19 $127.47 $164.38 $289.23
Alliance Aggressive Stock $94.98 $132.84 $173.34 $307.10
Alliance Small Cap Growth $98.76 $144.12 $192.03 $343.81
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
EQ/Alliance Premier Growth $98.26 $142.63 -- --
BT Equity 500 Index $92.30 $124.78 $159.88 $280.19
BT Small Company Index $94.29 $130.75 $169.85 $300.17
BT International Equity Index $96.77 $138.19 $182.22 $324.65
Capital Guardian U.S. Equity $96.27 $136.71 -- --
Capital Guardian Research $96.27 $136.71 -- --
Capital Guardian International $98.76 $144.12 -- --
JPM Core Bond $94.78 $132.24 $172.34 $305.12
Lazard Large Cap Value $96.27 $136.71 $179.76 $319.80
Lazard Small Cap Value $98.76 $144.12 $192.03 $343.81
MFS Growth with Income $95.28 $133.74 -- --
MFS Research $95.28 $133.74 $174.83 $310.05
MFS Emerging Growth Companies $95.28 $133.74 $174.83 $310.05
- --------------------------------------------------------------------------------
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
----------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
Alliance Money Market $26.15 $80.35 $137.22 $292.13
Alliance High Yield $28.73 $88.10 $150.14 $317.87
Alliance Common Stock $26.34 $80.94 $138.21 $294.12
Alliance Aggressive Stock $28.13 $86.31 $147.16 $311.98
Alliance Small Cap Growth $31.91 $97.59 $165.86 $348.69
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
EQ/Alliance Premier Growth $31.41 $96.11 -- --
BT Equity 500 Index $25.45 $78.25 $133.71 $285.07
BT Small Company Index $27.44 $84.23 $143.69 $305.09
BT International Equity Index $29.92 $91.66 $156.05 $329.53
Capital Guardian U.S. Equity $29.42 $90.17 -- --
Capital Guardian Research $29.42 $90.17 -- --
Capital Guardian International $31.91 $97.59 -- --
JPM Core Bond $27.93 $85.72 $146.17 $310.01
Lazard Large Cap Value $29.42 $90.17 $153.58 $324.68
Lazard Small Cap Value $31.91 $97.59 $165.86 $348.69
MFS Growth with Income $28.43 $87.20 -- --
MFS Research $28.43 $87.20 $148.64 $314.93
MFS Emerging Growth Companies $28.43 $87.20 $148.64 $314.93
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Fee table 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
--------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morgan Stanley Emerging Markets Equity $104.22 $160.29 $218.58 $394.59
EQ/Putnam Growth & Income Value $ 95.28 $133.74 $174.83 $310.05
EQ/Putnam Investors Growth $ 96.27 $136.71 $179.76 $319.80
EQ/Putnam International Equity $ 98.76 $144.12 $192.03 $343.81
- -------------------------------------------------------------------------------------------
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
--------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morgan Stanley Emerging Markets Equity $37.37 $113.76 $192.41 $399.49
EQ/Putnam Growth & Income Value $28.43 $ 87.20 $148.64 $314.93
EQ/Putnam Investors Growth $29.42 $ 90.17 $153.58 $324.68
EQ/Putnam International Equity $31.91 $ 97.59 $165.86 $348.69
- -------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods
shown in the examples. This is because if the amount applied to purchase
an annuity payout option is less than $2,000, or the initial payment is
less than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example for "if
you do not surrender your contract" would, in each case, be increased by $4.43
based on the average amount applied to annuity payout options in 1998. See
"Annuity administrative fee" under "Charges and expenses."
CONDENSED FINANCIAL INFORMATION
Please see Appendix I, at the end of this prospectus for the unit values and the
number of units outstanding as of the end of the periods shown for each of the
variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
16 Contract features and benefits
- --------------------------------------------------------------------------------
Contract features and benefits
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us we call "contributions." We
require a minimum contribution amount for each type of contract. The following
table summarizes our rules regarding contributions to your contract. All ages in
the table refer to the age of the annuitant named in the contract.
- --------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NQ 0 through 83 o $5,000 (initial) o After-tax money. o No additional
contributions after
o $1,000 (additional) o Paid to us by check or age 84.
transfer of
contract
value in a
tax-deferred
exchange
under Section
1035 of the
Internal
Revenue Code.
- -----------------------------------------------------------------------------------------------------------------------
Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular
Premium IRA contributions. IRA contributions in the
o $50 (additional after calendar year you turn
the first contract year) o Rollovers from a age 70 1/2 and
qualified plan. thereafter.
o Rollovers from a TSA. o Total regular
contributions may not
o Rollovers from another exceed $2,000 each
traditional individual year.
retirement
arrangement. o No additional rollover
or direct transfer
o Direct custodian- contributions after
to-custodian transfers age 71.
from another
traditional individual o Rollover and direct
retirement transfer contributions
arrangement. after age 70 1/2 must
be net of required
minimum distributions.
Although we accept rollover and direct transfer contributions under the Flexible Premium
IRA contract, we intend that this contract be used for ongoing regular contributions.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover IRA 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover
qualified plan. or direct transfer
o $1,000 (additional) contributions after
o Rollovers from a TSA. age 84.
o Rollovers from another o Contributions after
traditional individual age 70 1/2 must be net
retirement of required minimum
arrangement. distributions.
o Direct o Regular IRA
custodian-to-custodian contributions are not
transfers from another permitted.
traditional individual
retirement
arrangement.
Only rollover and direct transfer contributions are permitted under the Rollover IRA
contract.
- -----------------------------------------------------------------------------------------------------------------------
Flexible 20 through 83 o $2,000 (initial) o "Regular" after-tax o No additional regular
Premium Roth contributions. after-tax contributions
IRA o $50 (additional after after age 84.
the first contract year) o Rollovers from another
Roth IRA. o No additional rollover
or direct transfer
o Conversion rollovers contributions after
from a traditional IRA. age 84.
o Direct transfers from o Contributions are
another Roth IRA. subject to income
limits. See "Tax
information-
Contributions to
Roth IRAs."
Although we accept rollover and direct transfer contributions under the Flexible
Premium Roth IRA contract, we intend that this contract be used for ongoing regular
contributions.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
18 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover
Conversion IRA Roth IRA. or direct transfer
o $1,000 (additional) contributions after
o Conversion rollovers age 84.
from a traditional IRA.
o Conversion rollovers
o Direct transfers from after age 70 1/2 must be
another Roth IRA. net of required
minimum distributions
for the traditional IRA
you are rolling over.
o You cannot roll over
funds from a traditional
IRA if your adjusted
gross income is
$100,000 or more.
o Regular after-tax
contributions are not
permitted.
Only rollover and direct transfer contributions are permitted under the Roth Conversion
IRA contract.
- -----------------------------------------------------------------------------------------------------------------------
QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing
contributions from an payroll contributions
o $1,000 (additional) existing qualified plan are not permitted.
trust as a change of
investment vehicle o No additional transfer
under the plan. contributions after
age 76.
o The plan must be
qualified under Section o For defined benefit
401(a) of the Internal plans, employee
Revenue Code. contributions are not
permitted.
o For 401(k) plans,
transferred o Contributions after age
contributions may only 70 1/2 must be net of
include employee any required minimum
pre-tax contributions. distributions.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover TSA 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover
TSA contract or or direct transfer
o $1,000 (additional) arrangement. contributions after
age 84.
o Rollovers from a
traditional IRA which o Contributions after age
was a "conduit" for 70 1/2 must be net of
TSA funds previously required minimum
rolled over. distributions.
o Direct transfers from
another contract or
arrangement under
Section 403(b) of the
Internal Revenue Code,
complying with IRS
Revenue Ruling 90-24.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Tax information" for a more detailed discussion of sources of contributions
and certain contribution limitations. We may refuse to accept any contribution
if the sum of all contributions under all Equitable Accumulator contracts 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 contracts
that you own would then total more than $2,500,000.
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" later in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
20 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint
owner may also be named. Only natural persons can be joint owners. This means
that an entity such as a corporation cannot be a joint owner.
Under all IRA and Rollover TSA contracts, the owner and annuitant must be the
same person.
Under QP contracts, the owner must be the trustee of the qualified plan and
the annuitant must be the plan participant/employee. See Appendix II for more
information on QP contracts.
- --------------------------------------------------------------------------------
A participant is an individual who is currently, or was formerly participating
in an eligible employer's QP or TSA plan.
- --------------------------------------------------------------------------------
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
For your convenience, we will accept initial and additional contributions by
wire transmittal from certain broker-dealers who have agreements with us for
this purpose. Additional contributions may also be made under our automatic
investment program. These methods of payment are discussed in detail under
"More information" later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing
or unclear, we will try to obtain that information. If we are unable to obtain
all of the information we require within five business days after we receive an
incomplete application or form, we will inform the registered representative
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- --------------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
SECTION 1035 EXCHANGES
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
NQ contract in a tax-free exchange if you follow certain procedures as shown in
the form that we require you to use. Also see "Tax information" later in this
prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options, the fixed maturity
options, and the account for special dollar cost averaging.
VARIABLE INVESTMENT OPTIONS
Your investment results in any one of the 22 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed
below are the currently available Portfolios, their investment objectives, and
their advisers.
- --------------------------------------------------------------------------------
You can choose among 22 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market High level of current income while preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- -----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P.
to the extent consistent with that objective,
capital appreciation
- -----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
income
- -----------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- -----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- -----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total return
of the Standard & Poor's 500 Composite Stock
Price Index
- -----------------------------------------------------------------------------------------------------------------------
BT Small Company Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total return
of the Russell 2000 Index
- -----------------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total return
of the Morgan Stanley Capital International
Europe, Australia, Far East Index
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- -----------------------------------------------------------------------------------------------------------------------
Capital Guardian International* Long-term growth of capital Capital Guardian Trust Company
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
22 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- -----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JPM Core Bond High total return consistent with moderate J. P. Morgan Investment Management Inc.
risk of capital and maintenance
of liquidity
- -----------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value Capital appreciation Lazard Asset Management
- -----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Capital appreciation Lazard Asset Management
- -----------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company
growth of capital and income
- -----------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company
- -----------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company
Companies
- -----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- -----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc.
Value objective
- -----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth Long-term growth of capital and any increased Putnam Investment Management, Inc.
income that results from this growth
- -----------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Capital appreciation Putnam Investment Management, Inc.
Equity
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not curently be available in all states
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
FIXED MATURITY OPTIONS
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. These amounts become part of our general account assets. They
will accumulate interest at the "rate to maturity" for each fixed maturity
option. The total amount you allocate to and accumulate in each fixed maturity
option is called the "fixed maturity amount." The fixed maturity options are
not available in contracts issued in Maryland.
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the rate
to maturity in effect for new contributions allocated to that fixed maturity
option on the date we apply your contribution. If you make any withdrawals or
transfers from a fixed maturity option before the maturity date, we will make a
"market value adjustment" that may increase or decrease any fixed maturity
amount you have left in that fixed maturity option. We will discuss the market
value adjustment below and in greater detail later in this prospectus under
"More information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. It will reflect the market value adjustment that we would make if
you were to withdraw all of your fixed maturity amounts on the date of the
report. We call this your "market adjusted amount."
FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 are
available at any time.
We will not accept allocations to a fixed maturity option if on the date the
contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the
year before each of your fixed maturity options is scheduled to mature. At that
time, you may choose to have one of the following options take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity option,
or into any of the variable investment options; or
(b) withdraw the maturity value (there may be a withdrawal charge).
If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the
fixed maturity option that will mature next.
MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have left in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate
an amount to a fixed maturity option to the time that you take a withdrawal,
the market value adjustment will be negative. Likewise, if interest rates drop
at the end of that time, the market value adjustment will be positive. Also,
the amount of the market value adjustment, either up or down, will be greater
the longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment
<PAGE>
- --------------------------------------------------------------------------------
24 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
could greatly reduce your value in the fixed maturity options, particularly in
the fixed maturity options with later maturity dates.
We provide an illustration of the market adjusted amount of specified maturity
values, an explanation of how we calculate the market value adjustment, and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information" later
in this prospectus. Appendix III of this prospectus provides an example of how
the market value adjustment is calculated.
ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING
The account for special dollar cost averaging is part of our general account.
We pay interest at guaranteed rates in this account. We will credit interest to
the amounts that you have in the account for special dollar cost averaging
every day. We set the interest rates periodically, according to procedures that
we have. We reserve the right to change these procedures.
The account for special dollar cost averaging is available for allocation of
your initial contribution only under the special dollar cost averaging program.
It is available only for the first year of your contract. We will guarantee to
pay our current interest rate that is in effect on the date that your
contribution is allocated to this account. Your guaranteed interest rate will be
shown in your contract. The rate will never be less than 3%. See "Allocating
your contributions," below for the rules and restrictions that apply to the
special dollar cost averaging program.
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among three ways to allocate your contributions under your
contract: self-directed, principal assurance or dollar cost averaging.
SELF-DIRECTED ALLOCATION
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity options
with maturity dates that are later than the February 15th immediately following
the date annuity payments are to begin.
PRINCIPAL ASSURANCE ALLOCATION
Under this allocation program you select a fixed maturity option. We specify the
portion of your initial contribution to be allocated to that fixed maturity
option in an amount that will cause the maturity value to equal the amount of
your entire initial contribution on the fixed maturity option's maturity date.
The maturity date you select generally may not be later than 10 years, or
earlier than seven years from your contract date. You allocate the rest of your
contribution to the variable investment options however you choose.
For example, if your initial contribution is $10,000, and on April 1, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009,
since the rate to maturity was 4.97% on April 1, 1999, we would have allocated
$6,191.16 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA,
Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity
year that would extend beyond the year in which you will reach age 70 1/2, you
should consider whether your value in the variable investment options, or your
other traditional IRA or TSA funds are sufficient to meet your required minimum
distributions. See "Tax information."
DOLLAR COST AVERAGING
We offer two dollar cost averaging programs. Each program allows you to
gradually allocate amounts to the variable investment options by periodically
transferring approximately
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Contract features and benefits 25
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the same dollar amount to the variable investment options you select. This will
cause you to purchase more units if the unit's value is low and fewer units if
the unit's value is high. Therefore, you may get a lower average cost per unit
over the long term. These plans of investing, however, do not guarantee that you
will earn a profit or be protected against losses.
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Units measure your value in each variable investment option.
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SPECIAL DOLLAR COST AVERAGING PROGRAMS. You may dollar cost average from the
account for special dollar cost averaging into any of the variable investment
options. You must allocate your entire initial contribution into the account. We
will transfer your value in the account for special dollar cost averaging into
the variable investment options that you select over the next 12 months or such
other period we offer at the time. The transfer date will be the same day of the
month as the contract date, but not later than the 28th. All amounts will be
transferred out by the end of the first contract year or such other period we
offer at the time. You may not allocate additional contributions to the account
for special dollar cost averaging.
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The account for special dollar cost averaging provides guaranteed interest.
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The only amounts that should be transferred from the account for special dollar
cost averaging are your regularly scheduled monthly transfers to the variable
investment options. If you request to transfer or withdraw any other amounts,
we will transfer all of the value that you have remaining in the account for
special dollar cost averaging to the investment options according to the
allocation percentages we have on file for you. As a result, you will no longer
be able to participate in the special dollar cost averaging program. You may
also ask us to cancel your participation at any time.
If the account for special dollar cost averaging is not available in your state,
we offer a special dollar cost averaging program in the Alliance Money Market
option. Under this program we will not deduct the mortality and expense risks
and administrative charges from assets in the Alliance Money Market option. You
may not allocate amounts other than your initial contribution to this program,
which is in effect only for your first contract year. We reserve the right to
discontinue offering the Alliance Money Market special dollar cost averaging
program for new contracts once the account for special dollar cost averaging
becomes available in a state. Your registered representative can provide
information about state availability. You may also contact us directly.
GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money
Market option is at least $5,000, you may choose, at any time, to have a
specified dollar amount or percentage of your value transferred from that option
to the other variable investment options. You can select to have transfers made
on a monthly, quarterly or annual basis. The transfer date will be the same
calendar day of the month as the contract date, but not later than the 28th day
of the month.
The minimum amount that we will transfer each time is $250. The maximum amount
we will transfer is equal to your value in the Alliance Money Market option at
the time the program is elected, divided by the number of transfers scheduled.
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The general dollar cost averaging program
will then end. You may change the transfer amount once each contract year, or
cancel this program at any time.
----------------------------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program. See "Transferring your money among investment options".
<PAGE>
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26 Contract features and benefits
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OUR BASEBUILDER OPTION
The baseBUILDER option offers you a combined guaranteed minimum income benefit
and guaranteed minimum death benefit. The combined benefit is available if the
annuitant is between the ages of 20 and 75. There is an additional charge for
this benefit. See "baseBUILDER benefits charge" under "Charges and expenses."
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baseBUILDER provides income protection if you elect an income payout while the
annuitant is alive and a death benefit if the annuitant dies.
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The guaranteed minimum income benefit component of baseBUILDER is described
below under "Your guaranteed minimum income benefit under baseBUILDER." As part
of baseBUILDER you have a choice of two guaranteed minimum death benefit
options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The
two options are described under "Guaranteed minimum death benefit." The
guaranteed minimum death benefit is provided under the contract even if you do
not elect baseBUILDER, and for a broader range of annuitant ages at contract
issue than those available under baseBUILDER. baseBUILDER is not currently
available in New York.
YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER
The guaranteed minimum income benefit guarantees you a minimum amount of
lifetime income under our Income Manager (Life Annuity with a Period Certain)
payout annuity contract. The Income Manager (Life Annuity with a Period Certain)
payout annuity contract provides payments during a specified period of time
(called a period certain) that will continue for the rest of the annuitant's
life thereafter. If the annuitant dies before the period certain has ended,
payments will continue to the beneficiary for the time remaining in the period
certain.
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We also refer to the guaranteed minimum income benefit as the "Living Benefit."
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GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE.
On the contract date, your guaranteed minimum income benefit's benefit base
("benefit base") is equal to the initial contribution. Thereafter, the benefit
base will be credited with interest each day through the annuitant's age 80. The
effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option) and in the special dollar
cost averaging programs. Amounts in the Alliance Money Market option, the fixed
maturity options, and in a Rollover TSA contract loan reserve account will be
credited with interest at a 3% effective annual rate. No interest is credited
after age 80.
If you make an additional contribution to your contract, we will increase your
current benefit base by the dollar amount of the additional contribution on the
date that the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your benefit base for the
withdrawal on the date that you make the withdrawal. See "How withdrawals affect
your guaranteed minimum income benefit and guaranteed minimum death benefit"
under "Accessing Your Money" for more detailed information. The benefit base
will be reduced by any withdrawal charge remaining when you exercise your
guaranteed minimum income benefit. Under Rollover TSA contracts, we will also
reduce your benefit base by the amount of any outstanding loan plus accrued
interest on the date that you exercise your guaranteed minimum income benefit.
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Your benefit base is not an account value or a cash value and is used solely for
purposes of calculating your guaranteed minimum income benefit.
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EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE.
If you exercise the guaranteed minimum income benefit, the annual lifetime
income that you will receive under the Income Manager (Life Annuity with a
Period Certain) payout annuity contract, will be the greater of (i) your
guaranteed minimum income benefit, and (ii) the income provided by applying your
actual account value at our then current annuity purchase factors.
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Contract features and benefits 27
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The guaranteed minimum income benefit is based on conservative actuarial
factors. Therefore, even if your account value is less than your benefit base,
you may generate more income by applying your account value to current annuity
purchase factors. We will make this comparison for you when the need arises.
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The guaranteed minimum income benefit should be regarded as a safety net only.
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ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT.
The table below illustrates the guaranteed minimum income benefit amounts per
$100,000 of initial contribution, for a male annuitant age 60 (at issue) on the
contract date anniversaries indicated, assuming no additional contributions,
withdrawals, or loans under Rollover TSA contracts, and assuming there were no
allocations to the Alliance Money Market option or the fixed maturity options.
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GUARANTEED MINIMUM
INCOME BENEFIT -- ANNUAL INCOME
CONTRACT DATE PAYABLE FOR LIFE WITH
ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN
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7 $ 8,315
10 10,341
15 14,924
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Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income
benefit only within 30 days following the seventh or later contract date
anniversary under your contract. However, you may not exercise the benefit
before the annuitant is age 60, or after the annuitant is age 83. There is an
exception if the annuitant is between ages 20 and 44 when your contract is
issued. In this case you may exercise the benefit following the 15th or later
contract date anniversary, but not after the annuitant is age 83. See "Exercise
of guaranteed minimum income benefit under QP and Rollover TSA contracts" below
regarding exercising the benefit under QP and Rollover TSA contracts.
Your contract will terminate when you exercise your guaranteed minimum income
benefit. You will then receive an Income Manager (Life Annuity with a Period
Certain) payout annuity contract. Your period certain will be based on the
annuitant's age at the time the benefit is exercised, as follows:
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LEVEL PAYMENTS*
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PERIOD CERTAIN
YEARS
--------------------
ANNUITANT'S
AGE AT EXERCISE IRAS 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
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* Other forms and periods certain may also be available. For Rollover IRA
and Flexible Premium IRA contracts, please see "Minimum distributions"
under "Tax information," as to how this option may be affected if
exercised after age 70 1/2.
You will begin receiving payments one payment period after the payout annuity
contract is issued. For example, if you select monthly annuity payments, we will
send your first payment to you approximately one month from the date your
contract is issued.
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 as of 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. You
must return your contract to us in order to exercise this benefit. The amount of
income you actually receive will be determined when we receive your request to
exercise the benefit.
You may also apply your cash value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity contract, and you may always apply
your account value to any of our annuity payout options. The traditional annuity
payout options are discussed under "Accessing your money." These options differ
from the Income Manager
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28 Contract features and benefits
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payout annuity contracts. They may provide higher or lower income levels, but do
not have all the features of the Income Manager payout annuity contract. You may
request an illustration of the Income Manager payout annuity contract from your
registered representative.
The Income Manager (Life Annuity with a Period Certain) payout annuity contracts
are offered through our prospectus for the Income Manager payout annuities. You
may obtain a copy of the most current version from your registered
representative. You should read it carefully before you decide to exercise your
guaranteed minimum income benefit.
SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner
(discussed under "More information" later in this prospectus) elects to continue
the contract after your death, the guaranteed minimum income benefit will
continue to be available on the contract date anniversaries specified above
based on the contract date. However, the guaranteed minimum income benefit must
be exercised based on the age of the successor annuitant/contract owner.
EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA
CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be
exercised in the same manner as described above only after the trustee of the
qualified plan directly rolls over the QP contract to a Rollover IRA contract.
In this process the ownership of the QP contract is changed to the annuitant.
The rollover to a Rollover IRA contract and change of ownership may only occur
when the annuitant will no longer be a participant in the qualified plan.
Similarly, under Rollover TSA contracts the contract owner must convert the
Rollover TSA contract in a direct rollover to a Rollover IRA contract according
to our rules. The rollover to a Rollover IRA contract may only occur when you
are eligible for a rollover distribution from a TSA. This may generally occur
when you are age 59 1/2, or you are separated from service from the employer who
provided the Rollover TSA funds. See "Rollover or direct transfer contributions"
under "Tax information" later in this prospectus.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through
79 at issue of Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA, and
Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA
contracts; and 20 through 75 at issue of QP contracts.
You may elect either the "5% roll up to age 80" or the "annual ratchet to age
80" guaranteed minimum death benefit when you apply for a contract. Once you
have made your election, you may not change it.
5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit
equals your initial contribution. Thereafter, the guaranteed minimum death
benefit will be credited with interest each day through the annuitant's age 80.
The effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option) and in the special dollar
cost averaging programs. Amounts in the Alliance Money Market option, the fixed
maturity options and in a Rollover TSA contract loan reserve account will be
credited with interest at a 3% effective annual rate. No interest is credited
after the annuitant is age 80.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the additional contribution on the
date the contribution is allocated to your investment options. If you take a
withdrawal from your contract, we will adjust your guaranteed minimum death
benefit for the withdrawal on the date you take the withdrawal.
The 5% roll up to age 80 guaranteed minimum death benefit is not available in
New York.
ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death
benefit equals your initial contribution. Then, on each contract date
anniversary, we will determine your guaranteed minimum death benefit by
comparing your current guaranteed minimum death benefit to your account value on
that contract date anniversary. If your account value is higher than your
guaranteed minimum death benefit, we will increase your guaranteed minimum
<PAGE>
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Contract features and benefits 29
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death benefit to equal your account value. On the other hand, if your account
value on the contract date anniversary is less than your guaranteed minimum
death benefit, we will not adjust your guaranteed minimum death benefit either
up or down.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the contribution on the date the
contribution is allocated to your investment options. If you take a withdrawal
from your contract, we will adjust your guaranteed minimum death benefit on the
date you take the withdrawal.
Applicable for annuitant ages 80 through 83 when the contract is issued.
On the contract date, your guaranteed minimum death benefit equals your initial
contribution. Thereafter, it will be increased by the dollar amount of any
additional contributions. We will adjust your guaranteed minimum death benefit
if you take any withdrawals.
----------------------------------------
Please see "How withdrawals affect your guaranteed minimum income benefit and
guaranteed minimum death benefit" under "Accessing your money" for information
on how withdrawals affect your guaranteed minimum death benefit. For contracts
issued in New York, the guaranteed minimum death benefit at the annuitant's
death will never be less than your value in the variable investment options,
plus the sum of the fixed maturity amounts in each fixed maturity option.
See Appendix IV for an example of how we calculate the guaranteed minimum death
benefit.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it to
us for a refund. To exercise this cancellation right you must mail the contract
directly to our Processing Office within 10 days after you receive it. In some
states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract and will
reflect (i) any investment gain or loss in the variable investment options, (ii)
any positive or negative market value adjustments in the fixed maturity options,
and (iii) any guaranteed interest in the account for special dollar cost
averaging, through the date we receive your contract. However, some states
require that we refund the full amount of your contribution (not reflecting (i),
(ii) or (iii) above). For any IRA contract returned to us within seven days
after you receive it, we are required to refund the full amount of your
contribution.
We may require that you wait six months before you may apply for a contract
with us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA or Flexible Premium Roth IRA contract, you may cancel your Roth Conversion
IRA or Flexible Premium Roth IRA contract and return to a Rollover IRA or
Flexible Premium IRA contract, whichever applies. Our Processing Office, or your
registered representative, can provide you with the cancellation instructions.
<PAGE>
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30 Determining your contract's value
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Determining your contract's value
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YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have allocated to the (i)
variable investment options, (ii) fixed maturity options, and (iii) account for
special dollar cost averaging. These amounts are subject to certain fees and
charges discussed under "Charges and expenses." Under Rollover TSA contracts, if
you have any outstanding loan your account value will include any amount in the
loan reserve account.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value, less the annual
administrative charge under Flexible Premium IRA and Flexible Premium Roth IRA
contracts, and less any withdrawal charge that may apply if you surrender your
contract. If you have a Rollover TSA contract with an outstanding loan, your
cash value also is reduced by the amount of any outstanding loan plus accrued
interest. Please see "Surrendering your contract to receive its cash value"
below.
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option invests in shares of a corresponding Portfolio.
Your value in each variable investment option is measured by "units." The value
of your units will increase or decrease as though you had invested it in the
corresponding Portfolio's shares directly. Your value, however, will be reduced
by the amount of the fees and charges that we deduct under the contract. Your
value will also be reduced by the dollar amount of any withdrawals that you
make.
The unit value for each variable investment option depends on the investment
performance of that option, minus daily charges for mortality and expense risks
and administrative expenses. On any day, your value in any variable investment
option equals the number of units credited to your contract under that option,
multiplied by that day's value for one unit. The number of your contract units
in any variable investment option does not change unless you make additional
contributions, make a withdrawal, or transfer amounts among investment options,
or we transfer your loan amount to the loan reserve account under a TSA
contract. In addition, when we deduct the baseBUILDER benefits charge and any
withdrawal charge the number of units credited to your contract will be reduced.
Your units are also reduced under Flexible Premium IRA and Flexible Premium Roth
IRA contracts when we deduct the annual administrative charge. A description of
how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date is
the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value.
YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING
Your value in the account for special dollar cost averaging at any time will
equal your initial contribution allocated to that option, plus interest, less
the sum of all amounts that have been transferred to the variable investment
options you have selected.
<PAGE>
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Transferring your money among investment options 31
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Transferring your money among investment options
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TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer some
or all of your account value among the investment options, subject to the
following:
o You may not transfer any amount to the account for special dollar cost
averaging.
o You may not transfer to a fixed maturity option that matures in the
current calendar year, or if its rate to maturity is 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately
following the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office. Transfer
requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option (whole
percentages only), and
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. However, it will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among each
variable investment option so that the percentage of your account value that you
specify is invested in each option at the end of each rebalancing date.
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Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your registered representative or
other financial adviser before electing the program.
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You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in a dollar
cost averaging program. Rebalancing is not available for amounts you have
allocated in the fixed maturity options.
<PAGE>
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32 Accessing your money
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Accessing your money
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WITHDRAWING YOUR ACCOUNT VALUE
You have several ways to withdraw your account value before annuity payments
begin. The table below shows the methods available under each type of contract.
More information follows the table. For the tax consequences of withdrawals, see
"Tax information."
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METHOD OF WITHDRAWAL
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SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
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NQ Yes Yes No No
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Rollover IRA Yes Yes Yes Yes
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Flexible
Premium IRA Yes Yes Yes Yes
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Roth Conversion
IRA Yes Yes Yes Yes
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Flexible
Premium Roth
IRA Yes Yes Yes No
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QP Yes No No Yes
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Rollover TSA Yes* No No Yes
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* For some Rollover TSA contracts, your ability to take withdrawals, loans
or surrender your contract may be limited. You must provide withdrawal
restriction information when you apply for a contract. See "Tax
information -- Tax Sheltered Annuity contracts (TSAs)" below.
LUMP SUM WITHDRAWALS
(All contracts)
You may take lump sum withdrawals from your account value at any time. (Rollover
TSA contracts may have restrictions.) The minimum amount you may withdraw is
$1,000. If you request to withdraw more than 90% of a contract's current cash
value we will treat it as a request to surrender the contract for its cash
value. See "Surrendering your contract to receive its cash value" below.
Lump sum withdrawals in excess of the 15% free withdrawal amount may be subject
to a withdrawal charge. Under Rollover TSA contracts, if a loan is outstanding,
you may only take lump sum withdrawals as long as the cash value remaining after
any withdrawal equals at least 10% of the outstanding loan plus accrued
interest.
SYSTEMATIC WITHDRAWALS
(NQ and all IRA contracts)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would be
less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own an IRA
contract, you may elect this withdrawal method only if you are between ages
59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you
have balances in the account for special dollar cost averaging.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change the
amount or percentage in any contract year in which you have already taken a lump
sum withdrawal. You can cancel the systematic withdrawal option at any time.
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 withdrawal amount.
<PAGE>
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Accessing your money 33
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SUBSTANTIALLY EQUAL WITHDRAWALS
(All IRA contracts)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have otherwise been due on prior withdrawals
made under this option and for any interest on those withdrawals.
You may elect to take substantially equal withdrawals at any time before age 59
1/2. We will make the withdrawal on any day of the month that you select as long
as it is not later than the 28th day of the month. You may not elect to receive
the first payment in the same contract year in which you took a lump sum
withdrawal. We will calculate the amount of your substantially equal withdrawals
based on the method you choose from the choices we offer. The payments will be
made monthly, quarterly or annually as you select. These payments will continue
until we receive written notice from you to cancel this option or you take a
lump sum withdrawal. You may elect to start receiving substantially equal
withdrawals again, but the payments may not restart in the same contract year in
which you took a lump sum withdrawal. We will calculate the new withdrawal
amount.
You may not elect substantially equal withdrawals if you have balances in the
account for special dollar cost averaging.
Substantially equal withdrawals are not subject to a withdrawal charge.
MINIMUM DISTRIBUTION WITHDRAWALS
(Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only -- See
"Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out
is $250. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We do not impose a withdrawal charge on minimum distribution withdrawals except
if when added to a lump sum withdrawal previously taken in the same contract
year, the minimum distribution withdrawal exceeds the 15% free withdrawal
amount.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
Under Rollover TSA contracts, you may not elect minimum distribution
withdrawals if a loan is outstanding.
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For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, 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).
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HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar
basis or on a pro rata basis as explained below:
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34 Accessing your money
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INCOME BENEFIT
Benefit base -- Your current benefit base will be reduced on a dollar-for-dollar
basis as long as the sum of your withdrawals in a contract year is 5% or less of
the guaranteed minimum death benefit on the most recent contract date
anniversary. Once you take a withdrawal that causes the sum of your withdrawals
in a contract year to exceed 5% of the guaranteed minimum death benefit on the
most recent contract date anniversary, that withdrawal and any subsequent
withdrawals in that same contract year will reduce your current benefit base on
a pro rata basis.
DEATH BENEFIT
5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed minimum
death benefit, your current guaranteed minimum death benefit will be reduced on
a dollar-for-dollar basis as long as the sum of your withdrawals in a contract
year is 5% or less of the guaranteed minimum death benefit on the most recent
contract date anniversary. Once you take a withdrawal that causes the sum of
your withdrawals in a contract year to exceed 5% of the guaranteed minimum death
benefit on the most recent contract date anniversary, that withdrawal and any
subsequent withdrawals in that same contract year will reduce your current
guaranteed minimum death benefit on a pro rata basis.
Annual ratchet to age 80 -- If you elect the annual ratchet to age 80 guaranteed
minimum death benefit, each withdrawal will always reduce your current
guaranteed minimum death benefit on a pro rata basis.
Annuitant issue ages 80 through 83 -- If your contract was issued when the
annuitant was between ages 80 and 83, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
----------------------------------------
Reduction on a dollar-for-dollar basis means that your current benefit will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of your current account value that is
being withdrawn and we reduce your current benefit by that same percentage. For
example, if your account value is $30,000 and you withdraw $12,000, you have
withdrawn 40% of your account value. If your guaranteed minimum death benefit
was $40,000 before 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 5% threshold
described above can have a significant impact on your guaranteed minimum income
benefit or guaranteed minimum death benefit.
LOANS UNDER ROLLOVER TSA CONTRACTS
You may take loans from a Rollover TSA unless restricted by the employer who
provided the Rollover TSA funds. If you cannot take a loan, or cannot take a
loan without approval from the employer who provided the funds, we will have
this information in our records based on what you and the employer who provided
the funds told us when you purchased your contract. The employer must also tell
us whether special employer plan rules of the Employee Retirement Income
Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan
while you are taking minimum distribution withdrawals.
You should read the terms and conditions on our loan request form carefully
before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may
only take a loan with the written consent of your spouse. Your contract contains
further details of the loan provision. Also, see "Tax information" for general
rules applicable to loans.
We will permit you to have only one loan outstanding at a time. The minimum loan
amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account
value, subject to any limits under the federal income tax rules. The term of a
loan is five years. However, if you use the loan to acquire your primary
residence, the term is 10 years. The term may not extend beyond the earliest of:
(1) the date annuity payments begin,
(2) the date the contract terminates, and
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Accessing your money 35
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(3) the date a death benefit is paid (the outstanding loan will be deducted
from the death benefit amount).
Interest will accrue daily on your outstanding loan at a rate we set. The loan
interest rate will be equal to the Moody's Corporate Bond Yield Averages for the
calendar month ending two months before the day of the calendar quarter in which
the rate is determined.
LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the
amount of your loan to the loan reserve account. Unless you specify otherwise,
we will subtract your loan on a pro rata basis from your value in the variable
investment options. If there is insufficient value or no value in the variable
investment options, any additional amount of the loan will be subtracted from
the fixed maturity options in order of the earliest maturity date(s) first. A
market value adjustment may apply.
We will credit interest to the amount in the loan reserve account at a rate of
2% lower than the loan interest rate that applies for the time your loan is
outstanding. On each contract date anniversary after the date the loan is
processed, we will transfer the amount of interest earned in the loan reserve
account to the variable investment options on a pro rata basis. When you make a
loan repayment, unless you specify otherwise, we will transfer the dollar amount
of the loan repaid from the loan reserve account to the investment options
according to the allocation percentages we have on our records.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while the
annuitant is living and before you begin to receive annuity payments. (Rollover
TSA contracts may have restrictions.) For a surrender to be effective, we must
receive your written request and your contract at our Processing Office. We will
determine your cash value on the date we receive the required information. All
benefits under the contract will terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we may
delay payment as described in "When to expect payments," below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any amount you withdraw
(less any withdrawal charge) and, upon surrender, payment of the cash value. We
may postpone such payments or applying proceeds for any period during which:
(1) the New York Stock Exchange is closed or restricts trading,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people remaining
in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
and the account for special dollar cost averaging (other than for death
benefits) for up to six months while you are living. We also may defer payments
for a reasonable amount of time (not to exceed 15 days) while we are waiting for
a contribution check to clear.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery service at your expense.
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36 Accessing your money
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CHOOSING YOUR ANNUITY PAYOUT OPTIONS
The Equitable Accumulator offers you several choices for receiving retirement
income. Each choice enables you to receive fixed or, in some cases, variable
annuity payments.
You can choose from among the six different annuity payout options listed below.
Restrictions apply, depending on the type of contract you own.
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Annuity payout options Life annuity
Life annuity -- period
certain
Life annuity -- refund
certain
Period certain annuity
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Income Manager payout Life annuity with a period
options certain
Period certain annuity
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ANNUITY PAYOUT OPTIONS
You can choose from among the following annuity payout options:
o Life annuity: An annuity that 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 continuation of benefits following
the annuitant's death with this payout option, it provides the highest
monthly payment of any of the life annuity options, so long as the
annuitant is living.
o Life annuity -- period certain: An annuity that guarantees payments for
the rest of the annuitant's life. If the annuitant dies before the end of
a selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity -- refund certain: An annuity that guarantees payments for
the rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered. This
payout option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not
permit any repayment of the unpaid principal, so you cannot elect to
receive part of the payments as a single sum payment with the rest paid in
monthly annuity payments. Currently, this payout option is available only
as a fixed annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
The life annuity, life annuity -- period certain, and life annuity -- refund
certain payout options are available on a single life or joint and survivor life
basis. The joint and survivor life annuity guarantees payments for the rest of
the annuitant's life and, after the annuitant's death, payments continue to the
survivor.
The following annuity payout options are available as variable annuities:
o Life annuity (except in New York).
o Life annuity -- period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed income annuity option which can be elected in combination with
the variable income annuity options. The amount of each variable annuity payment
will fluctuate, depending upon the performance of the variable investment
options, and
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Accessing your money 37
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whether the actual rate of investment return is higher or lower than an assumed
base rate. Please see "Annuity Unit Values" in the SAI.
We may offer other payout options not outlined here. Your registered
representative can provide details.
SELECTING AN ANNUITY PAYOUT OPTION
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return
your contract before annuity payments begin.
For NQ and IRA contracts, unless you choose a different payout option, we will
pay annuity payments under a life annuity with a certain period of 10 years. The
only payout options available under QP contracts and Rollover TSA contracts are
the life annuity 10 year period certain and the joint and survivor life annuity
10 year period certain.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be later than the
contract date anniversary that follows the annuitant's 90th birthday. This may
be different in some states.
Before your annuity payments are to begin, we will notify you by letter that the
annuity payout options are available. Once you have selected a payout option and
payments have begun, no change can be made other than transfers (if permitted in
the future) among the variable investment options if a variable annuity is
selected.
The amount of the annuity payments will depend on the amount applied to purchase
the annuity, the type of annuity chosen and whether it is fixed or variable, in
the case of a life annuity, the annuitant's age (or the annuitant's and joint
annuitant's ages) and in certain instances, the sex of the annuitant(s).
The amount we apply to provide annuity payments will depend on the type of
payout option you select. If you select a payout option that provides for
payments for the rest of the annuitant's life, then we will apply your account
value. If you select a payout option that provides for payments for a period
certain, then we will apply your cash value. However, if the period certain is
more than five years, we will apply not less than 95% of the account value.
Amounts in the fixed maturity options that are applied to a payout option before
a maturity date will result in a market value adjustment.
If, at the time you elect a payout option, 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 account value in a single sum rather than as
payments under the payout option chosen.
INCOME MANAGER PAYOUT OPTIONS
For NQ and IRA contracts, two Income Manager payout options are also available.
These are the Income Manager (Life Annuity with a Period Certain) and the Income
Manager (Period Certain).
For QP contracts, the Income Manager payout options are available only after the
trustee of the qualified plan directly rolls over the QP contract to a Rollover
IRA contract. In this process the ownership of the QP contract is changed to the
annuitant. The rollover to a Rollover IRA contract and the change of ownership
may only occur when the annuitant will no longer be a participant in the
qualified plan.
For Rollover TSA contracts, the Income Manager payout annuity options are
available only after the Rollover TSA contract is rolled over to a Rollover IRA
contract. This may generally occur when you are age 59 1/2, or you have
separated from service with the employer who provided the Rollover TSA funds.
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for the annuitant's life and the life of a
joint annuitant. The Income Manager (Period Certain) provides payments for a
specified period. The contract owner and annuitant must meet the issue age and
payment requirements. Both Income Manager annuities provide guaranteed level
payments (NQ
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38 Accessing your money
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and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also
provides guaranteed increasing payments (NQ contracts only).
If you apply only part of the account value of your contract to either of the
Income Manager payout annuities we will consider it a withdrawal and may deduct
a withdrawal charge. We will not deduct a withdrawal charge if you apply all of
your account value at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals). However, a new
withdrawal charge schedule will apply under the Income Manager annuity. For
purposes of the withdrawal charge schedule, the year in which your account value
is applied under the Income Manager annuity will be "contract year 1." In
addition, we will not deduct a withdrawal charge if you apply all of your
account value from your Equitable Accumulator contract when the dollar amount of
the withdrawal charge under such contract is 2% or less. This means that no
withdrawal charge schedule will apply under the Income Manager payout annuity
contract.
You should consider the timing of your purchase as it relates to the potential
for withdrawal charges under the Income Manager annuity. No additional
contributions will be permitted under an Income Manager (Life Annuity with a
Period Certain).
You also may apply your account value to an Income Manager (Period Certain)
annuity once withdrawal charges are no longer in effect under your contract. No
withdrawal charges will apply under that Income Manager annuity.
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your registered representative. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free basis.
Please consult your tax adviser.
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Charges and expenses 39
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Charges and expenses
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CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option:
o A mortality and expense risks charge.
o An administrative charge.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
o On each contract date anniversary -- an annual administrative charge
(Flexible Premium IRA and Flexible Premium Roth IRA contracts only)
o At the time you make certain withdrawals or surrender your contract -- a
withdrawal charge.
o If you elect the optional benefit -- a charge for the optional baseBUILDER
benefit.
o At the time annuity payments are to begin -- charges for state premium and
other taxes. An annuity administrative fee may also apply.
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
To help with your retirement planning, we may offer other annuities with
different charges, benefits, and features. Please contact your registered
representative for more information.
MORTALITY AND EXPENSE RISKS CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the guaranteed
minimum death benefit. The daily charge is equivalent to an annual rate of 1.10%
of the net assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, 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 contract, 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 contract. The expense risk
we assume is the risk that it will cost us more to issue and administer the
contracts than we expect.
ADMINISTRATIVE CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to increase
this charge to an annual rate of 0.35%.
ANNUAL ADMINISTRATIVE CHARGE (FLEXIBLE PREMIUM IRA AND FLEXIBLE PREMIUM ROTH IRA
CONTRACTS ONLY)
Under Flexible Premium IRA and Flexible Premium Roth IRA contracts, we deduct an
administrative charge from your account value on each contract date anniversary.
We deduct the charge if your account value on the last business day of the
contract year, before the deduction of any other charges, is less than $25,000.
If your account value on such date is $25,000 or more, this charge will equal
zero. During the first two contract years, the charge is equal to $30 or, if
less, 2% of your account value. The charge is $30 for contract years three and
later.
We will deduct this charge from your value in the variable investment options on
a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. If you surrender your
contract during the contract year we will deduct a pro rata portion of the
charge.
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40 Charges and expenses
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WITHDRAWAL CHARGE
A withdrawal charge applies in two circumstances:
(1) if you make one or more withdrawals during a contract year that, in total,
exceed the 15% free withdrawal amount, described below, or (2) if you surrender
your contract to receive its cash value.
The withdrawal charge equals a percentage of the contributions withdrawn. The
percentage that applies depends on how long each contribution has been invested
in the contract. We determine the withdrawal charge separately for each
contribution according to the following table:
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CONTRACT YEAR
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1 2 3 4 5 6 7 8+
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Percentage of
contribution 7% 6% 5% 4% 3% 2% 1% 0%
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For purposes of calculating the withdrawal charge, we treat the contract year in
which we receive a contribution as "contract year 1." Amounts withdrawn up to
the free withdrawal amount are not considered withdrawal of any contribution. We
also treat contributions that have been invested the longest as being withdrawn
first. We treat contributions as withdrawn before earnings for purposes of
calculating the withdrawal charge. However, federal income tax rules treat
earnings under your contract as withdrawn first. See "Tax information."
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the withdrawal charge from your account
value. Any amount deducted to pay a withdrawal charge is also subject to a
withdrawal charge. We deduct the charge in proportion to the amount of the
withdrawal subtracted from each investment option. The withdrawal charge helps
cover our sales expenses.
The withdrawal charge does not apply in the circumstances described below.
15% FREE WITHDRAWAL AMOUNT. Each contract year you can withdraw up to 15% of
your account value without paying a withdrawal charge. The 15% free withdrawal
amount is determined using your account value on the most recent contract date
anniversary, minus any other withdrawals made during the contract year. The 15%
free withdrawal amount does not apply if you surrender your contract.
Note the following special rule for NQ contracts issued to a charitable
remainder trust, the free withdrawal amount will equal the greater of: (1) the
current account value, less contributions that have not been withdrawn (earnings
in the contract), and (2) the 15% free withdrawal amount defined above.
MINIMUM DISTRIBUTIONS. The withdrawal charge does not apply to withdrawals taken
under our minimum distribution withdrawal option. However, those withdrawals are
counted towards the 15% free withdrawal amount if you also make a lump sum
withdrawal in any contract year.
DISABILITY, TERMINAL ILLNESS OR CONFINEMENT TO NURSING HOME. The withdrawal
charge also does not apply if:
o The annuitant has qualified to receive Social Security disability benefits
as certified by the Social Security Administration; or
o We receive proof satisfactory to us (including certification by a licensed
physician) that the annuitant's life expectancy is six months or less; or
o The annuitant has been confined to a nursing home for more than 90 days
(or such other period, as required in your state) as verified by a
licensed physician. A nursing home for this purpose means one that is (a)
approved by Medicare as a provider of skilled nursing care service, or (b)
licensed as a skilled nursing home by the state or territory in which it
is located (it must be within the United States, Puerto Rico, or U.S.
Virgin Islands) and meets all of the following:
-- its main function is to provide skilled, intermediate, or custodial
nursing care;
-- it provides continuous room and board to three or more persons;
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Charges and expenses 41
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-- it is supervised by a registered nurse or licensed practical nurse;
-- it keeps daily medical records of each patient;
-- it controls and records all medications dispensed; and
-- its primary service is other than to provide housing for residents.
We reserve the right to impose a withdrawal charge, in accordance with your
contract and applicable state law, if the disability is caused by a preexisting
condition or a condition that began within 12 months of the contract date. Some
states may not permit us to waive the withdrawal charge in the above
circumstances, or may limit the circumstances for which the withdrawal charge
may be waived. Your registered representative can provide more information or
you may contact our Processing Office.
BASEBUILDER BENEFITS CHARGE
If you elect the baseBUILDER combined guaranteed minimum income benefit and
guaranteed minimum death benefit, we deduct a charge annually from your account
value on each contract date anniversary. The charge is equal to 0.30% of the
benefit base in effect on the contract date anniversary.
We will deduct this charge from your value in the variable investment options on
a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. A market value
adjustment may apply.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout. 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).
ANNUITY ADMINISTRATIVE FEE
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges, please
refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust
following this 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 also may change the guaranteed minimum income
benefit and the guaranteed minimum death benefit, or offer variable investment
options that invest in shares of The Hudson River Trust or EQ Advisors Trust
that 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 IRA
contracts. Sponsored arrangements include those in which an employer allows us
to sell contracts to its employees or retirees on an individual basis.
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42 Charges and expenses
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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, such as requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy contracts or
that have been in existence less than six months will not qualify for reduced
charges.
We also may establish different rates to maturity for the fixed maturity options
under different classes of contracts for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in effect
when we approve a contract 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 federal income tax rules,
ERISA, or both. We make no representations with regard to the impact of these
and other applicable laws on such programs. We recommend that employers,
trustees, and others purchasing or making contracts available for purchase under
such programs seek the advice of their own legal and benefits advisers.
OTHER DISTRIBUTION ARRANGEMENTS
We may reduce or eliminate charges when sales are made in a manner that result
in savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and who receive no
commission or reduced commissions in connection with the sale of the contracts.
We will not permit a reduction or elimination of charges where it would be
unfairly discriminatory.
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Payment of death benefit 43
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Payment of death benefit
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YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for the change is signed. Under jointly owned contracts, the
surviving owner is considered the beneficiary, and will take the place of any
other beneficiary. You may be limited as to the beneficiary you can designate in
a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee.
The death benefit is equal to your account value, or, if greater, the guaranteed
minimum death benefit. The guaranteed minimum death benefit is part of your
contract, whether you select the combined baseBUILDER benefit or not. We
determine the amount of the death benefit as of the date we receive satisfactory
proof of the annuitant's death and any required instructions for the method of
payment. Under Rollover TSA contracts we will deduct the amount of any
outstanding loan plus accrued interest from the amount of the death benefit.
EFFECT OF THE ANNUITANT'S DEATH
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you
cannot have a successor owner/annuitant.
For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a
surviving spouse may be able to have limited ownership.
WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the person named to receive the death benefit upon the annuitant's death to
be the successor owner, you should name a successor owner. You may name a
different person that will become the successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes the
sole contract owner. This person will be considered the "beneficiary" for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a joint
ownership situation, the surviving spouse of the first owner to die) is the
successor owner for this purpose, the entire interest in the contract must be
distributed under the following rules:
o The cash value of the contract 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).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new
owner's life expectancy). Payments must begin no later than December 31st
following the calendar year of the non-annuitant owner's death. Unless
this alternative is elected, we will pay any cash value on December 31st
of the fifth calendar year following the year of your death (or the death
of the first owner to die).
o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long
as the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have
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not chosen an annuity payout option as of the time of the annuitant's death, the
beneficiary will receive the death benefit in a single sum. However, subject to
any exceptions in the contract, our rules and any applicable requirements under
federal income tax rules, the beneficiary may elect to apply the death benefit
to one or more annuity payout options we offer at the time. See "Choosing your
annuity payout options" earlier in this prospectus. Please note that if you are
both the contract owner and the annuitant, you may elect only a life annuity or
an annuity that does not extend beyond the life expectancy of the beneficiary.
SUCCESSOR OWNER AND ANNUITANT
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current guaranteed minimum death benefit, if it is higher than the
account value. In determining whether the guaranteed minimum death benefit will
continue to grow, we will use your surviving spouse's age (as of the contract
date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA
CONTRACTS
Upon your death under a Rollover IRA or Flexible Premium IRA contract, a
non-spouse beneficiary may generally elect to keep the contract in your name and
receive distributions under the contract instead of the death benefit being paid
in a single sum.
If you die AFTER the "required beginning date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract;
and
(b) the pattern of minimum distribution withdrawals you chose was based in
part on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the "required beginning date" (and therefore you were not
taking minimum distribution withdrawals under the contract), the beneficiary may
begin taking minimum distribution withdrawals under the contract. We will
increase the account value to equal the death benefit if the death benefit is
greater than the account value. That amount will be used to provide the
withdrawals. These withdrawals will begin by December 31st of the calendar year
following your death and will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used.
The designated beneficiary must be a natural person and of legal age at the time
of election. The beneficiary must elect this option within 30 days following the
date we receive proof of your death.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the guaranteed minimum income benefit and the death benefit
(including the guaranteed minimum death benefit) provisions will no longer be in
effect. Although the only withdrawals that will be permitted are minimum
distribution withdrawals, the beneficiary may choose at any time to withdraw all
of the account value and no withdrawal charges will apply.
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator contracts owned by United States
taxpayers. The tax rules can differ, depending on the type of contract, whether
NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Flexible Premium
Roth IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type
of contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state income
and other state taxes, federal income tax and withholding rules for non-U.S.
taxpayers, or federal gift and estate taxes. Transfers of the contract, rights
under the contract, or payments under the contract may be subject to gift or
estate taxes. You should not rely only on this document, but should consult your
tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides tax
deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover
TSA), you should do so for the contract's features and benefits other than tax
deferral. In such situations, the tax deferral of the contract does not provide
additional benefits.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TRANSFERS AMONG INVESTMENT OPTIONS
You can make transfers among investment options inside the contract without
triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
CONTRIBUTIONS
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
CONTRACT EARNINGS
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
o if a contract fails investment diversification requirements as specified
in federal income tax rules (these rules are based on or are similar to
those specified for mutual funds under the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that we issue to you during the same
calendar year are linked together and treated as one contract for calculating
the taxable amount of any distribution from any of those contracts.
ANNUITY PAYMENTS
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your "investment in the contract." Generally, your investment in the contract
equals the contributions you made, less any amounts you previously withdrew that
were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount of the payment. For variable annuity payments, your
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investment in the contract divided by the number of expected payments is your
tax-free portion of each payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any unrecovered
investment in the contract.
PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the contract.
If you withdraw an amount which is more than the earnings in the contract as of
the date of the withdrawal, the balance of the distribution is treated as a
return of your investment in the contract and is not taxable.
CONTRACTS PURCHASED THROUGH EXCHANGES
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase
the NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator NQ contract (if you are using a life insurance or
endowment contract the owner and the insured must be the same on both
sides of the exchange transaction).
The tax basis of the source contract carries over to the Equitable Accumulator
NQ contract.
Surrenders
If you surrender or cancel the contract, the distribution is taxable as ordinary
income (not capital gain) to the extent it exceeds your investment in the
contract.
Death benefit payments made to a beneficiary after your death
For the rules applicable to death benefits, see "Payment of Death Benefit" and
"When an NQ contract owner dies before the annuitant" earlier in this
prospectus. The tax treatment of a death benefit taken as a single sum is
generally the same as the tax treatment of a withdrawal from or surrender of
your contract. The tax treatment of a death benefit taken as annuity payments is
generally the same as the tax treatment of annuity payments under your contract.
EARLY DISTRIBUTION PENALTY TAX
If you take distributions before you are age 59 1/2 a penalty tax of 10% of the
taxable portion of your distribution applies in addition to the income tax. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract 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 from the contract
for each tax return. Puerto Rico generally provides a credit against Puerto Rico
tax for U.S. tax paid. Depending on your
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS")
GENERAL
"IRA" stands for individual retirement arrangement. There are two basic types of
such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds the
assets for the benefit of the IRA owner. The assets can include mutual funds and
certificates of deposit. In an individual retirement annuity, an insurance
company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required to
combine IRA values or contributions for tax purposes. For further information
about individual retirement arrangements, you can read Internal Revenue Service
Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication
is usually updated annually, and can be obtained from any IRS district office or
the IRS website (http://www.irs.ustreas.gov).
The Equitable Accumulator IRA contract is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Internal Revenue Code. You may
purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we
offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth
IRA available are the Roth Conversion IRA and Roth Flexible Premium IRA. This
prospectus contains the information that the IRS requires you to have before you
purchase an IRA. This section of the prospectus covers some of the special tax
rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are
not discussed in this prospectus because they are not available in individual
retirement annuity form.
The Equitable Accumulator IRA contract has been approved by the IRS as to form
for use as a traditional IRA. We expect to submit the Roth IRA version for
formal IRS approval in 1999. This IRS approval is a determination only as to the
form of the annuity. It does not represent a determination of the merits of the
annuity as an investment. The IRS approval does not address every feature
possibly available under the Equitable Accumulator IRA contract.
CANCELLATION
You can cancel an Equitable Accumulator IRA contract by following the directions
under "Your right to cancel within a certain number of days" earlier in the
prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA contract
issued as a result of a full conversion of an Equitable Accumulator Rollover IRA
or Flexible Premium IRA contract by following the instructions in the request
for full conversion form. The form is available from our Processing Office or
your registered representative. If you cancel an IRA contract, we may have to
withhold tax, and we must report the transaction to the IRS. A contract
cancellation could have an unfavorable tax impact.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
CONTRIBUTIONS TO TRADITIONAL IRAS
Individuals may make three different types of contributions to a traditional
IRA:
o regular contributions out of earned income or compensation; or
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o tax-free "rollover" contributions; or
o direct custodian-to-custodian transfers from other traditional IRAs
("direct transfers").
Regular traditional IRA, direct transfer, and rollover contributions may be made
to a Flexible Premium IRA contract. We only permit direct transfer and rollover
contributions under a Rollover IRA contract. See "Rollovers and transfers"
below.
REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS
Limits on contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. When your earnings are below $2,000,
your earned income or compensation for the year is the most you can contribute.
This $2,000 limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into a traditional IRA. You cannot make regular
traditional IRA contributions for the tax year in which you reach age 70 1/2 or
any tax year after that.
Special rules for spouses
If you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make 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 earned income is 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 IRAs. Each spouse
owns his or her traditional IRAs and Roth IRAs even if the other spouse funded
the contributions. A working spouse age 70 1/2 or over can contribute up to the
lesser of $2,000 or 100% of "earned income" to a traditional IRA for a
nonworking spouse until the year in which the nonworking spouse reaches age 70
1/2.
Deductibility of contributions
The amount of traditional IRA contributions that you can deduct for a tax year
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan, as defined under special federal income tax rules. Your Form
W-2 will indicate whether or not you are covered by such a retirement plan.
IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can
make fully deductible contributions to your traditional IRAs for each tax year
up to $2,000 or, if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT
RANGE, you can make fully deductible contributions to your traditional IRAs. For
each tax year, your fully deductible contribution can be up to $2,000 or, if
less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE
CONTRIBUTIONS to your traditional IRAs.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any
of your regular contributions to your traditional IRAs.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for IRA contributions phases out with AGI between
$31,000 and $41,000 in 1999. This range will increase every year until 2005 when
the range is $50,000-$60,000.
If you are married and file a joint return, and you are covered by a retirement
plan during any part of the taxable year, the deduction for traditional IRA
contributions phases out with
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AGI between $51,000 and $61,000 in 1999. This range will increase every year
until 2007 when the range is $80,000-$100,000.
Married individuals filing separately and living apart at all times are not
considered 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 in 1999, you determine
AGI and subtract $31,000 if you are single, or $51,000 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:
($10,000-excess AGI) times $2,000 (or earned Equals the adjusted
- -------------------- x income, if less) = deductible
divided by $10,000 contribution
limit
Nondeductible regular contributions
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 combined deductible and
nondeductible contributions to your traditional IRA (or the nonworking spouse's
traditional IRA) may not, however, exceed the maximum $2,000 per person limit.
See "Excess contributions" below. You must keep your own records of deductible
and nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Withdrawals, payments and
transfer of funds out of traditional IRAs" 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 distributions 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.
When you can make regular contributions
If you file your tax returns on a calendar year basis like most taxpayers, you
have until the April 15 return filing deadline (without extensions) of the
following calendar year to make your regular traditional IRA contributions for a
tax year.
EXCESS CONTRIBUTIONS
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000; or
o regular contributions of more than earned income for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age
70 1/2; or
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income. It
is also not subject to the 10% additional penalty tax on early distributions,
discussed below under "Early distribution penalty tax." You do have to withdraw
any earnings that are attributed to the excess contribution. The withdrawn
earnings would be included in your gross income and could be subject to the 10%
penalty tax.
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Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
Any amount contributed to a traditional IRA after you reach 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.
ROLLOVERS FROM QUALIFIED PLANS OR TSAS
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll
it over to a traditional IRA within 60 days after the date you receive the
funds. The distribution from your qualified plan or TSA will be net of 20%
mandatory federal income tax withholding. If you want, you can replace the
withheld funds yourself and roll over the full amount.
o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to
send the distribution directly to your traditional IRA issuer. Direct
rollovers are not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o "required minimum distributions" after age 70 1/2 or separation from
service; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of
you and your designated beneficiary; or
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently than
once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases,
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traditional IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a traditional IRA at any time.
You do not need to wait for a special event like retirement.
Taxation of payments
Earnings in traditional IRAs are not subject to federal income tax until you or
your beneficiary receives them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any traditional IRA (it
does not have to be to this particular traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. At the end of any year in which
you have received a distribution from any traditional IRA, you calculate the
ratio of your total nondeductible traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
traditional IRAs you own at the end of the year plus all traditional IRA
distributions made during the year. Multiply this by all distributions from the
traditional IRA during the year to determine the nontaxable portion of each
distribution.
In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA
that accepts rollover contributions. To get this "conduit" traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must
have been a rollover contribution from a qualified plan, and
o 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to roll
over these eligible rollover distribution contributions and earnings to another
qualified plan or TSA at a future date. The Rollover IRA contract can be used as
a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
Lifetime required minimum distributions
You must start taking annual distributions from your traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the
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calendar year you actually reach age 70 1/2, or to delay taking it until the
first three-month period in the next calendar year (January 1-April 1).
Distributions must start no later than your "required beginning date," which is
April 1st of the calendar year after 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 each year.
How you can calculate required minimum distributions
There are two approaches to taking required minimum distributions -
"account-based" or "annuity-based."
Account-based method. If you choose an "account-based" method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by a
life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of you
and another individual. You can decide to "recalculate" your life expectancy
every year by using your current life expectancy factor. You can decide instead
to use the "term certain" method, where you reduce your life expectancy by one
every year after the initial year. If your spouse is your designated beneficiary
for the purpose of calculating annual account-based required minimum
distributions, you can also annually "recalculate" your spouse's life expectancy
if you want. If you choose someone who is not your spouse as your designated
beneficiary for the purpose of calculating annual account-based required minimum
distributions, you have to use the "term certain" method of calculating that
person's life expectancy. If you pick a nonspouse designated beneficiary, you
may also have to do another special calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). 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.
Annuity-based method. If you choose an "annuity-based" method, you do not have
to do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your traditional IRA based on
the method you choose?
No, unless you affirmatively select an annuity payout option or an account-based
withdrawal option such as our minimum distribution withdrawal option. Because
the options we offer do not cover every option permitted under federal income
tax rules, you may prefer to do your own required minimum distribution
calculations for one or more of your traditional IRAs.
What if you take more than you need to for any year?
The required minimum distribution amount for your traditional IRAs is calculated
on a year-by-year basis. There are no carry-back or carry-forward provisions.
Also, you cannot apply required minimum distribution amounts you
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take from your qualified plans to the amounts you have to take from your
traditional IRAs and vice-versa. However, the IRS will let you calculate the
required minimum distribution for each traditional IRA that you maintain, using
the method that you picked for that particular IRA. You can add these required
minimum distribution amount calculations together. As long as the total amount
you take out every year satisfies your overall traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50% penalty
tax on the shortfall (required amount for traditional IRAs less amount actually
taken). It is your responsibility to meet the required minimum distribution
rules. We will remind you when our records show that your age 70 1/2 is
approaching. If you do not select a method with us, we will assume you are
taking your required minimum distribution from another traditional IRA that you
own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values in
the contract at least as rapidly as under the distribution method before your
death. In some circumstances, your surviving spouse may elect to become the
owner of the traditional IRA and halt distributions until he or she reaches age
70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract within five years after your death. Payments to a
designated beneficiary over the beneficiary's life or over a period certain that
does not extend beyond the beneficiary's life expectancy are also permitted, if
these payments start within one year of your death. A surviving spouse
beneficiary can also (a) delay starting any payments until you would have
reached age 70 1/2 or (b) roll over your traditional IRA into his or her own
traditional IRA.
Successor annuitant and owner
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
IRA death benefits are taxed the same as IRA distributions.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
You cannot get loans from a traditional IRA. You cannot use a traditional IRA as
collateral for a loan or other obligation. If you borrow against your IRA or use
it as collateral, its tax-favored status will be lost as of the first day of the
tax year in which this prohibited event occurs. If this happens, you must
include the value of the traditional IRA in your federal gross income. 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.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition); or
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o used to pay certain higher education expenses (special federal income tax
definition); or
o in the form of substantially equal periodic payments made at least
annually over your life (or your life expectancy), or over the joint lives
of you and your beneficiary (or your joint life expectancy) using an
IRS-approved distribution method.
To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10% penalty
tax, they are taxable as discussed in "Withdrawals, payments and transfers of
funds out of traditional IRAs" above. Once substantially equal withdrawals or
Income Manager annuity payments begin, the distributions should not be stopped
or changed until the later of your reaching 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 contract as changing your pattern of substantially
equal withdrawals or Income Manager payments for purposes of determining whether
the penalty applies.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS)
This section of the prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth
individual retirement annuity under Sections 408A and 408(b) of the Internal
Revenue Code.
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to a Roth IRA:
o regular after-tax contributions out of earnings; or
o taxable "rollover" contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers").
Regular after-tax, direct transfer, and rollover contributions may be made to a
Flexible Premium Roth IRA contract. We only permit direct transfer and rollover
contributions under the Roth Conversion IRA contract. See "Rollovers and direct
transfers" below. If you use the forms we require, we will also accept
traditional IRA funds which are subsequently recharacterized as Roth IRA funds
following special federal income tax rules.
REGULAR CONTRIBUTIONS TO ROTH IRAS
Limits on regular contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. This $2,000 limit does not apply to
rollover contributions or direct custodian-to-custodian transfers into a Roth
IRA. Any contributions to Roth IRAs reduce your ability to contribute to
traditional IRAs and vice versa. When your earnings are below $2,000, your
earned income or compensation for the year is the most you can contribute. If
you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make to Roth IRAs and traditional IRAs. See the discussion
above under traditional IRAs.
With a Roth IRA, you can make regular contributions when you reach 70 1/2, as
long as you have sufficient earnings. But, you cannot make contributions for any
year that:
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o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is over $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is over $110,000.
However, you can make regular Roth IRA contributions in reduced amounts when:
o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is between $150,000 and $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is between $95,000 and $110,000.
If you are married and filing separately and your adjusted gross income is
between $0 and $10,000 the amount of regular contribution you are permitted to
make is phased out. If your adjusted gross income is more than $10,000 you
cannot make a regular Roth IRA contribution.
When you can make contributions
Same as traditional IRAs.
Deductibility of contributions
Roth IRA contributions are not tax deductible.
ROLLOVERS AND DIRECT TRANSFERS
What is the difference between rollover and direct transfer transactions?
You may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under Section
401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the
Internal Revenue Code. You may make direct transfer contributions to a Roth IRA
only from another Roth IRA.
The difference between a rollover transaction and a direct transfer transaction
is the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. You can make direct transfer
transactions only between identical plan types (for example, Roth IRA to Roth
IRA). You can also make rollover transactions between identical plan types.
However, you can only use rollover transactions between different plan types
(for example, traditional IRA to Roth IRA).
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions
only once in any 12-month period for the same funds. Trustee-to-trustee or
custodian-to-custodian direct transfers can be made more frequently than once a
year. Also, if you send us the rollover contribution to apply it to a Roth IRA,
you must do so within 60 days after you receive the proceeds from the original
IRA to get rollover treatment.
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. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Conversion contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) 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 considered to
have received) the traditional IRA proceeds. Unlike a rollover from
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a traditional IRA to another traditional IRA, the conversion rollover
transaction is not tax-free. Instead, the distribution from the traditional IRA
is generally fully taxable. For this reason, we are required to withhold 10%
federal income tax from the amount converted unless you elect out of such
withholding. (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-free.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age 59
1/2.
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.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
No federal income tax law 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.
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your contract, surrender of your contract
and annuity payments from your contract. Death benefits are also distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o Return of excess contributions or amounts recharacterized to a traditional
IRA.
Qualified distributions from Roth IRAs
Qualified distributions from Roth IRAs made because of one of the following four
qualifying events or reasons are not includable in income:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-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). It is not possible to have a
tax-free qualified distribution before the year 2003 because of the five-year
aging requirement.
Nonqualified distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are distributions that do not meet the
qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all of
your Roth IRAs is taxable. You have to reduce the amount of contributions to all
of your Roth IRAs to reflect any previous tax-free recoveries.
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You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records pertaining to such
contributions and distributions until your interests in all Roth IRAs are
distributed.
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.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
Same as traditional IRA.
EXCESS CONTRIBUTIONS
Same as traditional IRA, except that regular contributions made after age 70 1/2
are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions 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).
You can withdraw or recharacterize any contribution to a Roth IRA before the due
date (including extensions) for filing your federal income tax return for the
tax year. If you do this, you must also withdraw or recharacterize any earnings
attributable to the contribution.
EARLY DISTRIBUTION PENALTY TAX
Same as traditional IRA.
For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable
to 1998 conversion rollovers.
SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS
Under QP contracts your plan administrator or trustee notifies you as to tax
consequences. See Appendix II.
TAX SHELTERED ANNUITY CONTRACTS (TSAS)
GENERAL
This section of the prospectus covers some of the special tax rules that apply
to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If
the rules are the same as those that apply to another kind of contract, for
example, traditional IRAs, we will refer you to the same topic under
"traditional IRAs."
CONTRIBUTIONS TO TSAS
There are two ways you can make contributions to this Equitable Accumulator
Rollover TSA contract:
o a rollover from another TSA contract or arrangement that meets the
requirements of Section 403(b) of the Internal Revenue Code, or
o a full or partial direct transfer of assets ("direct transfer") from
another contract or arrangement that meets the requirements of Section
403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24.
With appropriate written documentation satisfactory to us, we will accept
rollover contributions from "conduit IRAs" for TSA funds.
If you make a direct transfer, you must fill out our transfer form.
Employer-remitted contributions
The Equitable Accumulator Rollover TSA contract does not accept
employer-remitted contributions. However, we provide the following discussion as
part of our description of
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restrictions on the distribution of funds directly transferred, which include
employer-remitted contributions to other TSAs.
Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
Rollover or direct transfer contributions
You may make rollover contributions to your Equitable Accumulator Rollover TSA
contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally,
you may make a rollover contribution to a TSA when you have a distributable
event from an existing TSA as a result of your:
o termination of employment with the employer who provided the TSA funds; or
o reaching age 59 1/2 even if you are still employed; or
o disability (special federal income tax definition).
A transfer occurs when changing the funding vehicle, even if there is no
distributable event. Under a direct transfer, you do not receive a distribution.
We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if:
o you give us acceptable written documentation as to the source of the
funds, and
o the Equitable Accumulator contract receiving the funds has provisions at
least as restrictive as the source contract.
Before you transfer funds to an Equitable Accumulator Rollover TSA contract, you
may have to obtain your employer's authorization or demonstrate that you do not
need employer authorization. For example, the transferring TSA may be subject to
Title I of ERISA, if the employer makes matching contributions to salary
reduction contributions made by employees. In that case, the employer must
continue to approve distributions from the plan or contract.
Your contribution to the Equitable Accumulator Rollover TSA must be net of the
required minimum distribution for the tax year in which we issue the contract
if:
o you are or will be at least age 70 1/2 in the current calendar year, and
o you have separated from service with the employer who provided the funds
to purchase the TSA you are transferring or rolling over to the Equitable
Accumulator Rollover TSA.
This rule applies regardless of whether the source of funds is a:
o rollover by check of the proceeds from another TSA; or
o direct rollover from another TSA; or
o direct transfer under Revenue Ruling 90-24 from another TSA.
Further, you must use the same elections regarding recalculation of your life
expectancy (and if applicable, your spouse's life expectancy) if you have
already begun to receive required minimum distributions from or with respect to
the TSA from which you are making your contribution to the Equitable Accumulator
Rollover TSA. You must also elect or have elected a minimum distribution
calculation method requiring recalculation of your life expectancy (and if
applicable, your spouse's life expectancy) if you elect an annuity payout for
the funds in this contract subsequent to this year.
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DISTRIBUTIONS FROM TSAS
General
Depending on the terms of the employer plan and your employment status, you may
have to get your employer's consent to take a loan or withdrawal. Your employer
will tell us this when you establish the TSA through a direct transfer.
Withdrawal restrictions
If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts
transferred to this contract and any future earnings on the amount transferred
as not eligible for withdrawal until one of the following events happens:
o you are separated from service with the employer who provided the funds to
purchase the TSA you are transferring to the Equitable Accumulator
Rollover TSA;
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o you take a "hardship" withdrawal (special federal income tax definition).
If any portion of the funds directly transferred to your TSA contract is
attributable to amounts that you invested in a 403(b)(7) custodial account, such
amounts, including earnings, are subject to withdrawal restrictions. With
respect to the portion of the funds that were never invested in a 403(b)(7)
custodial account, these restrictions apply to the salary reduction (elective
deferral) contributions to a TSA annuity contract you made and any earnings on
them. These restrictions do not apply to the amount directly transferred to your
TSA contract that represents your December 31, 1988 account balance attributable
to salary reduction contributions to a TSA annuity contract and earnings. To
take advantage of this grandfathering you must properly notify us in writing at
our Processing Office of your December 31, 1988 account balance if you have
qualifying amounts transferred to your TSA contract.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur:
(1) the requirements for minimum distribution (discussed under "Required
minimum distributions" below) are met; or
(2) death; or
(3) retirement; or
(4) termination of employment in all Texas public institutions of higher
education.
For you to make a withdrawal, we must receive a properly completed written
acknowledgement from the employer. If a distributable event occurs before you
are vested, we will refund to the employer any amounts provided by an employer's
first-year matching contribution. We reserve the right to change these
provisions without your consent, but only to the extent necessary to maintain
compliance with applicable law. Loans are not permitted under Texas Optional
Retirement Programs.
Tax treatment of distributions
Amounts held under TSAs are generally not subject to federal income tax until
benefits are distributed. Distributions include withdrawals from your TSA
contract and annuity payments from your TSA contract. Death benefits paid to a
beneficiary are also taxable distributions. Unless an exception applies, amounts
distributed from TSAs are includable in gross income as ordinary income.
Distributions from TSAs may be subject to 20% federal income tax withholding.
See "Federal and state income tax withholding and information reporting" below.
In addition, TSA distributions may be subject to additional tax penalties.
If you have made after-tax contributions, you will have a tax basis in your TSA
contract, which will be recovered tax-free. Since we do not track your
investment in the contract, if any, it is your responsibility to determine how
much of the distribution is taxable.
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Distributions before annuity payments begin. On a total surrender, the amount
received in excess of the investment in the contract is taxable. We will report
the total amount of the distribution. The amount of any partial distribution
from a TSA prior to the annuity starting date is generally taxable, except to
the extent that the distribution is treated as a withdrawal of after-tax
contributions. Distributions are normally treated as pro rata withdrawals of
after-tax contributions and earnings on those contributions.
Annuity payments. If you elect an annuity payout option, you will recover any
investment in the contract as each payment is received by dividing the
investment in the contract by an expected return determined under an IRS table
prescribed for qualified annuities. The amount of each payment not excluded from
income under this exclusion ratio is fully taxable. The full amount of the
payments received after your investment in the contract is recovered is fully
taxable. If you (and your beneficiary under a joint and survivor annuity) die
before recovering the full investment in the contract, a deduction is allowed on
your (or your beneficiary's) final tax return.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Death benefit distributions from a TSA generally receive the same tax treatment
as distributions during your lifetime. In some instances, distributions from a
TSA made to your surviving spouse may be rolled over to a traditional IRA.
LOANS FROM TSAS
You may take loans from a TSA unless restricted by the employer (for example,
under an employer plan subject to ERISA). If you cannot take a loan, or cannot
take a loan without approval from the employer who provided the funds, we will
have this information in our records based on what you and the employer who
provided the TSA funds told us when you purchased your contract.
Loans are generally not treated as a taxable distribution. If the amount of the
loan exceeds permissible limits under federal income tax rules when made, the
amount of the excess is treated (solely for tax purposes) as a taxable
distribution. Additionally, if the loan is not repaid at least quarterly,
amortizing (paying down) interest and principal, the amount not repaid when due
will be treated as a taxable distribution. Under Proposed Treasury Regulations
the entire unpaid balance of the loan is includable in income in the year of the
default.
TSA loans are subject to federal income tax limits and may also be subject to
the limits of the plan from which the funds came. Federal income tax rule
requirements apply even if the plan is not subject to ERISA. For example, loans
offered by TSAs are subject to the following conditions:
o The amount of a loan to a participant, when combined with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the lesser of (1) the greater of $10,000 or 50% of the participant's
nonforfeitable accrued benefits and (2) $50,000 reduced by the excess (if
any) of the highest outstanding loan balance over the previous twelve
months over the outstanding loan balance of plan loans on the date the
loan was made.
o In general, the term of the loan cannot exceed five years unless the loan
is used to acquire the participant's primary residence. Equitable
Accumulator Rollover TSA contracts have a term limit of 10 years for loans
used to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly.
The amount borrowed and not repaid may be treated as a distribution if:
o the loan does not qualify under the conditions above,
o the participant fails to repay the interest or principal when due, or
o in some instances, the participant separates from service with the
employer who provided the funds or the plan is terminated.
In this case, the participant may have to include the unpaid amount due as
ordinary income. In addition, the 10% early
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distribution penalty tax may apply. The amount of the unpaid loan balance is
reported to the IRS on Form 1099-R as a distribution.
TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS
You may roll over any "eligible rollover distribution" from a TSA into another
eligible retirement plan, either directly or within 60 days of your receiving
the distribution. To the extent rolled over, a distribution remains
tax-deferred.
You may roll over a distribution from a TSA to another TSA or to a traditional
IRA. A spousal beneficiary may roll over death benefits only to a traditional
IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under federal income tax rules. Distributions that you
cannot roll over generally include periodic payments for life or for a period of
10 years or more, hardship withdrawals, and required minimum distributions under
federal income tax rules.
Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24
are not distributions.
REQUIRED MINIMUM DISTRIBUTIONS
Same as traditional IRA with these differences:
When you have to take the first required minimum distribution
The minimum distribution rules force TSA participants to start calculating and
taking annual distributions from their TSAs by a required date. Generally, you
must take the first required minimum distribution for the calendar year in which
you turn age 70 1/2. You may be able to delay the start of required minimum
distributions for all or part of your account balance until after age 70 1/2, as
follows:
o For TSA participants who have not retired from service with the employer
who provided the funds for the TSA by the calendar year the participant
turns age 70 1/2, the required beginning date for minimum distributions is
extended to April 1 following the calendar year of retirement.
o TSA plan participants may also delay the start of required minimum
distributions to age 75 of the portion of their account value attributable
to their December 31, 1986 TSA account balance, even if retired at age
70 1/2. We will know whether or not you qualify for this exception because
it will only apply to people who establish their Equitable Accumulator
Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give
us the amount of your December 31, 1986 account balance that is being
transferred to the Equitable Accumulator Rollover TSA on the form used to
establish the TSA, you do not qualify.
SPOUSAL CONSENT RULES
This will only apply to you if you establish your Equitable Accumulator Rollover
TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the
form used to establish the TSA whether or not you need to get spousal consent
for loans, withdrawals, or other distributions. If you do, you will need such
consent if you are married when you request a withdrawal under the TSA contract.
In addition, unless you elect otherwise with the written consent of your spouse,
the retirement benefits payable under the plan must be paid in the form of a
qualified joint and survivor annuity. A qualified joint and survivor annuity is
payable for the life of the annuitant with a survivor annuity for the life of
the spouse in an amount not less than one-half of the amount payable to the
annuitant during his or her lifetime. In addition, if you are married, the
beneficiary must be your spouse, unless your spouse consents in writing to the
designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments will
be made to your surviving spouse in the form of a life annuity unless at the
time of your death a contrary election was in effect. However, your surviving
spouse may elect, before payments begin, to receive payments in any form
permitted under the terms of the TSA contract and the plan of the employer who
provided the funds for the TSA.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a TSA before you reach age
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59 1/2. This is in addition to any income tax. There are exceptions to the extra
penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o to pay for certain extraordinary medical expenses (special federal income
tax definition); or
o if you are separated from service, any form of payout after you are age
55; or
o only if you are separated from service, a payout in the form of
substantially equal periodic payments made at least annually over your
life (or your life expectancy), or over the joint lives of you and your
beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable. The
rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this purpose.
You cannot elect out of withholding unless you provide us with your correct
Taxpayer Identification Number and a United States residence address. You cannot
elect out of withholding if we are sending the payment out of the United States.
You should note the following special situations:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of
traditional IRAs to Roth IRAs, as it is considered a withdrawal from the
traditional IRA and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or
in part.
Special withholding rules apply to foreign recipients and United States citizens
residing outside the United States. We do not discuss these rules here. Certain
states have indicated that state income tax withholding will also apply to
payments from the contracts made to residents. In some states, you may elect out
of state withholding, even if federal withholding applies. 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.
FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective unless
and until you revoke it. You may revoke or change your withholding election at
any time.
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FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We apply that rate to the taxable amount
in the case of nonqualified contracts, and to the payment amount in the case of
IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS
Unless you have the distribution go directly to the new plan, eligible rollover
distributions from qualified plans and TSAs are subject to mandatory 20%
withholding. An eligible rollover distribution from a TSA can be rolled over to
another TSA or a traditional IRA. An eligible rollover distribution from a
qualified plan can be rolled over to another qualified plan or traditional IRA.
All distributions from a TSA or qualified plan are eligible rollover
distributions unless they are on the following list of exceptions:
o any after-tax contributions you made to the plan; or
o any distributions which are "required minimum distributions" after age
70 1/2 or separation from service; or
o hardship withdrawals; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and your designated beneficiary; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
A death benefit payment to your surviving spouse, or a qualified domestic
relations order distribution to your current or former spouse, may be a
distribution subject to mandatory 20% withholding.
IMPACT OF TAXES TO EQUITABLE LIFE
The contracts provide that we may charge Separate Account No. 49 for taxes. We
do not now, but may in the future set up reserves for such taxes.
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ABOUT OUR SEPARATE ACCOUNT NO. 49
Each variable investment option is a subaccount of our Separate Account No. 49.
We established Separate Account No. 49 in 1996 under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable annuity contracts, including these contracts.
We are the legal owner of all of the assets in Separate Account No. 49 and may
withdraw any amounts that exceed our reserves and other liabilities with respect
to variable investment options under our contracts. The results of Separate
Account No. 49's operations are accounted for without regard to Equitable Life's
other operations.
Separate Account No. 49 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 49.
Each subaccount (variable investment option) within Separate Account No. 49
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors Trust.
We reserve the right subject to compliance with laws that apply:
(1) to add variable investment options to, or to remove variable investment
options from, Separate Account No. 49, or to add other separate accounts;
(2) to combine any two or more variable investment options;
(3) to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment
option to another variable investment option;
(4) to operate Separate Account No. 49 or any variable investment option as a
management investment company under the Investment Company Act of 1940 (in
which case, charges and expenses that otherwise would be assessed against
an underlying mutual fund would be assessed against Separate Account No.
49 or a variable investment option directly);
(5) to deregister Separate Account No. 49 under the Investment Company Act of
1940;
(6) to restrict or eliminate any voting rights as to Separate Account No. 49;
and
(7) to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the Investment
Company Act of 1940. They are classified as "open-end management investment
companies," more commonly called mutual funds. Each trust issues different
shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Board of Trustees
of The Hudson River Trust and EQ Advisors Trust may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their investment
objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans
relating to their Class IB shares, and other aspects of their operations,
appears in their prospectuses, or in their SAIs which are available upon
request.
PROPOSED SUBSTITUTION OF PORTFOLIOS. We are asking the SEC to approve the
substitution of 14 newly created Portfolios of the EQ Advisors Trust for The
Hudson River Trust Portfolios currently available under the variable investment
options (the "Substitutions"). The EQ Advisors Trust Portfolios will have
substantially identical investment objectives, strategies, and policies as those
of The Hudson River Trust Portfolios they would replace. The assets of any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of investment options with similar advisory structures.
You also will have a single EQ Advisors Trust prospectus for all the Portfolios,
rather than the two separate prospectuses you now receive. EQ Financial
Consultants Inc. will be the manager of the new EQ Advisors Trust Portfolios,
and Alliance Capital Management L.P. will continue to provide the day-to-day
advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution
transaction.
o The management fees for the new Portfolios will be the same as those for
the corresponding Portfolios of The Hudson River Trust. Certain of the new
EQ Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this prospectus.
It contains more information about the EQ Advisors Trust, including its
management structure, advisory arrangements, and general fees and expenses that
will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval, and again when the Substitution
is complete.
ABOUT OUR FIXED MATURITY OPTIONS
RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of April 1, 1999 and the related
price per $100 of maturity value were as follows:
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FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR APRIL 1, 1999 MATURITY VALUE
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2000 3.25% $97.23
2001 4.04% $92.83
2002 4.33% $88.51
2003 4.46% $84.43
2004 4.52% $80.60
2005 4.67% $76.45
2006 4.77% $72.56
2007 4.79% $69.16
2008 4.87% $65.55
2009 4.97% $61.91
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HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
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(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option
(based on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity
option.
(d) We determine the present value of the fixed maturity amount payable
at the maturity date, using the period determined in (b) and the
rate determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be positive
or negative.
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Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
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If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment that
would have applied if you had withdrawn the entire value in that fixed maturity
option. This percentage is equal to the percentage of the value in the fixed
maturity option that you are withdrawing. Any withdrawal charges that are
deducted from a fixed maturity option will result in a market value adjustment
calculated in the same way. See Appendix III for an example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) would apply,
we will use the rate at the next closest maturity date. If we are no longer
offering new fixed maturity options, the "current rate to maturity" will be
determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
INVESTMENTS UNDER THE FIXED MATURITY OPTIONS
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. Under New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the contracts are not
chargeable with liabilities from any other business we may conduct. We own the
assets of the separate account, as well as any favorable investment performance
on those assets. You do not participate in the performance of the assets held in
this separate account. We may, subject to state law that applies, transfer all
assets allocated to the separate account to our general account. We guarantee
all benefits relating to your value in the fixed maturity options, regardless of
whether assets supporting fixed maturity options are held in a separate account
or our general account.
We have no specific formula for establishing the rates to maturity for the fixed
maturity options. We expect the rates to be influenced by, but not necessarily
correspond to, among other things, the yields that we can expect to realize on
the separate account's investments from time to time. Our current plans are to
invest 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 fixed maturity options.
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Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the contracts,
we are not obligated to invest those assets according to any particular plan
except as we may be required to by state insurance laws. We will not determine
the rates to maturity we establish by the performance of the nonunitized
separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options and the account for
special dollar cost averaging, as well as our general obligations.
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 exemptions
and exclusionary provisions that apply, interests in the general account have
not been registered under the Securities Act of 1933, nor is the general account
an investment company under the Investment Company Act of 1940. However, the
market value adjustment interests under the contracts are registered under the
Securities Act of 1933.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests). The disclosure with regard to the general account,
however, may be subject to certain provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
WIRE TRANSMITTALS
We accept initial contributions sent by wire to our Processing Office by
agreement with certain broker-dealers. The transmittals must be accompanied by
information we require to allocate your contribution. Wire orders not
accompanied by complete information may be retained as described under "How you
can make your contributions."
Even if we accept the wire order and essential information, a contract generally
will not be issued until we receive and accept a properly completed application.
In certain cases we may issue a contract based on information forwarded
electronically. In these cases, you must sign our Acknowledgement of Receipt
form.
Where we require a signed application, no financial transactions will be
permitted until we receive the signed application and have issued the contract.
Where we require an Acknowledgement of Receipt form, financial transactions are
only permitted if you request them in writing, sign the request and have it
signature guaranteed, until we receive the signed Acknowledgement of Receipt
form.
After your contract has been issued, additional contributions may be transmitted
by wire.
AUTOMATIC INVESTMENT PROGRAM -- FOR NQ, FLEXIBLE PREMIUM IRA, AND ROTH FLEXIBLE
PREMIUM IRA CONTRACTS ONLY
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution into
an NQ, Flexible Premium IRA or Roth Flexible Premium IRA contract on a monthly
or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA,
QP or Rollover TSA contracts.
For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300
quarterly. Under Flexible Premium IRA and Roth Flexible Premium IRA contracts,
the minimum amount is $50. AIP additional contributions may be allocated to any
of the variable investment options and available fixed maturity options, but not
the account for special dollar cost averaging. You choose the day of the month
you wish to have your account debited as long as it is not later than the 28th
day of the month.
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You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
BUSINESS DAY
Our business day is any day the New York Stock Exchange is open for trading.
Each business day ends at the time trading on the exchange closes (or is
suspended) for the day. We calculate unit values for our variable investment
options as of the end of each business day. This usually is 4:00 p.m., Eastern
Time. Contributions will be applied and any other transaction requests will be
processed when they are received along with all the required information.
o If your contribution, transfer or any other transaction request,
containing all the required information, reaches us on a non-business day
or after 4:00 p.m. on a business day, we will use the next business day.
o A loan request under your Rollover TSA contract will be processed on the
first business day of the month following the date on which the properly
completed loan request form is received.
o If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then
the transaction will occur on either the 28th day of the month or the 1st
day of the next month, whichever is the closest business day.
o When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
CONTRIBUTIONS AND TRANSFERS
o Contributions allocated to the variable investment options are invested at
the value next determined after the close of the business day.
o Contributions allocated to a fixed maturity option will receive the rate
to maturity in effect for that fixed maturity option on that business day.
o Initial contributions allocated to the account for special dollar cost
averaging receive the interest rate in effect on that business day. At
certain times, we may offer the opportunity to lock in the interest rate
for an initial contribution to be received under Section 1035 exchanges
and trustee to trustee transfers. Your registered representative can
provide information or you can call our Processing Office.
o Transfers to or from variable investment options will be made at the value
next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the
rate to maturity in effect for that fixed maturity option on the business
day of the transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o The election of trustees.
o The formal approval of independent auditors selected for each trust.
o Any other matters described in the prospectuses for the trusts or
requiring a shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is taken.
If we do not receive instructions in time from all contract owners, we will vote
the shares of a Portfolio for which no instructions have been
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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 a Portfolio in the same proportions
that contract owners vote.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River Trust
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 contract owners, we
currently do not foresee any disadvantages because of this. The Hudson River
Trust Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that may arise and to determine what action,
if any, should be taken in response. If we believe that a response to any of
those events insufficiently protects our contract owners, we will see to it that
appropriate action is taken.
SEPARATE ACCOUNT NO. 49 VOTING RIGHTS
If actions relating to Separate Account No. 49 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in a variable investment option divided
by the annuity unit value for that option. We will cast votes attributable to
any amounts we have in the variable investment options in the same proportion as
votes cast by contract 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
published 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.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and services,
including those considered to be mission-critical, to be confirmed as year 2000
compliant, renovated, replaced or the subject of contingency plans, by June 30,
1999, except for one investment accounting system that is scheduled to be
replaced by August 31, 1999 and confirmed as year 2000 compliant by September
30, 1999. Additionally, Equitable Life will be supplementing its existing
business continuity and disaster recovery plans to cover certain categories of
contingencies that could arise as a result of year 2000 related failures. Year
2000 specific contingency plans are anticipated to be in place by June 30, 1999.
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There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is a
"Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information
and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon Separate Account No. 49, our ability to meet our obligations under the
contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity payments
begin. We will continue to treat you as the owner until we receive notification
of any change at our Processing Office. You cannot assign your NQ contract as
collateral or security for a loan. Loans are also not available under your NQ
contract. In some cases, an assignment or change of ownership may have adverse
tax consequences. See "Tax information."
You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract
except by surrender to us. Loans are not available and you cannot assign IRA and
QP contracts as security for a loan or other obligation. If the employer that
provided the funds does not restrict them, loans are available under a Rollover
TSA contract.
For limited transfers of ownership after the owner's death see "Payment of death
benefit" and "Beneficiary continuation option for Rollover IRA and Flexible
Premium IRA contracts." You may direct the transfer of the values under your
IRA, QP or Rollover TSA contract to another similar arrangement. Under federal
income tax rules, in the case of such a transfer, we will impose a withdrawal
charge, if one applies.
DISTRIBUTION OF THE CONTRACTS
Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 49. EDI serves as the
principal underwriter of Separate Account No. 49. 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 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, New York 10104. Under a
distribution agreement between EDI, Equitable Life, and certain of Equitable
Life's separate accounts, including Separate Account No. 49, Equitable Life paid
EDI distribution fees of $35,452,793 for 1998, $9,566,343 for 1997, and $87,157
for 1996, as the distributor of certain contracts, including these contracts,
and as the principal underwriter of several Equitable Life separate accounts,
including Separate Account No. 49.
The contracts will be sold by registered representatives of EDI, as well as by
affiliated and unaffiliated broker-dealers with which EDI has entered into
selling agreements. Broker-dealer sales compensation will generally not exceed
<PAGE>
- --------------------------------------------------------------------------------
More Information 71
- --------------------------------------------------------------------------------
Investment performance
- --------------------------------------------------------------------------------
7% of total contributions made under the contracts. 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 of it to their registered
representatives as commissions related to sales of the contracts. The offering
of the contracts is intended to be continuous.
<PAGE>
- --------------------------------------------------------------------------------
72 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT
INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY
ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR
RESULTS WILL DIFFER.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the variable
investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into account
all fees and charges under the contract, including the withdrawal charge, the
optional baseBUILDER benefits charge, the annual administrative charge under
Flexible Premium IRA and Roth Flexible Premium IRA contracts, but do not take
the charges for any applicable taxes such as premium taxes, or any applicable
annuity administrative fee, into account.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the
withdrawal charge, the optional baseBUILDER benefits charge, the annual
administrative charge or the charges for any applicable taxes such as premium
taxes or any applicable annuity administrative fee. If the charges were
reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest. In
some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted the
results of the Portfolios to reflect the charges under the contracts that would
have applied had the investment options and/or contracts been available. The
contracts were first offered on May 1, 1997.
In addition, we have adjusted the results prior to October 1996, when The Hudson
River Trust Class IB shares were not available, to reflect the 12b-1 fees
currently imposed. Finally, the results shown for the Alliance Money Market and
Alliance Common Stock options for periods before March 22, 1985 reflect the
results of the variable investment options that preceded them. The "Since
inception" figures for these options are based on the date of inception of the
preceding variable investment options. We have adjusted these results to reflect
the maximum investment advisory fee payable for the Portfolios, as well as an
assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as 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. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charges, or any withdrawal or optional benefit charge. Comparisons with these
benchmarks, therefore, may be 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. The benchmarks include:
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 73
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard &
Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index.
CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital International Europe,
Australia, Far East Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe,
Australia, Far East Index.
JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond.
LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index.
LAZARD SMALL CAP VALUE: Russell 200 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International
Emerging Markets Free Price Return Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index.
EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index.
EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital International Europe,
Australia, Far East Index.
- --------------------------------------------------------------------------------
LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) 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.
<PAGE>
- --------------------------------------------------------------------------------
74 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------------------------------------
SINCE SINCE PORTFOLIO
1 3 5 10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market (3.64)% 1.59% 2.40% 3.35% -- -- 7/13/81
- -----------------------------------------------------------------------------------------------------------------------------
Alliance High Yield (13.96)% 7.72% 7.28% 8.93% -- -- 1/2/87
- -----------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 20.02% 24.05% 19.18% 16.35% -- -- 1/13/76
- -----------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock (8.60)% 7.09% 8.76% 16.79% -- -- 1/27/86
- -----------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth (13.03)% -- -- -- 5.51% 5.51% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index 16.14% -- -- -- 16.14% 16.14% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
BT Small Company Index (10.93)% -- -- -- (10.93)% (10.93)% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
BT International Equity Index 11.17% -- -- -- 11.17% 11.17% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
JPM Core Bond 0.26% -- -- -- 0.26% 0.26% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value 11.14% -- -- -- 11.14% 11.14% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value (15.62)% -- -- -- (15.62)% (15.62)% 12/31/97
- -----------------------------------------------------------------------------------------------------------------------------
MFS Research 15.13% -- -- -- 15.64% 15.64% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies 25.40% -- -- -- 24.05% 24.05% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (35.31) -- -- -- (35.31)% (28.99)% 8/20/97
- -----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 4.00% -- -- -- 10.08% 10.08% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth 27.15% -- -- -- 26.08% 26.08% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity 10.56% -- -- -- 9.98% 9.98% 5/1/97
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* The since inception dates for the variable investment options are as
follows: Alliance Money Market, Alliance High Yield, Alliance Common
Stock, Alliance Aggressive Stock, 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); BT
Equity 500 Index, BT Small Company Index, BT International Equity Index,
JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, and Morgan
Stanley Emerging Markets Equity (December 31, 1997).
The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are: MFS
Growth with Income (December 31, 1998); EQ/Alliance Premier Growth,
Capital Guardian U.S. Equity, Capital Guardian Research, and Capital
Guardian International (May 1, 1999).
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 75
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------------------------
SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 963.60 $ 1,048.36 $ 1,126.12 $ 1,390.07 --
- ---------------------------------------------------------------------------------------------------------------
Alliance High Yield $ 860.40 $ 1,250.11 $ 1,421.32 $ 2,352.06 --
- ---------------------------------------------------------------------------------------------------------------
Alliance Common Stock $ 1,200.20 $ 1,908.73 $ 2,404.59 $ 4,547.90 --
- ---------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock $ 914.00 $ 1,228.21 $ 1,521.63 $ 4,719.54 --
- ---------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 869.70 -- -- -- $ 1,113.16
- ---------------------------------------------------------------------------------------------------------------
BT Equity 500 Index $ 1,161.40 -- -- -- $ 1,161.40
- ---------------------------------------------------------------------------------------------------------------
BT Small Company Index $ 890.70 -- -- -- $ 890.70
- ---------------------------------------------------------------------------------------------------------------
BT International Equity Index $ 1,111.70 -- -- -- $ 1,111.70
- ---------------------------------------------------------------------------------------------------------------
JPM Core Bond $ 1,002.60 -- -- -- $ 1,002.60
- ---------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value $ 1,111.40 -- -- -- $ 1,111.40
- ---------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value $ 843.80 -- -- -- $ 843.80
- ---------------------------------------------------------------------------------------------------------------
MFS Research $ 1,151.30 -- -- -- $ 1,337.29
- ---------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $ 1,254.00 -- -- -- $ 1,538.76
- ---------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 646.90 -- -- -- $ 504.25
- ---------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value $ 1,040.00 -- -- -- $ 1,211.78
- ---------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth $ 1,271.50 -- -- -- $ 1,589.59
- ---------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity $ 1,105.60 -- -- -- $ 1,209.59
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
76 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% -- 5.38%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76%
- ----------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% -- 8.73%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72%
- ----------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98%
- ----------------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% -- 15.88%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78%
- ----------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 10.53%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- 16.72%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 16.58%
- ----------------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- 26.78%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- ----------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.53%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- ----------------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 12.17%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 20.00%
- ----------------------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.56% -- -- -- -- 7.56%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 8.72% -- -- -- -- 8.72%
- ----------------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% -- -- -- -- 24.16%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- ----------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)%
- ----------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.53%
- ----------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 77
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3 (continued)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFS RESEARCH 22.43% -- -- -- -- 22.75%
- -------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 28.73%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 33.03%
- -------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- 22.72%
- -------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- -------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (33.62)%
- -------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)%
- -------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (28.92)%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 16.03%
- -------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 35.53%
- -------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 28.73%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 15.94%
- -------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 9.06%
- -------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 13.43%
- -------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
78 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% -- 149.59%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45%
- ---------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% -- 172.86%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69%
- ---------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92%
- ---------------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% -- 572.32%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67%
- ---------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 18.19%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- 28.98%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 29.23%
- ---------------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- 26.78%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- ---------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.49%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- ---------------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 12.23%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 20.00%
- ---------------------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.56% -- -- -- -- 7.56%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt 7.23% -- -- -- -- 7.23%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 8.72% -- -- -- -- 8.72%
- ---------------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% -- -- -- -- 24.09%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- ---------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)%
- ---------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.53%
- ---------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 79
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4 (continued)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFS RESEARCH 22.43% -- -- -- -- 40.79%
- -------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 52.86%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 60.99%
- -------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- 42.16%
- -------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 25.40%
- -------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (42.83)%
- -------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)%
- -------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (36.71)%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 28.16%
- -------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 38.49%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 66.08%
- -------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 52.86%
- -------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 27.98%
- -------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 15.88%
- -------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 23.42%
- -------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
80 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32% 2.36% 4.06% 3.64% 3.74% 3.66%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19% (4.33)% 18.01% 20.91% 16.58% (6.66)%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83% (3.70)% 30.34% 22.28% 27.16% 27.32%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89% (5.35)% 29.54% 20.24% 9.04% (1.30)%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.38%+ (5.73)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.44%
- ------------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index -- -- -- -- -- -- -- -- -- (3.63)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index -- -- -- -- -- -- -- -- -- 18.47%
- ------------------------------------------------------------------------------------------------------------------------------------
JPM Core Bond -- -- -- -- -- -- -- -- -- 7.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value -- -- -- -- -- -- -- -- -- 18.44%
- ------------------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value -- -- -- -- -- -- -- -- -- (8.32)%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Research -- -- -- -- -- -- -- -- 14.99%+ 22.43%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.32%+ 32.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.59)%+ (28.01)%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 15.15%+ 11.30%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth -- -- -- -- -- -- -- -- 23.53%+ 34.45%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity -- -- -- -- -- -- -- -- 8.59%+ 17.86%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Returns for these options represent less than 12 months of performance.
The returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements or
other communications that include evaluations of a variable investment option or
Portfolio by nationally recognized financial publications. Examples of such
publications are:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
- --------------------------------------------------------------------------------
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
- --------------------------------------------------------------------------------
Business Week National Underwriter
- --------------------------------------------------------------------------------
Forbes Pension & Investments
- --------------------------------------------------------------------------------
Fortune USA Today
- --------------------------------------------------------------------------------
Institutional Investor Investor's Business Daily
- --------------------------------------------------------------------------------
Money The New York Times
- --------------------------------------------------------------------------------
Kiplinger's Personal Finance The Wall Street Journal
- --------------------------------------------------------------------------------
Financial Planning The Los Angeles Times
- --------------------------------------------------------------------------------
Investment Adviser The Chicago Tribune
- --------------------------------------------------------------------------------
Investment Management Weekly
- --------------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types of
fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts, and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
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 level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
YIELD INFORMATION
Current yield for the Alliance Money Market option 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 option
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 similar manner, 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 option and monthly for the
Alliance High Yield option. The yields and effective yields assume the deduction
of all contract charges and expenses other than the withdrawal charge, the
optional baseBUILDER benefits charge, the annual administrative charge, and any
charge for taxes such
<PAGE>
- --------------------------------------------------------------------------------
82 Investment performance
- --------------------------------------------------------------------------------
as premium tax. The yields and effective yields for the Alliance Money Market
option, when used for the special dollar cost averaging program, assume that no
contract charges are deducted. For more information, see "Yield Information for
the Alliance Money Market Option and Alliance High Yield Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
Incorporation of certain documents by reference 83
- --------------------------------------------------------------------------------
Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December
31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to
be a part of this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of
the securities under this prospectus, all documents or reports we file with the
SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be
considered to become part of this prospectus because they are incorporated by
reference.
Any statement contained in a document that is, or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each
person to whom this prospectus is delivered, a copy of any or all of the
documents considered to be part of this prospectus because they are incorporated
herein. This does not include exhibits not specifically incorporated by
reference into the text of such documents. Requests for 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).
<PAGE>
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information A-1
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE
INVESTMENT OPTION
- --------------------------------------------------------------------------------
For the years ending
------------------------------------
Dec. 31, 1997 Dec. 31, 1998
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
- --------------------------------------------------------------------------------
Unit value $70.28 $69.37
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 380 939
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK
- --------------------------------------------------------------------------------
Unit value $186.29 $237.18
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 434 1,542
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD
- --------------------------------------------------------------------------------
Unit value $29.96 $27.96
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1,256 4,521
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET
- --------------------------------------------------------------------------------
Unit value $25.00 $25.92
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1,153 5,158
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH
- --------------------------------------------------------------------------------
Unit value $12.54 $11.82
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2,521 6,101
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
BT EQUITY 500 INDEX
- --------------------------------------------------------------------------------
Unit value $10.00 $12.34
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 12,279
- --------------------------------------------------------------------------------
BT SMALL COMPANY INDEX
- --------------------------------------------------------------------------------
Unit value $10.00 $9.64
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 1,610
- --------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX
- --------------------------------------------------------------------------------
Unit value $10.00 $11.85
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 1,827
- --------------------------------------------------------------------------------
JPM CORE BOND
- --------------------------------------------------------------------------------
Unit value $10.00 $10.76
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 8,661
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
A-2 Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the years ending
---------------------------------
Dec. 31, 1997 Dec. 31, 1998
- --------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE
- --------------------------------------------------------------------------------
Unit value $10.00 $11.84
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 5,696
- --------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE
- --------------------------------------------------------------------------------
Unit value $10.00 $9.17
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 4,733
- --------------------------------------------------------------------------------
MFS RESEARCH
- --------------------------------------------------------------------------------
Unit value $11.50 $14.08
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 5,257 14,913
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES
- --------------------------------------------------------------------------------
Unit value $12.13 $16.10
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 3,327 9,117
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY
- --------------------------------------------------------------------------------
Unit value $7.94 $5.72
- --------------------------------------------------------------------------------
Number of units outstanding (000s) -- 1,805
- --------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE
- --------------------------------------------------------------------------------
Unit value $11.52 $12.82
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 8,113 24,343
- --------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH
- --------------------------------------------------------------------------------
Unit value $12.35 $16.61
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2,581 10,072
- --------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY
- --------------------------------------------------------------------------------
Unit value $10.86 $12.80
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 4,609 10,607
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts B-1
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
Trustees who are considering the purchase of an Equitable Accumulator QP
contract should discuss with their tax advisers 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 contract, 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 federal income tax rules. The QP contract and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
Assuming continued plan qualification and operation, earnings on qualified plan
assets will accumulate value on a tax-deferred basis even if the plan is not
funded by the Equitable Accumulator QP contract or another annuity. Therefore,
you should purchase an Equitable Accumulator QP contract to fund a plan for the
contract's features and benefits other than tax deferral. This QP contract
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" that can be funded by a QP
contract is 80%. The account value under a QP contract 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 account value under a QP contract 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 contract may be required. A withdrawal
charge and/or market value adjustment may apply.
Further, Equitable Life will not perform or provide any plan recordkeeping
services with respect to the QP contracts. 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 contracts, 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. Given
that required minimum distributions must commence from the plan for annuitants
after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan
funds) trustees should consider whether the QP contract is an appropriate
purchase for annuitants approaching or over age 70 1/2.
Finally, because the method of purchasing the QP contract and the features of
the QP contract may appeal more to plan participants/employees who are older and
tend to be highly paid, and because certain features of the QP contract 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 contract would cause the plan to engage in
prohibited discrimination in contributions, benefits or otherwise.
<PAGE>
- --------------------------------------------------------------------------------
Appendix III: Market value adjustment example C-1
- --------------------------------------------------------------------------------
Appendix III: 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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a
maturity value at the maturity date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later on February 15, 2004.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004
---------------------------------------------
5.00% 9.00%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
- ------------------------------------------------------------------------------------------------------------------
(1) Market adjusted amount $144,048 $119,487
- ------------------------------------------------------------------------------------------------------------------
(2) Fixed maturity amount $131,080 $131,080
- ------------------------------------------------------------------------------------------------------------------
(3) Market value adjustment:
(1)-(2) $ 12,968 $(11,593)
- ------------------------------------------------------------------------------------------------------------------
ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL)
- ------------------------------------------------------------------------------------------------------------------
(4) Portion of market value adjustment associated with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $(4,851)
- ------------------------------------------------------------------------------------------------------------------
(5) Reduction in fixed maturity amount:
[$50,000-(4)] $ 45,499 $ 54,851
- ------------------------------------------------------------------------------------------------------------------
(6) Fixed maturity amount: (2)-(5) $ 85,581 $ 76,229
- ------------------------------------------------------------------------------------------------------------------
(7) Maturity value $120,032 $106,915
- ------------------------------------------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 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% (right column), 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% (left column), a portion of a positive
market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example D-1
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
The death benefit under the contracts is equal to the account value or, if
greater, the guaranteed minimum death benefit.
The following illustrates the guaranteed minimum death benefit calculation.
Assuming $100,000 is allocated to the variable investment options (with no
allocation to the Alliance Money Market option or the fixed maturity options),
no additional contributions, no transfers and no withdrawals, and no loans under
a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant
age 45 would be calculated as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
5% ROLL UP TO
END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED
CONTRACT GUARANTEED MINIMUM MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $105,000 $105,000(1) $105,000(3)
- -----------------------------------------------------------------------------------------
2 $115,500 $110,250(2) $115,500(3)
- -----------------------------------------------------------------------------------------
3 $129,360 $115,763(2) $129,360(3)
- -----------------------------------------------------------------------------------------
4 $103,488 $121,551(1) $129,360(4)
- -----------------------------------------------------------------------------------------
5 $113,837 $127,628(1) $129,360(4)
- -----------------------------------------------------------------------------------------
6 $127,497 $134,010(1) $129,360(4)
- -----------------------------------------------------------------------------------------
7 $127,497 $140,710(1) $129,360(4)
- -----------------------------------------------------------------------------------------
</TABLE>
The account values for contract years 1 through 7 are based on hypothetical
rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We
are using these rates solely to illustrate how the benefit is determined. The
return rates bear no relationship to past or future investment results.
5% ROLL UP TO AGE 80
(1) At the end of contract year 1, and again at the end of contract years 4
through 7, the death benefit will be equal to the guaranteed minimum death
benefit.
(2) At the end of contract years 2 and 3, the death benefit will be equal to
the current account value since it is higher than the current guaranteed
minimum death benefit.
ANNUAL RATCHET TO AGE 80
(3) At the end of contract years 1 through 3, the guaranteed minimum death
benefit is equal to the current account value.
(4) At the end of contract years 4 through 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 account value.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of additional information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market Option and
Alliance High Yield Option 3
Long-Term Market Trends 4
Key Factors in Retirement Planning 6
Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
Please send me an Equitable Accumulator SAI for Separate Account No. 49 dated
May 1, 1999.
________________________________________________________________________________
Name:
________________________________________________________________________________
Address:
________________________________________________________________________________
City State Zip
(EDISAI)
<PAGE>
Equitable Accumulator(SM)
A combination variable and fixed deferred
annuity contract
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing, or taking any other action
under your contract. Also, at the end of this prospectus you will find attached
the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain
important information about their Portfolios.
PROSPECTUS DATED MAY 1, 1999
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR?
Equitable Accumulator is a deferred annuity contract issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation
of retirement savings and for income. The contract offers income and death
benefit protection. It also offers a number of payout options. You invest to
accumulate value on a tax-deferred basis in one or more of our variable
investment options, fixed maturity options or the account for special dollar
cost averaging ("investment options").
- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
o Alliance Money Market o JPM Core Bond
o Alliance High Yield o Lazard Large Cap Value
o Alliance Common Stock o Lazard Small Cap Value
o Alliance Aggressive Stock o MFS Growth with Income
o Alliance Small Cap Growth o MFS Research
o EQ/Alliance Premier Growth o MFS Emerging Growth
o BT Equity 500 Index Companies
o BT Small Company Index o Merrill Lynch Basic Value Equity
o BT International Equity Index o Merrill Lynch World Strategy
o Capital Guardian U.S. Equity o Morgan Stanley Emerging
o Capital Guardian Research Markets Equity
o Capital Guardian International o EQ/Putnam Growth & Income
o EQ/Evergreen Value
o EQ/Evergreen Foundation o EQ/Putnam Investors Growth
o EQ/Putnam International Equity
- --------------------------------------------------------------------------------
You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 49.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed
interest at guaranteed rates. It is only available for dollar cost averaging
during your contract's first year.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An individual retirement annuity ("IRA"), either traditional IRA or Roth
IRA.
We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible
Premium IRA." We also offer two versions of the Roth IRA: "Roth Conversion
IRA" and "Flexible Premium Roth IRA."
o An annuity which is an investment vehicle for a qualified defined
contribution or defined benefit plan ("QP").
o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") --
("Rollover TSA").
A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA,
Roth Conversion IRA, QP, or Rollover TSA contract. For Flexible Premium IRA or
Flexible Premium Roth IRA contracts, we require a contribution of $2,000 to
purchase a contract.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated May 1, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our
Processing Office or calling 1-800-789-7771. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be
obtained from the SEC's website at http://www.sec.gov. The table of contents
for the SAI appears at the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS 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.
<PAGE>
- --------------------------------------------------------------------------------
2 CONTENTS OF THIS PROSPECTUS
- --------------------------------------------------------------------------------
Contents of this prospectus
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR(SM)
- ------------------------------------------------------------------
Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator at a glance -- key features 8
- ------------------------------------------------------------------
FEE TABLE 11
- ------------------------------------------------------------------
Examples 14
Condensed financial information 15
- ------------------------------------------------------------------
- ------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 16
- ------------------------------------------------------------------
How you can purchase and contribute to your contract 16
Owner and annuitant requirements 20
How you can make your contributions 20
What are your investment options under the contract? 20
Portfolios of The Hudson River Trust 21
Portfolios of EQ Advisors Trust 21
Allocating your contributions 24
Our baseBUILDER option 26
Guaranteed minimum death benefit 28
Your right to cancel within a certain number of days 29
- ------------------------------------------------------------------
DETERMINING YOUR CONTRACT'S VALUE 30
- ------------------------------------------------------------------
Your account value 30
Your contract's value in the variable investment options 30
Your contract's value in the fixed maturity options 30
Your contract's value in the account for special dollar cost
averaging 30
- --------------------------------------------------------------------------------
"We," "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS OF THIS PROSPECTUS 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG
INVESTMENT OPTIONS 31
- ------------------------------------------------------------------
Transferring your account value 31
Rebalancing your account value 31
- ------------------------------------------------------------------
ACCESSING YOUR MONEY 32
- ------------------------------------------------------------------
Withdrawing your account value 32
How withdrawals are taken from your account value 33
How withdrawals affect your guaranteed minimum
income benefit and guaranteed minimum death
benefit 33
Loans under Rollover TSA contracts 34
Surrendering your contract to receive its cash value 35
When to expect payments 35
Choosing your annuity payout options 36
- ------------------------------------------------------------------
CHARGES AND EXPENSES 39
- ------------------------------------------------------------------
Charges that Equitable Life deducts 39
Charges that the trusts deduct 41
Group or sponsored arrangements 41
Other distribution arrangements 42
- ------------------------------------------------------------------
PAYMENT OF DEATH BENEFIT 43
- ------------------------------------------------------------------
Your beneficiary and payment of benefit 43
How death benefit payment is made 43
Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts 44
- ------------------------------------------------------------------
TAX INFORMATION 45
- ------------------------------------------------------------------
Overview 45
Transfers among investment options 45
Taxation of nonqualified annuities 45
Special rules for NQ contracts issued in Puerto Rico 46
Individual retirement arrangements (IRAs) 47
Special rules for nonqualified contracts in qualified plans 57
Tax Sheltered Annuity contracts (TSAs) 57
Federal and state income tax withholding and
information reporting 62
Impact of taxes to Equitable Life 63
- ------------------------------------------------------------------
MORE INFORMATION 64
- ------------------------------------------------------------------
About our Separate Account No. 49 64
About The Hudson River Trust and EQ Advisors Trust 64
About our fixed maturity options 65
About the general account 67
About other methods of payment 67
Dates and prices at which contract events occur 68
About your voting rights 68
About our year 2000 progress 69
About legal proceedings 70
About our independent accountants 70
Transfers of ownership, collateral assignments, loans,
and borrowing 70
Distribution of the contracts 70
- ------------------------------------------------------------------
INVESTMENT PERFORMANCE 72
- ------------------------------------------------------------------
Benchmarks 72
Communicating performance data 81
- ------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 83
- ------------------------------------------------------------------
Appendices
I - Condensed financial information A-1
II - Purchase considerations for QP contracts B-1
III - Market value adjustment example C-1
IV - Guaranteed minimum death benefit example D-1
- ------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- ------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
4 INDEX OF KEY WORDS AND PHRASES
- --------------------------------------------------------------------------------
Index of key words and phrases
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
account for special dollar cost guaranteed minimum death benefit 28
averaging 24 guaranteed minimum income benefit 26
account value 30 IRA 47
annuitant 16 IRS 45
baseBUILDER 26 investment options 20
beneficiary 43 loan reserve account 35
benefit base 26 market adjusted amount 23
business day 68 market value adjustment 23
cash value 30 maturity value 23
conduit IRA 51 NQ 45
contract date 9 participant 20
contract date anniversary 9 payout option 36
contract year 9 Portfolio cover
contributions to Roth IRAs 54 Processing Office 6
regular contributions 54 QP 57
rollover contributions 55 rate to maturity 23
conversion contributions 55 required beginning date 52
direct custodian-to-custodian Rollover IRA cover
transfers 55 Rollover TSA cover
contributions to traditional IRAs 47 Roth Conversion IRA cover
regular contributions 48 Roth IRA 54
rollover contributions 50 SAI cover
direct custodian-to-custodian SEC cover
transfers 50 TOPS 6
ERISA 34 TSA 57
fixed maturity amount 23 traditional IRA 47
fixed maturity options 23 unit 30
Flexible Premium IRA cover variable investment options 20
Flexible Premium Roth IRA cover
</TABLE>
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract or supplemental materials. Your registered representative can provide
further explanation about your contract.
- --------------------------------------------------------------------------------
PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS
- --------------------------------------------------------------------------------
fixed maturity options Guarantee Periods (Guaranteed Fixed
Interest Accounts in supplemental materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 5
- --------------------------------------------------------------------------------
Who is Equitable Life?
- --------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing
business since 1859. Equitable Life is a wholly owned subsidiary of The
Equitable Companies Incorporated ("Equitable Companies"), whose majority
shareholder is AXA, a French holding company for an international group of
insurance and related financial services companies. As a majority shareholder,
and under its other arrangements with Equitable Life and Equitable Life's
parent, AXA exercises significant influence over the operations and capital
structure of Equitable Life and its parent. No company other than Equitable
Life, however, has any legal responsibility to pay amounts that Equitable Life
owes under the contract. During 1999, Equitable Companies plans to change its
name to AXA Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are
licensed to sell life insurance and annuities in all fifty states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is
located at 1290 Avenue of the Americas, New York, N.Y. 10104.
<PAGE>
- --------------------------------------------------------------------------------
6 WHO IS EQUITABLE LIFE?
- --------------------------------------------------------------------------------
HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator
P.O. Box 13014
Newark, NJ 07188-0014
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
REPORTS WE PROVIDE:
- --------------------------------------------------------------------------------
o written confirmation of financial transactions;
o statement of your contract values at the close of each
calendar quarter (four per year);
o annual statement of your contract values as of the close of
the contract year.
- --------------------------------------------------------------------------------
TELEPHONE OPERATED PROGRAM SUPPORT
("TOPS") SYSTEM:
- --------------------------------------------------------------------------------
TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling
toll-free 1-888-909-7770. Of course, for reasons beyond our control, the
service may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone
instructions and we will provide written confirmation of your transfers. We
will not be liable for following telephone instructions we reasonably believe
to be genuine.
- --------------------------------------------------------------------------------
BY INTERNET:
- --------------------------------------------------------------------------------
You can also access information about your contract on the Internet. Please
visit our website at http://www.equitable.com, and click on EQAccess.
<PAGE>
- --------------------------------------------------------------------------------
WHO IS EQUITABLE LIFE? 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVE:
- --------------------------------------------------------------------------------
You may also use our toll-free number (1-800-789-7771) to speak with one of our
customer service representatives. Our customer service representatives are
available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our Processing
Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1) authorization for telephone transfers by your registered representative;
(2) conversion of a traditional IRA to a Roth Conversion IRA or Flexible
Premium Roth IRA contract;
(3) cancellation of your Roth Conversion IRA or Flexible Premium Roth IRA
contract and return to a Rollover IRA or Flexible Premium IRA contract;
(4) election of the automatic investment program;
(5) election of the rebalancing program;
(6) to obtain a PIN required for TOPS;
(7) requests for loans under Rollover TSA contracts;
(8) spousal consent for loans under Rollover TSA contracts;
(9) tax withholding election; and
(10) beneficiary continuation option election.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES
OF REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options;
(4) withdrawal requests;
(5) contract surrender; and
(6) requests to exercise your guaranteed minimum income benefit.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1) automatic investment program;
(2) general dollar cost averaging;
(3) rebalancing;
(4) special dollar cost averaging;
(5) substantially equal withdrawals;
(6) systematic withdrawals; and
(7) the date annuity payments are to begin.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
<PAGE>
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8 EQUITABLE ACCUMULATOR AT A GLANCE -- KEY FEATURES
- --------------------------------------------------------------------------------
Equitable Accumulator at a
glance -- key features
- --------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
PROFESSIONAL Equitable Accumulator's variable investment options invest in 26 different Portfolios managed by
INVESTMENT professional investment advisers.
MANAGEMENT
- -----------------------------------------------------------------------------------------------------------------------------
FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years.
OPTIONS
o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to
maturity.
o Principal guarantees.
-- If you make withdrawals or transfers from a fixed maturity option before maturity, there
will be a market value adjustment due to differences in interest rates. This may increase or
decrease any value that you have left in that fixed maturity option. If you surrender your
contract, a market value adjustment may also apply.
- -----------------------------------------------------------------------------------------------------------------------------
ACCOUNT FOR SPECIAL DOLLAR Available for dollar cost averaging of your initial contribution.
COST AVERAGING
- -----------------------------------------------------------------------------------------------------------------------------
TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you make
contract withdrawals from your contract or receive annuity payments.
------------------------------------------------------------------------------------------------
o On transfers inside the No tax on transfers among investment options.
contract
------------------------------------------------------------------------------------------------
If you are buying a contract to fund a retirement plan that already provides tax deferral under
sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the
contract's features and benefits other than tax deferral. In such situations, the tax deferral
of the contract does not provide additional benefits.
- -----------------------------------------------------------------------------------------------------------------------------
BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum
PROTECTION death benefit. This optional feature provides income protection for you while the
annuitant lives, as well as a death benefit for the beneficiary should the annuitant die.
- -----------------------------------------------------------------------------------------------------------------------------
CONTRIBUTION AMOUNTS o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts
o Initial minimum: $ 5,000
o Additional minimum: $ 1,000
$100 monthly, and $300 quarterly under our automatic
investment program (NQ contracts)
------------------------------------------------------------------------------------------------
o Flexible Premium IRA and Flexible Premium Roth IRA contracts
o Initial minimum: $ 2,000
o Additional minimum: $50 ($50 under our automatic investment program)
------------------------------------------------------------------------------------------------
Maximum investment limitations may apply.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR AT A GLANCE - KEY FEATURES 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCESS TO YOUR MONEY o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Loans under Rollover TSA contracts
o Contract surrender
You may incur a withdrawal charge for certain
withdrawals. You may also incur income tax and a tax
penalty.
- --------------------------------------------------------------------------------
PAYOUT ALTERNATIVES o Annuity payout options
o Income Manager(Reg. TM) payout annuity options
- --------------------------------------------------------------------------------
ADDITIONAL FEATURES o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually and
annually)
o Unlimited free transfers
o Waiver of withdrawal charge for disability, terminal
illness or confinement to a nursing home
- --------------------------------------------------------------------------------
FEES AND CHARGES o Daily charges on amounts invested in variable
investment options for mortality and expense risks and
administrative charges at an annual rate of 1.35%.
o Annual 0.30% benefit base charge for the optional
baseBUILDER benefit. The benefit base is described
under "Your guaranteed minimum income benefit under
baseBUILDER." No additional charge if you want a
guaranteed minimum death benefit only.
o Under Flexible Premium IRA and Flexible Premium Roth
IRA contracts, if your account value at the end of the
contract year is less than $25,000, we deduct an annual
administrative charge equal to $30 or during the first
two contract years 2% of your account value, if less.
If your account value is $25,000 or more, we will not
deduct the charge.
o No sales charge deducted at the time you make
contributions.
o During the first seven contract years following a
contribution, a charge will be deducted from amounts
that you withdraw that exceed 15% of your account
value. We use the account value on the most recent
contract date anniversary to calculate the 15% amount
available. The charge begins at 7% in the first
contract year following a contribution. It declines
each year to 1% in the seventh contract year. There is
no withdrawal charge in the eighth and later contract
years following a contribution.
---------------------------------------------------------
The 12-month period beginning on your contract date and
each 12-month period after that date is a "contract
year." The end of each 12-month period is your "contract
date anniversary." The "contract date" is the effective
date of a contract. This usually is the business day we
receive your initial contribution. Your contract date
will be shown in your contract.
---------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
10 EQUITABLE ACCUMULATOR AT A GLANCE - KEY FEATURES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------
FEES AND o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. This
CHARGES (CONTINUED) charge is generally deducted from the amount applied to an annuity payout option.
o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life
annuity payout options.
o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a
percentage of the average daily net assets invested in each Portfolio. These expenses include
management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other
expenses.
- -----------------------------------------------------------------------------------------------------------------------------
ANNUITANT ISSUE AGES NQ: 0-83
Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA, and Rollover TSA: 20-83
Flexible Premium IRA: 20-70
QP: 20-75
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF
THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
registered representative, or call us, if you have any questions.
<PAGE>
- --------------------------------------------------------------------------------
Fee table 11
- --------------------------------------------------------------------------------
Fee table
- --------------------------------------------------------------------------------
The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an administrative fee may apply when your annuity payments are to begin.
Each of the charges and expenses is more fully described under "Charges and
expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options and the account for special dollar cost averaging are
not covered by the fee table and examples. Generally, the only charges shown in
the table that are applicable to the fixed maturity options and the account for
special dollar cost averaging are the annual administrative charge and the
withdrawal charge. A market value adjustment (up or down) may apply as a result
of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN
ANNUAL PERCENTAGE OF DAILY NET ASSETS
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Mortality and expense risks (1) 1.10%
Administrative (2) 0.25%
-----
Total annual expenses 1.35%
- ------------------------------------------------------------------------------------------------------------------
FLEXIBLE PREMIUM IRA AND FLEXIBLE PREMIUM ROTH IRA CONTRACTS ONLY:
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY
- ------------------------------------------------------------------------------------------------------------------
Maximum annual administrative charge
If your account value is less than $25,000 $ 30(3)
If your account value is $25,000 or more $ 0
- ------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted if you surrender Contract
your contract or make certain withdrawals. The withdrawal charge percentage year
we use is determined by the contract year in which you make the withdrawal or 1 .........7.00%
surrender your contract. For each contribution, we consider the contract 2 .........6.00
year in which we receive that contribution to be "contract year 1")(4) 3 .........5.00
4 .........4.00
5 .........3.00
6 .........2.00
7 .........1.00
8+ ........0.00
- ------------------------------------------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT
- ------------------------------------------------------------------------------------------------------------------
BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base.
Deducted annually on each contract date anniversary)(5) 0.30%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
12 FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TOTAL
ANNUAL
INVESTMENT EXPENSES(6)
MANAGEMENT OTHER (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(6) EXPENSES LIMITATION)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62%
Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88%
Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64%
Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82%
Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
EQ ADVISORS TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TOTAL
OTHER ANNUAL
INVESTMENT EXPENSES(8) EXPENSES(8)
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(6) LIMITATION) LIMITATION)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55%
BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75%
BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00%
Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95%
Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95%
Capital Guardian International(8) 0.75% 0.25% 0.20% 1.20%
EQ/Evergreen(8) 0.75% 0.25% 0.05% 1.05%
EQ/Evergreen Foundation(8) 0.63% 0.25% 0.07% 0.95%
JPM Core Bond(8) 0.45% 0.25% 0.10% 0.80%
Lazard Large Cap Value(8) 0.55% 0.25% 0.15% 0.95%
Lazard Small Cap Value(8) 0.80% 0.25% 0.15% 1.20%
MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85%
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(8) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy(8) 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% 0.15% 0.95%
EQ/Putnam International Equity(8) 0.70% 0.25% 0.25% 1.20%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
Notes:
(1) A portion of this charge is for providing the guaranteed minimum death
benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
(3) For Flexible Premium IRA and Flexible Premium Roth IRA contracts, during
the first two contract years this charge is equal to the lesser of $30 or
2% of your account value. Thereafter, the charge is $30 for each contract
year.
<PAGE>
- --------------------------------------------------------------------------------
Fee table 13
- --------------------------------------------------------------------------------
(4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal
amount, and upon surrender of a contract.
(5) The benefit base is described under "Your guaranteed minimum income
benefit under baseBUILDER."
(6) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ
Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The 12b-1 fee will not be increased for the life of the
contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth
Portfolio 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 equaling 1.20%. Absent the expense
limitation, the total annual expenses for 1998 for the Alliance Small Cap
Growth Portfolio would have been 1.21%.
(7) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The
maximum investment management and advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. See the
prospectus for The Hudson River Trust. The other direct operating
expenses will also fluctuate from year to year depending on actual
expenses.
(8) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF 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 average daily
net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier
Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index;
0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S.
Equity and Capital Guardian Research; 0.95% for Capital Guardian
International; 0.80% for EQ/Evergreen; 0.70% for EQ/Evergreen Foundation;
0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value; 0.95% for
Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS Research,
MFS Emerging Growth Companies, and Merrill Lynch Basic Value Equity;
0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging
Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70% for
EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity. The
expenses shown for the BT International Equity Index, BT Small Company
Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value Portfolios
reflect an increase effective on May 1, 1999. During 1999, EQF plans to
change its name to AXA Advisors, Inc.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for
BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard
Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research;
0.24% for MFS Emerging Growth Companies; 0.26% for Merrill Lynch Basic
Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan
Stanley Emerging Markets Equity; 0.24% for EQ/Putnam Growth & Income
Value; 0.29% for EQ/Putnam Investors Growth; 0.51% for EQ/Putnam
International Equity. For the following Portfolios, the "Other Expenses"
for 1999, absent the expense limitation, are estimated to be as follows:
0.74% for EQ/Alliance Premier Growth; 0.74% for Capital Guardian U.S.
Equity and Capital Guardian Research; 1.03% for Capital Guardian
International; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation;
0.59% for MFS Growth with Income. Initial seed capital was invested on
December 31, 1998 for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS
Growth with Income Portfolios. The EQ/Alliance Premier Growth, Capital
Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian
International Portfolios commenced operations on May 1, 1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF 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.
<PAGE>
- --------------------------------------------------------------------------------
14 Fee table
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
The examples below show the expenses that a hypothetical contract owner (who has
purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract and
elected baseBUILDER) would pay in the two situations (surrender and
nonsurrender) illustrated. We assume that a $1,000 contribution is invested in
one of the variable investment options listed and a 5% annual return is earned
on the assets in that option.(1) The annual administrative charge is based on an
estimated $10,000 average account value at the end of the contract year and the
maximum charge of $30, so that the administrative charge per $1,000 is $3. Since
the annual administrative charge only applies under Flexible Premium IRA and
Flexible Premium Roth IRA contracts, the charges shown in the examples would be
lower for the NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA
contracts.
These examples should not be considered a representation of past or future
expenses for each option. 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.
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
Alliance Money Market $ 93.00 $ 126.88 $ 163.38 $ 287.23
Alliance High Yield $ 95.58 $ 134.62 $ 176.30 $ 312.98
Alliance Common Stock $ 93.19 $ 127.47 $ 164.38 $ 289.23
Alliance Aggressive Stock $ 94.98 $ 132.84 $ 173.34 $ 307.10
Alliance Small Cap Growth $ 98.76 $ 144.12 $ 192.03 $ 343.81
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
EQ/Alliance Premier Growth $ 98.26 $ 142.63 - -
BT Equity 500 Index $ 92.30 $ 124.78 $ 159.88 $ 280.19
BT Small Company Index $ 94.29 $ 130.75 $ 169.85 $ 300.17
BT International Equity Index $ 96.77 $ 138.19 $ 182.22 $ 324.65
Capital Guardian U.S. Equity $ 96.27 $ 136.71 - -
Capital Guardian Research $ 96.27 $ 136.71 - -
Capital Guardian International $ 98.76 $ 144.12 - -
EQ/Evergreen $ 97.27 $ 139.68 - -
EQ/Evergreen Foundation $ 96.27 $ 136.71 - -
JPM Core Bond $ 94.78 $ 132.24 $ 172.34 $ 305.12
Lazard Large Cap Value $ 96.27 $ 136.71 $ 179.76 $ 319.80
Lazard Small Cap Value $ 98.76 $ 144.12 $ 192.03 $ 343.81
MFS Growth with Income $ 95.28 $ 133.74 - -
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
Alliance Money Market $ 26.15 $ 80.35 $ 137.22 $ 292.13
Alliance High Yield $ 28.73 $ 88.10 $ 150.14 $ 317.87
Alliance Common Stock $ 26.34 $ 80.94 $ 138.21 $ 294.12
Alliance Aggressive Stock $ 28.13 $ 86.31 $ 147.16 $ 311.98
Alliance Small Cap Growth $ 31.91 $ 97.59 $ 165.86 $ 348.69
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
EQ/Alliance Premier Growth $ 31.41 $ 96.11 - -
BT Equity 500 Index $ 25.45 $ 78.25 $ 133.71 $ 285.07
BT Small Company Index $ 27.44 $ 84.23 $ 143.69 $ 305.09
BT International Equity Index $ 29.92 $ 91.66 $ 156.05 $ 329.53
Capital Guardian U.S. Equity $ 29.42 $ 90.17 - -
Capital Guardian Research $ 29.42 $ 90.17 - -
Capital Guardian International $ 31.91 $ 97.59 - -
EQ/Evergreen $ 30.42 $ 93.15 - -
EQ/Evergreen Foundation $ 29.42 $ 90.17 - -
JPM Core Bond $ 27.93 $ 85.72 $ 146.17 $ 310.01
Lazard Large Cap Value $ 29.42 $ 90.17 $ 153.58 $ 324.68
Lazard Small Cap Value $ 31.91 $ 97.59 $ 165.86 $ 348.69
MFS Growth with Income $ 28.43 $ 87.20 - -
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE 15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
- ------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Research $ 95.28 $ 133.74 $ 174.83 $ 310.05
MFS Emerging Growth Companies $ 95.28 $ 133.74 $ 174.83 $ 310.05
Merrill Lynch Basic Value Equity $ 95.28 $ 133.74 $ 174.83 $ 310.05
Merrill Lynch World Strategy $ 98.76 $ 144.12 $ 192.03 $ 343.81
Morgan Stanley Emerging Markets Equity $ 104.22 $ 160.29 $ 218.58 $ 394.59
EQ/Putnam Growth & Income Value $ 95.28 $ 133.74 $ 174.83 $ 310.05
EQ/Putnam Investors Growth $ 96.27 $ 136.71 $ 179.76 $ 319.80
EQ/Putnam International Equity $ 98.76 $ 144.12 $ 192.03 $ 343.81
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
- ------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS Research $ 28.43 $ 87.20 $ 148.64 $ 314.93
MFS Emerging Growth Companies $ 28.43 $ 87.20 $ 148.64 $ 314.93
Merrill Lynch Basic Value Equity $ 28.43 $ 87.20 $ 148.64 $ 314.93
Merrill Lynch World Strategy $ 31.91 $ 97.59 $ 165.86 $ 348.69
Morgan Stanley Emerging Markets Equity $ 37.37 $ 113.76 $ 192.41 $ 399.49
EQ/Putnam Growth & Income Value $ 28.43 $ 87.20 $ 148.64 $ 314.93
EQ/Putnam Investors Growth $ 29.42 $ 90.17 $ 153.58 $ 324.68
EQ/Putnam International Equity $ 31.91 $ 97.59 $ 165.86 $ 348.69
- ------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods
shown in the examples. This is because if the amount applied to purchase
an annuity payout option is less than $2,000, or the initial payment is
less than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example for "if
you do not surrender your contract" would, in each case, be increased by $4.43
based on the average amount applied to annuity payout options in 1998. See
"Annuity administrative fee" under "Charges and expenses."
CONDENSED FINANCIAL INFORMATION
Please see Appendix I, at the end of this prospectus for the unit values and the
number of units outstanding as of the end of the periods shown for each of the
variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
16 Contract features and benefits
- --------------------------------------------------------------------------------
Contract features and benefits
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us we call "contributions." We
require a minimum contribution amount for each type of contract. The following
table summarizes our rules regarding contributions to your contract. All ages in
the table refer to the age of the annuitant named in the contract.
- ------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NQ 0 through 83 o $5,000 (initial) o After-tax money. o No additional
contributions after
o $1,000 (additional) o Paid to us by check or age 84.
transfer of contract value in a
tax-deferred exchange under Section
1035 of the Internal Revenue Code.
- ------------------------------------------------------------------------------------------------------------------------------------
Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular
Premium IRA contributions. IRA contributions in the
o $50 (additional after calendar year you turn
the first contract year) o Rollovers from a age 70 1/2 and
qualified plan. thereafter.
o Rollovers from a TSA.
o Total regular
o Rollovers from another contributions may
traditional individual not exceed $2,000
retirement each year.
arrangement.
o No additional rollover
o Direct custodian- or direct transfer
to-custodian transfers contributions after
from another age 71.
traditional individual
retirement arrangement. o Rollover and direct
transfer contributions
after age 70 1/2 must
be net of required
minimum distributions.
Although we accept rollover and direct transfer
contributions under the Flexible Premium IRA
contract, we intend that this contract be used for
ongoing regular contributions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
17 Contract features and benefits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover
IRA qualified plan. or direct transfer
o $1,000 (additional) contributions after
o Rollovers from a TSA. age 84.
o Rollovers from another o Contributions after
traditional individual age 70 1/2 must be net
retirement of required minimum
arrangement. distributions.
o Direct o Regular IRA
custodian-to-custodian contributions are not
transfers from another permitted.
traditional individual
retirement arrangement.
Only rollover and direct transfer contributions are permitted under the Rollover IRA contract.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Flexible 20 through 83 o $2,000 (initial) o "Regular" after-tax o No additional regular
Premium Roth contributions. after-tax contributions
IRA o $50 (additional after after age 84.
the first contract year) o Rollovers from another
Roth IRA. o No additional rollover
or direct transfer
o Conversion rollovers contributions after
from a traditional IRA. age 84.
o Direct transfers from o Contributions are
another Roth IRA. subject to income
limits. See "Tax
information --
Contributions to
Roth IRAs."
Although we accept rollover and direct transfer contributions under the Flexible Premium Roth IRA
contract, we intend that this contract be used for ongoing regular contributions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
18 Contract features and benefits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover
Conversion Roth IRA. or direct transfer
o $1,000 (additional) contributions after
o Conversion rollovers age 84.
from a traditional IRA.
o Conversion rollovers
o Direct transfers from after age 70 1/2 must be
another Roth IRA. net of required
minimum distributions
for the traditional IRA
you are rolling over.
o You cannot roll over
funds from a traditional
IRA if your adjusted
gross income is
$100,000 or more.
o Regular after-tax
contributions are not
permitted.
Only rollover and direct transfer contributions are permitted under the Roth Conversion IRA
contract.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing
contributions from an payroll contributions
o $1,000 (additional) existing qualified plan are not permitted.
trust as a change of
investment vehicle o No additional transfer
under the plan. contributions after
age 76.
o The plan must be
qualified under Section o For defined benefit
401(a) of the Internal plans, employee
Revenue Code. contributions are not
permitted.
o For 401(k) plans,
transferred o Contributions after
contributions may only age 70 1/2 must be net
include employee of any required
pre-tax contributions. minimum distributions.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 19
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover TSA 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover
TSA contract or or direct transfer
o $1,000 (additional) arrangement. contributions after
age 84.
o Rollovers from a
traditional IRA which o Contributions after age
was a "conduit" for 70 1/2 must be net of
TSA funds previously required minimum
rolled over. distributions.
o Direct transfers from
another contract or
arrangement under
Section 403(b) of the
Internal Revenue Code,
complying with IRS
Revenue Ruling 90-24.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Tax information" for a more detailed discussion of sources of contributions
and certain contribution limitations. We may refuse to accept any contribution
if the sum of all contributions under all Equitable Accumulator contracts 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 contracts
that you own would then total more than $2,500,000.
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" later in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
20 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint
owner may also be named. Only natural persons can be joint owners. This means
that an entity such as a corporation cannot be a joint owner.
Under all IRA and Rollover TSA contracts, the owner and annuitant must be the
same person.
Under QP contracts, the owner must be the trustee of the qualified plan and
the annuitant must be the plan participant/employee. See Appendix II for more
information on QP contracts.
- --------------------------------------------------------------------------------
A participant is an individual who is currently, or was formerly participating
in an eligible employer's QP or TSA plan.
- --------------------------------------------------------------------------------
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
For your convenience, we will accept initial and additional contributions by
wire transmittal from certain broker-dealers who have agreements with us for
this purpose. Additional contributions may also be made under our automatic
investment program. These methods of payment are discussed in detail under
"More information" later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing
or unclear, we will try to obtain that information. If we are unable to obtain
all of the information we require within five business days after we receive an
incomplete application or form, we will inform the registered representative
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- --------------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
Section 1035 exchanges
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
NQ contract in a tax-free exchange if you follow certain procedures as shown in
the form that we require you to use. Also see "Tax information" later in this
prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options, the fixed maturity
options, and the account for special dollar cost averaging.
Variable investment options
Your investment results in any one of the 26 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed
below are the currently available Portfolios, their investment objectives, and
their advisers.
- --------------------------------------------------------------------------------
You can choose among 26 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 21
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- --------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market High level of current income while preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- --------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P.
to the extent consistent with that objective,
capital appreciation
- --------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
income
- --------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Standard & Poor's 500 Composite
Stock Price Index
- ----------------------------------------------------------------------------------------------------------------------
BT Small Company Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Russell 2000 Index
- ----------------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Morgan Stanley Capital
International Europe, Australia, Far East Index
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- ----------------------------------------------------------------------------------------------------------------------
Capital Guardian International* Long-term growth of capital Capital Guardian Trust Company
- ----------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Capital appreciation Evergreen Asset Management Corp.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
22 Contract features and benefits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp.
conservation of capital, and capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
JPM Core Bond High total return consistent with moderate risk J. P. Morgan Investment
of capital and maintenance of liquidity Management Inc.
- ----------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value Capital appreciation Lazard Asset Management
- ----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Capital appreciation Lazard Asset Management
- ----------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services
growth of capital and income Company
- ----------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services
Company
- ----------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services
Companies Company
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management,
L.P.
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management,
L.P.
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management,
Value objective Inc.
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth Long-term growth of capital and any increased Putnam Investment Management,
income that results from this growth Inc.
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity Capital appreciation Putnam Investment Management,
Inc.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not currently be available in all states.
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fixed maturity options
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. These amounts become part of our general account assets. They
will accumulate interest at the "rate to maturity" for each fixed maturity
option. The total amount you allocate to and accumulate in each fixed maturity
option is called the "fixed maturity amount." The fixed maturity options are
not available in contracts issued in Maryland.
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity.
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the
rate to maturity in effect for new contributions allocated to that fixed
maturity option on the date we apply your contribution. If you make any
withdrawals or transfers from a fixed maturity option before the maturity date,
we will make a "market value adjustment" that may increase or decrease any
fixed maturity amount you have left in that fixed maturity option. We will
discuss the market value adjustment below and in greater detail later in this
prospectus under "More information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. It will reflect the market value adjustment that we would make if
you were to withdraw all of your fixed maturity amounts on the date of the
report. We call this your "market adjusted amount."
Fixed maturity options and maturity dates. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 are
available at any time.
We will not accept allocations to a fixed maturity option if on the date the
contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
Options at maturity date. We will notify you on or before December 31st of the
year before each of your fixed maturity options is scheduled to mature. At that
time, you may choose to have one of the following options take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity
option, or into any of the variable investment options; or
(b) withdraw the maturity value (there may be a withdrawal charge).
If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the
fixed maturity option that will mature next.
Market value adjustment. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the
amount being withdrawn and the rate to maturity
<PAGE>
- --------------------------------------------------------------------------------
24 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
in effect at that time for new allocations to that same fixed maturity
option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate
an amount to a fixed maturity option to the time that you take a withdrawal,
the market value adjustment will be negative. Likewise, if interest rates drop
at the end of that time, the market value adjustment will be positive. Also,
the amount of the market value adjustment, either up or down, will be greater
the longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment could greatly reduce
your value in the fixed maturity options, particularly in the fixed maturity
options with later maturity dates.
We provide an illustration of the market adjusted amount of specified maturity
values, an explanation of how we calculate the market value adjustment, and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information" later
in this prospectus. Appendix III of this prospectus provides an example of how
the market value adjustment is calculated.
Account for special dollar cost averaging
The account for special dollar cost averaging is part of our general account.
We pay interest at guaranteed rates in this account. We will credit interest to
the amounts that you have in the account for special dollar cost averaging
every day. We set the interest rates periodically, according to procedures that
we have. We reserve the right to change these procedures.
The account for special dollar cost averaging is available for allocation of
your initial contribution only under the special dollar cost averaging program.
It is available only for the first year of your contract. We will guarantee to
pay our current interest rate that is in effect on the date that your
contribution is allocated to this account. Your guaranteed interest rate will
be shown in your contract. The rate will never be less than 3%. See "Allocating
your contributions," below for the rules and restrictions that apply to the
special dollar cost averaging program.
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among three ways to allocate your contributions under your
contract: self-directed, principal assurance or dollar cost averaging.
Self-directed allocation
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity
options with maturity dates that are later than the February 15th immediately
following the date annuity payments are to begin.
Principal assurance allocation
Under this allocation program you select a fixed maturity option. We specify
the portion of your initial contribution to be allocated to that fixed maturity
option in an amount that will cause the maturity value to equal the amount of
your entire initial contribution on the fixed maturity option's maturity date.
The maturity date you select generally may not be later than 10 years, or
earlier than seven years from your contract date. You allocate the rest of your
contribution to the variable investment options however you choose.
For example, if your initial contribution is $10,000, and on April 1, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009,
since the rate to maturity was 4.97% on April 1, 1999, we would have allocated
$6,191.16 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA,
Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity
year that would extend beyond the year in which you will reach age 70 1/2, you
should consider whether your value in the variable investment options, or your
other traditional IRA or TSA funds are sufficient to meet your required minimum
distributions. See "Tax information."
Dollar cost averaging
We offer two dollar cost averaging programs. Each program allows you to
gradually allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low and fewer units if the unit's value is high. Therefore, you may
get a lower average cost per unit over the long term. These plans of
investing, however, do not guarantee that you will earn a profit or be
protected against losses.
- --------------------------------------------------------------------------------
Units measure your value in each variable investment option.
- --------------------------------------------------------------------------------
Special dollar cost averaging programs. You may dollar cost average from the
account for special dollar cost averaging into any of the variable investment
options. You must allocate your entire initial contribution into the account.
We will transfer your value in the account for special dollar cost averaging
into the variable investment options that you select over the next 12 months or
such other period we offer at the time. The transfer date will be the same day
of the month as the contract date, but not later than the 28th. All amounts
will be transferred out by the end of the first contract year or such other
period we offer at the time. You may not allocate additional contributions to
the account for special dollar cost averaging.
- --------------------------------------------------------------------------------
The account for special dollar cost averaging provides guaranteed interest.
- --------------------------------------------------------------------------------
The only amounts that should be transferred from the account for special dollar
cost averaging are your regularly scheduled monthly transfers to the variable
investment options. If you request to transfer or withdraw any other amounts,
we will transfer all of the value that you have remaining in the account for
special dollar cost averaging to the investment options according to the
allocation percentages we have on file for you. As a result, you will no longer
be able to participate in the special dollar cost averaging program. You may
also ask us to cancel your participation at any time.
If the account for special dollar cost averaging is not available in your
state, we offer a special dollar cost averaging program in the Alliance Money
Market option. Under this program we will not deduct the mortality and expense
risks and administrative charges from assets in the Alliance Money Market
option. You may not allocate amounts other than your initial contribution to
this program, which is in effect only for your first contract year. We reserve
the right to discontinue offering the Alliance Money Market special dollar cost
averaging program for new contracts once the account for special dollar cost
averaging becomes available in a state. Your registered representative can
provide information about state availability. You may also contact us directly.
General dollar cost averaging program. If your value in the Alliance Money
Market option is at least $5,000, you may choose, at any time, to have a
specified dollar amount or percentage of your value transferred from that
option to the other variable investment options. You can select to have
transfers made on a monthly, quarterly or annual basis. The transfer date will
be the same calendar day of the month as the contract date, but not later than
the 28th day of the month.
The minimum amount that we will transfer each time is $250. The maximum amount
we will transfer is equal to your value in the Alliance Money Market option at
the time the program is elected, divided by the number of transfers scheduled.
<PAGE>
- --------------------------------------------------------------------------------
26 Contract features and benefits
- --------------------------------------------------------------------------------
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The general dollar cost averaging program
will then end. You may change the transfer amount once each contract year, or
cancel this program at any time.
----------------------------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program. See "Transferring your money among investment options"
below.
OUR BASEBUILDER OPTION
The baseBUILDER option offers you a combined guaranteed minimum income benefit
and guaranteed minimum death benefit. The combined benefit is available if the
annuitant is between the ages of 20 and 75. There is an additional charge for
this benefit. See "baseBUILDER benefits charge" under "Charges and expenses."
- --------------------------------------------------------------------------------
baseBUILDER provides income protection if you elect an income payout while the
annuitant is alive and a death benefit if the annuitant dies.
- --------------------------------------------------------------------------------
The guaranteed minimum income benefit component of baseBUILDER is described
below under "Your guaranteed minimum income benefit under baseBUILDER." As part
of baseBUILDER you have a choice of two guaranteed minimum death benefit
options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The
two options are described under "Guaranteed minimum death benefit." The
guaranteed minimum death benefit is provided under the contract even if you do
not elect baseBUILDER, and for a broader range of annuitant ages at contract
issue than those available under baseBUILDER. baseBUILDER is not currently
available in New York.
Your guaranteed minimum income benefit under baseBUILDER
The guaranteed minimum income benefit guarantees you a minimum amount of
lifetime income under our Income Manager (Life Annuity with a Period Certain)
payout annuity contract. The Income Manager (Life Annuity with a Period
Certain) payout annuity contract provides payments during a specified period
of time (called a period certain) that will continue for the rest of the
annuitant's life thereafter. If the annuitant dies before the period certain
has ended, payments will continue to the beneficiary for the time remaining in
the period certain.
- --------------------------------------------------------------------------------
We also refer to the guaranteed minimum income benefit as the "Living
Benefit."
- --------------------------------------------------------------------------------
Guaranteed minimum income benefit's benefit base.
On the contract date, your guaranteed minimum income benefit's benefit base
("benefit base") is equal to the initial contribution. Thereafter, the benefit
base will be credited with interest each day through the annuitant's age 80.
The effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option) and in the special dollar
cost averaging programs. Amounts in the Alliance Money Market option, the fixed
maturity options, and in a Rollover TSA contract loan reserve account will be
credited with interest at a 3% effective annual rate. No interest is credited
after age 80.
If you make an additional contribution to your contract, we will increase your
current benefit base by the dollar amount of the additional contribution on the
date that the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your benefit base for the
withdrawal on the date that you make the withdrawal. See "How withdrawals
affect your guaranteed minimum income benefit and guaranteed minimum death
benefit" under "Accessing Your Money" for more detailed information. The
benefit base will be reduced by any withdrawal charge remaining when you
exercise your guaranteed minimum income benefit. Under Rollover TSA contracts,
we will also reduce your benefit base by the amount of any outstanding loan
plus accrued interest on the date that you exercise your guaranteed minimum
income benefit.
<PAGE>
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Contract features and benefits 27
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Your benefit base is not an account value or a cash value and is used solely
for purposes of calculating your guaranteed minimum income benefit.
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Exercising your benefit and income you will receive.
If you exercise the guaranteed minimum income benefit, the annual lifetime
income that you will receive under the Income Manager (Life Annuity with a
Period Certain) payout annuity contract, will be the greater of (i) your
guaranteed minimum income benefit, and (ii) the income provided by applying
your actual account value at our then current annuity purchase factors.
The guaranteed minimum income benefit is based on conservative actuarial
factors. Therefore, even if your account value is less than your benefit base,
you may generate more income by applying your account value to current annuity
purchase factors. We will make this comparison for you when the need arises.
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The guaranteed minimum income benefit should be regarded as a safety net only.
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Illustrations of guaranteed minimum income benefit.
The table below illustrates the guaranteed minimum income benefit amounts per
$100,000 of initial contribution, for a male annuitant age 60 (at issue) on the
contract date anniversaries indicated, assuming no additional contributions,
withdrawals, or loans under Rollover TSA contracts, and assuming there were no
allocations to the Alliance Money Market option or the fixed maturity options.
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GUARANTEED MINIMUM
INCOME BENEFIT -- ANNUAL INCOME
CONTRACT DATE PAYABLE FOR LIFE WITH
ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN
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7 $ 8,315
10 10,341
15 14,924
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Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income
benefit only within 30 days following the seventh or later contract date
anniversary under your contract. However, you may not exercise the benefit
before the annuitant is age 60, or after the annuitant is age 83. There is an
exception if the annuitant is between ages 20 and 44 when your contract is
issued. In this case you may exercise the benefit following the 15th or later
contract date anniversary, but not after the annuitant is age 83. See "Exercise
of guaranteed minimum income benefit under QP and Rollover TSA contracts" below
regarding exercising the benefit under QP and Rollover TSA contracts.
Your contract will terminate when you exercise your guaranteed minimum income
benefit. You will then receive an Income Manager (Life Annuity with a Period
Certain) payout annuity contract. Your period certain will be based on the
annuitant's age at the time the benefit is exercised, as follows:
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LEVEL PAYMENTS*
- ----------------------------------------
PERIOD CERTAIN
YEARS
--------------------
ANNUITANT'S
AGE AT EXERCISE IRAS 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
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* Other forms and periods certain may also be available. For Rollover IRA and
Flexible Premium IRA contracts, please see "Minimum distributions" under "Tax
information," as to how this option may be affected if exercised after age
70 1/2.
You will begin receiving payments one payment period after the payout annuity
contract is issued. For example, if you select monthly annuity payments, we
will send your first payment to you approximately one month from the date your
contract is issued.
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 as of the contract date
anniversary. You may then notify us within 30 days following the contract date
anniversary if you want to exercise the
<PAGE>
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28 Contract features and benefits
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guaranteed minimum income benefit. You must return your contract to us in order
to exercise this benefit. The amount of income you actually receive will be
determined when we receive your request to exercise the benefit.
You may also apply your cash value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity contract, and you may always
apply your account value to any of our annuity payout options. The traditional
annuity payout options are discussed under "Accessing your money." These
options differ from the Income Manager payout annuity contracts. They may
provide higher or lower income levels, but do not have all the features of the
Income Manager payout annuity contract. You may request an illustration of the
Income Manager payout annuity contract from your registered representative.
The Income Manager (Life Annuity with a Period Certain) payout annuity
contracts are offered through our prospectus for the Income Manager payout
annuities. You may obtain a copy of the most current version from your
registered representative. You should read it carefully before you decide to
exercise your guaranteed minimum income benefit.
Successor annuitant/contract owner. If the successor annuitant/contract owner
(discussed under "More information" later in this prospectus) elects to
continue the contract after your death, the guaranteed minimum income benefit
will continue to be available on the contract date anniversaries specified
above based on the contract date. However, the guaranteed minimum income
benefit must be exercised based on the age of the successor annuitant/contract
owner.
Exercise of guaranteed minimum income benefit under QP and Rollover TSA
contracts. Under QP contracts, the guaranteed minimum income benefit may be
exercised in the same manner as described above only after the trustee of the
qualified plan directly rolls over the QP contract to a Rollover IRA contract.
In this process the ownership of the QP contract is changed to the annuitant.
The rollover to a Rollover IRA contract and change of ownership may only occur
when the annuitant will no longer be a participant in the qualified plan.
Similarly, under Rollover TSA contracts the contract owner must convert the
Rollover TSA contract in a direct rollover to a Rollover IRA contract according
to our rules. The rollover to a Rollover IRA contract may only occur when you
are eligible for a rollover distribution from a TSA. This may generally occur
when you are age 59 1/2, or you are separated from service from the employer
who provided the Rollover TSA funds. See "Rollover or direct transfer
contributions" under "Tax information" later in this prospectus.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through
79 at issue of Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA,
and Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA
contracts; and 20 through 75 at issue of QP contracts.
You may elect either the "5% roll up to age 80" or the "annual ratchet to age
80" guaranteed minimum death benefit when you apply for a contract. Once you
have made your election, you may not change it.
5% roll up to age 80. On the contract date, the guaranteed minimum death
benefit equals your initial contribution. Thereafter, the guaranteed minimum
death benefit will be credited with interest each day through the annuitant's
age 80. The effective annual interest rate is 5% for amounts in the variable
investment options (other than the Alliance Money Market option) and in the
special dollar cost averaging programs. Amounts in the Alliance Money Market
option, the fixed maturity options and in a Rollover TSA contract loan reserve
account will be credited with interest at a 3% effective annual rate. No
interest is credited after the annuitant is age 80.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the additional contribution on
the date the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your guaranteed minimum death
benefit for the withdrawal on the date you take the withdrawal.
<PAGE>
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Contract features and benefits 29
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The 5% roll up to age 80 guaranteed minimum death benefit is not available in
New York.
Annual ratchet to age 80. On the contract date, your guaranteed minimum death
benefit equals your initial contribution. Then, on each contract date
anniversary, we will determine your guaranteed minimum death benefit by
comparing your current guaranteed minimum death benefit to your account value
on that contract date anniversary. If your account value is higher than your
guaranteed minimum death benefit, we will increase your guaranteed minimum
death benefit to equal your account value. On the other hand, if your account
value on the contract date anniversary is less than your guaranteed minimum
death benefit, we will not adjust your guaranteed minimum death benefit either
up or down.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the contribution on the date the
contribution is allocated to your investment options. If you take a withdrawal
from your contract, we will adjust your guaranteed minimum death benefit on the
date you take the withdrawal.
Applicable for annuitant ages 80 through 83 when the contract is issued.
On the contract date, your guaranteed minimum death benefit equals your
initial contribution. Thereafter, it will be increased by the dollar amount of
any additional contributions. We will adjust your guaranteed minimum death
benefit if you take any withdrawals.
----------------------------------------
Please see "How withdrawals affect your guaranteed minimum income benefit and
guaranteed minimum death benefit" under "Accessing your money" for information
on how withdrawals affect your guaranteed minimum death benefit. For contracts
issued in New York, the guaranteed minimum death benefit at the annuitant's
death will never be less than your value in the variable investment options,
plus the sum of the fixed maturity amounts in each fixed maturity option.
See Appendix IV for an example of how we calculate the guaranteed minimum death
benefit.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it
to us for a refund. To exercise this cancellation right you must mail the
contract directly to our Processing Office within 10 days after you receive it.
In some states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract and
will reflect (i) any investment gain or loss in the variable investment
options, (ii) any positive or negative market value adjustments in the fixed
maturity options, and (iii) any guaranteed interest in the account for special
dollar cost averaging, through the date we receive your contract. However, some
states require that we refund the full amount of your contribution (not
reflecting (i), (ii) or (iii) above). For any IRA contract returned to us
within seven days after you receive it, we are required to refund the full
amount of your contribution.
We may require that you wait six months before you may apply for a contract
with us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA or Flexible Premium Roth IRA contract, you may cancel your Roth Conversion
IRA contract and return to a Rollover IRA or Flexible Premium IRA contract,
whichever applies. Our Processing Office, or your registered representative,
can provide you with the cancellation instructions.
<PAGE>
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30 Determining your contract's value
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Determining your contract's value
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YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have allocated to the (i)
variable investment options, (ii) fixed maturity options, and (iii) account for
special dollar cost averaging. These amounts are subject to certain fees and
charges discussed under "Charges and expenses." Under Rollover TSA contracts,
if you have any outstanding loan your account value will include any amount in
the loan reserve account.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value, less the
annual administrative charge under Flexible Premium IRA and Flexible Premium
Roth IRA contracts, and less any withdrawal charge that may apply if you
surrender your contract. If you have a Rollover TSA contract with an
outstanding loan, your cash value also is reduced by the amount of any
outstanding loan plus accrued interest. Please see "Surrendering your contract
to receive its cash value."
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option invests in shares of a corresponding Portfolio.
Your value in each variable investment option is measured by "units." The value
of your units will increase or decrease as though you had invested it in the
corresponding Portfolio's shares directly. Your value, however, will be reduced
by the amount of the fees and charges that we deduct under the contract. Your
value will also be reduced by the dollar amount of any withdrawals that you
make.
The unit value for each variable investment option depends on the investment
performance of that option, minus daily charges for mortality and expense risks
and administrative expenses. On any day, your value in any variable investment
option equals the number of units credited to your contract under that option,
multiplied by that day's value for one unit. The number of your contract units
in any variable investment option does not change unless you make additional
contributions, make a withdrawal, or transfer amounts among investment options,
or we transfer your loan amount to the loan reserve account under a TSA
contract. In addition, when we deduct the baseBUILDER benefits charge and any
withdrawal charge the number of units credited to your contract will be
reduced. Your units are also reduced under Flexible Premium IRA and Flexible
Premium Roth IRA contracts when we deduct the annual administrative charge. A
description of how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date
is the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value.
YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING
Your value in the account for special dollar cost averaging at any time will
equal your initial contribution allocated to that option, plus interest, less
the sum of all amounts that have been transferred to the variable investment
options you have selected.
<PAGE>
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Transferring your money among investment options 31
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Transferring your money among investment options
- --------------------------------------------------------------------------------
TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer
some or all of your account value among the investment options, subject to the
following:
o You may not transfer any amount to the account for special dollar cost
averaging.
o You may not transfer to a fixed maturity option that matures in the current
calendar year, or if its rate to maturity is 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately following
the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office.
Transfer requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option (whole
percentages only), and
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. However, it will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among
each variable investment option so that the percentage of your account value
that you specify is invested in each option at the end of each rebalancing
date.
-------------------------------------------------------------------------------
Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your registered representative or
other financial adviser before electing the program.
-------------------------------------------------------------------------------
You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in a dollar
cost averaging program. Rebalancing is not available for amounts you have
allocated in the fixed maturity options.
<PAGE>
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32 Accessing your money
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Accessing your money
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WITHDRAWING YOUR ACCOUNT VALUE
You have several ways to withdraw your account value before annuity payments
begin. The table below shows the methods available under each type of contract.
More information follows the table. For the tax consequences of withdrawals,
see "Tax information."
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METHOD OF WITHDRAWAL
- --------------------------------------------------------------------------------
SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
- --------------------------------------------------------------------------------
NQ Yes Yes No No
- --------------------------------------------------------------------------------
Rollover IRA Yes Yes Yes Yes
- --------------------------------------------------------------------------------
Flexible
Premium IRA Yes Yes Yes Yes
- --------------------------------------------------------------------------------
Roth Conversion
IRA Yes Yes Yes Yes
- --------------------------------------------------------------------------------
Flexible
Premium Roth
IRA Yes Yes Yes No
- --------------------------------------------------------------------------------
QP Yes No No Yes
- --------------------------------------------------------------------------------
Rollover TSA Yes* No No Yes
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* For some Rollover TSA contracts, your ability to take withdrawals, loans or
surrender your contract may be limited. You must provide withdrawal
restriction information when you apply for a contract. See "Tax information
-- Tax Sheltered Annuity contracts (TSAs)."
Lump sum withdrawals
(All contracts)
You may take lump sum withdrawals from your account value at any time.
(Rollover TSA contracts may have restrictions.) The minimum amount you may
withdraw is $1,000. If you request to withdraw more than 90% of a contract's
current cash value we will treat it as a request to surrender the contract for
its cash value. See "Surrendering your contract to receive its cash value"
below.
Lump sum withdrawals in excess of the 15% free withdrawal amount may be subject
to a withdrawal charge. Under Rollover TSA contracts, if a loan is outstanding,
you may only take lump sum withdrawals as long as the cash value remaining
after any withdrawal equals at least 10% of the outstanding loan plus accrued
interest.
Systematic withdrawals
(NQ and all IRA contracts)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would
be less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own an IRA
contract, you may elect this withdrawal method only if you are between ages
59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you
have balances in the account for special dollar cost averaging.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change
the amount or percentage in any contract year in which you have already taken a
lump sum withdrawal. You can cancel the systematic withdrawal option at any
time.
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 withdrawal
amount.
<PAGE>
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Accessing your money 33
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Substantially equal withdrawals
(All IRA contracts)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have otherwise been due on prior withdrawals
made under this option and for any interest on those withdrawals.
You may elect to take substantially equal withdrawals at any time before age
59 1/2. We will make the withdrawal on any day of the month that you select as
long as it is not later than the 28th day of the month. You may not elect to
receive the first payment in the same contract year in which you took a lump
sum withdrawal. We will calculate the amount of your substantially equal
withdrawals based on the method you choose from the choices we offer. The
payments will be made monthly, quarterly or annually as you select. These
payments will continue until we receive written notice from you to cancel this
option or you take a lump sum withdrawal. You may elect to start receiving
substantially equal withdrawals again, but the payments may not restart in the
same contract year in which you took a lump sum withdrawal. We will calculate
the new withdrawal amount.
You may not elect substantially equal withdrawals if you have balances in the
account for special dollar cost averaging.
Substantially equal withdrawals are not subject to a withdrawal charge.
Minimum distribution withdrawals
(Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only -- See
"Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out
is $250. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We do not impose a withdrawal charge on minimum distribution withdrawals except
if when added to a lump sum withdrawal previously taken in the same contract
year, the minimum distribution withdrawal exceeds the 15% free withdrawal
amount.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
Under Rollover TSA contracts, you may not elect minimum distribution
withdrawals if a loan is outstanding.
- --------------------------------------------------------------------------------
For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, 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).
- --------------------------------------------------------------------------------
HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar
basis or on a pro rata basis as explained below:
<PAGE>
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34 Accessing your money
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Income benefit
Benefit base -- Your current benefit base will be reduced on a
dollar-for-dollar basis as long as the sum of your withdrawals in a contract
year is 5% or less of the guaranteed minimum death benefit on the most recent
contract date anniversary. Once you take a withdrawal that causes the sum of
your withdrawals in a contract year to exceed 5% of the guaranteed minimum
death benefit on the most recent contract date anniversary, that withdrawal and
any subsequent withdrawals in that same contract year will reduce your current
benefit base on a pro rata basis.
Death benefit
5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed
minimum death benefit, your current guaranteed minimum death benefit will be
reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in
a contract year is 5% or less of the guaranteed minimum death benefit on the
most recent contract date anniversary. Once you take a withdrawal that causes
the sum of your withdrawals in a contract year to exceed 5% of the guaranteed
minimum death benefit on the most recent contract date anniversary, that
withdrawal and any subsequent withdrawals in that same contract year will
reduce your current guaranteed minimum death benefit on a pro rata basis.
Annual ratchet to age 80 -- If you elect the annual ratchet
to age 80 guaranteed minimum death benefit, each withdrawal will always reduce
your current guaranteed minimum death benefit on a pro rata basis.
Annuitant issue ages 80 through 83 -- If your contract was issued when the
annuitant was between ages 80 and 83, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
----------------------------------------
Reduction on a dollar-for-dollar basis means that your current benefit will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of your current account value that is
being withdrawn and we reduce your current benefit by that same percentage. For
example, if your account value is $30,000 and you withdraw $12,000, you have
withdrawn 40% of your account value. If your guaranteed minimum death benefit
was $40,000 before 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 5% threshold
described above can have a significant impact on your guaranteed minimum income
benefit or guaranteed minimum death benefit.
LOANS UNDER ROLLOVER TSA CONTRACTS
You may take loans from a Rollover TSA unless restricted by the employer who
provided the Rollover TSA funds. If you cannot take a loan, or cannot take a
loan without approval from the employer who provided the funds, we will have
this information in our records based on what you and the employer who provided
the funds told us when you purchased your contract. The employer must also tell
us whether special employer plan rules of the Employee Retirement Income
Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan
while you are taking minimum distribution withdrawals.
You should read the terms and conditions on our loan request form carefully
before taking out a loan. Under Rollover TSA contracts subject to ERISA, you
may only take a loan with the written consent of your spouse. Your contract
contains further details of the loan provision. Also, see "Tax information" for
general rules applicable to loans.
We will permit you to have only one loan outstanding at a time. The minimum
loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your
account value, subject to any limits under the federal income tax rules. The
term of a loan is five years. However, if you use the loan to acquire your
primary residence, the term is 10 years. The term may not extend beyond the
earliest of:
(1) the date annuity payments begin,
(2) the date the contract terminates, and
<PAGE>
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Accessing your money 35
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- --------------------------------------------------------------------------------
(3) the date a death benefit is paid (the outstanding loan will be deducted
from the death benefit amount).
Interest will accrue daily on your outstanding loan at a rate we set. The loan
interest rate will be equal to the Moody's Corporate Bond Yield Averages for
the calendar month ending two months before the day of the calendar quarter in
which the rate is determined.
Loan reserve account. On the date your loan is processed, we will transfer the
amount of your loan to the loan reserve account. Unless you specify otherwise,
we will subtract your loan on a pro rata basis from your value in the variable
investment options. If there is insufficient value or no value in the variable
investment options, any additional amount of the loan will be subtracted from
the fixed maturity options in order of the earliest maturity date(s) first. A
market value adjustment may apply.
We will credit interest to the amount in the loan reserve account at a rate of
2% lower than the loan interest rate that applies for the time your loan is
outstanding. On each contract date anniversary after the date the loan is
processed, we will transfer the amount of interest earned in the loan reserve
account to the variable investment options on a pro rata basis. When you make a
loan repayment, unless you specify otherwise, we will transfer the dollar
amount of the loan repaid from the loan reserve account to the investment
options according to the allocation percentages we have on our records.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while the
annuitant is living and before you begin to receive annuity payments. (Rollover
TSA contracts may have restrictions.) For a surrender to be effective, we must
receive your written request and your contract at our Processing Office. We
will determine your cash value on the date we receive the required information.
All benefits under the contract will terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we
may delay payment as described in "When to expect payments," below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any amount you
withdraw (less any withdrawal charge) and, upon surrender, payment of the cash
value. We may postpone such payments or applying proceeds for any period during
which:
(1) the New York Stock Exchange is closed or restricts trading,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people
remaining in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
and the account for special dollar cost averaging (other than for death
benefits) for up to six months while you are living. We also may defer payments
for a reasonable amount of time (not to exceed 15 days) while we are waiting
for a contribution check to clear.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery service at your expense.
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36 Accessing your money
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CHOOSING YOUR ANNUITY PAYOUT OPTIONS
The Equitable Accumulator offers you several choices for receiving retirement
income. Each choice enables you to receive fixed or, in some cases, variable
annuity payments.
You can choose from among the six different annuity payout options listed
below. Restrictions apply, depending on the type of contract you own.
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Annuity payout options Life annuity
Life annuity -- period
certain
Life annuity -- refund
certain
Period certain annuity
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Income Manager payout Life annuity with a period
options certain
Period certain annuity
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Annuity payout options
You can choose from among the following annuity payout options:
o Life annuity: An annuity that 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 continuation of benefits following
the annuitant's death with this payout option, it provides the highest
monthly payment of any of the life annuity options, so long as the annuitant
is living.
o Life annuity -- period certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the end of a
selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity -- refund certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered. This payout
option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments. Currently, this payout option is available only as a fixed
annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
The life annuity, life annuity -- period certain, and life annuity -- refund
certain payout options are available on a single life or joint and survivor
life basis. The joint and survivor life annuity guarantees payments for the
rest of the annuitant's life and, after the annuitant's death, payments
continue to the survivor.
The following annuity payout options are available as variable annuities:
o Life annuity (except in New York).
o Life annuity -- period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed income annuity option which can be elected in combination with
the variable income annuity options. The amount of each variable annuity
payment will fluctuate, depending upon the performance of the variable
investment options, and
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Accessing your money 37
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whether the actual rate of investment return is higher or lower than an assumed
base rate. Please see "Annuity Unit Values" in the SAI.
We may offer other payout options not outlined here. Your registered
representative can provide details.
Selecting an annuity payout option
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return
your contract before annuity payments begin.
For NQ and IRA contracts, unless you choose a different payout option, we will
pay annuity payments under a life annuity with a certain period of 10 years.
The only payout options available under QP contracts and Rollover TSA contracts
are the life annuity 10 year period certain and the joint and survivor life
annuity 10 year period certain.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be later than the
contract date anniversary that follows the annuitant's 90th birthday. This may
be different in some states.
Before your annuity payments are to begin, we will notify you by letter that
the annuity payout options are available. Once you have selected a payout
option and payments have begun, no change can be made other than transfers (if
permitted in the future) among the variable investment options if a variable
annuity is selected.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and whether it is fixed or
variable, in the case of a life annuity, the annuitant's age (or the
annuitant's and joint annuitant's ages) and in certain instances, the sex of
the annuitant(s).
The amount we apply to provide annuity payments will depend on the type of
payout option you select. If you select a payout option that provides for
payments for the rest of the annuitant's life, then we will apply your account
value. If you select a payout option that provides for payments for a period
certain, then we will apply your cash value. However, if the period certain is
more than five years, we will apply not less than 95% of the account value.
Amounts in the fixed maturity options that are applied to a payout option
before a maturity date will result in a market value adjustment.
If, at the time you elect a payout option, 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 account value in a single sum rather
than as payments under the payout option chosen.
Income Manager payout options
For NQ and IRA contracts, two Income Manager payout options are also available.
These are the Income Manager (Life Annuity with a Period Certain) and the
Income Manager (Period Certain).
For QP contracts, the Income Manager payout options are available only after
the trustee of the qualified plan directly rolls over the QP contract to a
Rollover IRA contract. In this process the ownership of the QP contract is
changed to the annuitant. The rollover to a Rollover IRA contract and the
change of ownership may only occur when the annuitant will no longer be a
participant in the qualified plan.
For Rollover TSA contracts, the Income Manager payout annuity options are
available only after the Rollover TSA contract is rolled over to a Rollover IRA
contract. This may generally occur when you are age 59 1/2, or you have
separated from service with the employer who provided the Rollover TSA funds.
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for the annuitant's life and the life of a
joint annuitant. The Income Manager (Period Certain) provides payments for a
specified period. The contract owner and annuitant must meet the issue age and
payment requirements. Both Income Manager annuities provide guaranteed level
payments (NQ
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38 Accessing your money
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and IRA contracts). The Income Manager (Life Annuity with a Period Certain)
also provides guaranteed increasing payments (NQ contracts only).
If you apply only part of the account value of your contract to either of the
Income Manager payout annuities we will consider it a withdrawal and may deduct
a withdrawal charge. We will not deduct a withdrawal charge if you apply all of
your account value at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals). However, a new
withdrawal charge schedule will apply under the Income Manager annuity. For
purposes of the withdrawal charge schedule, the year in which your account
value is applied under the Income Manager annuity will be "contract year 1." In
addition, we will not deduct a withdrawal charge if you apply all of your
account value from your Equitable Accumulator contract when the dollar amount
of the withdrawal charge under such contract is 2% or less. This means that no
withdrawal charge schedule will apply under the Income Manager payout annuity
contract.
You should consider the timing of your purchase as it relates to the potential
for withdrawal charges under the Income Manager annuity. No additional
contributions will be permitted under an Income Manager (Life Annuity with a
Period Certain).
You also may apply your account value to an Income Manager (Period Certain)
annuity once withdrawal charges are no longer in effect under your contract. No
withdrawal charges will apply under that Income Manager annuity.
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your registered representative. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free
basis. Please consult your tax adviser.
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Charges and expenses 39
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Charges and expenses
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CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option:
o A mortality and expense risks charge.
o An administrative charge.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
o On each contract date anniversary -- an annual administrative charge
(Flexible Premium IRA and Flexible Premium Roth IRA contracts only)
o At the time you make certain withdrawals or surrender your contract -- a
withdrawal charge.
o If you elect the optional benefit -- a charge for the optional baseBUILDER
benefit.
o At the time annuity payments are to begin - charges for state premium and
other taxes. An annuity administrative fee may also apply.
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
Mortality and expense risks charge
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the guaranteed
minimum death benefit. The daily charge is equivalent to an annual rate of
1.10% of the net assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, 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 contract, 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 contract. The
expense risk we assume is the risk that it will cost us more to issue and
administer the contracts than we expect.
Administrative charge
We deduct a daily charge from the net assets in each variable investment option
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to
increase this charge to an annual rate of 0.35%.
Annual administrative charge (Flexible Premium IRA and Flexible Premium Roth
IRA contracts only)
Under Flexible Premium IRA and Flexible Premium Roth IRA contracts, we deduct
an administrative charge from your account value on each contract date
anniversary. We deduct the charge if your account value on the last business
day of the contract year, before the deduction of any other charges, is less
than $25,000. If your account value on such date is $25,000 or more, this
charge will equal zero. During the first two contract years, the charge is
equal to $30 or, if less, 2% of your account value. The charge is $30 for
contract years three and later.
We will deduct this charge from your value in the variable investment options
on a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. If you surrender your
contract during the contract year we will deduct a pro rata portion of the
charge.
Withdrawal charge
A withdrawal charge applies in two circumstances: (1) if you make one or more
withdrawals during a contract
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40 Charges and expenses
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year that, in total, exceed the 15% free withdrawal amount, described below, or
(2) if you surrender your contract to receive its cash value.
The withdrawal charge equals a percentage of the contributions withdrawn. The
percentage that applies depends on how long each contribution has been invested
in the contract. We determine the withdrawal charge separately for each
contribution according to the following table:
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CONTRACT YEAR
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1 2 3 4 5 6 7 8+
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Percentage of
contribution 7% 6% 5% 4% 3% 2% 1% 0%
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For purposes of calculating the withdrawal charge, we treat the contract year
in which we receive a contribution as "contract year 1." Amounts withdrawn up
to the free withdrawal amount are not considered withdrawal of any
contribution. We also treat contributions that have been invested the longest
as being withdrawn first. We treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge. However, federal income tax
rules treat earnings under your contract as withdrawn first. See "Tax
information."
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the withdrawal charge from your account
value. Any amount deducted to pay a withdrawal charge is also subject to a
withdrawal charge. We deduct the charge in proportion to the amount of the
withdrawal subtracted from each investment option. The withdrawal charge helps
cover our sales expenses.
The withdrawal charge does not apply in the circumstances described below.
15% free withdrawal amount. Each contract year you can withdraw up to 15% of
your account value without paying a withdrawal charge. The 15% free withdrawal
amount is determined using your account value on the most recent contract date
anniversary, minus any other withdrawals made during the contract year. The 15%
free withdrawal amount does not apply if you surrender your contract.
Note the following special rule for NQ contracts issued to a charitable
remainder trust, the free withdrawal amount will equal the greater of: (1) the
current account value, less contributions that have not been withdrawn
(earnings in the contract), and (2) the 15% free withdrawal amount defined
above.
Minimum distributions. The withdrawal charge does not apply to withdrawals
taken under our minimum distribution withdrawal option. However, those
withdrawals are counted towards the 15% free withdrawal amount if you also make
a lump sum withdrawal in any contract year.
Disability, terminal illness or confinement to nursing home. The withdrawal
charge also does not apply if:
o The annuitant has qualified to receive Social Security disability benefits
as certified by the Social Security Administration; or
o We receive proof satisfactory to us (including certification by a licensed
physician) that the annuitant's life expectancy is six months or less; or
o The annuitant has been confined to a nursing home for more than 90 days (or
such other period, as required in your state) as verified by a licensed
physician. A nursing home for this purpose means one that is (a) approved by
Medicare as a provider of skilled nursing care service, or (b) licensed as a
skilled nursing home by the state or territory in which it is located (it
must be within the United States, Puerto Rico, or U.S. Virgin Islands) and
meets all of the following:
- its main function is to provide skilled, intermediate, or custodial
nursing care;
- it provides continuous room and board to three or more persons;
- it is supervised by a registered nurse or licensed practical nurse;
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Charges and expenses 41
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- it keeps daily medical records of each patient;
- it controls and records all medications dispensed; and
- its primary service is other than to provide housing for residents.
We reserve the right to impose a withdrawal charge, in accordance with your
contract and applicable state law, if the disability is caused by a preexisting
condition or a condition that began within 12 months of the contract date. Some
states may not permit us to waive the withdrawal charge in the above
circumstances, or may limit the circumstances for which the withdrawal charge
may be waived. Your registered representative can provide more information or
you may contact our Processing Office.
baseBUILDER benefits charge
If you elect the baseBUILDER combined guaranteed minimum income benefit and
guaranteed minimum death benefit, we deduct a charge annually from your account
value on each contract date anniversary. The charge is equal to 0.30% of the
benefit base in effect on the contract date anniversary.
We will deduct this charge from your value in the variable investment options
on a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. A market value
adjustment may apply.
Charges for state premium and other applicable taxes
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout. 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).
Annuity administrative fee
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges,
please refer to the prospectuses for The Hudson River Trust and EQ Advisors
Trust following this 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 also may change the guaranteed minimum income
benefit and the guaranteed minimum death benefit, or offer variable investment
options that invest in shares of The Hudson River Trust or EQ Advisors Trust
that 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
IRA contracts. Sponsored arrangements include those in which an employer allows
us to sell contracts 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
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42 Charges and expenses
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charges, a group or sponsored arrangement must meet certain requirements, such
as requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy contracts or that have been in
existence less than six months will not qualify for reduced charges.
We also may establish different rates to maturity for the fixed maturity
options under different classes of contracts for group or sponsored
arrangements.
We will make these and any similar reductions according to our rules in effect
when we approve a contract 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 federal income tax rules,
ERISA, or both. We make no representations with regard to the impact of these
and other applicable laws on such programs. We recommend that employers,
trustees, and others purchasing or making contracts available for purchase
under such programs seek the advice of their own legal and benefits advisers.
OTHER DISTRIBUTION ARRANGEMENTS
We may reduce or eliminate charges when sales are made in a manner that result
in savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and who receive no
commission or reduced commissions in connection with the sale of the contracts.
We will not permit a reduction or elimination of charges where it would be
unfairly discriminatory.
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Payment of death benefit 43
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Payment of death benefit
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YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for the change is signed. Under jointly owned contracts, the
surviving owner is considered the beneficiary, and will take the place of any
other beneficiary. You may be limited as to the beneficiary you can designate
in a Rollover TSA contract. In a QP contract, the beneficiary must be the
trustee.
The death benefit is equal to your account value, or, if greater, the
guaranteed minimum death benefit. The guaranteed minimum death benefit is part
of your contract, whether you select the combined baseBUILDER benefit or not.
We determine the amount of the death benefit as of the date we receive
satisfactory proof of the annuitant's death and any required instructions for
the method of payment. Under Rollover TSA contracts we will deduct the amount
of any outstanding loan plus accrued interest from the amount of the death
benefit.
Effect of the annuitant's death
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you
cannot have a successor owner/annuitant.
For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a
surviving spouse may be able to have limited ownership.
When an NQ contract owner dies before the annuitant
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the person named to receive the death benefit upon the annuitant's death
to be the successor owner, you should name a successor owner. You may name a
different person that will become the successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes
the sole contract owner. This person will be considered the "beneficiary" for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a
joint ownership situation, the surviving spouse of the first owner to die) is
the successor owner for this purpose, the entire interest in the contract must
be distributed under the following rules:
o The cash value of the contract 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).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new owner's
life expectancy). Payments must begin no later than December 31st following
the calendar year of the non-annuitant owner's death. Unless this
alternative is elected, we will pay any cash value on December 31st of the
fifth calendar year following the year of your death (or the death of the
first owner to die).
o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long as
the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have
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44 Payment of death benefit
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not chosen an annuity payout option as of the time of the annuitant's death,
the beneficiary will receive the death benefit in a single sum. However,
subject to any exceptions in the contract, our rules and any applicable
requirements under federal income tax rules, the beneficiary may elect to apply
the death benefit to one or more annuity payout options we offer at the time.
See "Choosing your annuity payout options" earlier in this prospectus. Please
note that if you are both the contract owner and the annuitant, you may elect
only a life annuity or an annuity that does not extend beyond the life
expectancy of the beneficiary.
Successor owner and annuitant
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current guaranteed minimum death benefit, if it is higher than the
account value. In determining whether the guaranteed minimum death benefit will
continue to grow, we will use your surviving spouse's age (as of the contract
date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA
CONTRACTS
Upon your death under a Rollover IRA or Flexible Premium IRA contract, a
non-spouse beneficiary may generally elect to keep the contract in your name
and receive distributions under the contract instead of the death benefit being
paid in a single sum.
If you die AFTER the "required beginning date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract;
and
(b) the pattern of minimum distribution withdrawals you chose was based in
part on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the "required beginning date" (and therefore you were not
taking minimum distribution withdrawals under the contract), the beneficiary
may begin taking minimum distribution withdrawals under the contract. We will
increase the account value to equal the death benefit if the death benefit is
greater than the account value. That amount will be used to provide the
withdrawals. These withdrawals will begin by December 31st of the calendar year
following your death and will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used.
The designated beneficiary must be a natural person and of legal age at the
time of election. The beneficiary must elect this option within 30 days
following the date we receive proof of your death.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the guaranteed minimum income benefit and the death benefit
(including the guaranteed minimum death benefit) provisions will no longer be
in effect. Although the only withdrawals that will be permitted are minimum
distribution withdrawals, the beneficiary may choose at any time to withdraw
all of the account value and no withdrawal charges will apply.
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Tax information 45
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Tax information
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator contracts owned by United States
taxpayers. The tax rules can differ, depending on the type of contract, whether
NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Flexible Premium
Roth IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each
type of contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state
income and other state taxes, federal income tax and withholding rules for
non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the
contract, rights under the contract, or payments under the contract may be
subject to gift or estate taxes. You should not rely only on this document, but
should consult your tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides
tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover
TSA), you should do so for the contract's features and benefits other than tax
deferral. In such situations, the tax deferral of the contract does not provide
additional benefits.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TRANSFERS AMONG INVESTMENT OPTIONS
You can make transfers among investment options inside the contract without
triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
Contributions
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
Contract earnings
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
o if a contract fails investment diversification requirements as specified in
federal income tax rules (these rules are based on or are similar to those
specified for mutual funds under the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that we issue to you during the
same calendar year are linked together and treated as one contract for
calculating the taxable amount of any distribution from any of those contracts.
Annuity payments
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your "investment in the contract." Generally, your investment in the contract
equals the contributions you made, less any amounts you previously withdrew
that were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount of the payment. For variable annuity payments, your
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investment in the contract divided by the number of expected payments is your
tax-free portion of each payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any
unrecovered investment in the contract.
Payments made before annuity payments begin
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the
contract. If you withdraw an amount which is more than the earnings in the
contract as of the date of the withdrawal, the balance of the distribution is
treated as a return of your investment in the contract and is not taxable.
Contracts purchased through exchanges
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator NQ contract (if you are using a life insurance or
endowment contract the owner and the insured must be the same on both sides
of the exchange transaction).
The tax basis of the source contract carries over to the Equitable Accumulator
NQ contract.
Surrenders
If you surrender or cancel the contract, the distribution is taxable as
ordinary income (not capital gain) to the extent it exceeds your investment in
the contract.
Death benefit payments made to a beneficiary after your death
For the rules applicable to death benefits, see "Payment of Death Benefit" and
"When an NQ contract owner dies before the annuitant" earlier in this
prospectus. The tax treatment of a death benefit taken as a single sum is
generally the same as the tax treatment of a withdrawal from or surrender of
your contract. The tax treatment of a death benefit taken as annuity payments
is generally the same as the tax treatment of annuity payments under your
contract.
Early distribution penalty tax
If you take distributions before you are age 59 1/2 a penalty tax of 10% of
the taxable portion of your distribution applies in addition to the income tax.
The extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN
PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract 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 from the
contract for each tax return. Puerto Rico generally provides a credit against
Puerto Rico tax for U.S. tax paid. Depending on your
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)
General
"IRA" stands for individual retirement arrangement. There are two basic types
of such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds
the assets for the benefit of the IRA owner. The assets can include mutual
funds and certificates of deposit. In an individual retirement annuity, an
insurance company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "Traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required
to combine IRA values or contributions for tax purposes. For further
information about individual retirement arrangements, you can read Internal
Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)").
This publication is usually updated annually, and can be obtained from any IRS
district office or the IRS website (http://www.irs.ustreas.gov).
The Equitable Accumulator IRA contract is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Internal Revenue Code. You may
purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we
offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth
IRA available are the Roth Conversion IRA and Flexible Premium Roth IRA. This
prospectus contains the information that the IRS requires you to have before
you purchase an IRA. This section of the prospectus covers some of the special
tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs
are not discussed in this prospectus because they are not available in
individual retirement annuity form.
The Equitable Accumulator IRA contract has been approved by the IRS as to form
for use as a traditional IRA. We expect to submit the Roth IRA version for
formal IRS approval in 1999. This IRS approval is a determination only as to
the form of the annuity. It does not represent a determination of the merits of
the annuity as an investment. The IRS approval does not address every feature
possibly available under the Equitable Accumulator IRA contract.
Cancellation
You can cancel an Equitable Accumulator IRA contract by following the
directions under "Your right to cancel within a certain number of days" earlier
in the prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA
contract issued as a result of a full conversion of an Equitable Accumulator
Rollover IRA or Flexible Premium IRA contract by following the instructions in
the request for full conversion form. The form is available from our Processing
Office or your registered representative. If you cancel an IRA contract, we may
have to withhold tax, and we must report the transaction to the IRS. A contract
cancellation could have an unfavorable tax impact.
Traditional individual retirement annuities (traditional IRAs)
Contributions to traditional IRAs
Individuals may make three different types of contributions to a traditional
IRA:
o regular contributions out of earned income or compensation; or
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o tax-free "rollover" contributions; or
o direct custodian-to-custodian transfers from other traditional IRAs ("direct
transfers").
Regular traditional IRA, direct transfer, and rollover contributions may be
made to a Flexible Premium IRA contract. We only permit direct transfer and
rollover contributions under a Rollover IRA contract. See "Rollovers and
transfers" below.
Regular contributions to traditional IRAs
Limits on contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. When your earnings are below $2,000,
your earned income or compensation for the year is the most you can contribute.
This $2,000 limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into a traditional IRA. You cannot make
regular traditional IRA contributions for the tax year in which you reach age
70 1/2 or any tax year after that.
Special rules for spouses
If you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make 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 earned income is 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 IRAs. Each spouse
owns his or her traditional IRAs and Roth IRAs even if the other spouse funded
the contributions. A working spouse age 70 1/2 or over can contribute up to
the lesser of $2,000 or 100% of "earned income" to a traditional IRA for a
nonworking spouse until the year in which the nonworking spouse reaches age
70 1/2.
Deductibility of contributions
The amount of traditional IRA contributions that you can deduct for a tax year
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan, as defined under special federal income tax rules. Your Form
W-2 will indicate whether or not you are covered by such a retirement plan.
IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you
can make fully deductible contributions to your traditional IRAs for each tax
year up to $2,000 or, if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT
RANGE, you can make fully deductible contributions to your traditional IRAs.
For each tax year, your fully deductible contribution can be up to $2,000 or,
if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE
CONTRIBUTIONS to your traditional IRAs.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct
any of your regular contributions to your traditional IRAs.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for IRA contributions phases out with AGI between
$31,000 and $41,000 in 1999. This range will increase every year until 2005
when the range is $50,000-$60,000.
If you are married and file a joint return, and you are covered by a retirement
plan during any part of the taxable year, the deduction for traditional IRA
contributions phases out with
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AGI between $51,000 and $61,000 in 1999. This range will increase every year
until 2007 when the range is $80,000-$100,000.
Married individuals filing separately and living apart at all times are not
considered 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 in 1999, you determine
AGI and subtract $31,000 if you are single, or $51,000 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:
times $2,000 (or earned Equals the adjusted
($10,000-excess AGI)
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divided by $10,000 x income, if less) = deductible
contribution
limit
Nondeductible regular contributions
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 combined deductible and
nondeductible contributions to your traditional IRA (or the nonworking spouse's
traditional IRA) may not, however, exceed the maximum $2,000 per person limit.
See "Excess contributions" below. You must keep your own records of deductible
and nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Withdrawals, payments and
transfer of funds out of traditional IRAs" 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 distributions 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.
When you can make regular contributions
If you file your tax returns on a calendar year basis like most taxpayers, you
have until the April 15 return filing deadline (without extensions) of the
following calendar year to make your regular traditional IRA contributions for
a tax year.
Excess contributions
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000; or
o regular contributions of more than earned income for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age
70 1/2; or
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income.
It is also not subject to the 10% additional penalty tax on early
distributions, discussed below under "Early distribution penalty tax." You do
have to withdraw any earnings that are attributed to the excess contribution.
The withdrawn earnings would be included in your gross income and could be
subject to the 10% penalty tax.
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Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
Rollovers and transfers
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
Any amount contributed to a traditional IRA after you reach 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.
Rollovers from qualified plans or TSAs
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll it
over to a traditional IRA within 60 days after the date you receive the
funds. The distribution from your qualified plan or TSA will be net of 20%
mandatory federal income tax withholding. If you want, you can replace the
withheld funds yourself and roll over the full amount.
o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to
send the distribution directly to your traditional IRA issuer. Direct
rollovers are not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o "required minimum distributions" after age 70 1/2 or separation from
service; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary; or
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
Rollovers from traditional IRAs to traditional IRAs
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently
than once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases,
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traditional IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Withdrawals, payments and transfers of funds out of traditional IRAs
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a traditional IRA at any time.
You do not need to wait for a special event like retirement.
Taxation of payments
Earnings in traditional IRAs are not subject to federal income tax until you or
your beneficiary receives them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any traditional IRA
(it does not have to be to this particular traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. At the end of any year in
which you have received a distribution from any traditional IRA, you calculate
the ratio of your total nondeductible traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
traditional IRAs you own at the end of the year plus all traditional IRA
distributions made during the year. Multiply this by all distributions from the
traditional IRA during the year to determine the nontaxable portion of each
distribution.
In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA that
accepts rollover contributions. To get this "conduit" traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must have
been a rollover contribution from a qualified plan, and
o 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to
roll over these eligible rollover distribution contributions and earnings to
another qualified plan or TSA at a future date. The Rollover IRA contract can
be used as a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
Required minimum distributions
Lifetime required minimum distributions
You must start taking annual distributions from your traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the
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calendar year you actually reach age 70 1/2, or to delay taking it until the
first three-month period in the next calendar year (January 1 - April 1).
Distributions must start no later than your "required beginning date," which is
April 1st of the calendar year after 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 each year.
How you can calculate required minimum distributions
There are two approaches to taking required minimum distributions -
"account-based" or "annuity-based."
Account-based method. If you choose an "account-based" method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by
a life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of
you and another individual. You can decide to "recalculate" your life
expectancy every year by using your current life expectancy factor. You can
decide instead to use the "term certain" method, where you reduce your life
expectancy by one every year after the initial year. If your spouse is your
designated beneficiary for the purpose of calculating annual account-based
required minimum distributions, you can also annually "recalculate" your
spouse's life expectancy if you want. If you choose someone who is not your
spouse as your designated beneficiary for the purpose of calculating annual
account-based required minimum distributions, you have to use the "term
certain" method of calculating that person's life expectancy. If you pick a
nonspouse designated beneficiary, you may also have to do another special
calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). 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.
Annuity-based method. If you choose an "annuity-based" method, you do not have
to do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your traditional IRA based on
the method you choose?
No, unless you affirmatively select an annuity payout option or an
account-based withdrawal option such as our minimum distribution withdrawal
option. Because the options we offer do not cover every option permitted under
federal income tax rules, you may prefer to do your own required minimum
distribution calculations for one or more of your traditional IRAs.
What if you take more than you need to for any year?
The required minimum distribution amount for your traditional IRAs is
calculated on a year-by-year basis. There are no carry-back or carry-forward
provisions. Also, you cannot apply required minimum distribution amounts you
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take from your qualified plans to the amounts you have to take from your
traditional IRAs and vice-versa. However, the IRS will let you calculate the
required minimum distribution for each traditional IRA that you maintain, using
the method that you picked for that particular IRA. You can add these required
minimum distribution amount calculations together. As long as the total amount
you take out every year satisfies your overall traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50%
penalty tax on the shortfall (required amount for traditional IRAs less amount
actually taken). It is your responsibility to meet the required minimum
distribution rules. We will remind you when our records show that your age
70 1/2 is approaching. If you do not select a method with us, we will assume
you are taking your required minimum distribution from another traditional IRA
that you own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values
in the contract at least as rapidly as under the distribution method before
your death. In some circumstances, your surviving spouse may elect to become
the owner of the traditional IRA and halt distributions until he or she reaches
age 70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract within five years after your death. Payments to a
designated beneficiary over the beneficiary's life or over a period certain
that does not extend beyond the beneficiary's life expectancy are also
permitted, if these payments start within one year of your death. A surviving
spouse beneficiary can also (a) delay starting any payments until you would
have reached age 70 1/2 or (b) roll over your traditional IRA into his or her
own traditional IRA.
Successor annuitant and owner
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
Payments to a beneficiary after your death
IRA death benefits are taxed the same as IRA distributions.
Borrowing and loans are prohibited transactions
You cannot get loans from a traditional IRA. You cannot use a traditional IRA
as collateral for a loan or other obligation. If you borrow against your IRA or
use it as collateral, its tax-favored status will be lost as of the first day
of the tax year in which this prohibited event occurs. If this happens, you
must include the value of the traditional IRA in your federal gross income.
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.
Early distribution penalty tax
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition); or
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o used to pay certain higher education expenses (special federal income tax
definition); or
o in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy), or over the joint lives of you and
your beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10%
penalty tax, they are taxable as discussed in "Withdrawals, payments and
transfers of funds out of traditional IRAs" above. Once substantially equal
withdrawals or Income Manager annuity payments begin, the distributions should
not be stopped or changed until the later of your reaching 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 contract as changing
your pattern of substantially equal withdrawals or Income Manager payments for
purposes of determining whether the penalty applies.
Roth individual retirement annuities (Roth IRAs)
This section of the prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth
individual retirement annuity under Sections 408A and 408(b) of the Internal
Revenue Code.
Contributions to Roth IRAs
Individuals may make four different types of contributions to a Roth IRA:
o regular after-tax contributions out of earnings; or
o taxable "rollover" contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers").
Regular after-tax, direct transfer, and rollover contributions may be made to a
Flexible Premium Roth IRA contract. We only permit direct transfer and rollover
contributions under the Roth Conversion IRA contract. See "Rollovers and direct
transfers" below. If you use the forms we require, we will also accept
traditional IRA funds which are subsequently recharacterized as Roth IRA funds
following special federal income tax rules.
Regular contributions to Roth IRAs
Limits on regular contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. This $2,000 limit does not apply to
rollover contributions or direct custodian-to-custodian transfers into a Roth
IRA. Any contributions to Roth IRAs reduce your ability to contribute to
traditional IRAs and vice versa. When your earnings are below $2,000, your
earned income or compensation for the year is the most you can contribute. If
you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make to Roth IRAs and traditional IRAs. See the discussion
above under traditional IRAs.
With a Roth IRA, you can make regular contributions when you reach 70 1/2, as
long as you have sufficient earnings. But, you cannot make contributions for
any year that:
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o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is over $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is over $110,000.
However, you can make regular Roth IRA contributions in reduced amounts when:
o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is between $150,000 and $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is between $95,000 and $110,000.
If you are married and filing separately and your adjusted gross income is
between $0 and $10,000 the amount of regular contribution you are permitted to
make is phased out. If your adjusted gross income is more than $10,000 you
cannot make a regular Roth IRA contribution.
When you can make contributions
Same as traditional IRAs.
Deductibility of contributions
Roth IRA contributions are not tax deductible.
Rollovers and direct transfers
What is the difference between rollover and direct transfer transactions?
You may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under
Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of
the Internal Revenue Code. You may make direct transfer contributions to a Roth
IRA only from another Roth IRA.
The difference between a rollover transaction and a direct transfer transaction
is the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. You can make direct transfer
transactions only between identical plan types (for example, Roth IRA to Roth
IRA). You can also make rollover transactions between identical plan types.
However, you can only use rollover transactions between different plan types
(for example, traditional IRA to Roth IRA).
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover
transactions only once in any 12-month period for the same funds.
Trustee-to-trustee or custodian-to-custodian direct transfers can be made more
frequently than once a year. Also, if you send us the rollover contribution to
apply it to a Roth IRA, you must do so within 60 days after you receive the
proceeds from the original IRA to get rollover treatment.
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. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Conversion contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) 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 considered to
have received) the traditional IRA proceeds. Unlike a rollover from
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a traditional IRA to another traditional IRA, the conversion rollover
transaction is not tax-free. Instead, the distribution from the traditional IRA
is generally fully taxable. For this reason, we are required to withhold 10%
federal income tax from the amount converted unless you elect out of such
withholding. (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-free.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age
59 1/2.
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.
Withdrawals, payments and transfers of funds out of Roth IRAs
No federal income tax law 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.
Distributions from Roth IRAs
Distributions include withdrawals from your contract, surrender of your
contract and annuity payments from your contract. Death benefits are also
distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o Return of excess contributions or amounts recharacterized to a traditional
IRA.
Qualified distributions from Roth IRAs
Qualified distributions from Roth IRAs made because of one of the following
four qualifying events or reasons are not includable in income:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-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). It is not possible to
have a tax-free qualified distribution before the year 2003 because of the
five-year aging requirement.
Nonqualified distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are distributions that do not meet
the qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all
of your Roth IRAs is taxable. You have to reduce the amount of contributions to
all of your Roth IRAs to reflect any previous tax-free recoveries.
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You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records pertaining to such
contributions and distributions until your interests in all Roth IRAs are
distributed.
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.
Required minimum distributions at death
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
Payments to a beneficiary after your death
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
Borrowing and loans are prohibited transactions
Same as traditional IRA.
Excess contributions
Same as traditional IRA, except that regular contributions made after age
70 1/2 are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions 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).
You can withdraw or recharacterize any contribution to a Roth IRA before the
due date (including extensions) for filing your federal income tax return for
the tax year. If you do this, you must also withdraw or recharacterize any
earnings attributable to the contribution.
Early distribution penalty tax
Same as traditional IRA.
For Roth IRAs, special penalty rules may apply to amounts withdrawn
attributable to 1998 conversion rollovers.
SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS
Under QP contracts your plan administrator or trustee notifies you as to tax
consequences. See Appendix II.
TAX SHELTERED ANNUITY CONTRACTS (TSAS)
General
This section of the prospectus covers some of the special tax rules that apply
to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If
the rules are the same as those that apply to another kind of contract, for
example, traditional IRAs, we will refer you to the same topic under
"traditional IRAs."
Contributions to TSAs
There are two ways you can make contributions to this Equitable Accumulator
Rollover TSA contract:
o a rollover from another TSA contract or arrangement that meets the
requirements of Section 403(b) of the Internal Revenue Code, or
o a full or partial direct transfer of assets ("direct transfer") from another
contract or arrangement that meets the requirements of Section 403(b) of the
Internal Revenue Code by means of IRS Revenue Ruling 90-24.
With appropriate written documentation satisfactory to us, we will accept
rollover contributions from "conduit IRAs" for TSA funds.
If you make a direct transfer, you must fill out our transfer form.
Employer-remitted contributions
The Equitable Accumulator Rollover TSA contract does not accept
employer-remitted contributions. However, we provide the following discussion
as part of our description of
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restrictions on the distribution of funds directly transferred, which include
employer-remitted contributions to other TSAs.
Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
Rollover or direct transfer contributions
You may make rollover contributions to your Equitable Accumulator Rollover TSA
contract from TSAs under Section 403(b) of the Internal Revenue Code.
Generally, you may make a rollover contribution to a TSA when you have a
distributable event from an existing TSA as a result of your:
o termination of employment with the employer who provided the TSA funds; or
o reaching age 59 1/2 even if you are still employed; or
o disability (special federal income tax definition).
A transfer occurs when changing the funding vehicle, even if there is no
distributable event. Under a direct transfer, you do not receive a
distribution. We accept direct transfers of TSA funds under Revenue Ruling
90-24 only if:
o you give us acceptable written documentation as to the source of the funds,
and
o the Equitable Accumulator contract receiving the funds has provisions at
least as restrictive as the source contract.
Before you transfer funds to an Equitable Accumulator Rollover TSA contract,
you may have to obtain your employer's authorization or demonstrate that you do
not need employer authorization. For example, the transferring TSA may be
subject to Title I of ERISA, if the employer makes matching contributions to
salary reduction contributions made by employees. In that case, the employer
must continue to approve distributions from the plan or contract.
Your contribution to the Equitable Accumulator Rollover TSA must be net of the
required minimum distribution for the tax year in which we issue the contract
if:
o you are or will be at least age 70 1/2 in the current calendar year, and
o you have separated from service with the employer who provided the funds to
purchase the TSA you are transferring or rolling over to the Equitable
Accumulator Rollover TSA.
This rule applies regardless of whether the source of funds is a:
o rollover by check of the proceeds from another TSA; or
o direct rollover from another TSA; or
o direct transfer under Revenue Ruling 90-24 from another TSA.
Further, you must use the same elections regarding recalculation of your life
expectancy (and if applicable, your spouse's life expectancy) if you have
already begun to receive required minimum distributions from or with respect to
the TSA from which you are making your contribution to the Equitable
Accumulator Rollover TSA. You must also elect or have elected a minimum
distribution calculation method requiring recalculation of your life expectancy
(and if applicable, your spouse's life expectancy) if you elect an annuity
payout for the funds in this contract subsequent to this year.
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Distributions from TSAs
General
Depending on the terms of the employer plan and your employment status, you may
have to get your employer's consent to take a loan or withdrawal. Your employer
will tell us this when you establish the TSA through a direct transfer.
Withdrawal restrictions
If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts
transferred to this contract and any future earnings on the amount transferred
as not eligible for withdrawal until one of the following events happens:
o you are separated from service with the employer who provided the funds to
purchase the TSA you are transferring to the Equitable Accumulator Rollover
TSA;
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o you take a "hardship" withdrawal (special federal income tax definition).
If any portion of the funds directly transferred to your TSA contract is
attributable to amounts that you invested in a 403(b)(7) custodial account,
such amounts, including earnings, are subject to withdrawal restrictions. With
respect to the portion of the funds that were never invested in a 403(b)(7)
custodial account, these restrictions apply to the salary reduction (elective
deferral) contributions to a TSA annuity contract you made and any earnings on
them. These restrictions do not apply to the amount directly transferred to
your TSA contract that represents your December 31, 1988 account balance
attributable to salary reduction contributions to a TSA annuity contract and
earnings. To take advantage of this grandfathering you must properly notify us
in writing at our Processing Office of your December 31, 1988 account balance
if you have qualifying amounts transferred to your TSA contract.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur:
(1) the requirements for minimum distribution (discussed under "Required
minimum distributions" below) are met; or
(2) death; or
(3) retirement; or
(4) termination of employment in all Texas public institutions of higher
education.
For you to make a withdrawal, we must receive a properly completed written
acknowledgement from the employer. If a distributable event occurs before you
are vested, we will refund to the employer any amounts provided by an
employer's first-year matching contribution. We reserve the right to change
these provisions without your consent, but only to the extent necessary to
maintain compliance with applicable law. Loans are not permitted under Texas
Optional Retirement Programs.
Tax treatment of distributions
Amounts held under TSAs are generally not subject to federal income tax until
benefits are distributed. Distributions include withdrawals from your TSA
contract and annuity payments from your TSA contract. Death benefits paid to a
beneficiary are also taxable distributions. Unless an exception applies,
amounts distributed from TSAs are includable in gross income as ordinary
income. Distributions from TSAs may be subject to 20% federal income tax
withholding. See "Federal and state income tax withholding and information
reporting" below. In addition, TSA distributions may be subject to additional
tax penalties.
If you have made after-tax contributions, you will have a tax basis in your TSA
contract, which will be recovered tax-free. Since we do not track your
investment in the contract, if any, it is your responsibility to determine how
much of the distribution is taxable.
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Distributions before annuity payments begin. On a total surrender, the amount
received in excess of the investment in the contract is taxable. We will report
the total amount of the distribution. The amount of any partial distribution
from a TSA prior to the annuity starting date is generally taxable, except to
the extent that the distribution is treated as a withdrawal of after-tax
contributions. Distributions are normally treated as pro rata withdrawals of
after-tax contributions and earnings on those contributions.
Annuity payments. If you elect an annuity payout option, you will recover any
investment in the contract as each payment is received by dividing the
investment in the contract by an expected return determined under an IRS table
prescribed for qualified annuities. The amount of each payment not excluded
from income under this exclusion ratio is fully taxable. The full amount of the
payments received after your investment in the contract is recovered is fully
taxable. If you (and your beneficiary under a joint and survivor annuity) die
before recovering the full investment in the contract, a deduction is allowed
on your (or your beneficiary's) final tax return.
Payments to a beneficiary after your death
Death benefit distributions from a TSA generally receive the same tax treatment
as distributions during your lifetime. In some instances, distributions from a
TSA made to your surviving spouse may be rolled over to a traditional IRA.
Loans from TSAs
You may take loans from a TSA unless restricted by the employer (for example,
under an employer plan subject to ERISA). If you cannot take a loan, or cannot
take a loan without approval from the employer who provided the funds, we will
have this information in our records based on what you and the employer who
provided the TSA funds told us when you purchased your contract.
Loans are generally not treated as a taxable distribution. If the amount of the
loan exceeds permissible limits under federal income tax rules when made, the
amount of the excess is treated (solely for tax purposes) as a taxable
distribution. Additionally, if the loan is not repaid at least quarterly,
amortizing (paying down) interest and principal, the amount not repaid when due
will be treated as a taxable distribution. Under Proposed Treasury Regulations
the entire unpaid balance of the loan is includable in income in the year of
the default.
TSA loans are subject to federal income tax limits and may also be subject to
the limits of the plan from which the funds came. Federal income tax rule
requirements apply even if the plan is not subject to ERISA. For example, loans
offered by TSAs are subject to the following conditions:
o The amount of a loan to a participant, when combined with all other loans to
the participant from all qualified plans of the employer, cannot exceed the
lesser of (1) the greater of $10,000 or 50% of the participant's
nonforfeitable accrued benefits and (2) $50,000 reduced by the excess (if
any) of the highest outstanding loan balance over the previous twelve months
over the outstanding loan balance of plan loans on the date the loan was
made.
o In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence. Equitable Accumulator
Rollover TSA contracts have a term limit of 10 years for loans used to
acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level payments
over the term of the loan, with payments being made at least quarterly.
The amount borrowed and not repaid may be treated as a distribution if:
o the loan does not qualify under the conditions above,
o the participant fails to repay the interest or principal when due, or
o in some instances, the participant separates from service with the employer
who provided the funds or the plan is terminated.
In this case, the participant may have to include the unpaid amount due as
ordinary income. In addition, the 10% early
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distribution penalty tax may apply. The amount of the unpaid loan balance is
reported to the IRS on Form 1099-R as a distribution.
Tax-deferred rollovers and direct transfers
You may roll over any "eligible rollover distribution" from a TSA into another
eligible retirement plan, either directly or within 60 days of your receiving
the distribution. To the extent rolled over, a distribution remains
tax-deferred.
You may roll over a distribution from a TSA to another TSA or to a traditional
IRA. A spousal beneficiary may roll over death benefits only to a traditional
IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under federal income tax rules. Distributions that you
cannot roll over generally include periodic payments for life or for a period
of 10 years or more, hardship withdrawals, and required minimum distributions
under federal income tax rules.
Direct transfers of TSA funds from one TSA to another under Revenue Ruling
90-24 are not distributions.
Required minimum distributions
Same as traditional IRA with these differences:
When you have to take the first required minimum distribution
The minimum distribution rules force TSA participants to start calculating and
taking annual distributions from their TSAs by a required date. Generally, you
must take the first required minimum distribution for the calendar year in
which you turn age 70 1/2. You may be able to delay the start of required
minimum distributions for all or part of your account balance until after age
70 1/2, as follows:
o For TSA participants who have not retired from service with the employer who
provided the funds for the TSA by the calendar year the participant turns
age 70 1/2, the required beginning date for minimum distributions is
extended to April 1 following the calendar year of retirement.
o TSA plan participants may also delay the start of required minimum
distributions to age 75 of the portion of their account value attributable
to their December 31, 1986 TSA account balance, even if retired at age
70 1/2. We will know whether or not you qualify for this exception
because it will only apply to people who establish their Equitable
Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfers. If you
do not give us the amount of your December 31, 1986 account balance that
is being transferred to the Equitable Accumulator Rollover TSA on the form
used to establish the TSA, you do not qualify.
Spousal consent rules
This will only apply to you if you establish your Equitable Accumulator
Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell
us on the form used to establish the TSA whether or not you need to get spousal
consent for loans, withdrawals, or other distributions. If you do, you will
need such consent if you are married when you request a withdrawal under the
TSA contract. In addition, unless you elect otherwise with the written consent
of your spouse, the retirement benefits payable under the plan must be paid in
the form of a qualified joint and survivor annuity. A qualified joint and
survivor annuity is payable for the life of the annuitant with a survivor
annuity for the life of the spouse in an amount not less than one-half of the
amount payable to the annuitant during his or her lifetime. In addition, if you
are married, the beneficiary must be your spouse, unless your spouse consents
in writing to the designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments
will be made to your surviving spouse in the form of a life annuity unless at
the time of your death a contrary election was in effect. However, your
surviving spouse may elect, before payments begin, to receive payments in any
form permitted under the terms of the TSA contract and the plan of the employer
who provided the funds for the TSA.
Early distribution penalty tax
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a TSA before you reach age
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59 1/2. This is in addition to any income tax. There are exceptions to the
extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions
made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o to pay for certain extraordinary medical expenses (special federal income
tax definition); or
o if you are separated from service, any form of payout after you are age 55;
or
o only if you are separated from service, a payout in the form of
substantially equal periodic payments made at least annually over your life
(or your life expectancy), or over the joint lives of you and your
beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable.
The rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this
purpose. You cannot elect out of withholding unless you provide us with your
correct Taxpayer Identification Number and a United States residence address.
You cannot elect out of withholding if we are sending the payment out of the
United States.
You should note the following special situations:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of traditional
IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA
and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or in
part.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. We do not discuss these rules
here. Certain states have indicated that state income tax withholding will also
apply to payments from the contracts made to residents. In some states, you may
elect out of state withholding, even if federal withholding applies. 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.
Federal income tax withholding on periodic annuity payments
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective
unless and until you revoke it. You may revoke or change your withholding
election at any time.
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Federal income tax withholding on non-periodic annuity payments (withdrawals)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We apply that rate to the taxable amount
in the case of nonqualified contracts, and to the payment amount in the case of
IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
Mandatory withholding from TSA and qualified plan distributions
Unless you have the distribution go directly to the new plan, eligible rollover
distributions from qualified plans and TSAs are subject to mandatory 20%
withholding. An eligible rollover distribution from a TSA can be rolled over to
another TSA or a traditional IRA. An eligible rollover distribution from a
qualified plan can be rolled over to another qualified plan or traditional IRA.
All distributions from a TSA or qualified plan are eligible rollover
distributions unless they are on the following list of exceptions:
o any after-tax contributions you made to the plan; or
o any distributions which are "required minimum distributions" after age
70 1/2 or separation from service; or
o hardship withdrawals; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and your designated beneficiary; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
A death benefit payment to your surviving spouse, or a qualified domestic
relations order distribution to your current or former spouse, may be a
distribution subject to mandatory 20% withholding.
IMPACT OF TAXES TO EQUITABLE LIFE
The contracts provide that we may charge Separate Account No. 49 for taxes. We
do not now, but may in the future set up reserves for such taxes.
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ABOUT OUR SEPARATE ACCOUNT NO. 49
Each variable investment option is a subaccount of our Separate Account No. 49.
We established Separate Account No. 49 in 1996 under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable annuity contracts, including these
contracts. We are the legal owner of all of the assets in Separate Account No.
49 and may withdraw any amounts that exceed our reserves and other liabilities
with respect to variable investment options under our contracts. The results of
Separate Account No. 49's operations are accounted for without regard to
Equitable Life's other operations.
Separate Account No. 49 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 49.
Each subaccount (variable investment option) within Separate Account No. 49
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors Trust.
We reserve the right subject to compliance with laws that apply:
(1) to add variable investment options to, or to remove variable investment
options from, Separate Account No. 49, or to add other separate accounts;
(2) to combine any two or more variable investment options;
(3) to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment
option to another variable investment option;
(4) to operate Separate Account No. 49 or any variable investment option as a
management investment company under the Investment Company Act of 1940
(in which case, charges and expenses that otherwise would be assessed
against an underlying mutual fund would be assessed against Separate
Account No. 49 or a variable investment option directly);
(5) to deregister Separate Account No. 49 under the Investment Company Act of
1940;
(6) to restrict or eliminate any voting rights as to Separate Account No. 49;
and
(7) to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the
Investment Company Act of 1940. They are classified as "open-end management
investment companies," more commonly called mutual funds. Each trust issues
different shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Board of Trustees
of The Hudson River Trust and EQ Advisors Trust may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their
investment objectives, policies, restrictions, risks, expenses, their Rule
12b-1 Plans relating to their Class IB shares, and other aspects of their
operations, appears in their prospectuses, or in their SAIs which are available
upon request.
Proposed substitution of Portfolios. We are asking the SEC to approve the
substitution of 14 newly created Portfolios of the EQ Advisors Trust for The
Hudson River Trust Portfolios currently available under the variable investment
options (the "Substitution"). The EQ Advisors Trust Portfolios will have
substantially identical investment objectives, strategies, and policies as
those of The Hudson River Trust Portfolios they would replace. The assets of
any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of investment options with similar advisory structures.
You also will have a single EQ Advisors Trust prospectus for all the
Portfolios, rather than the two separate prospectuses you now receive. EQ
Financial Consultants Inc. will be the manager of the new EQ Advisors Trust
Portfolios, and Alliance Capital Management L.P. will continue to provide the
day-to-day advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution transaction.
o The management fees for the new Portfolios will be the same as those for the
corresponding Portfolios of The Hudson River Trust. Certain of the new EQ
Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this
prospectus. It contains more information about the EQ Advisors Trust, including
its management structure, advisory arrangements, and general fees and expenses
that will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval, and again when the
Substitution is complete.
ABOUT OUR FIXED MATURITY OPTIONS
Rates to maturity and price per $100 of maturity value
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of April 1, 1999 and the related
price per $100 of maturity value were as follows:
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FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR APRIL 1, 1999 MATURITY VALUE
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2000 3.25% $97.23
2001 4.04% $92.83
2002 4.33% $88.51
2003 4.46% $84.43
2004 4.52% $80.60
2005 4.67% $76.45
2006 4.77% $72.56
2007 4.79% $69.16
2008 4.87% $65.55
2009 4.97% $61.91
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How we determine the market value adjustment
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
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(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option
(based on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity option.
(d) We determine the present value of the fixed maturity amount payable
at the maturity date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be
positive or negative.
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Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
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If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment
that would have applied if you had withdrawn the entire value in that fixed
maturity option. This percentage is equal to the percentage of the value in the
fixed maturity option that you are withdrawing. Any withdrawal charges that are
deducted from a fixed maturity option will result in a market value adjustment
calculated in the same way. See Appendix III for an example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) would apply,
we will use the rate at the next closest maturity date. If we are no longer
offering new fixed maturity options, the "current rate to maturity" will be
determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
Investments under the fixed maturity options
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. Under New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the contracts are not
chargeable with liabilities from any other business we may conduct. We own the
assets of the separate account, as well as any favorable investment performance
on those assets. You do not participate in the performance of the assets held
in this separate account. We may, subject to state law that applies, transfer
all assets allocated to the separate account to our general account. We
guarantee all benefits relating to your value in the fixed maturity options,
regardless of whether assets supporting fixed maturity options are held in a
separate account or our general account.
We have no specific formula for establishing the rates to maturity for the
fixed maturity options. We expect the rates to be influenced by, but not
necessarily correspond to, among other things, the yields that we can expect to
realize on the separate account's investments from time to time. Our current
plans are to invest 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 fixed maturity
options.
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Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the
contracts, we are not obligated to invest those assets according to any
particular plan except as we may be required to by state insurance laws. We
will not determine the rates to maturity we establish by the performance of the
nonunitized separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options and the account for
special dollar cost averaging, as well as our general obligations.
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
exemptions and exclusionary provisions that apply, interests in the general
account have not been registered under the Securities Act of 1933, nor is the
general account an investment company under the Investment Company Act of 1940.
However, the market value adjustment interests under the contracts are
registered under the Securities Act of 1933.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests). The disclosure with regard to the general account,
however, may be subject to certain provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
Wire transmittals
We accept initial contributions sent by wire to our Processing Office by
agreement with certain broker-dealers. The transmittals must be accompanied by
information we require to allocate your contribution. Wire orders not
accompanied by complete information may be retained as described under "How you
can make your contributions."
Even if we accept the wire order and essential information, a contract
generally will not be issued until we receive and accept a properly completed
application. In certain cases we may issue a contract based on information
forwarded electronically. In these cases, you must sign our Acknowledgement of
Receipt form.
Where we require a signed application, no financial transactions will be
permitted until we receive the signed application and have issued the contract.
Where we require an Acknowledgement of Receipt form, financial transactions are
only permitted if you request them in writing, sign the request and have it
signature guaranteed, until we receive the signed Acknowledgement of Receipt
form.
After your contract has been issued, additional contributions may be
transmitted by wire.
Automatic investment program - for NQ, Flexible Premium IRA, and Flexible
Premium Roth IRA contracts only
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution
into an NQ, Flexible Premium IRA or Flexible Premium Roth IRA contract on a
monthly or quarterly basis. AIP is not available for Rollover IRA, Roth
Conversion IRA, QP or Rollover TSA contracts.
For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300
quarterly. Under Flexible Premium IRA and Flexible Premium Roth IRA contracts,
the minimum amount is $50. AIP additional contributions may be allocated to any
of the variable investment options and available fixed maturity options, but
not the account for special dollar cost averaging. You choose the day of the
month you wish to have your account debited as long as it is not later than the
28th day of the month.
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You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
Business day
Our business day is any day the New York Stock Exchange is open for trading.
Each business day ends at the time trading on the exchange closes (or is
suspended) for the day. We calculate unit values for our variable investment
options as of the end of each business day. This usually is 4:00 p.m., Eastern
Time. Contributions will be applied and any other transaction requests will be
processed when they are received along with all the required information.
o If your contribution, transfer or any other transaction request, containing
all the required information, reaches us on a non-business day or after 4:00
p.m. on a business day, we will use the next business day.
o A loan request under your Rollover TSA contract will be processed on the
first business day of the month following the date on which the properly
completed loan request form is received.
o If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then the
transaction will occur on either the 28th day of the month or the 1st day of
the next month, whichever is the closest business day.
o When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
Contributions and transfers
o Contributions allocated to the variable investment options are invested at
the value next determined after the close of the business day.
o Contributions allocated to a fixed maturity option will receive the rate to
maturity in effect for that fixed maturity option on that business day.
o Initial contributions allocated to the account for special dollar cost
averaging receive the interest rate in effect on that business day. At
certain times, we may offer the opportunity to lock in the interest rate for
an initial contribution to be received under Section 1035 exchanges and
trustee to trustee transfers. Your registered representative can provide
information or you can call our Processing Office.
o Transfers to or from variable investment options will be made at the value
next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the rate to maturity
in effect for that fixed maturity option on the business day of the
transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o The election of trustees.
o The formal approval of independent auditors selected for each trust.
o Any other matters described in the prospectuses for the trusts or requiring
a shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is
taken. If we do not receive instructions in time from all contract owners, we
will vote the shares of a Portfolio for which no instructions have been
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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 a Portfolio in the same
proportions that contract owners vote.
Voting rights of others
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River
Trust 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 contract
owners, we currently do not foresee any disadvantages because of this. The
Hudson River Trust Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that may arise and to determine
what action, if any, should be taken in response. If we believe that a response
to any of those events insufficiently protects our contract owners, we will see
to it that appropriate action is taken.
Separate Account No. 49 voting rights
If actions relating to Separate Account No. 49 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount
of reserves we are holding for that annuity in a variable investment option
divided by the annuity unit value for that option. We will cast votes
attributable to any amounts we have in the variable investment options in the
same proportion as votes cast by contract 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
published 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.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and
services, including those considered to be mission- critical, to be confirmed
as year 2000 compliant, renovated, replaced or the subject of contingency
plans, by June 30, 1999, except for one investment accounting system that is
scheduled to be replaced by August 31, 1999 and confirmed as year 2000
compliant by September 30, 1999. Additionally, Equitable Life will be
supplementing its existing business continuity and disaster recovery plans to
cover certain categories of contingencies that could arise as a result of year
2000 related failures. Year 2000 specific contingency plans are anticipated to
be in place by June 30, 1999.
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There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is
a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon Separate Account No. 49, our ability to meet our obligations under the
contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity
payments begin. We will continue to treat you as the owner until we receive
notification of any change at our Processing Office. You cannot assign your NQ
contract as collateral or security for a loan. Loans are also not available
under your NQ contract. In some cases, an assignment or change of ownership may
have adverse tax consequences. See "Tax information."
You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract
except by surrender to us. Loans are not available and you cannot assign IRA
and QP contracts as security for a loan or other obligation. If the employer
that provided the funds does not restrict them, loans are available under a
Rollover TSA contract.
For limited transfers of ownership after the owner's death see "Payment of
death benefit" and "Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts." You may direct the transfer of the values
under your IRA, QP or Rollover TSA contract to another similar arrangement.
Under federal income tax rules, in the case of such a transfer, we will impose
a withdrawal charge, if one applies.
DISTRIBUTION OF THE CONTRACTS
Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 49. EDI serves as the
principal underwriter of Separate Account No. 49. EDI is registered with the
SEC as a broker-dealer 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, New York 10104. Under a distribution agreement between EDI,
Equitable Life, and certain of Equitable Life's separate accounts, including
Separate Account No. 49, Equitable Life paid EDI distribution fees of
$35,452,793 for 1998, $9,566,343 for 1997, and $87,157 for 1996, as the
distributor of certain contracts, including these contracts, and as the
principal underwriter of several Equitable Life separate accounts, including
Separate Account No. 49.
The contracts will be sold by registered representatives of EDI, as well as by
affiliated and unaffiliated broker-dealers with which EDI has entered into
selling agreements. Broker-dealer sales compensation will generally not exceed
7% of total contributions made under the contracts. EDI may also receive
compensation and reimbursement for its
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marketing services under the terms of its distribution agreement with Equitable
Life. Broker-dealers receiving sales compensation will generally pay a portion
of it to their registered representatives as commissions related to sales of
the contracts. The offering of the contracts is intended to be continuous.
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72 Investment performance
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Investment performance
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We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. The results shown reflect past performance. They do not
indicate how the variable investment options may perform in the future. They
also do not represent the results earned by any particular investor. Your
results will differ.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the
variable investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into
account all fees and charges under the contract, including the withdrawal
charge, the optional baseBUILDER benefits charge, the annual administrative
charge under Flexible Premium IRA and Flexible Premium Roth IRA contracts, but
do not take the charges for any applicable taxes such as premium taxes or any
applicable annuity administrative fee into account.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the
withdrawal charge, the optional baseBUILDER benefits charge, the annual
administrative charge or the charges for any applicable taxes such as premium
taxes or any applicable annuity administrative fee. If the charges were
reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest.
In some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted
the results of the Portfolios to reflect the charges under the contracts that
would have applied had the investment options and/or contracts been available.
The contracts were first offered on August 1, 1997.
In addition, we have adjusted the results prior to October 1996, when The
Hudson River Trust Class IB shares were not available, to reflect the 12b-1
fees currently imposed. Finally, the results shown for the Alliance Money
Market and Alliance Common Stock options for periods before March 22, 1985
reflect the results of the variable investment options that preceded them. The
"Since inception" figures for these options are based on the date of inception
of the preceding variable investment options. We have adjusted these results to
reflect the maximum investment advisory fee payable for the Portfolios, as well
as an assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as 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. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charges, or any withdrawal or optional benefit charge. Comparisons with these
benchmarks, therefore, may be 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. The benchmarks include:
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ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index.
CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital
International Europe, Australia, Far East Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital
International Europe, Australia, Far East Index.
EQ/EVERGREEN: Russell 2000 Index.
EQ/EVERGREEN FOUNDATION: 60% Standard & Poor's 500
Index/40% Lehman Brothers Aggregate Bond Index.
JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond.
LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index.
LAZARD SMALL CAP VALUE: Russell 200 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: 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: Morgan Stanley
Capital International Emerging Markets Free Price Return Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500
Index.
EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index.
EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital
International Europe, Australia, Far East Index.
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LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) 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.
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74 Investment performance
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<TABLE>
<CAPTION>
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TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
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LENGTH OF INVESTMENT PERIOD
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SINCE SINCE PORTFOLIO
1 3 5 10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE
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<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market (3.64)% 1.59% 2.40% 3.35% - - 7/13/81
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Alliance High Yield (13.96)% 7.72% 7.28% 8.93% - - 1/2/87
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Alliance Common Stock 20.02% 24.05% 19.18% 16.35% - - 1/13/76
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Alliance Aggressive Stock (8.60)% 7.09% 8.76% 16.79% - - 1/27/86
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Alliance Small Cap Growth (13.03)% - - - 5.51% 5.51% 5/1/97
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BT Equity 500 Index 16.14% - - - 16.14% 16.14% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index (10.93)% - - - (10.93)% (10.93)% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index 11.17% - - - 11.17% 11.17% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
JPM Core Bond 0.26% - - - 0.26% 0.26% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value 11.14% - - - 11.14% 11.14% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value (15.62)% - - - (15.62)% (15.62)% 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Research 15.13% - - - 15.64% 15.64% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies 25.40% - - - 24.05% 24.05% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity 2.78% - - - 9.86% 9.86% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy (1.92)% - - - 1.19% 1.19% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (35.31) - - - (35.31)% (28.99)% 8/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 4.00% - - - 10.08% 10.08% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth 27.15% - - - 26.08% 26.08% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity 10.56% - - - 9.98% 9.98% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* The since inception dates for the variable investment options are as
follows: Alliance Money Market, Alliance High Yield, Alliance Common
Stock, Alliance Aggressive Stock, 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); BT Equity 500 Index, BT Small Company Index, BT
International Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard
Small Cap Value, and Morgan Stanley Emerging Markets Equity (December 31,
1997).
The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are:
EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income
(December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S.
Equity, Capital Guardian Research, and Capital Guardian International (May
1, 1999).
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 75
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- -------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
----------------------------------------------------------------------------
SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 963.60 $1,048.36 $1,126.12 $1,390.07 -
- -------------------------------------------------------------------------------------------------------------------
Alliance High Yield $ 860.40 $1,250.11 $1,421.32 $2,352.06 -
- -------------------------------------------------------------------------------------------------------------------
Alliance Common Stock $1,200.20 $1,908.73 $2,404.59 $4,547.90 -
- -------------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock $ 914.00 $1,228.21 $1,521.63 $4,719.54 -
- -------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 869.70 - - - $1,113.16
- -------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index $1,161.40 - - - $1,161.40
- -------------------------------------------------------------------------------------------------------------------
BT Small Company Index $ 890.70 - - - $ 890.70
- -------------------------------------------------------------------------------------------------------------------
BT International Equity Index $1,111.70 - - - $1,111.70
- -------------------------------------------------------------------------------------------------------------------
JPM Core Bond $1,002.60 - - - $1,002.60
- -------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value $1,111.40 - - - $1,111.40
- -------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value $ 843.80 - - - $ 843.80
- -------------------------------------------------------------------------------------------------------------------
MFS Research $1,151.30 - - - $1,337.29
- -------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $1,254.00 - - - $1,538.76
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $1,027.80 - - - $1,206.83
- -------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy $ 980.80 - - - $1,023.94
- -------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 646.90 - - - $ 504.25
- -------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value $1,040.00 - - - $1,211.78
- -------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth $1,271.50 - - - $1,589.59
- -------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity $1,105.60 - - - $1,209.59
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
76 Investment performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ------------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% - 5.38%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% - 6.77%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% - 6.76%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% - 8.73%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% - 8.97%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% - 10.72%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% - 15.88%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% - 13.69%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% - 14.78%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.73)% - - - - 10.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% - - - - 16.72%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% - - - - 16.58%
- ------------------------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% - - - - 23.44%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% - - - - 26.78%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- ------------------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% - - - - (3.63)%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% - - - - 18.47%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 12.17%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 20.00%
- ------------------------------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.56% - - - - 7.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment Grade Debt 7.23% - - - - 7.23%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.72% - - - - 8.72%
- ------------------------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.44% - - - - 18.44%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% - - - - 24.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- ------------------------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (8.32)% - - - - (8.32)%
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 77
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -----------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFS RESEARCH 22.43% - - - - 22.75%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 28.73%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- -----------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% - - - - 33.03%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% - - - - 22.72%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 14.53%
- -----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.08% - - - - 15.76%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 21.32%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- -----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.38% - - - - 5.50%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% - - - - 11.15%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% - - - - 20.00%
- -----------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.01)% - - - - (33.62)%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% - - - - (36.28)%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% - - - - (28.92)%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.30% - - - - 16.03%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 21.32%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.45% - - - - 35.53%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 28.73%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 17.86% - - - - 15.94%
- -----------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 9.06%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 13.43%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
78 Investment performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -----------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% - 149.59%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% - 214.68%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% - 214.45%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% - 172.86%
- -----------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% - 182.21%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% - 239.69%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% - 572.32%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% - 448.32%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% - 494.67%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.73)% - - - - 18.19%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% - - - - 28.98%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% - - - - 29.23%
- -----------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% - - - - 23.44%
- -----------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% - - - - 26.78%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- -----------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% - - - - (3.63)%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.49%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- -----------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% - - - - 18.47%
- -----------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 12.23%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 20.00%
- -----------------------------------------------------------------------------------------------------------------------
JPM CORE BOND 7.56% - - - - 7.56%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Investment
Grade Debt 7.23% - - - - 7.23%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 8.72% - - - - 8.72%
- -----------------------------------------------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE 18.44% - - - - 18.44%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Capital Appreciation 24.16% - - - - 24.09%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- -----------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE (8.32)% - - - - (8.32)%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.53%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 79
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -----------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MFS RESEARCH 22.43% - - - - 40.79%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 52.86%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- -----------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% - - - - 60.99%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% - - - - 42.16%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 25.40%
- -----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.08% - - - - 27.65%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 15.59%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- -----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.38% - - - - 9.34%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% - - - - 19.41%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% - - - - 33.33%
- -----------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY (28.01)% - - - - (42.83)%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% - - - - (45.67)%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% - - - - (36.71)%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME
VALUE 11.30% - - - - 28.16%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 38.49%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH 34.45% - - - - 66.08%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 52.86%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- -----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY 17.86% - - - - 27.98%
- -----------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 15.88%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 23.42%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
80 Investment performance
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
- ---------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32%
- ---------------------------------------------------------------------------------------------------
Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19%
- ---------------------------------------------------------------------------------------------------
Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83%
- ---------------------------------------------------------------------------------------------------
Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89%
- ---------------------------------------------------------------------------------------------------
Alliance Small Cap Growth - - - - -
- ---------------------------------------------------------------------------------------------------
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>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market 2.36% 4.06% 3.64% 3.74% 3.66%
- -----------------------------------------------------------------------------------------------------------
Alliance High Yield (4.33)% 18.01% 20.91% 16.58% (6.66)%
- -----------------------------------------------------------------------------------------------------------
Alliance Common Stock (3.70)% 30.34% 22.28% 27.16% 27.32%
- -----------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock (5.35)% 29.54% 20.24% 9.04% (1.30)%
- -----------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth - - - 25.38%+ (5.73)%
- -----------------------------------------------------------------------------------------------------------
BT Equity 500 Index - - - - 23.44%
- -----------------------------------------------------------------------------------------------------------
BT Small Company Index - - - - (3.63)%
- -----------------------------------------------------------------------------------------------------------
BT International Equity Index - - - - 18.47%
- -----------------------------------------------------------------------------------------------------------
JPM Core Bond - - - - 7.56%
- -----------------------------------------------------------------------------------------------------------
Lazard Large Cap Value - - - - 18.44%
- -----------------------------------------------------------------------------------------------------------
Lazard Small Cap Value - - - - (8.32)%
- -----------------------------------------------------------------------------------------------------------
MFS Research - - - 14.99%+ 22.43%
- -----------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies - - - 21.32%+ 32.70%
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity - - - 15.97%+ 10.08%
- -----------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy - - - 3.76%+ 5.38%
- -----------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity - - - (20.59)%+ (28.01)%
- -----------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value - - - 15.15%+ 11.30%
- -----------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Growth - - - 23.53%+ 34.45%
- -----------------------------------------------------------------------------------------------------------
EQ/Putnam International Equity - - - 8.59%+ 17.86%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Returns for these options represent less than 12 months of performance. The
returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 81
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements
or other communications that include evaluations of a variable investment
option or Portfolio by nationally recognized financial publications. Examples
of such publications are:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
- --------------------------------------------------------------------------------
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
- --------------------------------------------------------------------------------
Business Week National Underwriter
- --------------------------------------------------------------------------------
Forbes Pension & Investments
- --------------------------------------------------------------------------------
Fortune USA Today
- --------------------------------------------------------------------------------
Institutional Investor Investor's Business Daily
- --------------------------------------------------------------------------------
Money The New York Times
- --------------------------------------------------------------------------------
Kiplinger's Personal Finance The Wall Street Journal
- --------------------------------------------------------------------------------
Financial Planning The Los Angeles Times
- --------------------------------------------------------------------------------
Investment Adviser The Chicago Tribune
- --------------------------------------------------------------------------------
Investment Management Weekly
- --------------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable
Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types
of fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts, and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
The Morningstar Variable Annuity/Life Reports 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 level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
Yield information
Current yield for the Alliance Money Market option 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
option 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 similar manner, 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 option. The yields and
effective yields assume the deduction of all contract charges and expenses
other than the withdrawal charge, the optional baseBUILDER benefits charge, the
annual administrative charge, and any charge for taxes such
<PAGE>
- --------------------------------------------------------------------------------
82 Investment performance
- --------------------------------------------------------------------------------
as premium tax. The yields and effective yields for the Alliance Money Market
option, when used for the special dollar cost averaging program, assume that no
contract charges are deducted. For more information, see "Yield Information for
the Alliance Money Market Option and Alliance High Yield Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
Incorporation of certain documents by reference 83
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December 31,
1998 and a current report on Form 8-K dated April 9, 1999, are considered to be
a part of this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Securities Exchange Act of 1934 ("Exchange Act") will be considered
to become part of this prospectus because they are incorporated by reference.
Any statement contained in a document that is or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each person
to whom this prospectus is delivered, a copy of any or all of the documents
considered to be part of this prospectus because they are incorporated herein.
This does not include exhibits not specifically incorporated by reference into
the text of such documents. Requests for 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).
<PAGE>
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information A-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE
INVESTMENT OPTION
- --------------------------------------------------------------------------------
FOR THE YEARS ENDING
------------------------------------
DEC. 31, 1997 DEC. 31, 1998
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
- --------------------------------------------------------------------------------
Unit value $ 70.28 $ 69.37
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 380 939
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK
- --------------------------------------------------------------------------------
Unit value $ 186.29 $ 237.18
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 434 1,542
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD
- --------------------------------------------------------------------------------
Unit value $ 29.96 $ 27.96
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1,256 4,521
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET
- --------------------------------------------------------------------------------
Unit value $ 25.00 $ 25.92
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1,153 5,158
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH
- --------------------------------------------------------------------------------
Unit value $ 12.54 $ 11.82
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2,521 6,101
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
BT EQUITY 500 INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 12.34
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 12,279
- --------------------------------------------------------------------------------
BT SMALL COMPANY INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 9.64
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 1,610
- --------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 11.85
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 1,827
- --------------------------------------------------------------------------------
JPM CORE BOND
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 10.76
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 8,661
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
A-2 Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR THE YEARS ENDING
-----------------------------------
DEC. 31, 1997 DEC. 31, 1998
- --------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 11.84
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 5,696
- --------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 9.17
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 4,733
- --------------------------------------------------------------------------------
MFS RESEARCH
- --------------------------------------------------------------------------------
Unit value $ 11.50 $ 14.08
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 5,257 14,913
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES
- --------------------------------------------------------------------------------
Unit value $ 12.13 $ 16.10
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 3,327 9,117
- --------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY
- --------------------------------------------------------------------------------
Unit value $ 11.60 $ 12.76
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1,182 4,389
- --------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY
- --------------------------------------------------------------------------------
Unit value $ 10.38 $ 10.94
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 306 717
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY
- --------------------------------------------------------------------------------
Unit value $ 7.94 $ 5.72
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 1,805
- --------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE
- --------------------------------------------------------------------------------
Unit value $ 11.52 $ 12.82
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 8,113 24,343
- --------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH
- --------------------------------------------------------------------------------
Unit value $ 12.35 $ 16.61
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2,581 10,072
- --------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY
- --------------------------------------------------------------------------------
Unit value $ 10.86 $ 12.80
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 4,609 10,607
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information
<PAGE>
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts B-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Trustees who are considering the purchase of an Equitable Accumulator QP
contract should discuss with their tax advisers 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 contract, 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 federal income tax rules. The QP contract and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
Assuming continued plan qualification and operation, earnings on qualified plan
assets will accumulate value on a tax-deferred basis even if the plan is not
funded by the Equitable Accumulator QP contract or another annuity. Therefore,
you should purchase an Equitable Accumulator QP Contract to fund a plan for the
contract's features and benefits other than tax deferral. This QP contract
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" that can be funded by a QP
contract is 80%. The account value under a QP contract 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 account value under a QP contract 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 contract may be required. A withdrawal
charge and/or market value adjustment may apply.
Further, Equitable Life will not perform or provide any plan recordkeeping
services with respect to the QP contracts. 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 contracts, 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. Given
that required minimum distributions must commence from the plan for annuitants
after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan
funds) trustees should consider whether the QP contract is an appropriate
purchase for annuitants approaching or over age 70 1/2.
Finally, because the method of purchasing the QP contract and the features of
the QP contract may appeal more to plan participants/employees who are older and
tend to be highly paid, and because certain features of the QP contract 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 contract would cause the plan to engage in
prohibited discrimination in contributions, benefits or otherwise.
<PAGE>
- --------------------------------------------------------------------------------
Appendix III: Market value adjustment example C-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Appendix III: 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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a
maturity value at the maturity date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later on February 15, 2004.
- --------------------------------------------------------------------------------
ASSUMED RATE TO MATURITY
ON FEBRUARY 15, 2004
--------------------------
5.00% 9.00%
- --------------------------------------------------------------------------------
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
- --------------------------------------------------------------------------------
(1) Market adjusted amount $ 144,048 $ 119,487
- --------------------------------------------------------------------------------
(2) Fixed maturity amount $ 131,080 $ 131,080
- --------------------------------------------------------------------------------
(3) Market value adjustment:
(1) - (2) $ 12,968 $ (11,593)
- --------------------------------------------------------------------------------
ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL)
- --------------------------------------------------------------------------------
(4) Portion of market value adjustment associated
with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $ (4,851)
- --------------------------------------------------------------------------------
(5) Reduction in fixed maturity amount:
[$50,000 - (4)] $ 45,499 $ 54,851
- --------------------------------------------------------------------------------
(6) Fixed maturity amount: (2) - (5) $ 85,581 $ 76,229
- --------------------------------------------------------------------------------
(7) Maturity value $ 120,032 $ 106,915
- --------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 94,048 $ 69,487
- --------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have
increased from 7.00% to 9.00% (right column), 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% (left column), a portion of a positive
market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example D-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
The death benefit under the contracts is equal to the account value or, if
greater, the guaranteed minimum death benefit.
The following illustrates the guaranteed minimum death benefit calculation.
Assuming $100,000 is allocated to the variable investment options (with no
allocation to the Alliance Money Market option or the fixed maturity options),
no additional contributions, no transfers and no withdrawals, and no loans under
a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant
age 45 would be calculated as follows:
- --------------------------------------------------------------------------------
5% ROLL UP TO
END OF AGE 80 ANNUAL RATCHET TO AGE 80
CONTRACT GUARANTEED MINIMUM GUARANTEED MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
- --------------------------------------------------------------------------------
1 $105,000 $ 105,000(1) $ 105,000(3)
- --------------------------------------------------------------------------------
2 $115,500 $ 110,250(2) $ 115,500(3)
- --------------------------------------------------------------------------------
3 $129,360 $ 115,763(2) $ 129,360(3)
- --------------------------------------------------------------------------------
4 $103,488 $ 121,551(1) $ 129,360(4)
- --------------------------------------------------------------------------------
5 $113,837 $ 127,628(1) $ 129,360(4)
- --------------------------------------------------------------------------------
6 $127,497 $ 134,010(1) $ 129,360(4)
- --------------------------------------------------------------------------------
7 $127,497 $ 140,710(1) $ 129,360(4)
- --------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical
rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We
are using these rates solely to illustrate how the benefit is determined. The
return rates bear no relationship to past or future investment results.
5% ROLL UP TO AGE 80
(1) At the end of contract year 1, and again at the end of contract years 4
through 7, the death benefit will be equal to the guaranteed minimum death
benefit.
(2) At the end of contract years 2 and 3, the death benefit will be equal to
the current account value since it is higher than the current guaranteed
minimum death benefit.
ANNUAL RATCHET TO AGE 80
(3) At the end of contract years 1 through 3, the guaranteed minimum death
benefit is equal to the current account value.
(4) At the end of contract years 4 through 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 account value.
Statement of Additional Information
<PAGE>
- --------------------------------------------------------------------------------
Statement of additional information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market
Option and Alliance High Yield Option 3
Long-Term Market Trends 4
Key Factors in Retirement Planning 6
Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Accumulator
P.O. Box 1547 Secaucus, NJ 07096-1547
- - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please send me an Equitable Accumulator SAI for Separate Account No. 49 dated
May 1, 1999.
- ------------------------------------------------------------------------------
Name:
- ------------------------------------------------------------------------------
Address:
- ------------------------------------------------------------------------------
City State Zip
(EDIMLFSAI)
<PAGE>
Equitable Accumulator(SM)
Select
A combination variable and fixed deferred
annuity contract
PROSPECTUS DATED MAY 1, 1999
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing or taking any other action
under your contract. Also, at the end of this prospectus you will find attached
the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain
important information about their Portfolios.
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR SELECT?
Equitable Accumulator Select is a deferred annuity contract issued by THE
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the
accumulation of retirement savings and for income. The contract offers income
and death benefit protection. It also offers a number of payout options. You
invest to accumulate value on a tax-deferred basis in one or more of our
variable investment options or fixed maturity options ("investment options").
There is no withdrawal charge under the contract. However, we deduct a
distribution charge calculated as a percentage of the amounts in the variable
investment options. We deduct this charge for the life of the contract. This
contract is not available in New York.
- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
o Alliance Money Market o JPM Core Bond
o Alliance High Yield o Lazard Large Cap Value
o Alliance Common Stock o Lazard Small Cap Value
o Alliance Aggressive Stock o MFS Growth with Income
o Alliance Small Cap Growth o MFS Research
o EQ/Alliance Premier Growth o MFS Emerging Growth
o BT Equity 500 Index Companies
o BT Small Company Index o Morgan Stanley Emerging
o BT International Equity Index Markets Equity
o Capital Guardian U.S. Equity o EQ/Putnam Growth & Income Value
o Capital Guardian Research o EQ/Putnam Investors Growth
o Capital Guardian International o EQ/Putnam International Equity
You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 49.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An annuity which is an investment vehicle for a qualified defined
contribution or defined benefit plan ("QP").
o An individual retirement annuity ("IRA"), either traditional IRA ("Rollover
IRA") or Roth IRA ("Roth Conversion IRA").
o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") --
("Rollover TSA").
A contribution of at least $25,000 is required to purchase a contract.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated May 1, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our
Processing Office or calling 1-800-789-7771. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be obtained
from the SEC's website at http://www.sec.gov. The table of contents for the SAI
appears at the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS 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.
<PAGE>
- --------------------------------------------------------------------------------
2 Contents of this prospectus
- --------------------------------------------------------------------------------
Contents of this prospectus
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR(SM) SELECT
- ---------------------------------------------------------------
Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator Select at a glance -- key features 8
- ---------------------------------------------------------------
FEE TABLE 10
- ---------------------------------------------------------------
Example 13
Condensed Financial Information 14
- ---------------------------------------------------------------
- ---------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 15
- ---------------------------------------------------------------
How you can purchase and contribute to your contract 15
Owner and annuitant requirements 18
How you can make your contributions 18
What are your investment options under the contract? 18
Portfolios of The Hudson River Trust 19
Portfolios of EQ Advisors Trust 19
Allocating your contributions 22
Our baseBUILDER option 23
Guaranteed minimum death benefit 26
Your right to cancel within a certain number of days 26
- ---------------------------------------------------------------
DETERMINING YOUR CONTRACT'S VALUE 28
- ---------------------------------------------------------------
Your account value 28
Your contract's value in the variable investment options 28
Your contract's value in the fixed maturity options 28
- --------------------------------------------------------------------------------
"We," "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS OF THIS PROSPECTUS 3
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG
INVESTMENT OPTIONS 29
- -------------------------------------------------------------------
Transferring your account value 29
Rebalancing your account value 29
- -------------------------------------------------------------------
ACCESSING YOUR MONEY 30
- -------------------------------------------------------------------
Withdrawing your account value 30
How withdrawals are taken from your account value 31
How withdrawals affect your guaranteed minimum
income benefit and guaranteed minimum death
benefit 31
Loans under Rollover TSA contracts 32
Surrendering your contract to receive its cash value 33
When to expect payments 33
Choosing your annuity payout options 33
- -------------------------------------------------------------------
CHARGES AND EXPENSES 36
- -------------------------------------------------------------------
Charges that Equitable Life deducts 36
Charges that the trusts deduct 37
Group or sponsored arrangements 37
- -------------------------------------------------------------------
PAYMENT OF DEATH BENEFIT 38
- -------------------------------------------------------------------
Your beneficiary and payment of benefit 38
How death benefit payment is made 38
Beneficiary continuation option for Rollover IRA contracts 39
- -------------------------------------------------------------------
TAX INFORMATION 40
- -------------------------------------------------------------------
Overview 40
Transfers among investment options 40
Taxation of nonqualified annuities 40
Special rules for NQ contracts issued in Puerto Rico 41
Individual retirement arrangements (IRAs) 42
Special rules for nonqualified contracts in qualified plans 50
Tax Sheltered Annuity contracts (TSAs) 50
Federal and state income tax withholding and
information reporting 55
Impact of taxes to Equitable Life 56
- -------------------------------------------------------------------
MORE INFORMATION 57
- -------------------------------------------------------------------
About our Separate Account No. 49 57
About The Hudson River Trust and EQ Advisors Trust 57
About our fixed maturity options 58
About the general account 60
About other methods of payment 60
Dates and prices at which contract events occur 60
About your voting rights 61
About our year 2000 progress 62
About legal proceedings 62
About our independent accountants 63
Transfers of ownership, collateral assignments, loans,
and borrowing 63
Distribution of the contracts 63
- -------------------------------------------------------------------
INVESTMENT PERFORMANCE 64
- -------------------------------------------------------------------
Benchmarks 64
Communicating performance data 73
- -------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 75
- -------------------------------------------------------------------
Appendices
I - Condensed financial information A-1
II - Purchase considerations for QP contracts B-1
III - Market value adjustment example C-1
IV - Guaranteed minimum death benefit example D-1
- -------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
4 Index of key words and phrases
- --------------------------------------------------------------------------------
Index of key words and phrases
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
PAGE IN
TERM PROSPECTUS
account value 28
annuitant 15
baseBUILDER 23
beneficiary 38
benefit base 24
business day 60
cash value 28
conduit IRA 45
contract date 17
contract date anniversary 17
contract year 17
contributions to Roth IRAs 48
rollover contributions 48
conversion contributions 48
direct custodian-to-custodian
transfers 48
contributions to traditional IRAs 42
rollover contributions 43
direct custodian-to-custodian
transfers 43
ERISA 32
fixed maturity amount 20
fixed maturity options 20
guaranteed minimum death benefit 26
guaranteed minimum income benefit 23
IRA 42
IRS 40
investment options 18
loan reserve account 32
market adjusted amount 21
market value adjustment 21
maturity value 21
NQ 40
participant 18
payout option 33
Portfolio cover
Processing Office 6
QP 50
rate to maturity 20
recharacterized 43
required beginning date 45
Rollover IRA cover
Rollover TSA cover
Roth IRA 47
Roth Conversion IRA cover
SAI cover
SEC cover
TOPS 6
TSA 50
traditional IRA 42
unit 28
variable investment options 18
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract. Your registered representative can provide further explanation about
your contract or supplemental materials.
---------------------------------------------------------------------------
PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS
---------------------------------------------------------------------------
fixed maturity options Guarantee Periods (Guaranteed Fixed Interest
Accounts in supplemental materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
---------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 5
- --------------------------------------------------------------------------------
Who is Equitable Life?
- --------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a wholly owned subsidiary of The Equitable
Companies Incorporated ("Equitable Companies"), whose majority shareholder is
AXA, a French holding company for an international group of insurance and
related financial services companies. As a majority shareholder, and under its
other arrangements with Equitable Life and Equitable Life's parent, AXA
exercises significant influence over the operations and capital structure of
Equitable Life and its parent. No company other than Equitable Life, however,
has any legal responsibility to pay amounts that Equitable Life owes under the
contracts. During 1999, Equitable Companies plans to change its name to AXA
Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are licensed
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located
at 1290 Avenue of the Americas, New York, N.Y. 10104.
<PAGE>
- --------------------------------------------------------------------------------
6 WHO IS EQUITABLE LIFE?
- --------------------------------------------------------------------------------
HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
P.O. Box 13014
Newark, NJ 07188-0014
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
REPORTS WE PROVIDE:
- --------------------------------------------------------------------------------
o written confirmation of financial transactions;
o statement of your contract values at the close of each calendar quarter
(four per year);
o annual statement of your contract values as of the close of the contract
year.
- --------------------------------------------------------------------------------
TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM
- --------------------------------------------------------------------------------
TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling
toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service
may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone instructions
and we will provide written confirmation of your transfers. We will not be
liable for following telephone instructions we reasonably believe to be genuine.
- --------------------------------------------------------------------------------
BY INTERNET:
- --------------------------------------------------------------------------------
You can also access information about your
contract on the Internet. Please visit our
website at http://www.equitable.com, and
click on EQAccess.
<PAGE>
- --------------------------------------------------------------------------------
WHO IS EQUITABLE LIFE? 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVE:
- --------------------------------------------------------------------------------
You may also use our toll-free number (1-800-789-7771) to speak with one of our
customer service representatives. Our customer service representatives are
available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our Processing
Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1) authorization for telephone transfers by your registered representative;
(2) conversion of a traditional IRA to a Roth Conversion IRA contract;
(3) cancellation of your Roth Conversion IRA contract and return to a Rollover
IRA contract;
(4) election of the automatic investment program;
(5) election of the rebalancing program;
(6) to obtain a PIN required for TOPS;
(7) requests for loans under Rollover TSA contracts;
(8) spousal consent for loans under Rollover TSA contracts;
(9) tax withholding election; and
(10) beneficiary continuation option election.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF
REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options;
(4) withdrawal requests;
(5) contract surrender; and
(6) requests to exercise your guaranteed minimum income benefit.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1) automatic investment program;
(2) general dollar cost averaging;
(3) rebalancing;
(4) special dollar cost averaging
(5) substantially equal withdrawals;
(6) systematic withdrawals; and
(7) the date annuity payments are to begin.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
<PAGE>
- --------------------------------------------------------------------------------
8 EQUITABLE ACCUMULATOR SELECT AT A GLANCE -- KEY FEATURES
- --------------------------------------------------------------------------------
Equitable Accumulator Select at a glance -- key features
- --------------------------------------------------------------------------------
PROFESSIONAL Equitable Accumulator Select's variable investment options
INVESTMENT invest in 22 different Portfolios managed by professional
MANAGEMENT investment advisers.
- --------------------------------------------------------------------------------
FIXED MATURITY o 10 fixed maturity options with maturities ranging from
OPTIONS approximately 1 to 10 years.
o Each fixed maturity option offers a guarantee of
principal and interest rate if you hold it to
maturity.
o Principal guarantees.
- If you make withdrawals or transfers from a fixed
maturity option before maturity, there will be a
market value adjustment due to differences in
interest rates. This may increase or decrease any
value that you have left in that fixed maturity
option. If you surrender your contract, a market
value adjustment may also apply.
- --------------------------------------------------------------------------------
TAX ADVANTAGES o On earnings inside the No tax on any dividends,
contract interest or capital gains
until you make withdrawals
from your contract or
receive annuity payments.
-----------------------------------------------------------
o On transfers inside the No tax on transfers among
contract investment options.
-----------------------------------------------------------
If you are buying a contract to fund a retirement plan that
already provides tax deferral under sections of the
Internal Revenue Code (IRA, QP, and Rollover TSA), you
should do so for the contract's features and benefits other
than tax deferral. In such situations, the tax deferral of
the contract does not provide additional benefits.
- --------------------------------------------------------------------------------
BASEBUILDER(Reg. TM) baseBUILDER combines a guaranteed minimum income benefit
PROTECTION with a guaranteed minimum death benefit. This optional
feature provides income protection for you while the
annuitant lives, as well as a death benefit for the
beneficiary should the annuitant die.
- --------------------------------------------------------------------------------
CONTRIBUTION AMOUNTS o Initial minimum: $25,000
o Additional minimum: $ 1,000
$100 monthly, and $300
quarterly under our automatic
investment program (NQ
contracts)
-----------------------------------------------------------
Maximum investment limitations may apply.
- --------------------------------------------------------------------------------
ACCESS TO YOUR MONEY o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Loans under Rollover TSA contracts
o Contract surrender
You may incur income tax and a tax penalty.
- --------------------------------------------------------------------------------
PAYOUT ALTERNATIVES o Annuity payout options
o Income Manager(Reg. TM) payout annuity options
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR SELECT AT A GLANCE -- KEY FEATURES 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ADDITIONAL FEATURES o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually,
and annually)
o Unlimited free transfers
- --------------------------------------------------------------------------------
FEES AND CHARGES o Daily charges on amounts invested in variable
investment options for mortality and expense risks,
administrative, and distribution charges at an annual
rate of 1.60%.
o Annual 0.30% benefit base charge for the optional
baseBUILDER benefit. The benefit base is described
under "Your guaranteed minimum income benefit under
baseBUILDER." No additional charge if you want a
guaranteed minimum death benefit only.
o No sales charge deducted at the time you make
contributions, no withdrawal charge, and no annual
contract fee.
o We also deduct a charge for taxes such as premium taxes
that may be imposed in your state. This charge is
generally deducted from the amount applied to an
annuity payout option.
o We generally deduct a $350 annuity administrative fee
from amounts applied to purchase certain life annuity
payout options.
o Annual expenses of The Hudson River Trust and EQ
Advisors Trust Portfolios are calculated as a
percentage of the average daily net assets invested in
each Portfolio. These expenses include management and
advisory fees ranging from 0.25% to 1.15% annually,
12b-1 fees of 0.25% and other expenses.
- --------------------------------------------------------------------------------
ANNUITANT ISSUE AGES NQ: 0-85
Rollover IRA, Roth Conversion IRA, and Rollover TSA: 20-85
QP: 20-75
- --------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF
THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
registered representative, or call us, if you have any questions.
<PAGE>
- --------------------------------------------------------------------------------
10 FEE TABLE
- --------------------------------------------------------------------------------
Fee table
- --------------------------------------------------------------------------------
The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an administrative fee may apply when your annuity payments are to begin.
Each of the charges and expenses is more fully described under "Charges and
expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options are not covered by the fee table and examples. A
market value adjustment (up or down) may apply as a result of a withdrawal,
transfer or surrender of amounts from a fixed maturity option.
- --------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN
ANNUAL PERCENTAGE OF DAILY NET ASSETS
- --------------------------------------------------------------------------------
Mortality and expense risks(1) 1.10%
Administrative(2) 0.25%
Distribution 0.25%
----
Total annual expenses 1.60%
- --------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE
OPTIONAL BENEFIT
- --------------------------------------------------------------------------------
BASEBUILDER BENEFITS CHARGE (calculated as a percentage of
the benefit base. Deducted annually on each contract date
anniversary)(3) 0.30%
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS IN EACH PORTFOLIO)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL
ANNUAL
INVESTMENT EXPENSES(4)
MANAGEMENT & OTHER (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(4) EXPENSES LIMITATION)
--------------- ----------------- ---------- ---------------
<S> <C> <C> <C> <C>
Alliance Money Market(5) 0.35% 0.25% 0.02% 0.62%
Alliance High Yield(5) 0.60% 0.25% 0.03% 0.88%
Alliance Common Stock(5) 0.36% 0.25% 0.03% 0.64%
Alliance Aggressive Stock(5) 0.54% 0.25% 0.03% 0.82%
Alliance Small Cap Growth(5) 0.90% 0.24% 0.06% 1.20%
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS
IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TOTAL
OTHER ANNUAL
INVESTMENT EXPENSES(6) EXPENSES(6)
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(4) LIMITATION) LIMITATION)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Alliance Premier Growth(6) 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index(6) 0.25% 0.25% 0.05% 0.55%
BT Small Company Index(6) 0.25% 0.25% 0.25% 0.75%
BT International Equity Index(6) 0.35% 0.25% 0.40% 1.00%
Capital Guardian U.S. Equity(6) 0.65% 0.25% 0.05% 0.95%
Capital Guardian Research(6) 0.65% 0.25% 0.05% 0.95%
Capital Guardian International(6) 0.75% 0.25% 0.20% 1.20%
JPM Core Bond(6) 0.45% 0.25% 0.10% 0.80%
Lazard Large Cap Value(6) 0.55% 0.25% 0.15% 0.95%
Lazard Small Cap Value(6) 0.80% 0.25% 0.15% 1.20%
MFS Growth with Income(6) 0.55% 0.25% 0.05% 0.85%
MFS Research(6) 0.55% 0.25% 0.05% 0.85%
MFS Emerging Growth Companies(6) 0.55% 0.25% 0.05% 0.85%
Morgan Stanley Emerging Markets
Equity(6) 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Growth & Income
Value(6) 0.55% 0.25% 0.05% 0.85%
EQ/Putnam Investors Growth(6) 0.55% 0.25% 0.15% 0.95%
EQ/Putnam International Equity(6) 0.70% 0.25% 0.25% 1.20%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
Notes:
(1) A portion of this charge is for providing the guaranteed minimum death
benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
(3) The benefit base is described under "Your guaranteed minimum income
benefit under baseBUILDER."
(4) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ
Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The 12b-1 fee will not be increased for the life of the
contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth
Portfolio 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 equaling 1.20%. Absent the expense
limitation, the total annual expenses for 1998 for the Alliance Small Cap
Growth Portfolio would have been 1.21%.
(5) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average
<PAGE>
- --------------------------------------------------------------------------------
12 FEE TABLE
- --------------------------------------------------------------------------------
daily net assets of the respective Portfolio. The maximum investment
management and advisory fees, however, cannot be increased without a vote
of that Portfolio's shareholders. See the prospectus for The Hudson River
Trust. The other direct operating expenses will also fluctuate from year to
year depending on actual expenses.
(6) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF 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 average daily
net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier
Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index;
0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S.
Equity and Capital Guardian Research; 0.95% for Capital Guardian
International; 0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value;
0.95% for Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS
Research, and MFS Emerging Growth Companies; 1.50% for Morgan Stanley
Emerging Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70%
for EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity.
The expenses shown for the BT International Equity Index, BT Small Company
Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value Portfolios
reflect an increase effective on May 1, 1999. During 1999, EQF plans to
change its name to AXA Advisors, Inc.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for
BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard
Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research;
0.24% for MFS Emerging Growth Companies; 1.23% for Morgan Stanley Emerging
Markets Equity; 0.24% for EQ/Putnam Growth & Income Value; 0.29% for
EQ/Putnam Investors Growth; 0.51% for EQ/Putnam International Equity. For
the following Portfolios, the "Other Expenses" for 1999, absent the expense
limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier
Growth; 0.74% for Capital Guardian U.S. Equity and Capital Guardian
Research; 1.03% for Capital Guardian International; 0.59% for MFS Growth
with Income. Initial seed capital was invested on December 31, 1998 for the
MFS Growth with Income Portfolio. The EQ/Alliance Premier Growth, Capital
Guardian U.S. Equity, Capital Guardian International, and Capital Guardian
Research Portfolios commenced operations on May 1, 1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF 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.
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE 13
- --------------------------------------------------------------------------------
EXAMPLE
The example below shows the expenses that a hypothetical contract owner (who has
elected baseBUILDER) would pay in the situation illustrated. We assume that a
$1,000 contribution is invested in one of the variable investment options listed
and a 5% annual return is earned on the assets in that option.(1)
The example should not be considered a representation of past or future expenses
for each option. Actual expenses may be greater or less than those shown.
Similarly, the annual rate of return assumed in the example is not an estimate
or guarantee of future investment performance.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
AT THE END OF EACH PERIOD SHOWN,
THE EXPENSES WOULD BE:
----------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $ 25.70 $ 79.22 $ 135.68 $ 290.79
Alliance High Yield $ 28.28 $ 86.95 $ 148.53 $ 316.23
Alliance Common Stock $ 25.90 $ 79.81 $ 136.67 $ 292.77
Alliance Aggressive Stock $ 27.68 $ 85.16 $ 145.57 $ 310.42
Alliance Small Cap Growth $ 31.45 $ 96.40 $ 164.16 $ 346.68
- --------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth $ 30.96 $ 94.93 - -
BT Equity 500 Index $ 25.01 $ 77.13 $ 132.19 $ 283.84
BT Small Company Index $ 26.99 $ 83.08 $ 142.11 $ 303.58
BT International Equity Index $ 29.47 $ 90.50 $ 154.42 $ 327.76
Capital Guardian U.S. Equity $ 28.97 $ 89.02 - -
Capital Guardian Research $ 28.97 $ 89.02 - -
Capital Guardian International $ 31.45 $ 96.40 - -
JPM Core Bond $ 27.49 $ 84.57 $ 144.58 $ 308.45
Lazard Large Cap Value $ 28.97 $ 89.02 $ 151.96 $ 322.95
Lazard Small Cap Value $ 31.45 $ 96.40 $ 164.16 $ 346.68
MFS Growth with Income $ 27.98 $ 86.05 - -
MFS Research $ 27.98 $ 86.05 $ 147.04 $ 313.31
MFS Emerging Growth Companies $ 27.98 $ 86.05 $ 147.04 $ 313.31
Morgan Stanley Emerging Markets Equity $ 36.91 $ 112.51 $ 190.55 $ 396.85
EQ/Putnam Growth & Income Value $ 27.98 $ 86.05 $ 147.04 $ 313.31
EQ/Putnam Investors Growth $ 28.97 $ 89.02 $ 151.96 $ 322.95
EQ/Putnam International Equity $ 31.45 $ 96.40 $ 164.16 $ 346.68
- --------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods shown
in the examples. This is because if the amount applied to purchase an
annuity payout option is less than $2,000, or the initial payment is less
than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
<PAGE>
- --------------------------------------------------------------------------------
14 FEE TABLE
- --------------------------------------------------------------------------------
IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example would, in
each case, be increased by $4.43 based on the average amount applied to annuity
payout options in 1998. See "Annuity administrative fee" under "Charges and
expenses."
CONDENSED FINANCIAL INFORMATION
Please see Appendix I, at the end of this prospectus for the unit values and the
number of units outstanding as of the end of the periods shown for each of the
variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 15
- --------------------------------------------------------------------------------
Contract features and benefits
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us we call "contributions."
We require a minimum initial contribution of $25,000 for you to purchase a
contract. You may make additional contributions of at least $1,000 each,
subject to limitations noted below. The following table summarizes our rules
regarding contributions to your contract. All ages in the table refer to the
age of the annuitant named in the contract.
- --------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT LIMITATIONS ON
TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NQ 0 through 85 o After-tax money. o No additional contributions after
age 86.
o Paid to us by check or transfer
of contract value in a tax-deferred
exchange under Section 1035 of the
Internal Revenue Code.
- --------------------------------------------------------------------------------------------------------
Rollover IRA 20 through 85 o Rollovers from a qualified plan. o No additional rollover or direct
transfer contributions after
o Rollovers from a TSA. age 86.
o Rollovers from another
traditional individual o Contributions after age 70 1/2
retirement arrangement. must be net of required
minimum distributions.
o Direct custodian-to-custodian
transfers from another o Regular IRA contributions are
traditional individual not permitted.
retirement arrangement.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
16 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT LIMITATIONS ON
TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Roth 20 through 85 o Rollovers from another Roth o No additional rollover or direct
Conversion IRA. transfer contributions after
IRA age 86.
o Conversion rollovers from a
traditional IRA. o Conversion rollovers after
age 70 1/2 must be net of
o Direct transfers from another required minimum distributions
Roth IRA. for the traditional IRA you are
rolling over.
o You cannot roll over funds from
a traditional IRA if your adjusted
gross income is $100,000 or
more.
o Regular after-tax contributions
are not permitted.
- --------------------------------------------------------------------------------------------------------
QP 20 through 75 o Only transfer contributions from o Regular ongoing payroll
an existing qualified plan trust contributions are not permitted.
as a change of investment
vehicle under the plan. o Only one additional contribution
may be made during a contract
o The plan must be qualified year.
under Section 401(a) of the
Internal Revenue Code. o No additional transfer
contributions after age 76.
o For 401(k) plans, transferred
contributions may only include o For defined benefit plans,
employee pre-tax contributions. employee contributions are not
permitted.
o Contributions after age 70 1/2
must be net of any required
minimum distributions.
- --------------------------------------------------------------------------------------------------------
Rollover TSA 20 through 85 o Rollovers from another TSA o No additional rollover or direct
contract or arrangement. transfer contributions after
age 86.
o Rollovers from a traditional IRA
which was a "conduit" for TSA o Contributions after age 70 1/2
funds previously rolled over. must be net of required
minimum distributions.
o Direct transfers from another
contract or arrangement under
Section 403(b) of the Internal
Revenue Code, complying with
IRS Revenue Ruling 90-24.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See "Tax information" for a more detailed discussion of sources of
contributions and certain contribution limitations. We may refuse to accept any
contribution if the sum of all contributions under all Equitable Accumulator
contracts 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 contracts that you own would then total more than
$2,500,000.
- --------------------------------------------------------------------------------
The 12-month period beginning on your contract date and each 12-month period
after that date is a "contract year." The end of each 12-month period is your
"contract date anniversary." The "contract date" is the effective date of a
contract. This usually is the business day we receive your initial contribution.
Your contract date will be shown in your contract.
- --------------------------------------------------------------------------------
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" later in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
18 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint owner
may also be named. Only natural persons can be joint owners. This means that an
entity such as a corporation cannot be a joint owner.
Under Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts, the owner
and annuitant must be the same person.
Under QP contracts, the owner must be the trustee of the qualified plan and the
annuitant must be the plan participant/employee. See Appendix II for more
information on QP contracts.
- --------------------------------------------------------------------------------
A participant is an individual who is currently, or was formerly participating
in an eligible employer's QP or TSA plan.
- -----------------------------------------------------------------------------
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
For your convenience, we will accept initial and additional contributions by
wire transmittal from certain broker-dealers who have agreements with us for
this purpose. Additional contributions may also be made under our automatic
investment program. These methods of payment are discussed in detail under "More
information" later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing or
unclear, we will try to obtain that information. If we are unable to obtain all
of the information we require within five business days after we receive an
incomplete application or form, we will inform the registered representative
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- -----------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
SECTION 1035 EXCHANGES
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
Select NQ contract in a tax-free exchange if you follow certain procedures as
shown in the form that we require you to use. Also see "Tax information" later
in this prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options and the fixed
maturity options.
VARIABLE INVESTMENT OPTIONS
Your investment results in any one of the 22 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed below
are the currently available Portfolios, their investment objectives, and their
advisers.
- --------------------------------------------------------------------------------
You can choose among 22 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- --------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Money Market High level of current income while preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- --------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income Alliance Capital Management L.P.
and, to the extent consistent with that
objective, capital appreciation
- --------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
income
- --------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- --------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- --------------------------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Standard & Poor's 500
Composite Stock Price Index
- --------------------------------------------------------------------------------------------------------------
BT Small Company Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Russell 2000 Index
- --------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Morgan Stanley Capital
International Europe, Australia, Far East Index
- --------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------
Capital Guardian International* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
20 CONTRACT FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- -------------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JPM Core Bond High total return consistent with moderate risk J.P. Morgan Investment Management Inc.
of capital and maintenance of liquidity
- -------------------------------------------------------------------------------------------------------------------------
Lazard Large Cap Value Capital appreciation Lazard Asset Management
- -------------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Value Capital appreciation Lazard Asset Management
- -------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company
growth of capital and income
- -------------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company
- -------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company
Companies
- -------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- -------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth Capital growth, current income is a secondary Putnam Investment Management, Inc.
& Income Value objective
- -------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Investors Long-term growth of capital and any increased Putnam Investment Management, Inc.
Growth income that results from this growth
- -------------------------------------------------------------------------------------------------------------------------
EQ/Putnam International Capital appreciation Putnam Investment Management, Inc.
Equity
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not currently be available in all states.
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
FIXED MATURITY OPTIONS
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. These amounts become part of our general account assets. They
will accumulate interest at the "rate to maturity" for each fixed maturity
option. The total amount you allocate to and accumulate in each fixed maturity
option is called the "fixed maturity amount." The fixed maturity options are not
available in contracts issued in Maryland.
<PAGE>
- --------------------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity.
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the rate
to maturity in effect for new contributions allocated to that fixed maturity
option on the date we apply your contribution. If you make any withdrawals or
transfers from a fixed maturity option before the maturity date, we will make a
"market value adjustment" that may increase or decrease any fixed maturity
amount you have left in that fixed maturity option. We discuss the market value
adjustment below and in greater detail later in this prospectus under "More
information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. It will reflect the market value adjustment that we would make if
you were to withdraw all of your fixed maturity amounts on the date of the
report. We call this your "market adjusted amount."
FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 are
available at any time.
We will not accept allocations to a fixed maturity option if on the date the
contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the
year before each of your fixed maturity options is scheduled to mature. At that
time, you may choose to have one of the following options take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity option,
or into any of the variable investment options; or
(b) withdraw the maturity value.
If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the fixed
maturity option that will mature next.
MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate an
amount to a fixed maturity option to the time that you take a withdrawal, the
market value adjustment will be negative. Likewise, if interest rates drop at
the end of that time, the market value adjustment will be positive. Also, the
amount of the market value adjustment, either up or down, will be greater the
longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment
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22 CONTRACT FEATURES AND BENEFITS
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could greatly reduce your value in the fixed maturity options, particularly in
the fixed maturity options with later maturity dates.
We provide an illustration of the market adjusted amount of specified maturity
values, an explanation of how we calculate the market value adjustment, and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information" later
in this prospectus. Appendix III of this prospectus provides an example of how
the market value adjustment is calculated.
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among three ways to allocate your contributions under your
contract: self-directed, principal assurance or dollar cost averaging.
SELF-DIRECTED ALLOCATION
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity options
with maturity dates that are later than the February 15th immediately following
the date annuity payments are to begin.
PRINCIPAL ASSURANCE ALLOCATION
Under this allocation program you select a fixed maturity option. We specify the
portion of your initial contribution to be allocated to that fixed maturity
option in an amount that will cause the maturity value to equal the amount of
your entire initial contribution on the fixed maturity option's maturity date.
The maturity date you select generally may not be later than 10 years, or
earlier than seven years from your contract date. You allocate the rest of your
contribution to the variable investment options however you choose.
For example, if your initial contribution is $10,000, and on April 1, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009, since
the rate to maturity was 4.72% on April 1, 1999, we would have allocated
$6,338.82 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA, QP or
Rollover TSA contract, before you select a maturity year that would extend
beyond the year in which you will reach age 70 1/2, you should consider whether
your value in the variable investment options, or your other traditional IRA or
TSA funds are sufficient to meet your required minimum distributions. See "Tax
information."
DOLLAR COST AVERAGING
We offer two dollar cost averaging programs. Each program allows you to
gradually transfer amounts from the Alliance Money Market option to the other
variable investment options by periodically transferring approximately the same
dollar amount to the other variable investment options you select. This will
cause you to purchase more units if the unit's value is low and fewer units if
the unit's value is high. Therefore, you may get a lower average cost per unit
over the long term. These plans of investing, however, do not guarantee that you
will earn a profit or be protected against losses.
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Units measure your value in each variable investment option.
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SPECIAL DOLLAR COST AVERAGING PROGRAM. You may dollar cost average from the
Alliance Money Market option into any of the other variable investment options.
You must allocate your entire initial contribution into the Alliance Money
Market option. We will transfer your value in the Alliance Money Market option
into the other variable investment options that you select over the next 12
months or such other period we may offer. The transfer date will be
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CONTRACT FEATURES AND BENEFITS 23
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the same day of the month as the contract date, but not later than the 28th. All
amounts will be transferred out by the end of the first contract year or such
other period we may offer. Under this program we will not deduct the mortality
and expense risks, administrative, and distribution charges from assets in the
Alliance Money Market option. You may not allocate additional contributions to
the Alliance Money Market option under this program.
The only amounts that should be transferred from the Alliance Money Market
option are your regularly scheduled monthly transfers to the other variable
investment options. If you request to transfer or withdraw any other amounts, we
will transfer all of the value that you have remaining in the Alliance Money
Market option to the other investment options according to the allocation
percentages we have on file for you. As a result, you will no longer be able to
participate in the special dollar cost averaging program. You may also ask us to
cancel your participation at any time.
GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money
Market option is at least $5,000, you may choose, at any time, to have a
specified dollar amount or percentage of your value transferred from that option
to the other variable investment options. You can select to have transfers made
on a monthly, quarterly or annual basis. The transfer date will be the same
calendar day of the month as the contract date, but not later than the 28th day
of the month.
The minimum amount that we will transfer each time is $250. The maximum amount
we will transfer is equal to your value in the Alliance Money Market option at
the time the program is elected, divided by the number of transfers scheduled.
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The general dollar cost averaging program
will then end. You may change the transfer amount once each contract year, or
cancel this program at any time.
----------------------------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program. See "Transferring your money among investment options."
OUR BASEBUILDER OPTION
The baseBUILDER option offers you a combined guaranteed minimum income benefit
and guaranteed minimum death benefit. The combined benefit is available if the
annuitant is between the ages of 20 and 75. There is an additional charge for
this benefit. See "baseBUILDER benefits charge" under "Charges and expenses."
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baseBUILDER provides income protection if you elect an income payout while the
annuitant is alive and a death benefit if the annuitant dies.
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The guaranteed minimum income benefit component of baseBUILDER is described
below under "Your guaranteed minimum income benefit under baseBUILDER." As part
of baseBUILDER you have a choice of two guaranteed minimum death benefit
options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The
two options are described under "Guaranteed minimum death benefit." The
guaranteed minimum death benefit is provided under the contract even if you do
not elect baseBUILDER, and for a broader range of annuitant ages at contract
issue than those available under baseBUILDER.
YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER
The guaranteed minimum income benefit guarantees you a minimum amount of
lifetime income under our Income Manager (Life Annuity with a Period Certain)
payout annuity contract. The Income Manager (Life Annuity with a Period Certain)
payout annuity contract provides payments during a specified period of time
(called a period certain) that will continue for the rest of the annuitant's
life thereafter. If the annuitant dies before the period certain has ended,
payments will continue to the beneficiary for the time remaining in the period
certain.
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24 CONTRACT FEATURES AND BENEFITS
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We also refer to the guaranteed minimum income benefit as the "Living
Benefit."
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GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE.
On the contract date, your guaranteed minimum income benefit's benefit base
("benefit base") is equal to the initial contribution. Thereafter, your benefit
base will be credited with interest each day through the annuitant's age 80. The
effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option) and in the special dollar
cost averaging program. Amounts in the Alliance Money Market option, the fixed
maturity options, and in a Rollover TSA contract loan reserve account will be
credited with interest at a 3% effective annual rate. No interest is credited
after age 80.
If you make an additional contribution to your contract, we will increase your
current benefit base by the dollar amount of the additional contribution on the
date that the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your benefit base for the
withdrawal on the date that you make the withdrawal. See "How withdrawals affect
your guaranteed minimum income benefit and guaranteed minimum death benefit"
under "Accessing your money" for more detailed information. Under Rollover TSA
contracts, we will reduce your benefit base by the amount of any outstanding
loan plus accrued interest on the date that you exercise your guaranteed minimum
income benefit.
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Your benefit base is not an account value or a cash value and is used solely for
purposes of calculating your guaranteed minimum income benefit.
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EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE.
If you exercise the guaranteed minimum income benefit, the annual lifetime
income that you will receive under the Income Manager (Life Annuity with a
Period Certain) payout annuity contract, will be the greater of (i) your
guaranteed minimum income benefit, and (ii) the income provided by applying your
actual account value at our then current annuity purchase factors.
The guaranteed minimum income benefit is based on conservative actuarial
factors. Therefore, even if your account value is less than your benefit base,
you may generate more income by applying your account value to current annuity
purchase factors. We will make this comparison for you when the need arises.
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The guaranteed minimum income benefit should be regarded as a safety net only.
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ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT.
The table below illustrates the guaranteed minimum income benefit amounts per
$100,000 of initial contribution, for a male annuitant age 60 (at issue) on the
contract date anniversaries indicated, assuming no additional contributions,
withdrawals, or loans under Rollover TSA contracts, and assuming there were no
allocations to the Alliance Money Market option or the fixed maturity options.
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GUARANTEED MINIMUM
INCOME BENEFIT -- ANNUAL INCOME
CONTRACT DATE PAYABLE FOR LIFE WITH
ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN
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7 $ 8,315
10 10,341
15 14,924
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Under NQ, Rollover IRA, and Roth Conversion IRA contracts, you may exercise the
guaranteed minimum income benefit only within 30 days following the seventh or
later contract date anniversary under your contract. However, you may not
exercise the benefit before the annuitant is age 60, or after the annuitant is
age 83. There is an exception if the annuitant is between ages 20 and 44 when
your contract is issued. In this case you may exercise the benefit following the
15th or later contract date anniversary, but not after the annuitant is age 83.
See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA
contracts" below regarding exercising the benefit under QP and Rollover TSA
contracts.
Your contract will terminate when you exercise your guaranteed minimum income
benefit. You will then receive an Income Manager (Life Annuity with a Period
Certain)
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CONTRACT FEATURES AND BENEFITS 25
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payout annuity contract. Your period certain will be based on the annuitant's
age at the time the benefit is exercised, as follows:
LEVEL PAYMENTS*
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PERIOD CERTAIN YEARS
-------------------------
ROLLOVER IRA
AND ROTH
ANNUITANT'S CONVERSION
AGE AT EXERCISE IRA NQ
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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
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* Other forms and periods certain may also be available. For Rollover IRA
contracts, please see "Minimum distributions" under "Tax information," as
to how this option may be affected if exercised after age 70 1/2.
You will begin receiving payments one payment period after the payout annuity
contract is issued. For example, if you select monthly annuity payments, we will
send your first payment to you approximately one month from the date your
contract is issued.
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 as of 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. You
must return your contract to us in order to exercise this benefit. The amount of
income you actually receive will be determined when we receive your request to
exercise the benefit.
You may also apply your cash value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity contract, and you may always apply
your account value to any of our annuity payout options. The annuity payout
options are discussed under "Accessing your money." These options differ from
the Income Manager payout annuity contracts. They may provide higher or lower
income levels, but do not have all the features of the Income Manager payout
annuity contract. You may request an illustration of the Income Manager payout
annuity contract from your registered representative.
The Income Manager (Life Annuity with a Period Certain) payout annuity contracts
are offered through our prospectus for the Income Manager payout annuities. You
may obtain a copy of the most current version from your registered
representative. You should read it carefully before you decide to exercise your
guaranteed minimum income benefit.
SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner
(discussed under "More information" later in this prospectus) elects to continue
the contract after your death, the guaranteed minimum income benefit will
continue to be available on the contract date anniversaries specified above
based on the contract date. However, the guaranteed minimum income benefit must
be exercised based on the age of the successor annuitant/contract owner.
EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA
CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be
exercised in the same manner as described above only after the trustee of the
qualified plan directly rolls over the QP contract to a Rollover IRA contract.
In this process the ownership of the QP contract is changed to the annuitant.
The rollover to a Rollover IRA contract and change of ownership may only occur
when the annuitant will no longer be a participant in the qualified plan.
Similarly, under Rollover TSA contracts the contract owner must convert the
Rollover TSA contract in a direct rollover to a Rollover IRA contract according
to our rules. The rollover to a Rollover IRA contract may only occur when you
are eligible for a rollover distribution from a TSA. This may generally occur
when you are age 59 1/2, or you are separated from service from the employer
who provided the Rollover TSA funds. See "Rollover or direct transfer
contributions" under "Tax information" later in this prospectus.
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26 CONTRACT FEATURES AND BENEFITS
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GUARANTEED MINIMUM DEATH BENEFIT
Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through
79 at issue of Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts;
and 20 through 75 at issue of QP contracts.
You may elect either the "5% roll up to age 80" or the "annual ratchet to age
80" guaranteed minimum death benefit when you apply for a contract. Once you
have made your election, you may not change it.
5% roll up to age 80. On the contract date, the guaranteed minimum death benefit
equals your initial contribution. Thereafter, the guaranteed minimum death
benefit will be credited with interest each day through the annuitant's age 80.
The effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option) and in the special dollar
cost averaging program. Amounts in the Alliance Money Market option, the fixed
maturity options and in a Rollover TSA contract loan reserve account will be
credited with interest at a 3% effective annual rate. No interest is credited
after the annuitant is age 80.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the additional contribution on the
date the contribution is allocated to your investment options. If you take a
withdrawal from your contract, we will adjust your guaranteed minimum death
benefit for the withdrawal on the date you take the withdrawal.
Annual ratchet to age 80. On the contract date, your guaranteed minimum death
benefit equals your initial contribution. Then, on each contract date
anniversary, we will determine your guaranteed minimum death benefit by
comparing your current guaranteed minimum death benefit to your account value on
that contract date anniversary. If your account value is higher than your
guaranteed minimum death benefit, we will increase your guaranteed minimum death
benefit to equal your account value. On the other hand, if your account value on
the contract date anniversary is less than your guaranteed minimum death
benefit, we will not adjust your guaranteed minimum death benefit either up or
down.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the contribution on the date the
contribution is allocated to your investment options. If you take a withdrawal
from your contract, we will adjust your guaranteed minimum death benefit on the
date you take the withdrawal.
Applicable for annuitant ages 80 through 85 when the contract is issued.
On the contract date, your guaranteed minimum death benefit equals your initial
contribution. Thereafter, it will be increased by the dollar amount of any
additional contributions. We will adjust your guaranteed minimum death benefit
if you take any withdrawals.
----------------------------------------
Please see "How withdrawals affect your guaranteed minimum income benefit and
guaranteed minimum death benefit" under "Accessing your money" for information
on how withdrawals affect your guaranteed minimum death benefit.
See Appendix IV for an example of how we calculate the guaranteed minimum death
benefit.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it to
us for a refund. To exercise this cancellation right you must mail the contract
directly to our Processing Office within 10 days after you receive it. In some
states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract and will
reflect (i) any investment gain or loss in the variable investment options and
(ii) any positive or negative market value adjustments in the fixed maturity
options through the date we receive your contract. However,
<PAGE>
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CONTRACT FEATURES AND BENEFITS 27
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some states require that we refund the full amount of your contribution (not
reflecting (i) or (ii) above). For any IRA contract returned to us within seven
days after you receive it, we are required to refund the full amount of your
contribution.
We may require that you wait six months before you may apply for a contract with
us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA contract, you may cancel your Roth Conversion IRA contract and return to a
Rollover IRA contract. Our Processing Office, or your registered representative,
can provide you with the cancellation instructions.
<PAGE>
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28 Determining your contract's value
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Determining your contract's value
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YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have allocated to the (i)
variable investment options and (ii) fixed maturity options. These amounts are
subject to certain fees and charges discussed under "Charges and expenses."
Under Rollover TSA contracts, if you have any outstanding loan your account
value will include any amount in the loan reserve account.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value. If you have a
Rollover TSA contract with an outstanding loan, your cash value also is reduced
by the amount of any outstanding loan plus accrued interest. Please see
"Surrendering your contract to receive its cash value."
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option invests in shares of a corresponding Portfolio.
Your value in each variable investment option is measured by "units." The value
of your units will increase or decrease as though you had invested it in the
corresponding Portfolio's shares directly. Your value, however, will be reduced
by the amount of the fees and charges that we deduct under the contract. Your
value will also be reduced by the dollar amount of any withdrawals that you
make.
The unit value for each variable investment option depends on the investment
performance of that option, minus daily charges for mortality and expense
risks, administrative, and distribution expenses. On any day, your value in any
variable investment option equals the number of units credited to your contract
under that option, multiplied by that day's value for one unit. The number of
your contract units in any variable investment option does not change unless
you make additional contributions, make a withdrawal, or transfer amounts
between investment options. In addition, when we deduct the baseBUILDER
benefits charge the number of units credited to your contract will be reduced.
A description of how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date
is the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value.
<PAGE>
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Transferring your money among investment options 29
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Transferring your money among investment options
- --------------------------------------------------------------------------------
TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer
some or all of your account value among the investment options, subject to the
following:
o You may not transfer to a fixed maturity option that matures in the current
calendar year, or if its rate to maturity is 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately following
the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office.
Transfer requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option
(whole percentages only), and
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. However, it will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among
each variable investment option so that the percentage of your account value
that you specify is invested in each option at the end of each rebalancing
date.
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Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your registered representative or
other financial adviser before electing the program.
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You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in a dollar
cost averaging program. Rebalancing is not available for amounts you have
allocated in the fixed maturity options.
<PAGE>
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30 ACCESSING YOUR MONEY
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Accessing your money
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WITHDRAWING YOUR ACCOUNT VALUE
You have several ways to withdraw your account value before annuity payments
begin. The table below shows the methods available under each type of contract.
More information follows the table. For the tax consequences of withdrawals,
see "Tax information."
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METHOD OF WITHDRAWAL
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SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
NQ Yes Yes No No
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Rollover IRA Yes Yes Yes Yes
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Roth
Conversion
IRA Yes Yes Yes No
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QP Yes No No Yes
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Rollover
TSA Yes* No No Yes
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* For some Rollover TSA contracts, your ability to take withdrawals, loans or
surrender your contract may be limited. You must provide withdrawal
restriction information when you apply for a contract. See "Tax information
-- Tax Sheltered Annuity contracts (TSAs)."
LUMP SUM WITHDRAWALS
(All contracts)
You may take lump sum withdrawals from your account value at any time.
(Rollover TSA contracts may have restrictions.) The minimum amount you may
withdraw is $1,000. If you request to withdraw more than 90% of a contract's
current cash value we will treat it as a request to surrender the contract for
its cash value. See "Surrendering your contract to receive its cash value"
below.
Under Rollover TSA contracts, if a loan is outstanding, you may only take lump
sum withdrawals as long as the cash value remaining after any withdrawal equals
at least 10% of the outstanding loan plus accrued interest.
SYSTEMATIC WITHDRAWALS
(NQ, Rollover IRA, and Roth Conversion IRA contracts only)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would
be less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own a Rollover
IRA or Roth Conversion IRA contract, you may elect this withdrawal method only
if you are between ages 59 1/2 and 70 1/2.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change
the amount or percentage in any contract year in which you have already taken a
lump sum withdrawal. You can cancel the systematic withdrawal option at any
time.
SUBSTANTIALLY EQUAL WITHDRAWALS
(Rollover IRA and Roth Conversion IRA contracts only)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have
<PAGE>
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ACCESSING YOUR MONEY 31
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otherwise been due on prior withdrawals made under this option and for any
interest on those withdrawals.
You may elect to take substantially equal withdrawals at any time before age
59 1/2. We will make the withdrawal on any day of the month that you select as
long as it is not later than the 28th day of the month. You may not elect to
receive the first payment in the same contract year in which you took a lump
sum withdrawal. We will calculate the amount of your substantially equal
withdrawals based on the method you choose from the choices we offer. The
payments will be made monthly, quarterly or annually as you select. These
payments will continue until we receive written notice from you to cancel this
option or you take a lump sum withdrawal. You may elect to start receiving
substantially equal withdrawals again, but the payments may not restart in the
same contract year in which you took a lump sum withdrawal. We will calculate
the new withdrawal amount.
MINIMUM DISTRIBUTION WITHDRAWALS
(Rollover IRA, QP, and Rollover TSA contracts only -- See "Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out
is $250. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
Under Rollover TSA contracts, you may not elect minimum distribution
withdrawals if a loan is outstanding.
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For Rollover IRA, QP, and Rollover TSA contracts, 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).
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HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar
basis or on a pro rata basis as explained below:
INCOME BENEFIT
Benefit base -- Your current benefit base will be reduced on a
dollar-for-dollar basis as long as the sum of your withdrawals in a contract
year is 5% or less of the guaranteed minimum death benefit on the most recent
contract date anniversary. Once you take a withdrawal that causes the sum of
your withdrawals in a contract year to exceed 5% of the guaranteed minimum
death benefit on the most recent contract date anniversary, that withdrawal and
any subsequent withdrawals in that same contract year will reduce your current
benefit base on a pro rata basis.
DEATH BENEFIT
5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed
minimum death benefit, your current guaranteed minimum death benefit will be
reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in
a contract year is 5% or less of the guaranteed minimum death benefit on the
most recent contract date anniversary. Once you take a withdrawal that causes
the sum of your withdrawals in a contract year to exceed 5% of the guaranteed
minimum death benefit on
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32 ACCESSING YOUR MONEY
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the most recent contract date anniversary, that withdrawal and any subsequent
withdrawals in that same contract year will reduce your current guaranteed
minimum death benefit on a pro rata basis.
Annual ratchet to age 80 -- If you elect the annual ratchet to age 80
guaranteed minimum death benefit, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
Annuitant issue ages 80 through 85 -- If your contract was issued when the
annuitant was between ages 80 and 85, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
----------------------------------------
Reduction on a dollar-for-dollar basis means that your current benefit will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of your current account value that is
being withdrawn and we reduce your current benefit by that same percentage. For
example, if your account value is $30,000 and you withdraw $12,000, you have
withdrawn 40% of your account value. If your guaranteed minimum death benefit
was $40,000 before 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 5% threshold
described above can have a significant impact on your guaranteed minimum income
benefit or guaranteed minimum death benefit.
LOANS UNDER ROLLOVER TSA CONTRACTS
You may take loans from a Rollover TSA unless restricted by the employer who
provided the Rollover TSA funds. If you cannot take a loan, or cannot take a
loan without approval from the employer who provided the funds, we will have
this information in our records based on what you and the employer who provided
the funds told us when you purchased your contract. The employer must also tell
us whether special employer plan rules of the Employee Retirement Income
Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan
while you are taking minimum distribution withdrawals.
You should read the terms and conditions on our loan request form carefully
before taking out a loan. Under Rollover TSA contracts subject to ERISA, you
may only take a loan with the written consent of your spouse. Your contract
contains further details of the loan provision. Also, see "Tax information"
for general rules applicable to loans.
We will permit you to have only one loan outstanding at a time. The minimum
loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your
account value, subject to any limits under the federal income tax rules. The
term of a loan is five years. However, if you use the loan to acquire your
primary residence, the term is 10 years. The term may not extend beyond the
earliest of:
(1) the date annuity payments begin,
(2) the date the contract terminates, and
(3) the date a death benefit is paid (the outstanding loan will be deducted
from the death benefit amount).
Interest will accrue daily on your outstanding loan at a rate we set. The loan
interest rate will be equal to the Moody's Corporate Bond Yield Averages for
the calendar month ending two months before the day of the calendar quarter in
which the rate is determined.
LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the
amount of your loan to the loan reserve account. Unless you specify otherwise,
we will subtract your loan on a pro rata basis from your value in the variable
investment options. If there is insufficient value or no value in the variable
investment options, any additional amount of the loan will be subtracted from
the fixed maturity options in order of the earliest maturity date(s) first. A
market value adjustment may apply.
We will credit interest to the amount in the loan reserve account at a rate of
2% lower than the loan interest rate that applies for the time your loan is
outstanding. On each contract date anniversary after the date the loan is
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ACCESSING YOUR MONEY 33
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processed, we will transfer the amount of interest earned in the loan reserve
account to the variable investment options on a pro rata basis. When you make a
loan repayment, unless you specify otherwise, we will transfer the dollar
amount of the loan repaid from the loan reserve account to the investment
options according to the allocation percentages we have on our records.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while the
annuitant is living and before you begin to receive annuity payments. (Rollover
TSA contracts may have restrictions.) For a surrender to be effective, we must
receive your written request and your contract at our Processing Office. We
will determine your cash value on the date we receive the required information.
All benefits under the contract will terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we
may delay payment as described in "When to expect payments," below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any amount you
withdraw and, upon surrender, payment of the cash value. We may postpone such
payments or applying proceeds for any period during which:
(1) the New York Stock Exchange is closed or restricts trading,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people
remaining in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
(other than for death benefits) for up to six months while you are living. We
also may defer payments for a reasonable amount of time (not to exceed 15 days)
while we are waiting for a contribution check to clear.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery service at your expense.
CHOOSING YOUR ANNUITY PAYOUT OPTIONS
The Equitable Accumulator Select offers you several choices for receiving
retirement income. Each choice enables you to receive fixed or, in some cases,
variable annuity payments.
You can choose from among the six different annuity payout options listed
below. Restrictions apply, depending on the type of contract you own.
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Annuity payout options Life annuity
Life annuity -- period
certain
Life annuity -- refund
certain
Period certain annuity
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Income Manager payout Life annuity with a period
options certain
Period certain annuity
- --------------------------------------------------------------
ANNUITY PAYOUT OPTIONS
You can choose from among the following annuity payout options:
o Life annuity: An annuity that guarantees payments for the rest of the
annuitant's life. Payments end with the last monthly payment before the
annuitant's death. Because
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34 ACCESSING YOUR MONEY
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there is no continuation of benefits following the annuitant's death with
this payout option, it provides the highest monthly payment of any of the
life annuity options, so long as the annuitant is living.
o Life annuity -- period certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the end of a
selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity -- refund certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered. This payout
option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments. Currently, this payout option is available only as a fixed
annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
The life annuity, life annuity -- period certain, and life annuity -- refund
certain payout options are available on a single life or joint and survivor
life basis. The joint and survivor life annuity guarantees payments for the
rest of the annuitant's life and, after the annuitant's death, payments
continue to the survivor.
The following annuity payout options are available as variable annuities:
o Life annuity.
o Life annuity -- period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed income annuity option which can be elected in combination with
the variable income annuity options. The amount of each variable annuity
payment will fluctuate, depending upon the performance of the variable
investment options, and whether the actual rate of investment return is higher
or lower than an assumed base rate. Please see "Annuity Unit Values" in the
SAI.
We may offer other payout options not outlined here. Your registered
representative can provide details.
SELECTING AN ANNUITY PAYOUT OPTION
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return
your contract before annuity payments begin.
For NQ, Rollover IRA, and Roth Conversion IRA contracts, unless you choose a
different payout option, we will pay annuity payments under a life annuity with
a certain period of 10 years. The only payout options available under QP
contracts and Rollover TSA contracts are the life annuity 10 year period
certain and the joint and survivor life annuity 10 year period certain.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be
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ACCESSING YOUR MONEY 35
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later than the contract date anniversary that follows the annuitant's 90th
birthday. This may be different in some states.
Before your annuity payments are to begin, we will notify you by letter that
the annuity payout options are available. Once you have selected a payout
option and payments have begun, no change can be made other than transfers (if
permitted in the future) among the variable investment options if a variable
annuity is selected.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and whether it is fixed or
variable, in the case of a life annuity, the annuitant's age (or the
annuitant's and joint annuitant's ages) and in certain instances, the sex of
the annuitant(s).
Amounts in the fixed maturity options that are applied to a payout option
before a maturity date will result in a market value adjustment.
If, at the time you elect a payout option, 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 account value in a single sum rather
than as payments under the payout option chosen.
INCOME MANAGER PAYOUT OPTIONS
For NQ, Rollover IRA, and Roth Conversion IRA contracts, two Income Manager
payout options are also available. These are the Income Manager (Life Annuity
with a Period Certain) and the Income Manager (Period Certain).
For QP contracts, the Income Manager payout options are available only after
the trustee of the qualified plan directly rolls over the QP contract to a
Rollover IRA contract. In this process the ownership of the QP contract is
changed to the annuitant. The rollover to a Rollover IRA contract and the
change of ownership may only occur when the annuitant will no longer be a
participant in the qualified plan.
For Rollover TSA contracts, the Income Manager payout annuity options are
available only after the Rollover TSA contract is rolled over to a Rollover IRA
contract. This may generally occur when you are age 59 1/2, or you have
separated from service with the employer who provided the Rollover TSA funds.
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for the annuitant's life and the life of a
joint annuitant. The Income Manager (Period Certain) provides payments for a
specified period. The contract owner and annuitant must meet the issue age and
payment requirements. Both Income Manager annuities provide guaranteed level
payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period
Certain) also provides guaranteed increasing payments (NQ contracts only).
No additional contributions will be permitted under an Income Manager (Life
Annuity with a Period Certain).
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your registered representative. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free
basis. Please consult your tax adviser.
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36 Charges and expenses
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Charges and expenses
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CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option:
o A mortality and expense risks charge.
o An administrative charge.
o A distribution charge.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
o If you elect the optional benefit a charge for the optional baseBUILDER
benefit.
o At the time annuity payments are to begin charges for state premium and
other taxes. An annuity administrative fee may also apply.
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
To help with your retirement planning, we may offer other annuities, including
an Equitable Accumulator contract that has a withdrawal charge but no
distribution charge. This other contract may also provide higher rates to
maturity for the fixed maturity options. A current prospectus for this other
Equitable Accumulator contract may be obtained from your registered
representative.
MORTALITY AND EXPENSE RISKS CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the guaranteed
minimum death benefit. The daily charge is equivalent to an annual rate of
1.10% of the net assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, 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 contract, 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 contract. The
expense risk we assume is the risk that it will cost us more to issue and
administer the contracts than we expect.
ADMINISTRATIVE CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to
increase this charge to an annual rate of 0.35%.
DISTRIBUTION CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for a portion of our sales expenses under the contracts. The
daily charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option.
BASEBUILDER BENEFITS CHARGE
If you elect the baseBUILDER combined guaranteed minimum income benefit and
guaranteed minimum death benefit, we deduct a charge annually from your account
value on each contract date anniversary. The charge is equal to 0.30% of the
benefit base in effect on the contract date anniversary.
We will deduct this charge from your value in the variable investment options
on a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
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CHARGES AND EXPENSES 37
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options in order of the earliest maturity date(s) first. A market value
adjustment may apply.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout. 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 ).
ANNUITY ADMINISTRATIVE FEE
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges,
please refer to the prospectuses for The Hudson River Trust and EQ Advisors
Trust following this prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the mortality and
expense risks charge or change the minimum initial contribution requirements.
We also may change the guaranteed minimum income benefit and the guaranteed
minimum death benefit, or offer variable investment options that invest in
shares of The Hudson River Trust or EQ Advisors Trust that 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 Rollover IRA and Roth
Conversion IRA contracts. Sponsored arrangements include those in which an
employer allows us to sell contracts 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, such as requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy contracts
or that have been in existence less than six months will not qualify for
reduced charges.
We also may establish different rates to maturity for the fixed maturity
options under different classes of contracts for group or sponsored
arrangements.
We will make these and any similar reductions according to our rules in effect
when we approve a contract for issue. We may change these rules from time to
time. Any variations will reflect differences in costs or services and will not
be unfairly discriminatory.
Group or sponsored arrangements may be governed by federal income tax rules,
ERISA, or both. We make no representations with regard to the impact of these
and other applicable laws on such programs. We recommend that employers,
trustees, and others purchasing or making contracts available for purchase
under such programs seek the advice of their own legal and benefits advisers.
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38 PAYMENT OF DEATH BENEFIT
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Payment of death benefit
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YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for the change is signed. Under jointly owned contracts, the
surviving owner is considered the beneficiary, and will take the place of any
other beneficiary. You may be limited as to the beneficiary you can designate
in a Rollover TSA contract. In a QP contract, the beneficiary must be the
trustee.
The death benefit is equal to your account value, or, if greater, the
guaranteed minimum death benefit. The guaranteed minimum death benefit is part
of your contract, whether you select the combined baseBUILDER benefit or not.
We determine the amount of the death benefit as of the date we receive
satisfactory proof of the annuitant's death and any required instructions for
the method of payment. Under Rollover TSA contracts we will deduct the amount
of any outstanding loan plus accrued interest from the amount of the death
benefit.
EFFECT OF THE ANNUITANT'S DEATH
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you
cannot have a successor owner/annuitant.
For Rollover IRA contracts, a beneficiary who is not a surviving spouse may be
able to have limited ownership.
WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the person named to receive the death benefit upon the annuitant's death
to be the successor owner, you should name a successor owner. You may name a
different person that will become the successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes
the sole contract owner. This person will be considered the "beneficiary" for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a
joint ownership situation, the surviving spouse of the first owner to die) is
the successor owner for this purpose, the entire interest in the contract must
be distributed under the following rules:
o The cash value of the contract 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).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new owner's
life expectancy). Payments must begin no later than December 31st following
the calendar year of the non-annuitant owner's death. Unless this
alternative is elected, we will pay any cash value on December 31st of the
fifth calendar year following the year of your death (or the death of the
first owner to die).
o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long as
the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have not chosen an annuity payout option
as of the time of the
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PAYMENT OF DEATH BENEFIT 39
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annuitant's death, the beneficiary will receive the death benefit in a single
sum. However, subject to any exceptions in the contract, our rules and any
applicable requirements under federal income tax rules, the beneficiary may
elect to apply the death benefit to one or more annuity payout options we offer
at the time. See "Choosing your annuity payout options" earlier in this
prospectus. Please note that if you are both the contract owner and the
annuitant, you may elect only a life annuity or an annuity that does not extend
beyond the life expectancy of the beneficiary.
SUCCESSOR OWNER AND ANNUITANT
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current guaranteed minimum death benefit, if it is higher than the
account value. In determining whether the guaranteed minimum death benefit will
continue to grow, we will use your surviving spouse's age (as of the contract
date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA CONTRACTS
Upon your death under a Rollover IRA contract, a non-spouse beneficiary may
generally elect to keep the contract in your name and receive distributions
under the contract instead of the death benefit being paid in a single sum.
If you die AFTER the "required beginning date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract;
and
(b) the pattern of minimum distribution withdrawals you chose was based in
part on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the "required beginning date" (and therefore you were not
taking minimum distribution withdrawals under the contract), the beneficiary
may begin taking minimum distribution withdrawals under the contract. We will
increase the account value to equal the death benefit if the death benefit is
greater than the account value. That amount will be used to provide the
withdrawals. These withdrawals will begin by December 31st of the calendar year
following your death and will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used.
The designated beneficiary must be a natural person and of legal age at the
time of election. The beneficiary must elect this option within 30 days
following the date we receive proof of your death.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the guaranteed minimum income benefit and the death benefit
(including the guaranteed minimum death benefit) provisions will no longer be
in effect. Although the only withdrawals that will be permitted are minimum
distribution withdrawals, the beneficiary may choose at any time to withdraw
all of the account value.
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40 TAX INFORMATION
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Tax information
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator Select contracts owned by United
States taxpayers. The tax rules can differ, depending on the type of contract,
whether NQ, Rollover IRA, Roth Conversion IRA, QP or Rollover TSA. Therefore,
we discuss the tax aspects of each type of contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state
income and other state taxes, federal income tax and withholding rules for
non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the
contract, rights under the contract, or payments under the contract may be
subject to gift or estate taxes. You should not rely only on this document, but
should consult your tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides
tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover
TSA), you should do so for the contract's features and benefits other than tax
deferral. In such situations, the tax deferral of the contract does not provide
additional benefits.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TRANSFERS AMONG INVESTMENT OPTIONS
You can make transfers among investment options inside the contract without
triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
Contributions
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
CONTRACT EARNINGS
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
o if a contract fails investment diversification requirements as specified in
federal income tax rules (these rules are based on or are similar to those
specified for mutual funds under the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that we issue to you during the
same calendar year are linked together and treated as one contract for
calculating the taxable amount of any distribution from any of those contracts.
ANNUITY PAYMENTS
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your "investment in the contract." Generally, your investment in the contract
equals the contributions you made, less any amounts you previously withdrew
that were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount
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of the payment. For variable annuity payments, your investment in the contract
divided by the number of expected payments is your tax-free portion of each
payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any
unrecovered investment in the contract.
PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the
contract. If you withdraw an amount which is more than the earnings in the
contract as of the date of the withdrawal, the balance of the distribution is
treated as a return of your investment in the contract and is not taxable.
CONTRACTS PURCHASED THROUGH EXCHANGES
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator Select NQ contract (if you are using a life insurance
or endowment contract the owner and the insured must be the same on both
sides of the exchange transaction).
The tax basis of the source contract carries over to the Equitable Accumulator
Select NQ contract.
SURRENDERS
If you surrender or cancel the contract, the distribution is taxable as
ordinary income (not capital gain) to the extent it exceeds your investment in
the contract.
Death benefit payments made to a beneficiary after your death
For the rules applicable to death benefits, see "Payment of Death Benefit" and
"When an NQ contract owner dies before the annuitant" earlier in this
prospectus. The tax treatment of a death benefit taken as a single sum is
generally the same as the tax treatment of a withdrawal from or surrender of
your contract. The tax treatment of a death benefit taken as annuity payments
is generally the same as the tax treatment of annuity payments under your
contract.
EARLY DISTRIBUTION PENALTY TAX
If you take distributions before you are age 59 1/2 a penalty tax of 10% of
the taxable portion of your distribution applies in addition to the income tax.
The extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN
PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract 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 from the
contract for each tax return. Puerto Rico generally provides a credit against
Puerto Rico tax for U.S. tax paid. Depending on your
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)
GENERAL
"IRA" stands for individual retirement arrangement. There are two basic types
of such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds
the assets for the benefit of the IRA owner. The assets can include mutual
funds and certificates of deposit. In an individual retirement annuity, an
insurance company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "Traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required
to combine IRA values or contributions for tax purposes. For further
information about individual retirement arrangements, you can read Internal
Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)").
This publication is usually updated annually, and can be obtained from any IRS
district office or the IRS website (http:// www.irs.ustreas.gov).
The Equitable Accumulator Select IRA contract is designed to qualify as an
"individual retirement annuity" under Section 408(b) of the Internal Revenue
Code. You may purchase the contract as a traditional IRA ("Rollover IRA") or
Roth IRA ("Roth Conversion IRA"). This prospectus contains the information that
the IRS requires you to have before you purchase an IRA. This section of the
prospectus covers some of the special tax rules that apply to IRAs. The next
section covers Roth IRAs. Education IRAs are not discussed in this prospectus
because they are not available in individual retirement annuity form.
The Equitable Accumulator Select IRA contract has been approved by the IRS as
to form for use as a traditional IRA. We expect to submit the Roth IRA version
for formal IRS approval in 1999. This IRS approval is a determination only as
to the form of the annuity. It does not represent a determination of the merits
of the annuity as an investment. The IRS approval does not address every
feature possibly available under the Equitable Accumulator Select IRA contract.
CANCELLATION
You can cancel an Equitable Accumulator Select IRA contract by following the
directions under "Your right to cancel within a certain number of days" earlier
in the prospectus. You can cancel an Equitable Accumulator Select Roth
Conversion IRA contract issued as a result of a full conversion of an Equitable
Accumulator Select Rollover IRA contract by following the instructions in the
request for full conversion form. The form is available from our Processing
Office or your registered representative. If you cancel an IRA contract, we may
have to withhold tax, and we must report the transaction to the IRS. A contract
cancellation could have an unfavorable tax impact.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
Contributions to traditional IRAs
Individuals may make three different types of contributions to a traditional
IRA:
o tax-free "rollover" contributions; or
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o direct custodian-to-custodian transfers from other traditional IRAs
("direct transfers"); or
o regular contributions out of earned income or compensation.
We require that all of your contributions to the Equitable Accumulator Select
Rollover IRA contract must be either a rollover or a direct
custodian-to-custodian transfer. See "Rollovers and transfers" below. Since we
do not permit regular contributions under the Equitable Accumulator Select
Rollover IRA contract, we do not discuss them in great detail in this
prospectus.
EXCESS CONTRIBUTIONS
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000; or
o regular contributions of more than earned income for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age
70 1/2; or
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income.
It is also not subject to the 10% additional penalty tax on early
distributions, discussed below under "Early distribution penalty tax." You do
have to withdraw any earnings that are attributed to the excess contribution.
The withdrawn earnings would be included in your gross income and could be
subject to the 10% penalty tax.
Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
Any amount contributed to a traditional IRA after you reach age 701|M/21/2 must
be net of your required minimum distribution for the year in which the rollover
or direct transfer contribution is made.
Rollovers from qualified plans or TSAs
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll it
over to a traditional IRA within 60 days after the date you receive the
funds. The distribution from your qualified plan or TSA will be net of 20%
mandatory federal income tax withholding. If you want, you can replace the
withheld funds yourself and roll over the full amount.
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o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to
send the distribution directly to your traditional IRA issuer. Direct
rollovers are not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o "required minimum distributions" after age 70 1/2 or separation from
service; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary; or
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently
than once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free
basis between spouses or former spouses as a result of a court ordered divorce
or separation decree.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a traditional IRA at any time.
You do not need to wait for a special event like retirement.
Taxation of payments
Earnings in traditional IRAs are not subject to federal income tax until you or
your beneficiary receives them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any traditional IRA
(it does not have to be to this particular traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. At the end of any year in
which you have received a distribution from any traditional IRA, you calculate
the ratio of your total nondeductible traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
traditional IRAs you own at the end of the year plus all traditional IRA
distributions made during the year. Multiply this by all distributions from the
traditional IRA during the year to determine the nontaxable portion of each
distribution.
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In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA that
accepts rollover contributions. To get this "conduit" traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must have
been a rollover contribution from a qualified plan, and
o 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to
roll over these eligible rollover distribution contributions and earnings to
another qualified plan or TSA at a future date. The Rollover IRA contract can
be used as a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
Lifetime required minimum distributions
You must start taking annual distributions from your traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the calendar year you actually reach age 70 1/2, or to
delay taking it until the first three-month period in the next calendar year
(January 1 - April 1). Distributions must start no later than your "required
beginning date," which is April 1st of the calendar year after 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 each year.
How you can calculate required minimum distributions
There are two approaches to taking required minimum distributions --
"account-based" or "annuity-based."
Account-based method. If you choose an "account-based" method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by
a life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of
you and another individual. You can decide to "recalculate" your life
expectancy every year by using your current life expectancy factor. You can
decide instead to use the "term certain" method, where you reduce your life
expectancy by one every year after the initial year. If your spouse is your
designated beneficiary for the purpose of calculating annual account-based
required minimum distributions, you can also annually "recalculate" your
spouse's life expectancy if you want. If you choose someone who is not your
spouse as your designated beneficiary for the purpose of calculating annual
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account-based required minimum distributions, you have to use the "term
certain" method of calculating that person's life expectancy. If you pick a
nonspouse designated beneficiary, you may also have to do another special
calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). 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.
Annuity-based method. If you choose an "annuity-based" method, you do not have
to do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your traditional IRA based on
the method you choose?
No, unless you affirmatively select an annuity payout option or an
account-based withdrawal option such as our minimum distribution withdrawal
option. Because the options we offer do not cover every option permitted under
federal income tax rules, you may prefer to do your own required minimum
distribution calculations for one or more of your traditional IRAs.
What if you take more than you need to for any year?
The required minimum distribution amount for your traditional IRAs is
calculated on a year-by-year basis. There are no carry-back or carry-forward
provisions. Also, you cannot apply required minimum distribution amounts you
take from your qualified plans to the amounts you have to take from your
traditional IRAs and vice-versa. However, the IRS will let you calculate the
required minimum distribution for each traditional IRA that you maintain, using
the method that you picked for that particular IRA. You can add these required
minimum distribution amount calculations together. As long as the total amount
you take out every year satisfies your overall traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50%
penalty tax on the shortfall (required amount for traditional IRAs less amount
actually taken). It is your responsibility to meet the required minimum
distribution rules. We will remind you when our records show that your age
70 1/2 is approaching. If you do not select a method with us, we will
assume you are taking your required minimum distribution from another
traditional IRA that you own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values
in the contract at least as rapidly as under the distribution method before
your death. In some circumstances, your surviving spouse may elect to become
the owner of the traditional IRA and halt distributions until he or she reaches
age 70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract
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within five years after your death. Payments to a designated beneficiary over
the beneficiary's life or over a period certain that does not extend beyond the
beneficiary's life expectancy are also permitted, if these payments start
within one year of your death. A surviving spouse beneficiary can also (a)
delay starting any payments until you would have reached age 70 1/2 or (b)
roll over your traditional IRA into his or her own traditional IRA.
Successor annuitant and owner
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
IRA death benefits are taxed the same as IRA distributions.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
You cannot get loans from a traditional IRA. You cannot use a traditional IRA
as collateral for a loan or other obligation. If you borrow against your IRA or
use it as collateral, its tax-favored status will be lost as of the first day
of the tax year in which this prohibited event occurs. If this happens, you
must include the value of the traditional IRA in your federal gross income.
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.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition); or
o used to pay certain higher education expenses (special federal income tax
definition); or
o in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy), or over the joint lives of you and
your beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10%
penalty tax, they are taxable as discussed in "Withdrawals, payments and
transfers of funds out of traditional IRAs" above. Once substantially equal
withdrawals or Income Manager annuity payments begin, the distributions should
not be stopped or changed until the later of your reaching 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 contract as
changing your pattern of substantially equal withdrawals or Income Manager
payments for purposes of determining whether the penalty applies.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS)
This section of the prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
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The Equitable Accumulator Select Roth Conversion IRA contract is designed to
qualify as a Roth individual retirement annuity under Sections 408A and 408(b)
of the Internal Revenue Code.
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to a Roth IRA:
o taxable "rollover" contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers"); or
o regular after-tax contributions out of earnings.
Since we only permit direct transfer and rollover contributions under the
Equitable Accumulator Select Roth Conversion IRA contract, we do not discuss
regular after-tax contributions here. If you use the forms we require, we will
also accept traditional IRA funds which are subsequently recharacterized as
Roth IRA funds following special federal income tax rules
ROLLOVERS AND DIRECT TRANSFERS
What is the difference between rollover and direct transfer transactions?
You may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under
Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of
the Internal Revenue Code. You may make direct transfer contributions to a Roth
IRA only from another Roth IRA.
The difference between a rollover transaction and a direct transfer transaction
is the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. You can make direct transfer
transactions only between identical plan types (for example, Roth IRA to Roth
IRA). You can also make rollover transactions between identical plan types.
However, you can only use rollover transactions between different plan types
(for example, traditional IRA to Roth IRA).
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover
transactions only once in any 12-month period for the same funds.
Trustee-to-trustee or custodian-to-custodian direct transfers can be made more
frequently than once a year. Also, if you send us the rollover contribution to
apply it to a Roth IRA, you must do so within 60 days after you receive the
proceeds from the original IRA to get rollover treatment.
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. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Conversion contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) 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 considered to
have received) the traditional IRA proceeds. Unlike a rollover from a
traditional IRA to another traditional IRA, the conversion rollover transaction
is not tax exempt. Instead, the distribution from the traditional IRA is
generally fully taxable.
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For this reason, we are required to withhold 10% federal income tax from the
amount converted unless you elect out of such withholding. (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-free.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age
59 1/2.
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 calculated 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.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
No federal income tax law 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.
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your contract, surrender of your
contract and annuity payments from your contract. Death benefits are also
distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o Return of excess contributions or amounts recharacterized to a traditional
IRA.
Qualified distributions from Roth IRAs
Qualified distributions from Roth IRAs made because of one of the following
four qualifying events or reasons are not includable in income:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-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). It is not possible to
have a tax-free qualified distribution before the year 2003 because of the
five-year aging requirement.
Nonqualified distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are distributions that do not meet
the qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all
of your Roth IRAs is taxable. You have to reduce the amount of contributions to
all of your Roth IRAs to reflect any previous tax-free recoveries.
You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records
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pertaining to such contributions and distributions until your interests in all
Roth IRAs are distributed.
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.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
Payments to a beneficiary after your death
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
Same as traditional IRA.
EXCESS CONTRIBUTIONS
Same as traditional IRA, except that regular contributions made after age
70 1/2 are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions 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).
You can withdraw or recharacterize any contribution to a Roth IRA before the
due date (including extensions) for filing your federal income tax return for
the tax year. If you do this, you must also withdraw or recharacterize any
earnings attributable to the contribution.
EARLY DISTRIBUTION PENALTY TAX
Same as traditional IRA.
For Roth IRAs, special penalty rules may apply to amounts withdrawn
attributable to 1998 conversion rollovers.
SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS
Under QP contracts your plan administrator or trustee notifies you as to tax
consequences. See Appendix II.
TAX SHELTERED ANNUITY CONTRACTS (TSAS)
GENERAL
This section of the prospectus covers some of the special tax rules that apply
to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If
the rules are the same as those that apply to another kind of contract, for
example, traditional IRAs, we will refer you to the same topic under
"traditional IRAs."
CONTRIBUTIONS TO TSAS
There are two ways you can make contributions to this Equitable Accumulator
Select Rollover TSA contract:
o a rollover from another TSA contract or arrangement that meets the
requirements of Section 403(b) of the Internal Revenue Code, or
o a full or partial direct transfer of assets ("direct transfer") from another
contract or arrangement that meets the requirements of Section 403(b) of the
Internal Revenue Code by means of IRS Revenue Ruling 90-24.
With appropriate written documentation satisfactory to us, we will accept
rollover contributions from "conduit IRAs" for TSA funds.
If you make a direct transfer, you must fill out our transfer form.
Employer-remitted contributions
The Equitable Accumulator Select Rollover TSA contract does not accept
employer-remitted contributions. However, we provide the following discussion
as part of our description of restrictions on the distribution of funds
directly transferred, which include employer-remitted contributions to other
TSAs.
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Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
Rollover or direct transfer contributions
You may make rollover contributions to your Equitable Accumulator Select
Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue
Code. Generally, you may make a rollover contribution to a TSA when you have a
distributable event from an existing TSA as a result of your:
o termination of employment with the employer who provided the TSA funds; or
o reaching age 59 1/2 even if you are still employed; or
o disability (special federal income tax definition).
A transfer occurs when changing the funding vehicle, even if there is no
distributable event. Under a direct transfer, you do not receive a
distribution. We accept direct transfers of TSA funds under Revenue Ruling
90-24 only if:
o you give us acceptable written documentation as to the source of the funds,
and
o the Equitable Accumulator Select contract receiving the funds has provisions
at least as restrictive as the source contract.
Before you transfer funds to an Equitable Accumulator Select Rollover TSA
contract, you may have to obtain your employer's authorization or demonstrate
that you do not need employer authorization. For example, the transferring TSA
may be subject to Title I of ERISA, if the employer makes matching
contributions to salary reduction contributions made by employees. In that
case, the employer must continue to approve distributions from the plan or
contract.
Your contribution to the Equitable Accumulator Select TSA must be net of the
required minimum distribution for the tax year in which we issue the contract
if:
o you are or will be at least age 70 1/2 in the current calendar year,
and
o you have separated from service with the employer who provided the funds to
purchase the TSA you are transferring or rolling over to the Equitable
Accumulator Select Rollover TSA.
This rule applies regardless of whether the source of funds is a:
o rollover by check of the proceeds from another TSA; or
o direct rollover from another TSA; or
o direct transfer under Revenue Ruling 90-24 from another TSA.
Further, you must use the same elections regarding recalculation of your life
expectancy (and if applicable, your spouse's life expectancy), if you have
already begun to receive required minimum distributions from or with respect to
the TSA from which you are making your contribution to the Equitable
Accumulator Select Rollover TSA. You must also elect or have elected a minimum
distribution calculation method requiring recalculation of your life expectancy
(and if applicable, your spouse's life expectancy) if you elect an annuity
payout for the funds in this contract subsequent to this year.
DISTRIBUTIONS FROM TSAS
General
Depending on the terms of the employer plan and your employment status, you
may have to get your employer's
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consent to take a loan or withdrawal. Your employer will tell us this when you
establish the TSA through a direct transfer.
Withdrawal restrictions
If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts
transferred to this contract and any future earnings on the amount transferred
as not eligible for withdrawal until one of the following events happens:
o you are separated from service with the employer
who provided the funds to purchase the TSA you
are transferring to the Equitable Accumulator Select Rollover TSA;
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o you take a "hardship" withdrawal (special federal income tax definition).
If any portion of the funds directly transferred to your TSA contract is
attributable to amounts that you invested in a 403(b)(7) custodial account,
such amounts, including earnings, are subject to withdrawal restrictions. With
respect to the portion of the funds that were never invested in a 403(b)(7)
custodial account, these restrictions apply to the salary reduction (elective
deferral) contributions to a TSA annuity contract you made and any earnings on
them. These restrictions do not apply to the amount directly transferred to
your TSA contract that represents your December 31, 1988 account balance
attributable to salary reduction contributions to a TSA annuity contract and
earnings. To take advantage of this grandfathering you must properly notify us
in writing at our Processing Office of your December 31, 1988 account balance
if you have qualifying amounts transferred to your TSA contract.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur:
(1) the requirements for minimum distribution (discussed under "Required
minimum distributions" below) are met; or
(2) death; or
(3) retirement; or
(4) termination of employment in all Texas public institutions of higher
education.
For you to make a withdrawal, we must receive a properly completed written
acknowledgement from the employer. If a distributable event occurs before you
are vested, we will refund to the employer any amounts provided by an
employer's first-year matching contribution. We reserve the right to change
these provisions without your consent, but only to the extent necessary to
maintain compliance with applicable law. Loans are not permitted under Texas
Optional Retirement Programs.
Tax treatment of distributions
Amounts held under TSAs are generally not subject to federal income tax until
benefits are distributed. Distributions include withdrawals from your TSA
contract and annuity payments from your TSA contract. Death benefits paid to a
beneficiary are also taxable distributions. Unless an exception applies,
amounts distributed from TSAs are includable in gross income as ordinary
income. Distributions from TSAs may be subject to 20% federal income tax
withholding. See "Federal and state income tax withholding and information
reporting" below. In addition, TSA distributions may be subject to additional
tax penalties.
If you have made after-tax contributions, you will have a tax basis in your TSA
contract, which will be recovered tax-free. Since we do not track your
investment in the contract, if any, it is your responsibility to determine how
much of the distribution is taxable.
Distributions before annuity payments begin. On a total surrender, the amount
received in excess of the investment in the contract is taxable. We will report
the total amount of the distribution. The amount of any partial distribution
from a TSA prior to the annuity starting date is generally taxable,
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except to the extent that the distribution is treated as a withdrawal of
after-tax contributions. Distributions are normally treated as pro rata
withdrawals of after-tax contributions and earnings on those contributions.
Annuity payments. If you elect an annuity payout option, you will recover any
investment in the contract as each payment is received by dividing the
investment in the contract by an expected return determined under an IRS table
prescribed for qualified annuities. The amount of each payment not excluded
from income under this exclusion ratio is fully taxable. The full amount of the
payments received after your investment in the contract is recovered is fully
taxable. If you (and your beneficiary under a joint and survivor annuity) die
before recovering the full investment in the contract, a deduction is allowed
on your (or your beneficiary's) final tax return.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Death benefit distributions from a TSA generally receive the same tax treatment
as distributions during your lifetime. In some instances, distributions from a
TSA made to your surviving spouse may be rolled over to a traditional IRA.
LOANS FROM TSAS
You may take loans from a TSA unless restricted by the employer (for example,
under an employer plan subject to ERISA). If you cannot take a loan, or cannot
take a loan without approval from the employer who provided the funds, we will
have this information in our records based on what you and the employer who
provided the TSA funds told us when you purchased your contract.
Loans are generally not treated as a taxable distribution. If the amount of the
loan exceeds permissible limits under federal income tax rules when made, the
amount of the excess is treated (solely for tax purposes) as a taxable
distribution. Additionally, if the loan is not repaid at least quarterly,
amortizing (paying down) interest and principal, the amount not repaid when due
will be treated as a taxable distribution. Under Proposed Treasury Regulations
the entire unpaid balance of the loan is includable in income in the year of
the default.
TSA loans are subject to federal income tax limits and may also be subject to
the limits of the plan from which the funds came. Federal income tax rule
requirements apply even if the plan is not subject to ERISA. For example, loans
offered by TSAs are subject to the following conditions:
o The amount of a loan to a participant, when combined with all other loans to
the participant from all qualified plans of the employer, cannot exceed the
lesser of (1) the greater of $10,000 or 50% of the participant's
nonforfeitable accrued benefits and (2) $50,000 reduced by the excess (if
any) of the highest outstanding loan balance over the previous twelve months
over the outstanding loan balance of plan loans on the date the loan was
made.
o In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence. Equitable Accumulator
Select Rollover TSA contracts have a term limit of 10 years for loans used
to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level payments
over the term of the loan, with payments being made at least quarterly.
The amount borrowed and not repaid may be treated as a distribution if:
o the loan does not qualify under the conditions above,
o the participant fails to repay the interest or principal when due, or
o in some instances, the participant separates from service with the employer
who provided the funds or the plan is terminated.
In this case, the participant may have to include the unpaid amount due as
ordinary income. In addition, the 10% early distribution penalty tax may apply.
The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as
a distribution.
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TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS
You may roll over any "eligible rollover distribution" from a TSA into another
eligible retirement plan, either directly or within 60 days of your receiving
the distribution. To the extent rolled over, a distribution remains
tax-deferred.
You may roll over a distribution from a TSA to another TSA or to a traditional
IRA. A spousal beneficiary may roll over death benefits only to a traditional
IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under federal income tax rules. Distributions that you
cannot roll over generally include periodic payments for life or for a period
of 10 years or more, hardship withdrawals, and required minimum distributions
under federal income tax rules.
Direct transfers of TSA funds from one TSA to another under Revenue Ruling
90-24 are not distributions.
REQUIRED MINIMUM DISTRIBUTIONS
Same as traditional IRA with these differences:
When you have to take the first required minimum distribution
The minimum distribution rules force TSA participants to start calculating and
taking annual distributions from their TSAs by a required date. Generally, you
must take the first required minimum distribution for the calendar year in
which you turn age 70 1/2. You may be able to delay the start of required
minimum distributions for all or part of your account balance until after age
70 1/2, as follows:
o For TSA participants who have not retired from service with the employer who
provided the funds for the TSA by the calendar year the participant turns
age 70 1/2, the required beginning date for minimum distributions is
extended to April 1 following the calendar year of retirement.
o TSA plan participants may also delay the start of required minimum
distributions to age 75 of the portion of their account value attributable
to their December 31, 1986 TSA account balance, even if retired at age
70 1/2. We will know whether or not you qualify for this exception
because it will only apply to people who establish their Equitable
Accumulator Select Rollover TSA by direct Revenue Ruling 90-24 transfers.
If you do not give us the amount of your December 31, 1986 account balance
that is being transferred to the Equitable Accumulator Select Rollover TSA
on the form used to establish the TSA, you do not qualify.
SPOUSAL CONSENT RULES
This will only apply to you if you establish your Equitable Accumulator Select
Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell
us on the form used to establish the TSA whether or not you need to get spousal
consent for loans, withdrawals, or other distributions. If you do, you will
need such consent if you are married when you request a withdrawal under the
TSA contract. In addition, unless you elect otherwise with the written consent
of your spouse, the retirement benefits payable under the plan must be paid in
the form of a qualified joint and survivor annuity. A qualified joint and
survivor annuity is payable for the life of the annuitant with a survivor
annuity for the life of the spouse in an amount not less than one-half of the
amount payable to the annuitant during his or her lifetime. In addition, if you
are married, the beneficiary must be your spouse, unless your spouse consents
in writing to the designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments
will be made to your surviving spouse in the form of a life annuity unless at
the time of your death a contrary election was in effect. However, your
surviving spouse may elect, before payments begin, to receive payments in any
form permitted under the terms of the TSA contract and the plan of the employer
who provided the funds for the TSA.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a TSA before you reach age 59 1/2. This is in addition
to any income tax. There are exceptions to the extra penalty tax. No penalty
tax applies to pre-age 59 1/2 distributions made:
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o on or after your death; or
o because you are disabled (special federal income tax definition); or
o to pay for certain extraordinary medical expenses (special federal income
tax definition); or
o if you are separated from service, any form of payout after you are age 55;
or
o only if you are separated from service, a payout in the form of
substantially equal periodic payments made at least annually over your life
(or your life expectancy), or over the joint lives of you and your
beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
FEDERAL AND STATE INCOME TAX WITHHOLDING
AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable.
The rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this
purpose. You cannot elect out of withholding unless you provide us with your
correct Taxpayer Identification Number and a United States residence address.
You cannot elect out of withholding if we are sending the payment out of the
United States.
You should note the following special situations:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of traditional
IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA
and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or in
part.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. We do not discuss these rules
here. Certain states have indicated that state income tax withholding will also
apply to payments from the contracts made to residents. In some states, you may
elect out of state withholding, even if federal withholding applies. 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.
FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective
unless and until you revoke it. You may revoke or change your withholding
election at any time.
FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We
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apply that rate to the taxable amount in the case of nonqualified contracts,
and to the payment amount in the case of IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS
Unless you have the distribution go directly to the new plan, eligible rollover
distributions from qualified plans and TSAs are subject to mandatory 20%
withholding. An eligible rollover distribution from a TSA can be rolled over to
another TSA or a traditional IRA. An eligible rollover distribution from a
qualified plan can be rolled over to another qualified plan or traditional IRA.
All distributions from a TSA or qualified plan are eligible rollover
distributions unless they are on the following list of exceptions:
o any after-tax contributions you made to the plan; or
o any distributions which are "required minimum distributions" after age
70 1/2 or separation from service; or
o hardship withdrawals; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and your designated beneficiary; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
A death benefit payment to your surviving spouse, or a qualified domestic
relations order distribution to your current or former spouse, may be a
distribution subject to mandatory 20% withholding.
IMPACT OF TAXES TO EQUITABLE LIFE
The contracts provide that we may charge Separate Account No. 49 for taxes. We
do not now, but may in the future set up reserves for such taxes.
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ABOUT OUR SEPARATE ACCOUNT NO. 49
Each variable investment option is a subaccount of our Separate Account No. 49.
We established Separate Account No. 49 in 1996 under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable annuity contracts, including these
contracts. We are the legal owner of all of the assets in Separate Account No.
49 and may withdraw any amounts that exceed our reserves and other liabilities
with respect to variable investment options under our contracts. The results of
Separate Account No. 49's operations are accounted for without regard to
Equitable Life's other operations.
Separate Account No. 49 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 49.
Each subaccount (variable investment option) within Separate Account No. 49
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors Trust.
We reserve the right subject to compliance with laws that apply:
(1) to add variable investment options to, or to remove variable investment
options from, Separate Account No. 49, or to add other separate accounts;
(2) to combine any two or more variable investment options;
(3) to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment
option to another variable investment option;
(4) to operate Separate Account No. 49 or any variable investment option as a
management investment company under the Investment Company Act of 1940
(in which case, charges and expenses that otherwise would be assessed
against an underlying mutual fund would be assessed against Separate
Account No. 49 or a variable investment option directly);
(5) to deregister Separate Account No. 49 under the Investment Company Act of
1940;
(6) to restrict or eliminate any voting rights as to Separate Account No. 49;
and
(7) to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the
Investment Company Act of 1940. They are classified as "open-end management
investment companies," more commonly called mutual funds. Each trust issues
different shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Board of Trustees
of The Hudson River Trust and EQ Advisors Trust may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their
investment objectives, policies, restrictions, risks, expenses, their Rule
12b-1 Plans relating to their Class IB shares, and other aspects of their
operations, appears in their prospectuses, or in their SAIs which are available
upon request.
PROPOSED SUBSTITUTION OF PORTFOLIOS. We are asking the SEC to approve the
substitution of 14 newly created Portfolios of the EQ Advisors Trust for The
Hudson River Trust Portfolios currently available under the variable investment
options (the "Substitution"). The EQ Advisors Trust Portfolios will have
substantially identical investment objectives, strategies, and policies as
those of The Hudson River Trust Portfolios they would replace. The assets of
any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of investment options with similar advisory structures.
You also will have a single EQ Advisors Trust prospectus for all the
Portfolios, rather than the two separate prospectuses you now receive. EQ
Financial Consultants Inc. will be the manager of the new EQ Advisors Trust
Portfolios, and Alliance Capital Management L.P. will continue to provide the
day-to-day advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution transaction.
o The management fees for the new Portfolios will be the same as those for the
corresponding Portfolios of The Hudson River Trust. Certain of the new EQ
Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this
prospectus. It contains more information about the EQ Advisors Trust, including
its management structure, advisory arrangements, and general fees and expenses
that will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval, and again when the
Substitution is complete.
ABOUT OUR FIXED MATURITY OPTIONS
RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of April 1, 1999 and the related
price per $100 of maturity value were as follows:
FIXED MATURITY
OPTIONS
WITH FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR APRIL 1, 1999 MATURITY VALUE
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2000 3.00% $97.44
2001 3.79% $93.25
2002 4.08% $89.12
2003 4.21% $85.22
2004 4.27% $81.54
2005 4.42% $77.54
2006 4.52% $73.77
2007 4.54% $70.47
2008 4.62% $66.95
2009 4.72% $63.39
HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
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(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option
(based on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity option.
(d) We determine the present value of the fixed maturity amount payable
at the maturity date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be
positive or negative.
-------------------------------------------------------------------------------
Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
-------------------------------------------------------------------------------
If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment
that would have applied if you had withdrawn the entire value in that fixed
maturity option. This percentage is equal to the percentage of the value in the
fixed maturity option that you are withdrawing. See Appendix III for an
example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) above would
apply, we will use the rate at the next closest maturity date. If we are no
longer offering new fixed maturity options, the "current rate to maturity" will
be determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
INVESTMENTS UNDER THE FIXED MATURITY OPTIONS
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. Under New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the contracts are not
chargeable with liabilities from any other business we may conduct. We own the
assets of the separate account, as well as any favorable investment performance
on those assets. You do not participate in the performance of the assets held
in this separate account. We may, subject to state law that applies, transfer
all assets allocated to the separate account to our general account. We
guarantee all benefits relating to your value in the fixed maturity options,
regardless of whether assets supporting fixed maturity options are held in a
separate account or our general account.
We have no specific formula for establishing the rates to maturity for the
fixed maturity options. We expect the rates to be influenced by, but not
necessarily correspond to, among other things, the yields that we can expect to
realize on the separate account's investments from time to time. Our current
plans are to invest 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 fixed maturity
options.
Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the
contracts, we are not
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60 MORE INFORMATION
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obligated to invest those assets according to any particular plan except as we
may be required to by state insurance laws. We will not determine the rates to
maturity we establish by the performance of the nonunitized separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options, as well as our
general obligations.
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
exemptions and exclusionary provisions that apply, interests in the general
account have not been registered under the Securities Act of 1933, nor is the
general account an investment company under the Investment Company Act of 1940.
However, the market value adjustment interests under the contracts are
registered under the Securities Act of 1933.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests). The disclosure with regard to the general account,
however, may be subject to certain provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
WIRE TRANSMITTALS
We accept initial contributions sent by wire to our Processing Office by
agreement with certain broker-dealers. The transmittals must be accompanied by
information we require to allocate your contribution. Wire orders not
accompanied by complete information may be retained as described under "How you
can make your contributions."
Even if we accept the wire order and essential information, a contract
generally will not be issued until we receive and accept a properly completed
application. In certain cases we may issue a contract based on information
forwarded electronically. In these cases, you must sign our Acknowledgement of
Receipt form.
Where we require a signed application, no financial transactions will be
permitted until we receive the signed application and have issued the contract.
Where we require an Acknowledgement of Receipt form, financial transactions are
only permitted if you request them in writing, sign the request and have it
signature guaranteed, until we receive the signed Acknowledgement of Receipt
form.
After your contract has been issued, additional contributions may be
transmitted by wire.
AUTOMATIC INVESTMENT PROGRAM - FOR NQ CONTRACTS ONLY
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution
into an NQ contract on a monthly or quarterly basis. AIP is not available for
Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts.
The minimum amounts we will deduct are $100 monthly and $300 quarterly. AIP
additional contributions may be allocated to any of the variable investment
options and available fixed maturity options. You choose the day of the month
you wish to have your account debited as long as it is not later than the 28th
day of the month.
You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions
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of this prospectus describe circumstances that may cause exceptions. We
generally do not repeat those exceptions below.
BUSINESS DAY
Our business day is any day the New York Stock Exchange is open for trading.
Each business day ends at the time trading on the exchange closes (or is
suspended) for the day. We calculate unit values for our variable investment
options as of the end of each business day. This is usually 4:00 p.m., Eastern
Time. Contributions will be applied and any other transaction requests will be
processed when they are received along with all the required information.
o If your contribution, transfer or any other transaction request, containing
all the required information, reaches us on a non-business day or after 4:00
p.m. on a business day, we will use the next business day.
o A loan request under your Rollover TSA contract will be processed on the
first business day of the month following the date on which the properly
completed loan request form is received.
o If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then the
transaction will occur on either the 28th day of the month or the 1st day of
the next month, whichever is the closest business day.
o When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
CONTRIBUTIONS AND TRANSFERS
o Contributions allocated to the variable investment options are invested at
the value next determined after the close of the business day.
o Contributions allocated to a fixed maturity option will receive the rate to
maturity in effect for that fixed maturity option on that business day.
o Transfers to or from variable investment options will be made at the value
next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the rate to maturity
in effect for that fixed maturity option on the business day of the
transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o The election of trustees.
o The formal approval of independent auditors selected for each trust.
o Any other matters described in the prospectuses for the trusts or requiring
a shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is
taken. If we do not receive instructions in time from all contract 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 a Portfolio in the same
proportions that contract owners vote.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River
Trust 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 contract
owners, we currently do not foresee any disadvantages
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62 MORE INFORMATION
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because of this. The Hudson River Trust Board of Trustees intends to monitor
events in order to identify any material irreconcilable conflicts that may
arise and to determine what action, if any, should be taken in response. If we
believe that a response to any of those events insufficiently protects our
contract owners, we will see to it that appropriate action is taken.
SEPARATE ACCOUNT NO. 49 VOTING RIGHTS
If actions relating to Separate Account No. 49 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount
of reserves we are holding for that annuity in a variable investment option
divided by the annuity unit value for that option. We will cast votes
attributable to any amounts we have in the variable investment options in the
same proportion as votes cast by contract 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
published 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.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and
services, including those considered to be mission-critical, to be confirmed
as year 2000 compliant, renovated, replaced or the subject of contingency
plans, by June 30, 1999, except for one investment accounting system that is
scheduled to be replaced by August 31, 1999 and confirmed as year 2000
compliant by September 30, 1999. Additionally, Equitable Life will be
supplementing its existing business continuity and disaster recovery plans to
cover certain categories of contingencies that could arise as a result of year
2000 related failures. Year 2000 specific contingency plans are anticipated to
be in place by June 30, 1999.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is
a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely
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MORE INFORMATION 63
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to have a material adverse effect upon Separate Account No. 49, our ability to
meet our obligations under the contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity
payments begin. We will continue to treat you as the owner until we receive
written notification of any change at our Processing Office. You cannot assign
your NQ contract as collateral or security for a loan. Loans are also not
available under your NQ contract. In some cases, an assignment or change of
ownership may have adverse tax consequences. See "Tax information."
You cannot assign or transfer ownership of Rollover IRA, Roth Conversion IRA,
QP or Rollover TSA contract except by surrender to us. Loans are not available
and you cannot assign Rollover IRA, Roth Conversion IRA and QP contracts as
security for a loan or other obligation. If the employer that provided the
funds does not restrict them, loans are available under a Rollover TSA
contract.
For limited transfers of ownership after the owner's death see "Payment of
death benefit" and "Beneficiary continuation option for Rollover IRA
contracts." You may direct the transfer of the values under your Rollover IRA,
Roth Conversion IRA, QP or Rollover TSA contract to another similar
arrangement.
DISTRIBUTION OF THE CONTRACTS
Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 49. EDI serves as the
principal underwriter of Separate Account No. 49. 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 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, New York 10104. Under a
distribution agreement between EDI, Equitable Life, and certain of Equitable
Life's separate accounts, including Separate Account No. 49, Equitable Life
paid EDI distribution fees of $35,452,793 for 1998, $9,566,343 for 1997, and
$87,157 for 1996, as the distributor of certain contracts, including these
contracts, and as the principal underwriter of several Equitable Life separate
accounts, including Separate Account No. 49.
The contracts will be sold by registered representatives of EDI, as well as by
affiliated and unaffiliated broker-dealers with which EDI has entered into
selling agreements. Broker-dealer sales compensation will not exceed 1%
annually of the account value on a contract date anniversary. 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 of it to their
registered representatives as commissions related to sales of the contracts.
The offering of the contracts is intended to be continuous.
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64 Investment performance
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Investment performance
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We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT
INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY
ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR
RESULTS WILL DIFFER.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the
variable investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into
account all fees and charges under the contract, including the optional
baseBUILDER benefits charge, but do not take the charges for any applicable
taxes such as premium taxes or any applicable annuity administrative fee into
account.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the
optional baseBUILDER benefits charge or the charges for any applicable taxes
such as premium taxes or any applicable annuity administrative fee. If the
charges were reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest.
In some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted
the results of the Portfolios to reflect the charges under the contracts that
would have applied had the investment options and/or contracts been available.
The contracts were first offered on October 1, 1997.
In addition, we have adjusted the results prior to October 1996, when The
Hudson River Trust Class IB shares were not available, to reflect the 12b-1
fees currently imposed. Finally, the results shown for the Alliance Money
Market and Alliance Common Stock options for periods before March 22, 1985
reflect the results of the variable investment options that preceded them. The
"Since inception" figures for these options are based on the date of inception
of the preceding variable investment options. We have adjusted these results to
reflect the maximum investment advisory fee payable for the Portfolios, as well
as an assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as 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. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charge, distribution charge or optional benefit charge. Comparisons with these
benchmarks, therefore, may be 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. The benchmarks include:
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INVESTMENT PERFORMANCE 65
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ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index.
CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital
International Europe, Australia, Far East Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital
International Europe, Australia, Far East Index.
JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond.
LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index.
LAZARD SMALL CAP VALUE: Russell 200 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley
Capital International Emerging Markets Free Price Return Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500
Index.
EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index.
EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital
International Europe, Australia, Far East Index.
LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) 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 Select performance relative
to other variable annuity products.
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66 Investment performance
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TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
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LENGTH OF INVESTMENT PERIOD
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SINCE SINCE PORTFOLIO
1 3 5 10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market 3.40% 3.20% 2.97% 3.34% - - 7/13/81
- -----------------------------------------------------------------------------------------------------------------------------
Alliance High Yield (6.90)% 9.11% 7.72% 8.85% - - 1/2/87
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Alliance Common Stock 27.00% 25.05% 19.42% 16.22% - - 1/13/76
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Alliance Aggressive Stock (1.55)% 8.51% 9.16% 16.54% - - 1/27/86
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Alliance Small Cap Growth (5.97)% - - - 8.35% 8.35% 5/1/97
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BT Equity 500 Index 23.13% - - - 23.13% 23.13% 12/31/97
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BT Small Company Index (3.87)% - - - (3.87)% (3.87)% 12/31/97
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BT International Equity Index 18.17% - - - 18.17% 18.17% 12/31/97
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JPM Core Bond 7.28% - - - 7.28% 7.28% 12/31/97
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Lazard Large Cap Value 18.14% - - - 18.14% 18.14% 12/31/97
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Lazard Small Cap Value (8.56)% - - - (8.56)% (8.56)% 12/31/97
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MFS Research 22.12% - - - 18.24% 18.24% 5/1/97
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MFS Emerging Growth Companies 32.37% - - - 26.45% 26.45% 5/1/97
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Morgan Stanley Emerging Markets Equity (28.19)% - - - (28.19)% (24.67)% 8/20/97
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EQ/Putnam Growth & Income Value 11.02% - - - 12.82% 12.82% 5/1/97
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EQ/Putnam Investors Growth 34.11% - - - 28.44% 28.44% 5/1/97
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EQ/Putnam International Equity 17.56% - - - 12.72% 12.72% 5/1/97
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</TABLE>
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* The since inception dates for the variable investment options are as
follows: Alliance Money Market, Alliance High Yield, Alliance Common
Stock, Alliance Aggressive Stock, Alliance Small Cap Growth, MFS
Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value,
EQ/Putnam Investors Growth, and EQ/Putnam International Equity (October
1, 1997); BT Equity 500 Index, BT Small Company Index, BT International
Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap
Value, and Morgan Stanley Emerging Markets Equity (December 31, 1997).
The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are: MFS Growth
with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital
Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian
International (May 1, 1999).
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INVESTMENT PERFORMANCE 67
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TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
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LENGTH OF INVESTMENT PERIOD
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SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 1,034.00 $ 1,099.25 $ 1,157.42 $ 1,388.83 -
Alliance High Yield $ 931.00 $ 1,299.09 $ 1,450.09 $ 2,335.95 -
Alliance Common Stock $ 1,270.00 $ 1,955.50 $ 2,428.99 $ 4,494.80 -
Alliance Aggressive Stock $ 984.50 $ 1,277.63 $ 1,549.85 $ 4,619.71 -
Alliance Small Cap Growth $ 940.30 - - - $ 1,173.92
BT Equity 500 Index $ 1,231.30 - - - $ 1,231.30
BT Small Company Index $ 961.30 - - - $ 961.30
BT International Equity Index $ 1,181.70 - - - $ 1,181.70
JPM Core Bond $ 1,072.80 - - - $ 1,072.80
Lazard Large Cap Value $ 1,181.40 - - - $ 1,181.40
Lazard Small Cap Value $ 914.40 - - - $ 914.40
MFS Research $ 1,221.20 - - - $ 1,398.09
MFS Emerging Growth Companies $ 1,323.70 - - - $ 1,598.96
Morgan Stanley Emerging Markets Equity $ 718.10 - - - $ 567.48
EQ/Putnam Growth & Income Value $ 1,110.20 - - - $ 1,272.79
EQ/Putnam Investors Growth $ 1,341.10 - - - $ 1,649.62
EQ/Putnam International Equity $ 1,175.60 - - - $ 1,270.65
</TABLE>
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* Portfolio inception dates are shown in Table 1.
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68 INVESTMENT PERFORMANCE
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TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
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SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.40% 3.42% 3.23% 3.63% - 5.11%
Lipper Money Market 4.84% 4.87% 4.77% 5.20% - 6.77%
Benchmark 5.05% 5.18% 5.11% 5.44% - 6.76%
ALLIANCE HIGH YIELD (6.90)% 9.30% 7.96% 9.11% - 8.45%
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% - 8.97%
Benchmark 3.66% 9.11% 9.01% 11.08% - 10.72%
ALLIANCE COMMON STOCK 27.00% 25.24% 19.66% 16.44% 16.42% 14.24%
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01%
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98%
ALLIANCE AGGRESSIVE STOCK (1.55)% 8.69% 9.39% 16.69% - 15.59%
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% - 13.69%
Benchmark 8.28% 17.77% 15.56% 16.49% - 14.78%
ALLIANCE SMALL CAP GROWTH (5.97)% - - - - 10.25%
Lipper Small Company Growth (0.33)% - - - - 16.72%
Benchmark 1.23% - - - - 16.58%
BT EQUITY 500 INDEX 23.13% - - - - 23.13%
Lipper S&P 500 Index 26.78% - - - - 26.78%
Benchmark 28.58% - - - - 28.58%
BT SMALL COMPANY INDEX (3.87)% - - - - (3.87)%
Lipper Small Cap 1.53% - - - - 1.53%
Benchmark (2.54)% - - - - (2.54)%
BT INTERNATIONAL EQUITY INDEX 18.17% - - - - 18.17%
Lipper International 12.17% - - - - 12.17%
Benchmark 20.00% - - - - 20.00%
JPM CORE BOND 7.28% - - - - 7.28%
Lipper Intermediate Investment Grade Debt 7.23% - - - - 7.23%
Benchmark 8.72% - - - - 8.72%
BT LAZARD LARGE CAP VALUE 18.14% - - - - 18.14%
Lipper Capital Appreciation 24.16% - - - - 24.16%
Benchmark 28.58% - - - - 28.58%
LAZARD SMALL CAP VALUE (8.56)% - - - - (8.56)%
Lipper Small Cap 1.53% - - - - 1.53%
Benchmark (2.54)% - - - - (2.54)%
MFS RESEARCH 22.12% - - - - 22.44%
Lipper Growth 25.82% - - - - 28.73%
Benchmark 28.58% - - - - 31.63%
MFS EMERGING GROWTH COMPANIES 32.37% - - - - 32.69%
Lipper Mid-Cap 15.97% - - - - 22.72%
Benchmark (2.54)% - - - - 14.53%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE 69
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.19)% - - - - (33.79)%
Lipper Emerging Markets (30.50)% - - - - (36.28)%
Benchmark (25.34)% - - - - (28.92)%
EQ/PUTNAM GROWTH & INCOME VALUE 11.02% - - - - 15.74%
Lipper Growth & Income 15.54% - - - - 21.32%
Benchmark 28.58% - - - - 31.63%
EQ/PUTNAM INVESTORS GROWTH 34.11% - - - - 35.19%
Lipper Growth 25.82% - - - - 28.73%
Benchmark 28.58% - - - - 31.63%
EQ/PUTNAM INTERNATIONAL EQUITY 17.56% - - - - 15.64%
Lipper International 12.17% - - - - 9.06%
Benchmark 20.00% - - - - 13.43%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
70 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.40% 10.60% 17.22%
Lipper Money Market 4.84% 15.34% 26.25%
Benchmark 5.05% 16.35% 28.27%
ALLIANCE HIGH YIELD (6.90)% 30.56% 46.65%
Lipper High Current Yield (0.44)% 26.80% 43.00%
Benchmark 3.66% 29.90% 53.96%
ALLIANCE COMMON STOCK 27.00% 96.46% 145.35%
Lipper Growth 22.86% 84.52% 138.97%
Benchmark 28.58% 110.85% 193.91%
ALLIANCE AGGRESSIVE STOCK (1.55)% 28.42% 56.67%
Lipper Mid-Cap Growth 12.16% 58.64% 102.73%
Benchmark 8.28% 63.35% 106.12%
ALLIANCE SMALL CAP GROWTH (5.97)% - -
Lipper Small Company Growth (0.33)% - -
Benchmark 1.23% - -
BT EQUITY 500 INDEX 23.13% - -
Lipper S&P 500 Index 26.78% - -
Benchmark 28.58% - -
BT SMALL COMPANY INDEX (3.87)% - -
Lipper Small Cap 1.53% - -
Benchmark (2.54)% - -
BT INTERNATIONAL EQUITY INDEX 18.17% - -
Lipper International 12.17% - -
Benchmark 20.00% - -
JPM CORE BOND 7.28% - -
Lipper Intermediate Investment Grade Debt 7.23% - -
Benchmark 8.72% - -
LAZARD LARGE CAP VALUE 18.14% - -
Lipper Capital Appreciation 24.16% - -
Benchmark 28.58% - -
LAZARD SMALL CAP VALUE (8.56)% - -
Lipper Small Cap 1.53% - -
Benchmark (2.54)% - -
MFS RESEARCH 22.12% - -
Lipper Growth 25.82% - -
Benchmark 28.58% - -
MFS EMERGING GROWTH COMPANIES 32.37% - -
Lipper Mid-Cap 15.97% - -
Benchmark (2.54)% - -
- ---------------------------------------------------------------------------
SINCE
10 YEARS 20 YEARS INCEPTION*
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 42.89% - 138.78%
Lipper Money Market 66.09% - 214.68%
Benchmark 69.88% - 214.45%
ALLIANCE HIGH YIELD 139.11% - 164.68%
Lipper High Current Yield 145.62% - 182.21%
Benchmark 186.01% - 239.69%
ALLIANCE COMMON STOCK 358.29% 1,991.24% 2,026.84%
Lipper Growth 388.00% 2,185.68% 3,490.04%
Benchmark 479.62% 2,530.43% 2,919.92%
ALLIANCE AGGRESSIVE STOCK 368.05% - 550.62%
Lipper Mid-Cap Growth 334.88% - 448.32%
Benchmark 360.30% - 494.67%
ALLIANCE SMALL CAP GROWTH - - 17.69%
Lipper Small Company Growth - - 28.98%
Benchmark - - 29.23%
BT EQUITY 500 INDEX - - 23.13%
Lipper S&P 500 Index - - 26.78%
Benchmark - - 28.58%
BT SMALL COMPANY INDEX - - (3.87)%
Lipper Small Cap - - 1.49%
Benchmark - - (2.54)%
BT INTERNATIONAL EQUITY INDEX - - 18.17%
Lipper International - - 12.23%
Benchmark - - 20.00%
JPM CORE BOND - - 7.28%
Lipper Intermediate Investment Grade Debt - - 7.23%
Benchmark - - 8.72%
LAZARD LARGE CAP VALUE - - 18.14%
Lipper Capital Appreciation - - 24.09%
Benchmark - - 28.58%
LAZARD SMALL CAP VALUE - - (8.56)%
Lipper Small Cap - - 1.53%
Benchmark - - (2.54)%
MFS RESEARCH - - 40.19%
Lipper Growth - - 52.86%
Benchmark - - 57.60%
MFS EMERGING GROWTH COMPANIES - - 60.31%
Lipper Mid-Cap - - 42.16%
Benchmark - - 25.40%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT PERFORMANCE 71
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ---------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS
- ---------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.19)% - -
Lipper Emerging Markets (30.50)% - -
Benchmark (25.34)% - -
EQ/PUTNAM GROWTH & INCOME VALUE 11.02% - -
Lipper Growth & Income 15.54% - -
Benchmark 28.58% - -
EQ/PUTNAM INVESTORS GROWTH 34.11% - -
Lipper Growth 25.82% - -
Benchmark 28.58% - -
EQ/PUTNAM INTERNATIONAL EQUITY 17.56% - -
Lipper International 12.17% - -
Benchmark 20.00% - -
- ---------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SINCE
10 YEARS 20 YEARS INCEPTION*
- ------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY - - (43.02)%
Lipper Emerging Markets - - (45.67)%
Benchmark - - (36.71)%
EQ/PUTNAM GROWTH & INCOME VALUE - - 27.62%
Lipper Growth & Income - - 38.49%
Benchmark - - 57.60%
EQ/PUTNAM INVESTORS GROWTH - - 65.38%
Lipper Growth - - 52.86%
Benchmark - - 57.60%
EQ/PUTNAM INTERNATIONAL EQUITY - - 27.44%
Lipper International - - 15.88%
Benchmark - - 23.42%
- ------------------------------------------------------------------------------
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
72 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market 7.18% 6.23% 4.23% 1.65% 1.06%
Alliance High Yield 3.20% (2.95)% 22.17% 10.23% 20.88%
Alliance Common Stock 23.28% (9.82)% 35.34% 1.31% 22.52%
Alliance Aggressive Stock 40.86% 6.16% 83.43% (4.95)% 14.59%
Alliance Small Cap Growth - - - - -
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 - - - - -
Morgan Stanley Emerging Markets Equity - - - - -
EQ/Putnam Growth & Income Value - - - - -
EQ/Putnam Investors Growth - - - - -
EQ/Putnam International Equity - - - - -
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market 2.10% 3.80% 3.37% 3.48% 3.40%
Alliance High Yield (4.58)% 17.71% 20.60% 16.28% (6.90)%
Alliance Common Stock (3.94)% 30.01% 21.97% 26.84% 27.00%
Alliance Aggressive Stock (5.59)% 29.21% 19.93% 8.77% (1.55)%
Alliance Small Cap Growth - - - 25.16%+ (5.97)%
BT Equity 500 Index - - - - 23.13%
BT Small Company Index - - - - (3.87)%
BT International Equity Index - - - - 18.17%
JPM Core Bond - - - - 7.28%
Lazard Large Cap Value - - - - 18.14%
Lazard Small Cap Value - - - - (8.56)%
MFS Research - - - 14.80%+ 22.12%
MFS Emerging Growth Companies - - - 21.11%+ 32.37%
Morgan Stanley Emerging Markets Equity - - - (20.66)%+ (28.19)%
EQ/Putnam Growth & Income Value - - - 14.96%+ 11.02%
EQ/Putnam Investors Growth - - - 23.32%+ 34.11%
EQ/Putnam International Equity - - - 8.40%+ 17.56%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Returns for these options represent less than 12 months of performance. The
returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 73
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements
or other communications that include evaluations of a variable investment
option or Portfolio by nationally recognized financial publications. Examples
of such publications are:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
Business Week National Underwriter
Forbes Pension & Investments
Fortune USA Today
Institutional Investor Investor's Business Daily
Money The New York Times
Kiplinger's Personal Finance The Wall Street Journal
Financial Planning The Los Angeles Times
Investment Adviser The Chicago Tribune
Investment Management Weekly
- --------------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable
Annuity/Life Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types
of fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts, and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
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 level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
YIELD INFORMATION
Current yield for the Alliance Money Market option 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
option 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 similar manner, 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 option. The yields and
effective yields assume the deduction of all contract charges and expenses
other than the optional baseBUILDER benefits charge, and any charge for taxes
such as premium tax. The yields and effective yields for the
<PAGE>
- --------------------------------------------------------------------------------
74 INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alliance Money Market option, when used for the special dollar cost averaging
program, assume that no contract charges are deducted. For more information,
see "Yield Information for the Alliance Money Market Option and Alliance High
Yield Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 75
- --------------------------------------------------------------------------------
Incorporation of Certain Documents by Reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December 31,
1998 and a current report on Form 8-K dated April 9, 1999, are considered to be
a part of this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Securities Exchange Act of 1934 ("Exchange Act") will be considered
to become part of this prospectus because they are incorporated by reference.
Any statement contained in a document that is or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each person
to whom this prospectus is delivered, a copy of any or all of the documents
considered to be part of this prospectus because they are incorporated herein.
This does not include exhibits not specifically incorporated by reference into
the text of such documents. Requests for 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).
<PAGE>
Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information A-1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE
INVESTMENT OPTION
- --------------------------------------------------------------------------------
FOR THE YEARS ENDING
-----------------------------------
DEC. 31, 1997 DEC. 31, 1998
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
- --------------------------------------------------------------------------------
Unit value $ 68.19 $ 67.13
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 16
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK
- --------------------------------------------------------------------------------
Unit value $176.22 $223.79
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1 35
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD
- --------------------------------------------------------------------------------
Unit value $ 29.13 $ 27.12
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2 170
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET
- --------------------------------------------------------------------------------
Unit value $ 23.98 $ 24.80
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 349
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH
- --------------------------------------------------------------------------------
Unit value $ 12.52 $ 11.77
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 211
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- --------------------------------------------------------------------------------
BT EQUITY 500 INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 12.31
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 951
- --------------------------------------------------------------------------------
BT SMALL COMPANY INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 9.61
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 211
- --------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 11.82
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 248
- --------------------------------------------------------------------------------
JPM CORE BOND
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 10.73
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 379
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
A-2 Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR THE YEARS ENDING
---------------------------------
DEC. 31, 1997 DEC. 31, 1998
- --------------------------------------------------------------------------------
LAZARD LARGE CAP VALUE
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 11.81
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 315
- --------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE
- --------------------------------------------------------------------------------
Unit value $ 10.00 $ 9.14
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 344
- --------------------------------------------------------------------------------
MFS RESEARCH
- --------------------------------------------------------------------------------
Unit value $ 11.48 $ 14.02
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 1 410
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES
- --------------------------------------------------------------------------------
Unit value $ 12.11 $ 16.03
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 2 200
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY
- --------------------------------------------------------------------------------
Unit value $ 7.93 $ 5.70
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 203
- --------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE
- --------------------------------------------------------------------------------
Unit value $ 11.50 $ 12.76
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 17 714
- --------------------------------------------------------------------------------
EQ/PUTNAM INVESTORS GROWTH
- --------------------------------------------------------------------------------
Unit value $ 12.33 $ 16.54
- --------------------------------------------------------------------------------
Number of units outstanding (000s) - 282
- --------------------------------------------------------------------------------
EQ/PUTNAM INTERNATIONAL EQUITY
- --------------------------------------------------------------------------------
Unit value $ 10.84 $ 12.75
- --------------------------------------------------------------------------------
Number of units outstanding (000s) 4 422
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts B-1
- --------------------------------------------------------------------------------
B-1 Appendix II: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
Trustees who are considering the purchase of an Equitable Accumulator Select QP
contract should discuss with their tax advisers 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 contract, 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 federal income tax rules. The QP contract and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
Assuming continued plan qualification and operation, earnings on qualified plan
assets will accumulate value on a tax-deferred basis even if the plan is not
funded by the Equitable Accumulator Select QP contract or another annuity.
Therefore, you should purchase an Equitable Accumulator QP contract to fund a
plan for the contract's features and benefits other than tax deferral. This QP
contract 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" that can be funded by a QP
contract is 80%. The account value under a QP contract 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 account value under a QP contract 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 contract may be required. A market value
adjustment may apply.
Further, Equitable Life will not perform or provide any plan recordkeeping
services with respect to the QP contracts. 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 contracts, 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. Given
that required minimum distributions must commence from the plan for annuitants
after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan
funds) trustees should consider whether the QP contract is an appropriate
purchase for annuitants approaching or over age 70 1/2.
Finally, because the method of purchasing the QP contract and the features of
the QP contract may appeal more to plan participants/employees who are older and
tend to be highly paid, and because certain features of the QP contract 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 contract would cause the plan to engage in
prohibited discrimination in contributions, benefits or otherwise.
<PAGE>
- --------------------------------------------------------------------------------
Appendix III: Market value adjustment example C-1
- --------------------------------------------------------------------------------
Appendix III: 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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a
maturity value at the maturity date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later on February 15, 2004.
- --------------------------------------------------------------------------------
ASSUMED RATE TO
MATURITY ON FEBRUARY 15,
2004
------------------------
5.00% 9.00%
------------------------
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
- --------------------------------------------------------------------------------
(1) Market adjusted amount $144,048 $ 119,487
- --------------------------------------------------------------------------------
(2) Fixed maturity amount $131,080 $ 131,080
- --------------------------------------------------------------------------------
(3) Market value adjustment:
(1) - (2) $ 12,968 $ (11,593)
- --------------------------------------------------------------------------------
On February 15, 2004 (after withdrawal)
- --------------------------------------------------------------------------------
(4) Portion of market value adjustment associated
with withdrawal: (3) x [$50,000/(1)] $ 4,501 $ (4,851)
- --------------------------------------------------------------------------------
(5) Reduction in fixed maturity amount:
[$50,000 - (4)] $ 45,499 $ 54,851
- --------------------------------------------------------------------------------
(6) Fixed maturity amount: (2) - (5) $ 85,581 $ 76,229
- --------------------------------------------------------------------------------
(7) Maturity value $120,032 $ 106,915
- --------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 94,048 $ 69,487
- --------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have
increased from 7.00% to 9.00% (right column), 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% (left column), a portion of a positive
market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example D-1
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
The death benefit under the contracts is equal to the account value or, if
greater, the guaranteed minimum death benefit.
The following illustrates the guaranteed minimum death benefit calculation.
Assuming $100,000 is allocated to the variable investment options (with no
allocation to the Alliance Money Market option or the fixed maturity options),
no additional contributions, no transfers and no withdrawals, and no loans under
a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant
age 45 would be calculated as follows:
- --------------------------------------------------------------------------------
5% ROLL UP TO
END OF AGE 80 ANNUAL RATCHET TO AGE 80
CONTRACT GUARANTEED MINIMUM GUARANTEED MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
- --------------------------------------------------------------------------------
1 $105,000 $ 105,000(1) $ 105,000(3)
- --------------------------------------------------------------------------------
2 $115,500 $ 110,250(2) $ 115,500(3)
- --------------------------------------------------------------------------------
3 $129,360 $ 115,763(2) $ 129,360(3)
- --------------------------------------------------------------------------------
4 $103,488 $ 121,551(1) $ 129,360(4)
- --------------------------------------------------------------------------------
5 $113,837 $ 127,628(1) $ 129,360(4)
- --------------------------------------------------------------------------------
6 $127,497 $ 134,010(1) $ 129,360(4)
- --------------------------------------------------------------------------------
7 $127,497 $ 140,710(1) $ 129,360(4)
- --------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical
rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We
are using these rates solely to illustrate how the benefit is determined. The
return rates bear no relationship to past or future investment results.
5% ROLL UP TO AGE 80
(1) At the end of contract year 1, and again at the end of contract years 4
through 7, the death benefit will be equal to the guaranteed minimum death
benefit.
(2) At the end of contract years 2 and 3, the death benefit will be equal to
the current account value since it is higher than the current guaranteed
minimum death benefit.
ANNUAL RATCHET TO AGE 80
(3) At the end of contract years 1 through 3, the guaranteed minimum death
benefit is equal to the current account value.
(4) At the end of contract years 4 through 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 account value.
<PAGE>
Statement of additional
information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market Option and
Alliance High Yield Option 3
Long-Term Market Trends 4
Key Factors in Retirement Planning 6
Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR SELECT STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 49
Send this request form to:
Equitable Accumulator Select
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Equitable Accumulator Select SAI for Separate Account No. 49
dated May 1, 1999:
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City State Zip
(EDISELSAI)
<PAGE>
Equitable Accumulator(SM)
A combination variable and fixed deferred
annuity contract
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing, or taking any other action
under your contract. Also, at the end of this prospectus you will find attached
the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain
important information about their Portfolios.
PROSPECTUS DATED MAY 1, 1999
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR?
Equitable Accumulator is a deferred annuity contract issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation of
retirement savings and for income. The contract offers income and death benefit
protection. It also offers a number of payout and distribution options. The
distribution options available under the contract are the Assured Payment Option
and APO Plus. You invest to accumulate value on a tax-deferred basis in one or
more of our variable investment options, fixed maturity options or the account
for special dollar cost averaging ("investment options").
- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
FIXED INCOME OPTIONS
- --------------------------------------------------------------------------------
DOMESTIC FIXED INCOME AGGRESSIVE FIXED INCOME
- --------------------------------------------------------------------------------
o Alliance Money Market o Alliance High Yield
o Alliance Intermediate
Government Securities
- --------------------------------------------------------------------------------
EQUITY OPTIONS
- --------------------------------------------------------------------------------
DOMESTIC EQUITY INTERNATIONAL EQUITY
- --------------------------------------------------------------------------------
o T. Rowe Price Equity Income o Alliance Global
o EQ/Putnam Growth & Income o Alliance International
Value o T. Rowe Price International
o Alliance Growth & Income Stock
o MFS Growth with Income o Morgan Stanley Emerging
o BT Equity 500 Index Markets Equity
o Merrill Lynch Basic Value Equity o BT International Equity Index
o Alliance Common Stock
o MFS Research
o EQ/Alliance Premier Growth
o Capital Guardian Research
o Capital Guardian U.S. Equity
- --------------------------------------------------------------------------------
AGGRESSIVE EQUITY
- --------------------------------------------------------------------------------
o BT Small Company Index o Alliance Small Cap Growth
o Alliance Aggressive Stock o MFS Emerging Growth
o EQ/Evergreen Companies
o Warburg Pincus Small Company
Value
- --------------------------------------------------------------------------------
ASSET ALLOCATION OPTIONS
- --------------------------------------------------------------------------------
o Alliance Conservative Investors o Alliance Growth Investors
o EQ/Putnam Balanced o Merrill Lynch World Strategy
o EQ/Evergreen Foundation
- --------------------------------------------------------------------------------
Alliance Equity Index (Available only under APO Plus)
- --------------------------------------------------------------------------------
You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 45.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed interest
at guaranteed rates. It is only available for dollar cost averaging during your
contract's first year.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An individual retirement annuity ("IRA"), either traditional IRA or Roth
IRA.
We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible
Premium IRA." The Assured Payment Option and APO Plus are available under
Rollover IRA and Flexible Premium IRA contracts.
We also offer two versions of the Roth IRA: "Roth Conversion IRA" and
"Flexible Premium Roth IRA."
o An annuity which is an investment vehicle for a qualified defined
contribution or defined benefit plan ("QP").
o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") -
("Rollover TSA").
A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA,
Roth Conversion IRA, QP or Rollover TSA contract. For Flexible Premium IRA or
Flexible Premium Roth IRA contracts, we require a contribution of $2,000 to
purchase a contract. Under Rollover IRA or Flexible Premium IRA contracts you
may elect the Assured Payment Option or APO Plus with a minimum initial
contribution of $10,000.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated May 1, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our
Processing Office or calling 1-800-789-7771. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be obtained
from the SEC's website at http://www.sec.gov. The table of contents for the SAI
appears at the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS 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.
<PAGE>
- --------------------------------------------------------------------------------
2 CONTENTS OF THIS PROSPECTUS
- --------------------------------------------------------------------------------
Contents of this prospectus
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR(SM)
- ------------------------------------------------------------------
Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator at a glance - key features 8
- ------------------------------------------------------------------
FEE TABLE 11
- ------------------------------------------------------------------
Examples 14
Condensed financial information 15
- ------------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 16
- ------------------------------------------------------------------
How you can purchase and contribute to your contract 16
Owner and annuitant requirements 20
How you can make your contributions 20
What are your investment options under the contract? 20
Portfolios of The Hudson River Trust 21
Portfolios of EQ Advisors Trust 21
Allocating your contributions 26
Our baseBUILDER option 27
Guaranteed minimum death benefit 30
Your right to cancel within a certain number of days 31
- ------------------------------------------------------------------
DETERMINING YOUR CONTRACT'S VALUE 32
- ------------------------------------------------------------------
Your account value 32
Your contract's value in the variable investment options 32
Your contract's value in the fixed maturity options 32
Your contract's value in the account for special dollar cost
averaging 32
- --------------------------------------------------------------------------------
"We," "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS OF THIS PROSPECTUS 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG
INVESTMENT OPTIONS 33
- ------------------------------------------------------------------
Transferring your account value 33
Rebalancing your account value 33
- ------------------------------------------------------------------
ACCESSING YOUR MONEY 34
- ------------------------------------------------------------------
Assured Payment Option and APO Plus 34
Withdrawing your account value 38
How withdrawals are taken from your account value 40
How withdrawals affect your guaranteed minimum
income benefit and guaranteed minimum death
benefit 40
Loans under Rollover TSA contracts 41
Surrendering your contract to receive its cash value 42
When to expect payments 42
Choosing your annuity payout options 43
- ------------------------------------------------------------------
CHARGES AND EXPENSES 46
- ------------------------------------------------------------------
Charges that Equitable Life deducts 46
Charges that the trusts deduct 48
Group or sponsored arrangements 48
Other distribution arrangements 49
- ------------------------------------------------------------------
PAYMENT OF DEATH BENEFIT 50
- ------------------------------------------------------------------
Your beneficiary and payment of benefit 50
How death benefit payment is made 51
Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts 51
- ------------------------------------------------------------------
TAX INFORMATION 53
- ------------------------------------------------------------------
Overview 53
Transfers among investment options 53
Taxation of nonqualified annuities 53
Special rules for NQ contracts issued in Puerto Rico 54
Individual retirement arrangements (IRAs) 55
Special rules for nonqualified contracts in qualified plans 66
Tax Sheltered Annuity contracts (TSAs) 66
Federal and state income tax withholding and
information reporting 71
Impact of taxes to Equitable Life 72
- ------------------------------------------------------------------
MORE INFORMATION 73
- ------------------------------------------------------------------
About our Separate Account No. 45 73
About The Hudson River Trust and EQ Advisors Trust 73
About our fixed maturity options 74
About the general account 75
About other methods of payment 76
Dates and prices at which contract events occur 76
About your voting rights 77
About our year 2000 progress 78
About legal proceedings 78
About our independent accountants 78
Transfers of ownership, collateral assignments, loans,
and borrowing 78
Distribution of the contracts 79
- ------------------------------------------------------------------
INVESTMENT PERFORMANCE 80
- ------------------------------------------------------------------
Benchmarks 80
Communicating performance data 91
- ------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 93
- ------------------------------------------------------------------
Appendices
I - Condensed financial information A-1
II - Purchase considerations for QP contracts B-1
III - Market value adjustment example C-1
IV - Guaranteed minimum death benefit example D-1
V - Example of payments under the Assured Payment
Option and APO Plus E-1
VI - Assured Payment Option and APO Plus contracts
issued in the state of Maryland F-1
- ------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- ------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
4 INDEX OF KEY WORDS AND PHRASES
- --------------------------------------------------------------------------------
Index of key words and phrases
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <S> <C>
account for special dollar cost Flexible Premium Roth IRA cover
averaging 25 guaranteed minimum death benefit 30
account value 32 guaranteed minimum income benefit 28
annuitant 16 IRA 55
APO Plus 37 IRS 53
Assured Payment Option 34 investment options 20
baseBUILDER 27 loan reserve account 42
beneficiary 50 market adjusted amount 23
benefit base 28 market value adjustment 24
business day 76 maturity value 23
cash value 32 NQ 53
conduit IRA 59 participant 20
contract date 9 payout option 43
contract date anniversary 9 Portfolio cover
contract year 9 Processing Office 6
contributions to Roth IRAs 63 QP 66
regular contributions 63 rate to maturity 23
rollover contributions 64 required beginning date 60
conversion contributions 64 Rollover IRA cover
direct custodian-to-custodian Rollover TSA cover
transfers 64 Roth Conversion IRA cover
contributions to traditional IRAs 55 Roth IRA 63
regular contributions 56 SAI cover
rollover contributions 58 SEC cover
direct custodian-to-custodian TOPS 6
transfers 58 TSA 66
ERISA 41 traditional IRA 55
fixed maturity amount 23 unit 32
fixed maturity options 23 variable investment options 20
Flexible Premium IRA cover
</TABLE>
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract or supplemental materials. Your Equitable associate can provide further
explanation about your contract.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS
- --------------------------------------------------------------------------------
<S> <C>
fixed maturity options Guarantee Periods (GIROs in Supplemental Materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 5
- --------------------------------------------------------------------------------
Who is Equitable Life?
- --------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing
business since 1859. Equitable Life is a wholly owned subsidiary of The
Equitable Companies Incorporated ("Equitable Companies"), whose majority
shareholder is AXA, a French holding company for an international group of
insurance and related financial services companies. As a majority shareholder,
and under its other arrangements with Equitable Life and Equitable Life's
parent, AXA exercises significant influence over the operations and capital
structure of Equitable Life and its parent. No company other than Equitable
Life, however, has any legal responsibility to pay amounts that Equitable Life
owes under the contract. During 1999, Equitable Companies plans to change its
name to AXA Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are
licensed to sell life insurance and annuities in all fifty states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is
located at 1290 Avenue of the Americas, New York, N.Y. 10104.
<PAGE>
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6 WHO IS EQUITABLE LIFE?
- --------------------------------------------------------------------------------
HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator
P.O. Box 13014
Newark, NJ 07188-0014
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G.,
REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
REPORTS WE PROVIDE:
- --------------------------------------------------------------------------------
o written confirmation of financial transactions;
o statement of your contract values at the close of each
calendar quarter (four per year);
o annual statement of your contract values as of the close of
the contract year.
- --------------------------------------------------------------------------------
TELEPHONE OPERATED PROGRAM SUPPORT
("TOPS") SYSTEM:
- --------------------------------------------------------------------------------
TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling
toll-free 1-888-909-7770. Of course, for reasons beyond our control, the
service may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone
instructions and we will provide written confirmation of your transfers. We
will not be liable for following telephone instructions we reasonably believe
to be genuine.
- --------------------------------------------------------------------------------
BY INTERNET:
- --------------------------------------------------------------------------------
You can also access information about your contract on the Internet. Please
visit our website at http://www.equitable.com, and click on EQAccess.
<PAGE>
- --------------------------------------------------------------------------------
WHO IS EQUITABLE LIFE? 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVE:
- --------------------------------------------------------------------------------
You may also use our toll-free number (1-800-789-7771) to speak with one of our
customer service representatives. Our customer service representatives are
available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our Processing
Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1) conversion of a traditional IRA to a Roth Conversion IRA or Flexible
Premium Roth IRA contract;
(2) cancellation of your Roth Conversion IRA or Flexible Premium Roth IRA
contract and return to a Rollover IRA or Flexible Premium IRA contract;
(3) election of the Assured Payment Option or APO Plus;
(4) election of the automatic investment program;
(5) election of the rebalancing program;
(6) to obtain a PIN required for TOPS;
(7) requests for loans under Rollover TSA contracts;
(8) spousal consent for loans under Rollover TSA contracts;
(9) tax withholding election; and
(10) beneficiary continuation option election.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES
OF REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options;
(4) withdrawal requests;
(5) contract surrender; and
(6) requests to exercise your guaranteed minimum income benefit.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1) automatic investment program;
(2) general dollar cost averaging;
(3) rebalancing;
(4) special dollar cost averaging;
(5) Assured Payment Option or APO Plus;
(6) substantially equal withdrawals;
(7) systematic withdrawals; and
(8) the date annuity payments are to begin.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
<PAGE>
- --------------------------------------------------------------------------------
8 EQUITABLE ACCUMULATOR AT A GLANCE -- KEY FEATURES
- --------------------------------------------------------------------------------
Equitable Accumulator at a
glance -- key features
- --------------------------------------------------------------------------------
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
PROFESSIONAL Equitable Accumulator's variable investment options invest in 30 different Portfolios managed by
INVESTMENT professional investment advisers.
MANAGEMENT
- -----------------------------------------------------------------------------------------------------------------------------
FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years. Under the
OPTIONS Assured Payment Option and APO Plus, 5 additional fixed maturity options with maturities
ranging from 11 to 15 years.
o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to
maturity.
o Principal guarantees.
-- If you make withdrawals or transfers from a fixed maturity option before maturity, there
will be a market value adjustment due to differences in interest rates. This may increase or
decrease any value that you have left in that fixed maturity option. If you surrender your
contract, a market value adjustment may also apply.
- -----------------------------------------------------------------------------------------------------------------------------
ACCOUNT FOR SPECIAL DOLLAR Available for dollar cost averaging of your initial contribution.
COST AVERAGING
- -----------------------------------------------------------------------------------------------------------------------------
TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you make
contract withdrawals from your contract or receive annuity payments.
------------------------------------------------------------------------------------------------
o On transfers inside the No tax on transfers among investment options.
contract
------------------------------------------------------------------------------------------------
If you are buying a contract to fund a retirement plan that already provides tax deferral under
sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the
contract's features and benefits other than tax deferral. In such situations, the tax deferral
of the contract does not provide additional benefits.
- -----------------------------------------------------------------------------------------------------------------------------
BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum
PROTECTION death benefit. This optional feature provides income protection for you while the
annuitant lives, as well as a death benefit for the beneficiary should the annuitant die.
- -----------------------------------------------------------------------------------------------------------------------------
CONTRIBUTION AMOUNTS o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts
o Initial minimum: $5,000
o Additional minimum: $1,000
$100 monthly, and $300 quarterly under our automatic
investment program (NQ contracts)
------------------------------------------------------------------------------------------------
o Flexible Premium IRA and Flexible Premium Roth IRA contracts
o Initial minimum: $2,000
o Additional minimum: $50 ($50 under our automatic investment program)
------------------------------------------------------------------------------------------------
o Assured Payment Option and APO Plus under Rollover IRA and Flexible Premium
IRA Contracts
o Initial minimum: $10,000
o Additional minimum: $1,000
------------------------------------------------------------------------------------------------
Maximum investment limitations may apply.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR AT A GLANCE - KEY FEATURES 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACCESS TO YOUR MONEY o Assured Payment Option
o APO Plus
o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Loans under Rollover TSA contracts
o Contract surrender
You may incur a withdrawal charge for certain
withdrawals. You may also incur income tax and a tax
penalty.
- --------------------------------------------------------------------------------
PAYOUT ALTERNATIVES o Annuity payout options
o Income Manager(Reg. TM) payout annuity options
- --------------------------------------------------------------------------------
ADDITIONAL FEATURES o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually, and
annually)
o Unlimited free transfers
o Waiver of withdrawal charge for disability, terminal
illness or confinement to a nursing home
- --------------------------------------------------------------------------------
FEES AND CHARGES o Daily charges on amounts invested in variable
investment options for mortality and expense risks and
administrative charges at an annual rate of 1.35%.
o Annual 0.30% benefit base charge for the optional
baseBUILDER benefit. The benefit base is described
under "Your guaranteed minimum income benefit under
baseBUILDER." No additional charge if you want a
guaranteed minimum death benefit only.
o Under Flexible Premium IRA and Flexible Premium Roth
IRA contracts, if your account value at the end of the
contract year is less than $25,000, we deduct an annual
administrative charge equal to $30 or during the first
two contract years 2% of your account value, if less.
If your account value is $25,000 or more, we will not
deduct the charge.
o No sales charge deducted at the time you make
contributions.
o During the first seven contract years following a
contribution, a charge will be deducted from amounts
that you withdraw that exceed 15% of your account
value. We use the account value on the most recent
contract date anniversary to calculate the 15% amount
available. The charge begins at 7% in the first
contract year following a contribution. It declines
each year to 1% in the seventh contract year. There is
no withdrawal charge in the eighth and later contract
years following a contribution.
-------------------------------------------------------
The 12-month period beginning on your contract date and
each 12-month period after that date is a "contract
year." The end of each 12-month period is your
"contract date anniversary." The "contract date" is the
effective date of a contract. This usually is the
business day we receive your initial contribution. Your
contract date will be shown in your contract.
-------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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10 EQUITABLE ACCUMULATOR AT A GLANCE -- KEY FEATURES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
FEES AND o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. This
CHARGES (CONTINUED) charge is generally deducted from the amount applied to an annuity payout option.
o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life
annuity payout options.
o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a
percentage of the average daily net assets invested in each Portfolio. These expenses include
management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other
expenses.
- -----------------------------------------------------------------------------------------------------------------------------
ANNUITANT ISSUE AGES NQ: 0-83
Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA, and Rollover TSA: 20-83
Flexible Premium IRA: 20-70
QP: 20-75
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF
THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
Equitable associate, or call us, if you have any questions.
<PAGE>
- --------------------------------------------------------------------------------
Fee table 11
- --------------------------------------------------------------------------------
Fee table
- --------------------------------------------------------------------------------
The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an administrative fee may apply when your annuity payments are to begin.
Each of the charges and expenses is more fully described under "Charges and
expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options and the account for special dollar cost averaging are
not covered by the fee table and examples. Generally, the only charges shown in
the table that are applicable to the fixed maturity options and the account for
special dollar cost averaging are the annual administrative charge and the
withdrawal charge. A market value adjustment (up or down) may apply as a result
of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
- --------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT
OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY
NET ASSETS
- --------------------------------------------------------------------------------
Mortality and expense risks (1) 1.10%
Administrative (2) 0.25%
-----
Total annual expenses 1.35%
- --------------------------------------------------------------------------------
FLEXIBLE PREMIUM IRA AND FLEXIBLE PREMIUM ROTH IRA
CONTRACTS ONLY: CHARGES WE DEDUCT FROM YOUR
ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY
- --------------------------------------------------------------------------------
Maximum annual administrative charge
If your account value is less than $25,000 $30(3)
If your account value is $25,000 or more $0
- --------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE
TIME YOU REQUEST CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS Contract
(deducted if you surrender Contract your contract year
or make certain withdrawals. The withdrawal charge 1........7.00%
percentage we use is year determined by the 2........6.00
contract year in which you make the withdrawal or 3........5.00
surrender your contract. For each contribution, we 4........4.00
consider the contract year in which we receive 5........3.00
that contribution to be "contract year 1")(4) 6........2.00
7........1.00
8+.......0.00
- --------------------------------------------------------------------------------
CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH
YEAR IF YOU ELECT THE OPTIONAL BENEFIT
- --------------------------------------------------------------------------------
BASEBUILDER BENEFITS CHARGE (calculated as a
percentage of the benefit base. Deducted annually
on each contract date anniversary)(5) 0.30%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
12 FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TOTAL
ANNUAL
INVESTMENT EXPENSES(6)
MANAGEMENT OTHER (AFTER EXPENSE
ADVISORY FEES 12B-1 FEES(6) EXPENSES LIMITATION)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82%
Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64%
Alliance Conservative Investors(7) 0.48% 0.25% 0.05% 0.78%
Alliance Equity Index(7) 0.31% 0.25% 0.03% 0.59%
Alliance Global(7) 0.64% 0.25% 0.07% 0.96%
Alliance Growth & Income(7) 0.55% 0.25% 0.03% 0.83%
Alliance Growth Investors(7) 0.51% 0.25% 0.04% 0.80%
Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88%
Alliance Intermediate Government Securities(7) 0.50% 0.25% 0.05% 0.80%
Alliance International(7) 0.90% 0.25% 0.16% 1.31%
Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62%
Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
EQ ADVISORS TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TOTAL
OTHER ANNUAL
INVESTMENT EXPENSES(8) EXPENSES(8)
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY FEES 12B-1 FEE(6) LIMITATION) LIMITATION)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55%
BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00%
BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75%
Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95%
Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95%
EQ/Evergreen(8) 0.75% 0.25% 0.05% 1.05%
EQ/Evergreen Foundation(8) 0.63% 0.25% 0.07% 0.95%
MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85%
MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85%
MFS Research(8) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity(8) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy(8) 0.70% 0.25% 0.25% 1.20%
Morgan Stanley Emerging Markets Equity(8) 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Balanced(8) 0.55% 0.25% 0.10% 0.90%
EQ/Putnam Growth & Income Value(8) 0.55% 0.25% 0.05% 0.85%
T. Rowe Price Equity Income(8) 0.55% 0.25% 0.05% 0.85%
T. Rowe Price International Stock(8) 0.75% 0.25% 0.20% 1.20%
Warburg Pincus Small Company Value(8) 0.65% 0.25% 0.10% 1.00%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Fee table 13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------
Notes:
(1) A portion of this charge is for providing the guaranteed minimum death
benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
(3) For Flexible Premium IRA and Flexible Premium Roth IRA contracts, during
the first two contract years this charge is equal to the lesser of $30 or
2% of your account value. Thereafter, the charge is $30 for each contract
year.
(4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal
amount, and upon surrender of a contract.
(5) The benefit base is described under "Your guaranteed minimum income
benefit under baseBUILDER."
(6) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ
Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The 12b-1 fee will not be increased for the life of the
contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth
Portfolio 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 equaling 1.20%. Absent the expense
limitation, the total annual expenses for 1998 for the Alliance Small Cap
Growth Portfolio would have been 1.21%.
(7) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The
maximum investment management and advisory fees, however, cannot be
increased without a vote of that Portfolio's shareholders. See the
prospectus for The Hudson River Trust. The other direct operating
expenses will also fluctuate from year to year depending on actual
expenses.
(8) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF 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 average daily
net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier
Growth; 0.30% for BT Equity 500 Index; 0.75% for BT International Equity
Index; 0.50% for BT Small Company Index; 0.70% for Capital Guardian
Research and Capital Guardian U.S. Equity; 0.80% for EQ/Evergreen; 0.70%
for EQ/Evergreen Foundation; 0.60% for MFS Emerging Growth Companies, MFS
Growth with Income, MFS Research, and Merrill Lynch Basic Value Equity;
0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging
Markets Equity; 0.65% for EQ/Putnam Balanced; 0.60% for EQ/Putnam Growth
& Income Value and T. Rowe Price Equity Income; 0.95% for T. Rowe Price
International Stock; and 0.75% for Warburg Pincus Small Company Value.
The expenses shown for the BT International Equity Index and BT Small
Company Index Portfolios reflect an increase effective on May 1, 1999.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 0.89% for BT International Equity Index;
1.31% for BT Small Company Index;0.24% for MFS Emerging Growth Companies;
0.25% for MFS Research; 0.26% for Merrill Lynch Basic Value Equity; 0.66%
for Merrill Lynch World Strategy; 1.23% for Morgan Stanley Emerging
Markets Equity; 0.45% for EQ/Putnam Balanced; 0.24% for EQ/Putnam Growth &
Income Value and T. Rowe Price Equity Income; 0.40% for T. Rowe Price
International Stock; and 0.27% for Warburg Pincus Small Company Value. For
the following Portfolios, the "Other Expenses" for 1999, absent the
expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance
Premier Growth, Capital Guardian Research, and Capital Guardian U.S.
Equity; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; and
0.59% for MFS Growth with Income. Initial seed capital was invested on
December 31, 1998 for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS
Growth with Income Portfolios. The EQ/Alliance Premier Growth, Capital
Guardian Research, and Capital Guardian U.S. Equity Portfolios commenced
operations on May 1, 1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF 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.
<PAGE>
- --------------------------------------------------------------------------------
14 Fee table
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
The examples below show the expenses that a hypothetical contract owner who has
purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract would pay
in the two situations (surrender and nonsurrender) illustrated. The examples
show the expenses if (1) baseBUILDER is elected and (2) APO Plus is elected. We
assume that a $1,000 contribution is invested in one of the variable investment
options listed and a 5% annual return is earned on the assets in that option.(1)
The annual administrative charge is based on an estimated $10,000 average
account value at the end of the contract year and the maximum charge of $30, so
that the administrative charge per $1,000 is $3. Since the annual administrative
charge only applies under Flexible Premium IRA and Flexible Premium Roth IRA
contracts, the charges shown in the examples would be lower for the NQ, Rollover
IRA, Roth Conversion IRA, QP, and Rollover TSA contracts.
These examples should not be considered a representation of past or future
expenses for each option. 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.
(1) EXPENSES REFLECTING BASEBUILDER ELECTION
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE HUDSON RIVER TRUST OPTIONS
- -----------------------------------------------------------------------------------------------
Alliance Aggressive Stock $94.98 $132.84 $173.34 $307.10
Alliance Common Stock $93.19 $127.47 $164.38 $289.23
Alliance Conservative Investors $94.59 $131.65 $171.35 $303.16
Alliance Global $96.37 $137.00 $180.25 $320.78
Alliance Growth & Income $95.08 $133.14 $173.83 $308.07
Alliance Growth Investors $94.78 $132.24 $172.34 $305.12
Alliance High Yield $95.58 $134.62 $176.30 $312.98
Alliance Intermediate Government Securities $94.78 $132.24 $172.34 $305.12
Alliance International $99.85 $147.36 $197.38 $354.17
Alliance Money Market $93.00 $126.88 $163.38 $287.23
Alliance Small Cap Growth $98.76 $144.12 $192.03 $343.81
- -----------------------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- -----------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth $98.26 $142.63 - -
BT Equity 500 Index $92.30 $124.78 $159.88 $280.19
BT International Equity Index $96.77 $138.19 $182.22 $324.65
BT Small Company Index $94.29 $130.75 $169.85 $300.17
Capital Guardian Research $96.27 $136.71 - -
Capital Guardian U.S. Equity $96.27 $136.71 - -
EQ/Evergreen $97.27 $139.68 - -
- -----------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Aggressive Stock $28.13 $ 86.31 $147.16 $311.98
Alliance Common Stock $26.34 $ 80.94 $138.21 $294.12
Alliance Conservative Investors $27.74 $ 85.13 $145.19 $308.05
Alliance Global $29.52 $ 90.47 $154.07 $325.65
Alliance Growth & Income $95.08 $133.14 $173.83 $308.07
Alliance Growth Investors $27.93 $ 85.72 $146.17 $310.01
Alliance High Yield $28.73 $ 88.10 $150.14 $317.87
Alliance Intermediate Government Securities $27.93 $ 85.72 $146.17 $310.01
Alliance International $33.00 $100.84 $171.21 $359.07
Alliance Money Market $26.15 $ 80.35 $137.22 $292.13
Alliance Small Cap Growth $31.91 $ 97.59 $165.86 $348.69
- -----------------------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- -----------------------------------------------------------------------------------------------
EQ/Alliance Premier Growth $31.41 $96.11 - -
BT Equity 500 Index $25.45 $78.25 $133.71 $285.07
BT International Equity Index $29.92 $91.66 $156.05 $329.53
BT Small Company Index $27.44 $84.23 $143.69 $305.09
Capital Guardian Research $29.42 $90.17 - -
Capital Guardian U.S. Equity $29.42 $90.17 - -
EQ/Evergreen $30.42 $93.15 - -
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE 15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT THE END
OF EACH PERIOD SHOWN, THE EXPENSES
WOULD BE:
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Evergreen Foundation $ 96.27 $136.71 - -
MFS Emerging Growth Companies $ 95.28 $133.74 $174.83 $310.05
MFS Growth with Income $ 95.28 $133.74 - -
MFS Research $ 95.28 $133.74 $174.83 $310.05
Merrill Lynch Basic Value Equity $ 95.28 $133.74 $174.83 $310.05
Merrill Lynch World Strategy $ 98.76 $144.12 $192.03 $343.81
Morgan Stanley Emerging Markets Equity $104.22 $160.29 $218.58 $394.59
EQ/Putnam Balanced $ 95.78 $135.22 $177.29 $314.94
EQ/Putnam Growth & Income Value $ 95.28 $133.74 $174.83 $310.05
T. Rowe Price Equity Income $ 95.28 $133.74 $174.83 $310.05
T. Towe Price International Stock $ 98.76 $144.12 $192.03 $343.81
Warburg Pincus Small Company Value $ 96.77 $138.19 $182.22 $324.65
- -----------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------
IF YOU DO NOT SURRENDER YOUR CONTRACT AT
THE END OF EACH PERIOD SHOWN, THE
EXPENSES WOULD BE:
------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Evergreen Foundation $29.42 $ 90.17 - -
MFS Emerging Growth Companies $28.43 $ 87.20 $148.64 $314.93
MFS Growth with Income $28.43 $ 87.20 - -
MFS Research $28.43 $ 87.20 $148.64 $314.93
Merrill Lynch Basic Value Equity $28.43 $ 87.20 $148.64 $314.93
Merrill Lynch World Strategy $31.91 $ 97.59 $165.86 $348.69
Morgan Stanley Emerging Markets Equity $37.37 $113.76 $192.41 $399.49
EQ/Putnam Balanced $28.93 $ 88.70 $151.13 $319.83
EQ/Putnam Growth & Income Value $28.43 $ 87.20 $148.64 $314.93
T. Rowe Price Equity Income $28.43 $ 87.20 $148.64 $314.93
T. Towe Price International Stock $31.91 $ 97.59 $165.86 $348.69
Warburg Pincus Small Company Value $29.92 $ 91.66 $156.05 $329.53
- -----------------------------------------------------------------------------------------------
</TABLE>
(2) EXPENSES REFLECTING APO PLUS ELECTION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT THE END IF YOU DO NOT SURRENDER YOUR CONTRACT AT
OF EACH PERIOD SHOWN, THE EXPENSES THE END OF EACH PERIOD SHOWN, THE
WOULD BE: EXPENSES WOULD BE:
------------------------------------------------- ------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Common Stock $93.19 $121.20 $151.48 $258.02 $23.19 $71.20 $121.48 $258.02
Alliance Equity Index $92.70 $119.71 $148.97 $252.93 $22.70 $69.71 $118.97 $252.93
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods
shown in the examples. This is because if the amount applied to purchase
an annuity payout option is less than $2,000, or the initial payment is
less than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example for "if
you do not surrender your contract" would, in each case, be increased by $4.43
based on the average amount applied to annuity payout options in 1998. See
"Annuity administrative fee" under "Charges and expenses."
CONDENSED FINANCIAL INFORMATION
Please see Appendix I, at the end of this prospectus for the unit values and the
number of units outstanding as of the end of the periods shown for each of the
variable investment options.
<PAGE>
- --------------------------------------------------------------------------------
16 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1
Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us we call "contributions." We
require a minimum contribution amount for each type of contract. The following
table summarizes our rules regarding contributions to your contract. All ages in
the table refer to the age of the annuitant named in the contract.
- ------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NQ 0 through 83 o $5,000 (initial) o After-tax money. o No additional
contributions after
o $1,000 (additional) o Paid to us by check or age 84.
transfer of contract
value in a tax-deferred
exchange under Section
1035 of the Internal
Revenue Code.
- ------------------------------------------------------------------------------------------------------------------------------
Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular
Premium IRA contributions. IRA contributions in the
o $50 (additional after calendar year you turn
the first contract year) o Rollovers from a age 70 1/2 and
qualified plan. thereafter.
o Rollovers from a TSA. o Total regular
contributions may
o Rollovers from another not exceed $2,000
traditional individual each year.
retirement arrangement.
o Direct custodian- o No additional rollover
to-custodian transfers or direct transfer
from another contributions after
traditional individual age 71.
retirement arrangement.
o Rollover and direct
transfer contributions
after age 70 1/2 must
be net of required
minimum distributions.
Although we accept rollover and direct transfer contributions under the Flexible Premium IRA
contract, we intend that this contract be used for ongoing regular contributions.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
17 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover IRA 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover
qualified plan. or direct transfer
o $1,000 (additional) contributions after
o Rollovers from a TSA. age 84.
o Rollovers from another
traditional individual o Contributions after
retirement age 70 1/2 must be net
arrangement. of required minimum
distributions.
o Direct
custodian-to-custodian o Regular IRA
transfers from another contributions are not
traditional individual permitted.
retirement
arrangement.
Only rollover and direct transfer contributions are permitted under the Rollover IRA contract.
- ------------------------------------------------------------------------------------------------------------------------------
Flexible 20 through 83 o $2,000 (initial) o "Regular" after-tax o No additional regular
Premium contributions. after-tax contributions
Roth IRA o $50 (additional after after age 84.
the first contract year)
o Rollovers from another
Roth IRA. o No additional rollover
or direct transfer
o Conversion rollovers contributions after
from a traditional IRA. age 84.
o Direct transfers from
another Roth IRA. o Contributions are
subject to income
limits. See "Tax
information --
Contributions to
Roth IRAs."
Although we accept rollover and direct transfer contributions under the Flexible Premium Roth
IRA contract, we intend that this contract be used for ongoing regular contributions.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
18 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover
Conversion IRA Roth IRA. or direct transfer
o $1,000 (additional) contributions after
o Conversion rollovers age 84.
from a traditional IRA.
o Conversion rollovers
o Direct transfers from after age 70 1/2 must be
another Roth IRA. net of required
minimum distributions
for the traditional IRA
you are rolling over.
o You cannot roll over
funds from a traditional
IRA if your adjusted
gross income is
$100,000 or more.
o Regular after-tax
contributions are not
permitted.
Only rollover and direct transfer contributions are permitted under the Roth Conversion IRA
contract.
- ------------------------------------------------------------------------------------------------------------------------------
QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing
contributions from an payroll contributions
o $1,000 (additional) existing qualified plan are not permitted.
trust as a change of
investment vehicle o No additional transfer
under the plan. contributions after
age 76.
o The plan must be o For defined benefit
qualified under Section plans, employee
401(a) of the Internal contributions are not
Revenue Code. permitted.
o For 401(k) plans, o Contributions after
transferred age 70 1/2 must be net
contributions may only of any required
include employee minimum distributions.
pre-tax contributions.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AVAILABLE
CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON
TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rollover TSA 20 through 83 o $ 5,000 (initial) o Rollovers from another o No additional rollover
TSA contract or or direct transfer
o $ 1,000 (additional) arrangement. contributions after
age 84.
o Rollovers from a
traditional IRA which o Contributions after age
was a "conduit" for 70 1/2 must be net of
TSA funds previously required minimum
rolled over. distributions.
o Direct transfers from
another contract or
arrangement under
Section 403(b) of the
Internal Revenue Code,
complying with IRS
Revenue Ruling 90-24.
- ------------------------------------------------------------------------------------------------------------------------------
Rollover 53 1/2 through 83 o $10,000 (initial) o Rollovers from a o Additional rollover or
IRA or qualified plan. direct transfer
Flexible o $ 1,000 (additional) contributions may be
Premium made until the earlier
IRA with o Rollovers from a TSA. of age 84 or within
Assured seven years from the
Payment o Rollovers from another end of the fixed period.
Option or traditional individual
APO Plus retirement o Contributions after age
arrangement. 70 1/2 must be net of
required minimum
o Direct distributions.
custodian-to-custodian
transfers from another
traditional individual
retirement
arrangement.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See "Tax information" for a more detailed discussion of sources of contributions
and certain contribution limitations. We may refuse to accept any contribution
if the sum of all contributions under all Equitable Accumulator contracts 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 contracts
that you own would then total more than $2,500,000.
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" later in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
20 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint
owner may also be named. Only natural persons can be joint owners. This means
that an entity such as a corporation cannot be a joint owner.
Under all IRA and Rollover TSA contracts, the owner and annuitant must be the
same person.
Under QP contracts, the owner must be the trustee of the qualified plan and
the annuitant must be the plan participant/employee. See Appendix II for more
information on QP contracts.
- --------------------------------------------------------------------------------
A participant is an individual who is currently, or was formerly participating
in an eligible employer's QP or TSA plan.
- --------------------------------------------------------------------------------
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
Additional contributions may also be made under our automatic investment
program. This method of payment is discussed in detail under "More information"
later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing
or unclear, we will try to obtain that information. If we are unable to obtain
all of the information we require within five business days after we receive an
incomplete application or form, we will inform the Equitable associate
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- --------------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
Section 1035 exchanges
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
NQ contract in a tax-free exchange if you follow certain procedures as shown in
the form that we require you to use. Also see "Tax information" later in this
prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options, the fixed maturity
options, and the account for special dollar cost averaging.
Variable investment options
Your investment results in any one of the 30 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed
below are the currently available Portfolios, their investment objectives, and
their advisers.
- --------------------------------------------------------------------------------
You can choose among 30 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
income
- ----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors High total return without, in the adviser's Alliance Capital Management L.P.
opinion, undue risk to principal
- ----------------------------------------------------------------------------------------------------------------------
Alliance Equity Index Total return (before deduction of Portfolio Alliance Capital Management L.P.
(available only under APO Plus) expenses) that approximates the total return
performance of the Standard & Poor's 500
Composite Index
- ----------------------------------------------------------------------------------------------------------------------
Alliance Global Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income High total return through a combination of Alliance Capital Management L.P.
current income and capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors High total return consistent with the adviser's Alliance Capital Management L.P.
determination of reasonable risk
- ----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P.
to the extent consistent with that objective,
capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Intermediate High current income consistent with relative Alliance Capital Management L.P.
Government Securities stability of principal
- ----------------------------------------------------------------------------------------------------------------------
Alliance International Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Money Market High level of current income while preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- ----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- --------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- --------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Standard & Poor's 500
Composite Stock Price Index
- --------------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Morgan Stanley Capital
International Europe, Australia, Far East Index
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
22 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- --------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OBJECTIVE ADVISER
- ----------------------------------- -------------------------------------------------- -----------------------------------------
<S> <C> <C>
BT Small Company Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Russell 2000 Index
- --------------------------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Capital appreciation Evergreen Asset Management Corp.
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp.
conservation of capital, and capital appreciation
- --------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company
Companies
- --------------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company
growth of capital and income
- --------------------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced Balanced investment Putnam Investment Management, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc.
Value objective
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Substantial dividend income and also capital T. Rowe Price Associates, Inc.
appreciation
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Long-term growth of capital Rowe Price-Fleming International, Inc.
Stock
- --------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Long-term capital appreciation Warburg Pincus Asset Management, Inc.
Value
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not currently be available in all states.
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
Fixed maturity options
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. Under the Assured Payment Option and APO Plus, we offer
additional fixed maturity options with maturity dates ranging from eleven to
fifteen years. We provide distributions during the fixed period under the
Assured Payment Option and APO Plus by allocating your contributions to fixed
maturity options that mature in consecutive order. These amounts become part of
our general account assets. They will accumulate interest at the "rate to
maturity" for each fixed maturity option. The total amount you allocate to and
accumulate in each fixed maturity option is called the "fixed maturity amount."
The fixed maturity options are generally not available in contracts issued in
Maryland. In Maryland the fixed maturity options are only available under the
Assured Payment Option and APO Plus which are issued as separate contracts
rather than as a part of a Rollover IRA or Flexible Premium IRA contract. See
Appendix VI for more information on the Assured Payment Option and APO Plus
contracts available in Maryland.
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity. Assured
Payment Option and APO Plus offer additional fixed maturity options for years
eleven to fifteen.
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the
rate to maturity in effect for new contributions allocated to that fixed
maturity option on the date we apply your contribution. If you make any
withdrawals or transfers from a fixed maturity option before the maturity date,
we will make a "market value adjustment" that may increase or decrease any
fixed maturity amount you have left in that fixed maturity option. We will
discuss the market value adjustment below and in greater detail later in this
prospectus under "More information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. It will reflect the market value adjustment that we would make if
you were to withdraw all of your fixed maturity amounts on the date of the
report. We call this your "market adjusted amount."
Fixed maturity options and maturity dates. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 are
available at any time.
Under the Assured Payment Option and APO Plus, we offer additional fixed
maturity options ending on February 15th for each of the maturity years 2010
through 2014.
We will not accept allocations to a fixed maturity option if on the date the
contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
<PAGE>
- --------------------------------------------------------------------------------
24 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
Options at maturity date. We will notify you on or before December 31st of the
year before each of your fixed maturity options is scheduled to mature. At that
time, you may choose to have one of the following options take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity
option, or into any of the variable investment options; or
(b) withdraw the maturity value (there may be a withdrawal charge).
If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the
fixed maturity option that will mature next.
Rates to maturity and price per $100 of maturity value
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of April 1, 1999 and the related
price per $100 of maturity value were as follows:
- -----------------------------------------------------------------
FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR APRIL 1, 1999 MATURITY VALUE
- -----------------------------------------------------------------
2000 3.25% $97.23
2001 4.04% $92.83
2002 4.33% $88.51
2003 4.46% $84.43
2004 4.52% $80.60
2005 4.67% $76.45
2006 4.77% $72.56
2007 4.79% $69.16
2008 4.87% $65.55
2009 4.97% $61.91
- -----------------------------------------------------------------
Available under the Assured Payment Option and APO Plus
- -----------------------------------------------------------------
FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO MATURITY PRICE
MATURITY DATE OF AS OF PER $100 OF
MATURITY YEAR APRIL 1, 1999 MATURITY VALUE
- -----------------------------------------------------------------
2010 4.90% $59.41
2011 4.90% $56.63
2012 4.90% $53.99
2013 4.90% $51.46
2014 4.90% $49.05
- -----------------------------------------------------------------
Market value adjustment. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate
an amount to a fixed maturity option to the time that you take a withdrawal,
the market value adjustment will be negative. Likewise, if interest rates drop
at the end of that time, the market value adjustment will be positive. Also,
the amount of the market value adjustment, either up or down, will be greater
the longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment could greatly reduce
your value in the fixed maturity options, particularly in the fixed maturity
options with later maturity dates.
We provide an explanation of how we calculate the market value adjustment and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information"
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
later in this prospectus. Appendix III of this prospectus provides an example
of how the market value adjustment is calculated.
Separate account for the fixed maturity options. Amounts allocated to the fixed
maturity options are held in a "nonunitized" separate account we have
established under the New York Insurance Law. This separate account provides an
additional measure of assurance that we will make full payment of amounts due
under the fixed maturity options. We provide additional information about this
separate account later in this prospectus under "More information."
Off maturity date payments. Under Assured Payment Option and APO Plus, you may
choose to receive payments monthly, quarterly or annually. If you choose annual
payments, generally your payments will be made on February 15th as each fixed
maturity option matures. You may instead choose to have your annual payments
made in a month other than February. We refer to payments we make on an annual
basis in any month other than February and monthly or quarterly payments, as
payments made "off maturity dates." If you choose to have your payments made
off maturity dates, we will be required to begin making your payments before
the maturity date of a fixed maturity option. In planning for these payments we
will allocate a portion of your initial contribution or account value to the
separate account for the fixed maturity options, but not to the fixed maturity
options contained in the separate account. We will credit these amounts with
interest at rates that will not be less than 3%.
After that, as each fixed maturity option expires we will transfer your
maturity value from the expired fixed maturity option and hold the maturity
value in the separate account. We will credit interest to these amounts at the
same rate as the rate to maturity that was credited in the expired fixed
maturity option. These amounts will then be used to provide for payments off
maturity dates during the fixed period.
- --------------------------------------------------------------------------------
Whether you choose monthly, quarterly, or annual payments, your payments will
be made on the 15th day of the month.
- --------------------------------------------------------------------------------
We will not make a market value adjustment to the amounts held in the separate
account to provide for payments off maturity dates.
Account for special dollar cost averaging
The account for special dollar cost averaging is part of our general account.
We pay interest at guaranteed rates in this account. We will credit interest to
the amounts that you have in the account for special dollar cost averaging
every day. We set the interest rates periodically, according to procedures that
we have. We reserve the right to change these procedures.
The account for special dollar cost averaging is available for allocation of
your initial contribution only under the special dollar cost averaging program.
It is available only for the first year of your contract. We will guarantee to
pay our current interest rate that is in effect on the date that your
contribution is allocated to this account. Your guaranteed interest rate will
be shown in your contract. The rate will never be less than 3%. See "Allocating
your contributions," below for the rules and restrictions that apply to the
special dollar cost averaging program.
<PAGE>
- --------------------------------------------------------------------------------
26 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE CONTRACT FEATURES AND BENEFITS DESCRIBED BELOW DO NOT APPLY WHEN THE ASSURED
PAYMENT OPTION OR APO PLUS IS IN EFFECT UNDER A ROLLOVER IRA OR FLEXIBLE PREMIUM
IRA CONTRACT. FOR INFORMATION REGARDING YOUR CONTRACT BENEFITS UNDER THE ASSURED
PAYMENT OPTION OR APO PLUS, SEE "ACCESSING YOUR MONEY ASSURED PAYMENT OPTION AND
APO PLUS."
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among three ways to allocate your contributions under your
contract: self-directed, principal assurance or dollar cost averaging.
Self-directed allocation
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity
options with maturity dates that are later than the February 15th immediately
following the date annuity payments are to begin.
Principal assurance allocation
Under this allocation program you select a fixed maturity option. We specify
the portion of your initial contribution to be allocated to that fixed maturity
option in an amount that will cause the maturity value to equal the amount of
your entire initial contribution on the fixed maturity option's maturity date.
The maturity date you select generally may not be later than 10 years, or
earlier than seven years from your contract date. You allocate the rest of your
contribution to the variable investment options however you choose.
For example, if your initial contribution is $10,000, and on April 1, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009,
since the rate to maturity was 4.97% on April 1, 1999, we would have allocated
$6,191.16 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA,
Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity
year that would extend beyond the year in which you will reach age 70 1/2, you
should consider whether your value in the variable investment options, or your
other traditional IRA or TSA funds are sufficient to meet your required minimum
distributions. See "Tax information."
Dollar cost averaging
We offer two dollar cost averaging programs. Each program allows you to
gradually allocate amounts to the variable investment options by periodically
transferring approximately the same dollar amount to the variable investment
options you select. This will cause you to purchase more units if the unit's
value is low and fewer units if the unit's value is high. Therefore, you may
get a lower average cost per unit over the long term. These plans of
investing, however, do not guarantee that you will earn a profit or be
protected against losses.
- --------------------------------------------------------------------------------
Units measure your value in each variable investment option.
- --------------------------------------------------------------------------------
Special dollar cost averaging programs. You may dollar cost average from the
account for special dollar cost averaging into any of the variable investment
options. You must allocate your entire initial contribution into the account.
We will transfer your value in the account for special dollar cost averaging
into the variable investment options that you select over the next 12 months.
The transfer date will be the same day of the month as the contract date, but
not later than the 28th. All amounts will
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
be transferred out by the end of the first contract year. You may not allocate
additional contributions to the account for special dollar cost averaging.
- --------------------------------------------------------------------------------
The account for special dollar cost averaging provides guaranteed interest.
- --------------------------------------------------------------------------------
The only amounts that should be transferred from the account for special dollar
cost averaging are your regularly scheduled monthly transfers to the variable
investment options. If you request to transfer or withdraw any other amounts,
we will transfer all of the value that you have remaining in the account for
special dollar cost averaging to the investment options according to the
allocation percentages we have on file for you. As a result, you will no longer
be able to participate in the special dollar cost averaging program. You may
also ask us to cancel your participation at any time.
If the account for special dollar cost averaging is not available in your
state, we offer a special dollar cost averaging program in the Alliance Money
Market option. Under this program we will not deduct the mortality and expense
risks and administrative charges from assets in the Alliance Money Market
option. You may not allocate amounts other than your initial contribution to
this program, which is in effect only for your first contract year. We reserve
the right to discontinue offering the Alliance Money Market special dollar cost
averaging program for new contracts once the account for special dollar cost
averaging becomes available in a state. Your Equitable associate can provide
information about state availability. You may also contact us directly.
General dollar cost averaging program. If your value in the Alliance Money
Market option is at least $5,000, you may choose, at any time, to have a
specified dollar amount or percentage of your value transferred from that
option to the other variable investment options. You can select to have
transfers made on a monthly, quarterly or annual basis. The transfer date will
be the same calendar day of the month as the contract date, but not later than
the 28th day of the month.
The minimum amount that we will transfer each time is $250. The maximum amount
we will transfer is equal to your value in the Alliance Money Market option at
the time the program is elected, divided by the number of transfers scheduled.
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The general dollar cost averaging program
will then end. You may change the transfer amount once each contract year, or
cancel this program at any time.
----------------------------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program. See "Transferring your money among investment options."
OUR BASEBUILDER OPTION
The baseBUILDER option offers you a combined guaranteed minimum income benefit
and guaranteed minimum death benefit. The combined benefit is available if the
annuitant is between the ages of 20 and 75. There is an additional charge for
this benefit. See "baseBUILDER benefits charge" under "Charges and expenses."
- --------------------------------------------------------------------------------
baseBUILDER provides income protection if you elect an income payout while the
annuitant is alive and a death benefit if the annuitant dies.
- --------------------------------------------------------------------------------
The guaranteed minimum income benefit component of baseBUILDER is described
below under "Your guaranteed minimum income benefit under baseBUILDER." As part
of baseBUILDER you have a choice of two guaranteed minimum death benefit
options: either a "5% roll up to age 80" or an "annual ratchet to age 80."
Under Rollover IRA, Flexible Premium IRA, and Rollover TSA contracts, we offer
an additional option, a "5% roll up to age 70" for ages 20 through 60. The
options are described under "Guaranteed minimum death benefit." The 5% roll up
to age 80 and annual ratchet to age 80 guaranteed minimum death benefits are
provided under the contract even if you do not elect baseBUILDER, and for a
broader range of annuitant
<PAGE>
- --------------------------------------------------------------------------------
28 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ages at contract issue than those available under baseBUILDER. The 5% roll up
to age 70 guaranteed minimum death benefit is only available if baseBUILDER is
elected. baseBUILDER is not currently available in New York.
Your guaranteed minimum income benefit under baseBUILDER
The guaranteed minimum income benefit guarantees you a minimum amount of
lifetime income under our Income Manager (Life Annuity with a Period Certain)
payout annuity contract. The Income Manager (Life Annuity with a Period
Certain) payout annuity contract provides payments during a specified period
of time (called a period certain) that will continue for the rest of the
annuitant's life thereafter. If the annuitant dies before the period certain
has ended, payments will continue to the beneficiary for the time remaining in
the period certain.
- --------------------------------------------------------------------------------
We also refer to the guaranteed minimum income benefit as the "Living
Benefit."
- --------------------------------------------------------------------------------
Guaranteed minimum income benefit's benefit base.
On the contract date, your guaranteed minimum income benefit's benefit base
("benefit base") is equal to the initial contribution. Thereafter, the benefit
base will be credited with interest each day through the annuitant's age 80
(age 70 if the 5% roll up to age 70 is elected). The effective annual interest
rate is 5% for amounts in the variable investment options (other than the
Alliance Money Market option and Alliance Intermediate Government Securities
option) and in the special dollar cost averaging programs. Amounts in the
Alliance Money Market option, Alliance Intermediate Government Securities
option, fixed maturity options, and in a Rollover TSA contract loan reserve
account will be credited with interest at a 3% effective annual rate. No
interest is credited after age 80 (age 70 if the 5% roll up to age 70 is
elected).
If you make an additional contribution to your contract, we will increase your
current benefit base by the dollar amount of the additional contribution on
the date that the contribution is allocated to your investment options. If you
take a withdrawal from your contract, we will adjust your benefit base for the
withdrawal on the date that you make the withdrawal. See "How withdrawals
affect your guaranteed minimum income benefit and guaranteed minimum death
benefit" under "Accessing Your Money" for more detailed information. The
benefit base will be reduced by any withdrawal charge remaining when you
exercise your guaranteed minimum income benefit. Under Rollover TSA contracts,
we will also reduce your benefit base by the amount of any outstanding loan
plus accrued interest on the date that you exercise your guaranteed minimum
income benefit.
- --------------------------------------------------------------------------------
Your benefit base is not an account value or a cash value and is used solely
for purposes of calculating your guaranteed minimum income benefit.
- --------------------------------------------------------------------------------
Exercising your benefit and income you will receive.
If you exercise the guaranteed minimum income benefit, the annual lifetime
income that you will receive under the Income Manager (Life Annuity with a
Period Certain) payout annuity contract, will be the greater of (i) your
guaranteed minimum income benefit, and (ii) the income provided by applying
your actual account value at our then current annuity purchase factors.
The guaranteed minimum income benefit is based on conservative actuarial
factors. Therefore, even if your account value is less than your benefit base,
you may generate more income by applying your account value to current annuity
purchase factors. We will make this comparison for you when the need arises.
- --------------------------------------------------------------------------------
The guaranteed minimum income benefit should be regarded as a safety net only.
- --------------------------------------------------------------------------------
Illustrations of guaranteed minimum income benefit.
The table below illustrates the guaranteed minimum income benefit amounts per
$100,000 of initial contribution, for a male annuitant age 60 (at issue) on the
contract date anniversaries indicated, assuming no additional contributions,
withdrawals, or loans under Rollover TSA contracts, and assuming there were no
allocations to the Alliance Money Market option, Alliance Intermediate
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Government Securities option or the fixed maturity options.
- --------------------------------------------------------------
GUARANTEED MINIMUM
INCOME BENEFIT -- ANNUAL INCOME
CONTRACT DATE PAYABLE FOR LIFE WITH
ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN
- --------------------------------------------------------------
7 $ 8,315
10 10,341
15 14,924
- --------------------------------------------------------------
Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income
benefit only within 30 days following the seventh or later contract date
anniversary under your contract. However, you may not exercise the benefit
before the annuitant is age 60, or after the annuitant is age 83. There is an
exception if the annuitant is between ages 20 and 44 when your contract is
issued. In this case you may exercise the benefit following the 15th or later
contract date anniversary, but not after the annuitant is age 83. See "Exercise
of guaranteed minimum income benefit under QP and Rollover TSA contracts" below
regarding exercising the benefit under QP and Rollover TSA contracts.
Your contract will terminate when you exercise your guaranteed minimum income
benefit. You will then receive an Income Manager (Life Annuity with a Period
Certain) payout annuity contract. Your period certain will be based on the
annuitant's age at the time the benefit is exercised, as follows:
- ----------------------------------------
LEVEL PAYMENTS*
- ----------------------------------------
PERIOD CERTAIN
YEARS
--------------------
ANNUITANT'S
AGE AT EXERCISE IRAS 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 Rollover IRA and
Flexible Premium IRA contracts, please see "Minimum distributions" under "Tax
information," as to how this option may be affected if exercised after age
70 1/2.
You will begin receiving payments one payment period after the payout annuity
contract is issued. For example, if you select monthly annuity payments, we
will send your first payment to you approximately one month from the date your
contract is issued.
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 as of 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. You
must return your contract to us in order to exercise this benefit. The amount
of income you actually receive will be determined when we receive your request
to exercise the benefit.
You may also apply your cash value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity contract, and you may always
apply your account value to any of our annuity payout options. The traditional
annuity payout options are discussed under "Accessing your money." These
options differ from the Income Manager payout annuity contracts. They may
provide higher or lower income levels, but do not have all the features of the
Income Manager payout annuity contract. You may request an illustration of the
Income Manager payout annuity contract from your Equitable associate.
The Income Manager (Life Annuity with a Period Certain) payout annuity
contracts are offered through our prospectus for the Income Manager payout
annuities. You may obtain a copy of the most current version from your
Equitable associate. You should read it carefully before you decide to exercise
your guaranteed minimum income benefit.
Successor annuitant/contract owner. If the successor annuitant/contract owner
(discussed under "More information" later in this prospectus) elects to
continue the contract after your death, the guaranteed minimum income
<PAGE>
- --------------------------------------------------------------------------------
30 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
benefit will continue to be available on the contract date anniversaries
specified above based on the contract date. However, the guaranteed minimum
income benefit must be exercised based on the age of the successor
annuitant/contract owner.
Exercise of guaranteed minimum income benefit under QP and Rollover TSA
contracts. Under QP contracts, the guaranteed minimum income benefit may be
exercised in the same manner as described above only after the trustee of the
qualified plan directly rolls over the QP contract to a Rollover IRA contract.
In this process the ownership of the QP contract is changed to the annuitant.
The rollover to a Rollover IRA contract and change of ownership may only occur
when the annuitant will no longer be a participant in the qualified plan.
Similarly, under Rollover TSA contracts the contract owner must convert the
Rollover TSA contract in a direct rollover to a Rollover IRA contract according
to our rules. The rollover to a Rollover IRA contract may only occur when you
are eligible for a rollover distribution from a TSA. This may generally occur
when you are age 59 1/2, or you are separated from service from the employer
who provided the Rollover TSA funds. See "Rollover or direct transfer
contributions" under "Tax information" later in this prospectus.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through
79 at issue of Rollover IRA, Roth Conversion IRA, Flexible Premium Roth IRA,
and Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA
contracts; and 20 through 75 at issue of QP contracts.
You may elect either the "5% roll up to age 80" or the "annual ratchet to age
80" guaranteed minimum death benefit when you apply for a contract. Once you
have made your election, you may not change it.
5% roll up to age 80. On the contract date, the guaranteed minimum death
benefit equals your initial contribution. Thereafter, the guaranteed minimum
death benefit will be credited with interest each day through the annuitant's
age 80. The effective annual interest rate is 5% for amounts in the variable
investment options (other than the Alliance Money Market option and Alliance
Intermediate Government Securities option) and in the special dollar cost
averaging programs. Amounts in the Alliance Money Market option, Alliance
Intermediate Government Securities option, fixed maturity options, and in a
Rollover TSA contract loan reserve account will be credited with interest at a
3% effective annual rate. No interest is credited after the annuitant is age
80.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the additional contribution on
the date the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your guaranteed minimum death
benefit for the withdrawal on the date you take the withdrawal.
The 5% roll up to age 80 guaranteed minimum death benefit is not available in
New York.
Annual ratchet to age 80. On the contract date, your guaranteed minimum death
benefit equals your initial contribution. Then, on each contract date
anniversary, we will determine your guaranteed minimum death benefit by
comparing your current guaranteed minimum death benefit to your account value
on that contract date anniversary. If your account value is higher than your
guaranteed minimum death benefit, we will increase your guaranteed minimum
death benefit to equal your account value. On the other hand, if your account
value on the contract date anniversary is less than your guaranteed minimum
death benefit, we will not adjust your guaranteed minimum death benefit either
up or down.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the contribution on the date the
contribution is allocated to your investment options. If you take a withdrawal
from your contract, we will adjust your guaranteed minimum death benefit on the
date you take the withdrawal.
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Contract features and benefits 31
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Optional guaranteed minimum death benefit available for ages 20 through 60 at
issue of Rollover IRA, Flexible Premium IRA, and TSA contracts if baseBUILDER
is also elected.
5% roll up to age 70. Your guaranteed minimum death benefit will be calculated
as described above under "5% roll up to age 80" except that interest will be
credited only through age 70. Additional contributions or withdrawals will also
be adjusted as described above under "5% roll up to age 80."
Applicable for annuitant ages 80 through 83 when the contract is issued.
On the contract date, your guaranteed minimum death benefit equals your
initial contribution. Thereafter, it will be increased by the dollar amount of
any additional contributions. We will adjust your guaranteed minimum death
benefit if you take any withdrawals.
----------------------------------------
Please see "How withdrawals affect your guaranteed minimum income benefit and
guaranteed minimum death benefit" under "Accessing your money" for information
on how withdrawals affect your guaranteed minimum death benefit. For contracts
issued in New York, the guaranteed minimum death benefit at the annuitant's
death will never be less than your value in the variable investment options,
plus the sum of the fixed maturity amounts in each fixed maturity option.
See Appendix IV for an example of how we calculate the guaranteed minimum death
benefit.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it
to us for a refund. To exercise this cancellation right you must mail the
contract directly to our Processing Office within 10 days after you receive it.
In some states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract and
will reflect (i) any investment gain or loss in the variable investment
options, (ii) any positive or negative market value adjustments in the fixed
maturity options, and (iii) any guaranteed interest in the account for special
dollar cost averaging, through the date we receive your contract. However, some
states require that we refund the full amount of your contribution (not
reflecting (i), (ii) or (iii) above). For any IRA contract returned to us
within seven days after you receive it, we are required to refund the full
amount of your contribution.
We may require that you wait six months before you may apply for a contract
with us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA or Flexible Premium Roth IRA contract, you may cancel your Roth Conversion
IRA contract and return to a Rollover IRA or Flexible Premium IRA contract,
whichever applies. Our Processing Office, or your Equitable associate, can
provide you with the cancellation instructions.
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32 Determining your contract's value
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2
Determining your contract's value
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YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have allocated to the (i)
variable investment options, (ii) fixed maturity options, and (iii) account for
special dollar cost averaging. These amounts are subject to certain fees and
charges discussed under "Charges and expenses." Under Rollover TSA contracts,
if you have any outstanding loan your account value will include any amount in
the loan reserve account.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value, less the
annual administrative charge under Flexible Premium IRA and Flexible Premium
Roth IRA contracts, and less any withdrawal charge that may apply if you
surrender your contract. If you have a Rollover TSA contract with an
outstanding loan, your cash value also is reduced by the amount of any
outstanding loan plus accrued interest. Please see "Surrendering your contract
to receive its cash value."
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option invests in shares of a corresponding Portfolio.
Your value in each variable investment option is measured by "units." The value
of your units will increase or decrease as though you had invested it in the
corresponding Portfolio's shares directly. Your value, however, will be reduced
by the amount of the fees and charges that we deduct under the contract. Your
value will also be reduced by the dollar amount of any withdrawals that you
make.
The unit value for each variable investment option depends on the investment
performance of that option, minus daily charges for mortality and expense risks
and administrative expenses. On any day, your value in any variable investment
option equals the number of units credited to your contract under that option,
multiplied by that day's value for one unit. The number of your contract units
in any variable investment option does not change unless you make additional
contributions, make a withdrawal, or transfer amounts among investment options,
or we transfer your loan amount to the loan reserve account under a TSA
contract. In addition, when we deduct the baseBUILDER benefits charge and any
withdrawal charge the number of units credited to your contract will be
reduced. Your units are also reduced under Flexible Premium IRA and Flexible
Premium Roth IRA contracts when we deduct the annual administrative charge. A
description of how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date
is the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value. Your value
will also include any amounts held in the separate account to provide for
payments off maturity dates under the Assured Payment Option and APO Plus.
YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING
Your value in the account for special dollar cost averaging at any time will
equal your initial contribution allocated to that option, plus interest, less\
the sum of all amounts that have been transferred to the variable investment
options you have selected.
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Transferring your money among investment options 33
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3
Transferring your money among investment options
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TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer
some or all of your account value among the investment options, subject to the
following:
o You may not transfer any amount to the account for special dollar cost
averaging.
o You may not transfer to a fixed maturity option that matures in the current
calendar year, or if its rate to maturity is 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately following
the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
o A transfer request while the Assured Payment Option or APO Plus is in effect
will terminate the option.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office.
Transfer requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option
(whole percentages only), and
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. However, it will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among
each variable investment option so that the percentage of your account value
that you specify is invested in each option at the end of each rebalancing
date.
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Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your Equitable associate or other
financial adviser before electing the program.
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You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in a dollar
cost averaging program or if the Assured Payment Option or APO Plus are in
effect. Rebalancing is not available for amounts you have allocated in the
fixed maturity options.
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34 Accessing your money
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4
Accessing your money
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ASSURED PAYMENT OPTION AND APO PLUS
(Rollover IRA and Flexible Premium IRA contracts only)
We offer two options, the Assured Payment Option and APO Plus, under which you
may receive distributions from your Rollover IRA or Flexible Premium IRA
contract. If you choose one of these two distribution options you will receive
guaranteed payments for a specified period of time we call the "fixed period."
When the fixed period ends you will continue to receive payments for as long as
you are living. Payments based solely on your life are made on a "single life"
basis. You may also elect to receive "joint and survivor" payments that are
based on the joint lifetimes of you and a joint annuitant.
You can elect the Assured Payment Option or APO Plus in the application or at a
later date, provided that your account value is at least $10,000 at the time of
election.
Assured Payment Option and APO Plus benefits will differ for contracts issued
in Maryland. See Appendix VI at the end of this prospectus for more
information.
Assured Payment Option
How we allocate your contributions. In order to provide for the payments you
receive during the fixed period, we allocate a portion of your initial
contribution or account value to fixed maturity options that mature in
consecutive date order. The remaining portion is allocated to the "life
contingent annuity" to provide for the payments you will receive after the
fixed period. The payments are intended to pay out your entire account value
by the end of the fixed period. If you are age 70 1/2 or older, the payments
are also designed to satisfy minimum distribution requirements. See "Tax
Information."
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The life contingent annuity provides for the payments after the fixed period
ends.
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We determine the allocation of your contributions based on a number of factors.
They are:
o the amount of your contribution;
o the form of payments;
o your age and sex (and the age and sex of the joint annuitant, if joint and
survivor payments are elected);
o the frequency of the payments; and
o the fixed period.
We then allocate your initial contribution among:
(1) the fixed maturity options;
(2) the separate account that holds amounts allocated to the fixed maturity
options if we need to make payments to you off maturity dates; and
(3) the life contingent annuity.
We will allocate your additional contributions in the same manner. Additional
contributions will increase the level of your future payments. You may not
change this allocation.
While the Assured Payment Option is in effect, no amounts may be allocated to
the variable investment options and the account for special dollar cost
averaging.
If you are using funds from multiple sources to purchase the Rollover IRA or
Flexible Premium IRA contract with the Assured Payment Option in effect, we
will allocate your contributions to the Alliance Money Market option until we
receive all amounts under the contract. Once all amounts are received we will
then apply them under the Assured Payment Option.
Payments. The payments you receive will increase by 10% every three years
during the fixed period on each third anniversary of the payment start date.
After the end of the fixed period, your first payment under the life contingent
annuity will be 10% greater than the final payment made under the fixed period.
Whether you choose monthly, quarterly or annual payments, you will usually
begin receiving payments one payment period from the contract date, unless you
elect otherwise, as described under "Off maturity date payments" earlier in
this prospectus. Your payments will always be made on the 15th day of the
month. However, if you are age 53 1/2 or older, you must defer the date your
payments will start until you
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Accessing your money 35
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are age 59 1/2. If you are at least age 59 1/2 at the time the Assured
Payment Option is elected you may choose to defer the date your payments will
start. Generally, you may defer payments for a period of up to 72 months. This
is called the deferral period. Deferral of the payment start date permits you
to lock in rates at a time when you may consider current rates to be high,
while permitting you to delay receiving payments if you have no immediate need
to receive income under your contract.
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The deferral period together with the fixed period may be referred to as a
"liquidity period." You will be able to make withdrawals before the end of the
fixed period. You may also choose to surrender your contract for its cash value
while keeping the life contingent annuity in effect.
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Before you decide to defer payments, you should consider the fact that the
amount of income you purchase is based on the rates to maturity in effect on
the date we allocate your contribution. Therefore, if rates rise during the
deferral period, your payments may be less than they would have been if you had
elected the Assured Payment Option at a later date. Deferral of the payment
start date is not available if you are older than age 80. If your deferred
payment start date is after you reach age 70 1/2, you should consider the
effect that deferral may have on your required minimum distributions.
See Appendix V for an example of how payments are made under the Assured
Payment Option.
If you are age 70 1/2 or older, your payments during the fixed period are
designed to meet required minimum distributions under your contract. We
determine the amount of the payments based on the value in each fixed maturity
option and the assigned value of the life contingent annuity for tax purposes.
If at any time your payment under the Assured Payment Option would be less than
the minimum amount required to be distributed under minimum distribution rules,
we will notify you of the difference. You may then choose to have an additional
amount withdrawn under your contract. We will treat such withdrawal as a lump
sum withdrawal. However, no withdrawal charge will apply. We will then adjust
your future scheduled payments so that the minimum distribution rules are met.
You also have the option to take the amount from other traditional IRA funds
you may have.
Fixed period. The fixed period based on your age at the time the contract is
issued (or your age at the time the Assured Payment Option is elected) will be
as follows:
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AGE* FIXED PERIOD
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59 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
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If you defer the date payments will start, your fixed period will be as
follows:
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FIXED PERIOD
BASED ON DEFERRAL PERIOD
---------------------------------
1-36 37-60 61-72
AGE* MONTHS MONTHS MONTHS
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53 1/2 through 70 12 years 9 years 9 years
71 through 75 9 years 9 years N/A
76 through 80 6 years 6 years N/A
81 through 83 N/A N/A N/A
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* For joint and survivor payments, the fixed period is based on the age of the
younger annuitant.
Purchase restrictions for joint and survivor payments
If you elect payments on a joint and survivor basis;
o the joint annuitant must be your spouse; and
o neither you nor the joint annuitant can be over age 83.
Payments after the fixed period. After the end of the fixed period, we will
continue your payments under the life contingent annuity if either you or the
joint annuitant is living. Payments continue throughout your lifetime (or the
lifetime of the joint annuitant, if joint and survivor payments are elected) on
the same payment schedule (either monthly, quarterly or annually) as the
payments you received during the fixed period.
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36 Accessing your money
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The portion of your contribution allocated to the life contingent annuity does
not have a cash value or an account value and, therefore, does not provide for
withdrawals.
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THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
PAYMENTS ARE MADE TO YOU ONLY IF YOU (OR THE JOINT ANNUITANT) ARE LIVING WHEN
THE PAYMENTS ARE SCHEDULED TO BEGIN. THESE PAYMENTS ARE ONLY MADE DURING YOUR
LIFETIME AND, IF APPLICABLE, THE LIFETIME OF THE JOINT ANNUITANT. THEREFORE,
YOU SHOULD CONSIDER THE POSSIBILITY THAT NO PAYMENTS WILL BE MADE UNDER THE
LIFE CONTINGENT ANNUITY IF YOU (OR THE JOINT ANNUITANT) DO NOT SURVIVE TO THE
DATE PAYMENTS ARE TO BEGIN.
Under the life contingent annuity you may elect single life or joint and
survivor payments. Joint and survivor payments are available on a 100%,
one-half or two-thirds to survivor basis. Your first payment under the life
contingent annuity will be 10% greater than the final payment under the fixed
period. After the fixed period we will increase your payments annually on each
anniversary of the payment start date under the life contingent annuity. We
will base this increase on the annual increase in the Consumer Price Index, but
it will never be greater than 3% per year.
Allocation of withdrawals. Only lump sum withdrawals are permitted under the
Assured Payment Option. We will subtract your withdrawal from all remaining
fixed maturity options to which your account value is allocated as well as from
amounts held in the separate account to provide for payments off maturity
dates. As a result we will reduce the amount of your payments and the length of
your fixed period. We will also begin making payments to you under the life
contingent annuity at an earlier date. In order to achieve this result we will
withdraw additional amounts over the amount of the withdrawal you requested.
These amounts will be taken from the fixed maturity options and from amounts
held in the separate account to provide for payments off maturity dates. The
amounts are then allocated to the life contingent annuity. The exact additional
amount we withdraw will depend on how much is necessary to assure that the same
pattern of payments will continue in reduced amounts for your life and the life
of the joint annuitant. The first increase in your payments will take place no
later than the date of the next planned increase.
Withdrawals are subject to a withdrawal charge and will have a 10% free
withdrawal amount available. No withdrawal charges will apply to the payments
made during the fixed period or a withdrawal made to meet the minimum
distribution requirement under the contract.
Death benefit. If a death benefit becomes payable during the fixed period we
will pay the death benefit amount to the designated beneficiary. The death
benefit amount is the greater of:
(1) your account value; and
(2) the sum of the fixed maturity amounts in each fixed maturity option plus
any amounts held in the separate account to provide for payments off
maturity dates.
We will not make any payments under the life contingent annuity after your
death unless you have elected payments on a joint and survivor basis. If you
elect joint and one-half or joint and two-thirds to survivor payments, at your
death or the joint annuitant's death, we will reduce the payments by one-half
or one-third, whichever applies.
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A death benefit is never payable under the life contingent annuity. The death
benefit applies only during the fixed period.
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Termination. The Assured Payment Option will be terminated if you:
(1) cancel the option at any time by sending a written request satisfactory to
us; or
(2) submit an additional contribution and you do not want it allocated under
the Assured Payment Option; or
(3) request a transfer of your account value; or
(4) request a change in the date the payments are to start under the life
contingent annuity.
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Accessing your money 37
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Once the Assured Payment Option has ended, the life contingent annuity will
remain in effect and payments will be made if you or the joint annuitant, are
living on the date payments are to start. No additional amounts will be
allocated under the life contingent annuity. You may elect to restart the
Assured Payment Option by submitting a written request satisfactory to us, but
no sooner than three years after the option was terminated. If you own an
Equitable Accumulator Rollover IRA or Flexible Premium IRA contract and you
elected the Assured Payment Option at age 70 1/2 or older and subsequently
terminate this option, required minimum distributions must continue to be made
under your contract. Before terminating the Assured Payment Option, you should
consider the implications this may have under the minimum distribution
requirements. See "Tax information."
Annuity payout options and surrendering the contract. Once your contract is
surrendered or an annuity payout option is chosen, we will return the contract
to you with a notation that the life contingent annuity is still in effect.
You may not surrender the life contingent annuity.
APO Plus
APO Plus is a variation of the Assured Payment Option. Except as indicated
below, APO Plus operates under the same guidelines as the Assured Payment
Option. Under APO Plus you will be able to keep a portion of your value in the
Alliance Common Stock option or the Alliance Equity Index option, whichever one
you choose. Once you have selected a variable investment option it may not be
changed.
You may not elect APO Plus if the Assured Payment Option is already in effect.
APO Plus allows you to remain invested in the variable investment option for
longer than would be possible if you had applied your entire account value all
at once to the Assured Payment Option or to an annuity payout option.
How we allocate your contributions. We allocate a portion of your initial
contribution or account value to the Assured Payment Option. Under the Assured
Payment Option amounts are allocated to the fixed maturity options, the
separate account for payments off maturity dates, and the life contingent
annuity to provide you with a minimum level amount of lifetime payments. Your
remaining account value is allocated to the variable investment option you
select. Periodically during the fixed period we transfer a portion of your
value in the variable investment option to the fixed maturity options to
increase your guaranteed level payments under the Assured Payment Option.
The amount allocated under the Assured Payment Option will provide for level
payments. The amount of the level payments are equal to the amount of the
initial payment that would have been provided if you had allocated your entire
initial contribution or account value under the Assured Payment Option. The
difference between the amount required for level payments and the amount
required for increasing payments provided under the Assured Payment Option, is
allocated to the variable investment option you selected. If you have any value
in the fixed maturity options at the time this option is elected, a market
value adjustment may apply as a result of such amounts being transferred to
activate the Assured Payment Option.
Fixed period. The fixed period and deferral period schedule shown for the
Assured Payment Option will also apply under APO Plus.
On the third February 15th following the date your first payment is made during
the fixed period, a portion of your value in the variable investment option is
transferred to the Assured Payment Option in order to increase your level
payments. If you elect a deferral period of three years or more, a portion of
your value in the variable investment option will be allocated to the Assured
Payment Option on the February 15th before the date your first payment is made.
If your payments are to be made on February 15th, the date of the first payment
will be counted as the first February 15th for the purpose of this transfer to
the Assured Payment Option.
The transfer of amounts to the Assured Payment Option is repeated each third
year during the fixed period. The first increase in payments will be reflected
in the payment made to you after three full years of payments and then every
three years after that. Immediately following your last payment
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38 Accessing your money
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during the fixed period, your remaining value in the variable investment option
is first allocated to the life contingent annuity to change the level payments
previously purchased to increasing payments. If you have any value remaining
after the increasing payments are purchased, this amount is allocated to the
life contingent annuity to further increase your lifetime payments. If your
value in the variable investment option is insufficient to purchase the
increasing payments, then the level payments previously purchased will be
increased as much as possible.
While APO Plus provides you with a minimum amount of level guaranteed lifetime
payments under the Assured Payment Option, the total amount of income that you
will receive over time will depend on the investment performance of the
variable investment option which you selected. It will also depend on the
current rates to maturity and the cost of the life contingent annuity, which
also varies. As a result, the combined amount of guaranteed lifetime income you
receive under APO Plus may be more or less than the amount that could have been
purchased if your entire initial contribution or account value had been
allocated to the Assured Payment Option.
See Appendix V for an example of the payments purchased under APO Plus.
Allocation of additional contributions. Any additional contributions you make
may only be allocated to the variable investment option. We do not permit
additional contributions after the end of the fixed period.
Withdrawals. If you take a lump sum withdrawal or if a lump sum withdrawal is
made to satisfy minimum distribution requirements such withdrawal will be taken
from your value in the variable investment option unless you specify otherwise.
If there is insufficient value in the variable investment option any additional
amount will be taken from the fixed maturity options and from amounts held in
the separate account to provide for payments off maturity dates, in the same
manner as described above for the Assured Payment Option.
Death Benefit. If a death benefit becomes payable during the fixed period we
will pay the death benefit amount to the designated beneficiary. The death
benefit amount is equal to the greater of:
(1) your value in the fixed maturity options; and
(2) the sum of the fixed maturity amounts in each fixed maturity option plus
any amounts held in the separate account to provide for payments off
maturity dates.
When the greater of (1) and (2) above is determined, the value in the variable
investment option is added. A death benefit is never payable under the life
contingent annuity.
Termination of APO Plus. You may terminate APO Plus at any time by submitting a
written request satisfactory to us. You may choose one of the following two
options if you terminate APO Plus:
(1) your contract will operate under the Equitable Accumulator Rollover IRA
or Flexible Premium IRA rules; or
(2) you may elect the Assured Payment Option.
If you elect the Assured Payment Option, your remaining value in the variable
investment option will be allocated to the fixed maturity options, the separate
account to provide for payments off maturity dates, and the life contingent
annuity. A market value adjustment may apply for any amounts allocated from a
fixed maturity option. At least 45 days prior to the end of each three-year
period, we will send you a quote indicating how much future income could be
provided under the Assured Payment Option. The quote would be based on your
current account value, current rates to maturity for the fixed maturity
options, and current purchase rates under the life contingent annuity as of the
date of the quote. The actual amount of future income you would receive depends
on the rates in effect on the day you switch to the Assured Payment Option.
WITHDRAWING YOUR ACCOUNT VALUE
You have several ways to withdraw your account value before annuity payments
begin. The table below shows the
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Accessing your money 39
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methods available under each type of contract. More information follows the
table. For the tax consequences of withdrawals, see "Tax information."
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METHOD OF WITHDRAWAL
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SUBSTANTIALLY MINIMUM
CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION
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NQ Yes Yes No No
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Rollover IRA* Yes Yes Yes Yes
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Flexible
Premium IRA* Yes Yes Yes Yes
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Roth Conversion
IRA Yes Yes Yes Yes
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Flexible Premium
Roth IRA Yes Yes Yes No
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QP Yes No No Yes
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Rollover TSA Yes** No No Yes
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* If Assured Payment Option or APO Plus is elected, only lump sum withdrawals
are available.
** For some Rollover TSA contracts, your ability to take withdrawals, loans or
surrender your contract may be limited. You must provide withdrawal
restriction information when you apply for a contract. See "Tax
information -- Tax Sheltered Annuity contracts (TSAs)."
Lump sum withdrawals
(All contracts)
You may take lump sum withdrawals from your account value at any time.
(Rollover TSA contracts may have restrictions.) The minimum amount you may
withdraw is $1,000. If you request to withdraw more than 90% of a contract's
current cash value we will treat it as a request to surrender the contract for
its cash value. See "Surrendering your contract to receive its cash value"
below.
Lump sum withdrawals in excess of the 15% (10% under Assured Payment Option or
APO Plus) free withdrawal amount may be subject to a withdrawal charge. Under
Rollover TSA contracts, if a loan is outstanding, you may only take lump sum
withdrawals as long as the cash value remaining after any withdrawal equals at
least 10% of the outstanding loan plus accrued interest.
Systematic withdrawals
(NQ and all IRA contracts)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would
be less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own an IRA
contract, you may elect this withdrawal method only if you are between ages
59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you
have balances in the account for special dollar cost averaging.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change
the amount or percentage in any contract year in which you have already taken a
lump sum withdrawal. You can cancel the systematic withdrawal option at any
time.
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 withdrawal
amount.
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Substantially equal withdrawals
(All IRA contracts)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have otherwise been due on prior withdrawals
made under this option and for any interest on those withdrawals.
You may elect to take substantially equal withdrawals at any time before age
59 1/2. We will make the withdrawal on any day of the month that you select as
long as it is not later than the 28th day of the month. You may not elect to
receive the first payment in the same contract year in which you took a lump
sum withdrawal. We will calculate the amount of your substantially equal
withdrawals based on the method you choose from the choices we offer. The
payments will be made monthly, quarterly or annually as you select. These
payments will continue until we receive written notice from you to cancel this
option or you take a lump sum withdrawal. You may elect to start receiving
substantially equal withdrawals again, but the payments may not restart in the
same contract year in which you took a lump sum withdrawal. We will calculate
the new withdrawal amount.
You may not elect substantially equal withdrawals if you have balances in the
account for special dollar cost averaging.
Substantially equal withdrawals are not subject to a withdrawal charge.
Minimum distribution withdrawals
(Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only -- See
"Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out
is $250. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We do not impose a withdrawal charge on minimum distribution withdrawals except
if when added to a lump sum withdrawal previously taken in the same contract
year, the minimum distribution withdrawal exceeds the 15% free withdrawal
amount.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
Under Rollover TSA contracts, you may not elect minimum distribution
withdrawals if a loan is outstanding.
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For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, 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).
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HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar
basis or on a pro rata basis as explained below:
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Income benefit
Benefit base - Your current benefit base will be reduced on a dollar-for-dollar
basis as long as the sum of your withdrawals in a contract year is 5% or less
of the guaranteed minimum death benefit on the most recent contract date
anniversary. Once you take a withdrawal that causes the sum of your withdrawals
in a contract year to exceed 5% of the guaranteed minimum death benefit on the
most recent contract date anniversary, that withdrawal and any subsequent
withdrawals in that same contract year will reduce your current benefit base on
a pro rata basis.
Death benefit
5% roll up to age 80 or age 70 - If you elect the 5% roll up to age 80 or 5%
roll up to age 70 guaranteed minimum death benefit, your current guaranteed
minimum death benefit will be reduced on a dollar-for-dollar basis as long as
the sum of your withdrawals in a contract year is 5% or less of the guaranteed
minimum death benefit on the most recent contract date anniversary. Once you
take a withdrawal that causes the sum of your withdrawals in a contract year to
exceed 5% of the guaranteed minimum death benefit on the most recent contract
date anniversary, that withdrawal and any subsequent withdrawals in that same
contract year will reduce your current guaranteed minimum death benefit on a
pro rata basis.
Annual ratchet to age 80 - If you elect the annual ratchet to age 80 guaranteed
minimum death benefit, each withdrawal will always reduce your current
guaranteed minimum death benefit on a pro rata basis.
Annuitant issue ages 80 through 83 - If your contract was issued when the
annuitant was between ages 80 and 83, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
----------------------------------------
Reduction on a dollar-for-dollar basis means that your current benefit will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of your current account value that is
being withdrawn and we reduce your current benefit by that same percentage. For
example, if your account value is $30,000 and you withdraw $12,000, you have
withdrawn 40% of your account value. If your guaranteed minimum death benefit
was $40,000 before 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 5% threshold
described above can have a significant impact on your guaranteed minimum income
benefit or guaranteed minimum death benefit.
LOANS UNDER ROLLOVER TSA CONTRACTS
You may take loans from a Rollover TSA unless restricted by the employer who
provided the Rollover TSA funds. If you cannot take a loan, or cannot take a
loan without approval from the employer who provided the funds, we will have
this information in our records based on what you and the employer who provided
the funds told us when you purchased your contract. The employer must also tell
us whether special employer plan rules of the Employee Retirement Income
Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan
while you are taking minimum distribution withdrawals.
You should read the terms and conditions on our loan request form carefully
before taking out a loan. Under Rollover TSA contracts subject to ERISA, you
may only take a loan with the written consent of your spouse. Your contract
contains further details of the loan provision. Also, see "Tax information" for
general rules applicable to loans.
We will permit you to have only one loan outstanding at a time. The minimum
loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your
account value, subject to any limits under the federal income tax rules. The
term of a loan is five years. However, if you use the loan to acquire your
primary residence, the term is 10 years. The term may not extend beyond the
earliest of:
(1) the date annuity payments begin,
(2) the date the contract terminates, and
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42 Accessing your money
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(3) the date a death benefit is paid (the outstanding loan will be deducted
from the death benefit amount).
Interest will accrue daily on your outstanding loan at a rate we set. The loan
interest rate will be equal to the Moody's Corporate Bond Yield Averages for
the calendar month ending two months before the day of the calendar quarter in
which the rate is determined.
Loan reserve account. On the date your loan is processed, we will transfer the
amount of your loan to the loan reserve account. Unless you specify otherwise,
we will subtract your loan on a pro rata basis from your value in the variable
investment options. If there is insufficient value or no value in the variable
investment options, any additional amount of the loan will be subtracted from
the fixed maturity options in order of the earliest maturity date(s) first. A
market value adjustment may apply.
We will credit interest to the amount in the loan reserve account at a rate of
2% lower than the loan interest rate that applies for the time your loan is
outstanding. On each contract date anniversary after the date the loan is
processed, we will transfer the amount of interest earned in the loan reserve
account to the variable investment options on a pro rata basis. When you make a
loan repayment, unless you specify otherwise, we will transfer the dollar
amount of the loan repaid from the loan reserve account to the investment
options according to the allocation percentages we have on our records.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while the
annuitant is living and before you begin to receive annuity payments. (Rollover
TSA contracts may have restrictions.) For a surrender to be effective, we must
receive your written request and your contract at our Processing Office. We
will determine your cash value on the date we receive the required information.
All benefits under the contract will terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we
may delay payment as described in "When to expect payments," below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any amount you
withdraw (less any withdrawal charge) and, upon surrender, payment of the cash
value. We may postpone such payments or applying proceeds for any period during
which:
(1) the New York Stock Exchange is closed or restricts trading,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people
remaining in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
and the account for special dollar cost averaging (other than for death
benefits) for up to six months while you are living. We also may defer payments
for a reasonable amount of time (not to exceed 15 days) while we are waiting
for a contribution check to clear.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery service at your expense.
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CHOOSING YOUR ANNUITY PAYOUT OPTIONS
The Equitable Accumulator offers you several choices for receiving retirement
income. Each choice enables you to receive fixed or, in some cases, variable
annuity payments.
You can choose from among the six different annuity payout options listed
below. Restrictions apply, depending on the type of contract you own.
- ----------------------------------------------------------
Annuity payout options Life annuity
Life annuity - period
certain
Life annuity - refund
certain
Period certain annuity
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Income Manager payout Life annuity with a period
options certain
Period certain annuity
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Annuity payout options
You can choose from among the following annuity payout options:
o Life annuity: An annuity that 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 continuation of benefits following
the annuitant's death with this payout option, it provides the highest
monthly payment of any of the life annuity options, so long as the annuitant
is living.
o Life annuity - period certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the end of a
selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity - refund certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered. This payout
option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments. Currently, this payout option is available only as a fixed
annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
The life annuity, life annuity - period certain, and life annuity - refund
certain payout options are available on a single life or joint and survivor
life basis. The joint and survivor life annuity guarantees payments for the
rest of the annuitant's life and, after the annuitant's death, payments
continue to the survivor.
The following annuity payout options are available as variable annuities:
o Life annuity (except in New York).
o Life annuity - period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed annuity payout option which can be elected in combination with
the variable annuity payout options. The amount of each variable annuity
payment will fluctuate, depending upon the performance of the variable
investment options, and
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44 Accessing your money
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whether the actual rate of investment return is higher or lower than an assumed
base rate. Please see "Annuity Unit Values" in the SAI.
We may offer other payout options not outlined here. Your Equitable associate
can provide details.
Selecting an annuity payout option
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return
your contract before annuity payments begin.
For NQ and IRA contracts, unless you choose a different payout option, we will
pay annuity payments under a life annuity with a certain period of 10 years.
The only payout options available under QP contracts and Rollover TSA contracts
are the life annuity 10 year period certain and the joint and survivor life
annuity 10 year period certain.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be later than the
contract date anniversary that follows the annuitant's 90th birthday. This may
be different in some states.
Before your annuity payments are to begin, we will notify you by letter that
the annuity payout options are available. Once you have selected a payout
option and payments have begun, no change can be made other than transfers (if
permitted in the future) among the variable investment options if a variable
annuity is selected.
The amount of the annuity payments will depend on the amount applied to
purchase the annuity, the type of annuity chosen and whether it is fixed or
variable, in the case of a life annuity, the annuitant's age (or the
annuitant's and joint annuitant's ages) and in certain instances, the sex of
the annuitant(s).
The amount we apply to provide annuity payments will depend on the type of
payout option you select. If you select a payout option that provides for
payments for the rest of the annuitant's life, then we will apply your account
value. If you select a payout option that provides for payments for a period
certain, then we will apply your cash value. However, if the period certain is
more than five years, we will apply not less than 95% of the account value.
Amounts in the fixed maturity options that are applied to a payout option
before a maturity date will result in a market value adjustment.
If, at the time you elect a payout option, 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 account value in a single sum rather
than as payments under the payout option chosen.
Income Manager payout options
For NQ and IRA contracts, two Income Manager payout options are also available.
These are the Income Manager (Life Annuity with a Period Certain) and the
Income Manager (Period Certain).
For QP contracts, the Income Manager payout options are available only after
the trustee of the qualified plan directly rolls over the QP contract to a
Rollover IRA contract. In this process the ownership of the QP contract is
changed to the annuitant. The rollover to a Rollover IRA contract and the
change of ownership may only occur when the annuitant will no longer be a
participant in the qualified plan.
For Rollover TSA contracts, the Income Manager payout annuity options are
available only after the Rollover TSA contract is rolled over to a Rollover IRA
contract. This may generally occur when you are age 59 1/2, or you have
separated from service with the employer who provided the Rollover TSA funds.
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for the annuitant's life and the life of a
joint annuitant. The Income Manager (Period Certain) provides payments for a
specified period. The contract owner and annuitant must meet the issue age and
payment requirements. Both Income Manager annuities provide guaranteed level
payments (NQ
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Accessing your money 45
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and IRA contracts). The Income Manager (Life Annuity with a Period Certain)
also provides guaranteed increasing payments (NQ contracts only).
If you apply only part of the account value of your contract to either of the
Income Manager payout annuities we will consider it a withdrawal and may deduct
a withdrawal charge. We will not deduct a withdrawal charge if you apply all of
your account value at a time when the dollar amount of the withdrawal charge is
greater than 2% of remaining contributions (after withdrawals). However, a new
withdrawal charge schedule will apply under the Income Manager annuity. For
purposes of the withdrawal charge schedule, the year in which your account
value is applied under the Income Manager annuity will be "contract year 1." In
addition, we will not deduct a withdrawal charge if you apply all of your
account value from your Equitable Accumulator contract when the dollar amount
of the withdrawal charge under such contract is 2% or less. This means that no
withdrawal charge schedule will apply under the Income Manager payout annuity
contract.
You should consider the timing of your purchase as it relates to the potential
for withdrawal charges under the Income Manager annuity. No additional
contributions will be permitted under an Income Manager (Life Annuity with a
Period Certain).
You also may apply your account value to an Income Manager (Period Certain)
annuity once withdrawal charges are no longer in effect under your contract. No
withdrawal charges will apply under that Income Manager annuity.
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your Equitable associate. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free
basis. Please consult your tax adviser.
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46 Charges and expenses
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5
Charges and expenses
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CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option:
o A mortality and expense risks charge.
o An administrative charge.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
o On each contract date anniversary - an annual administrative charge
(Flexible Premium IRA and Flexible Premium Roth IRA contracts only)
o At the time you make certain withdrawals or surrender your contract - a
withdrawal charge.
o If you elect the optional benefit - a charge for the optional baseBUILDER
benefit.
o At the time annuity payments are to begin - charges for state premium and
other taxes. An annuity administrative fee may also apply.
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
To help with your retirement planning, we may offer other annuities with
different charges, benefits, and features. Please contact your Equitable
associate for more information.
Mortality and expense risks charge
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the guaranteed
minimum death benefit. The daily charge is equivalent to an annual rate of
1.10% of the net assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, 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 contract, 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 contract. The
expense risk we assume is the risk that it will cost us more to issue and
administer the contracts than we expect.
Administrative charge
We deduct a daily charge from the net assets in each variable investment option
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to
increase this charge to an annual rate of 0.35%.
Annual administrative charge (Flexible Premium IRA and Flexible Premium Roth
IRA contracts only)
Under Flexible Premium IRA and Flexible Premium Roth IRA contracts, we deduct
an administrative charge from your account value on each contract date
anniversary. We deduct the charge if your account value on the last business
day of the contract year, before the deduction of any other charges, is less
than $25,000. If your account value on such date is $25,000 or more, this
charge will equal zero. During the first two contract years, the charge is
equal to $30 or, if less, 2% of your account value. The charge is $30 for
contract years three and later.
We will deduct this charge from your value in the variable investment options
on a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. If you surrender your
contract during the contract year we will deduct a pro rata portion of the
charge.
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Charges and expenses 47
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Withdrawal charge
A withdrawal charge applies in two circumstances:
(1) if you make one or more withdrawals during a contract year that, in total,
exceed the 15% free withdrawal amount, described below, or (2) if you surrender
your contract to receive its cash value.
The withdrawal charge equals a percentage of the contributions withdrawn. The
percentage that applies depends on how long each contribution has been invested
in the contract. We determine the withdrawal charge separately for each
contribution according to the following table:
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CONTRACT YEAR
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1 2 3 4 5 6 7 8+
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Percentage of
contribution 7% 6% 5% 4% 3% 2% 1% 0%
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If the Assured Payment Option or APO Plus is in effect, the withdrawal charge
is equal to a percentage of the contributions withdrawn minus any amounts
allocated to the life contingent annuity.
For purposes of calculating the withdrawal charge, we treat the contract year
in which we receive a contribution as "contract year 1." Amounts withdrawn up
to the free withdrawal amount are not considered withdrawal of any
contribution. We also treat contributions that have been invested the longest
as being withdrawn first. We treat contributions as withdrawn before earnings
for purposes of calculating the withdrawal charge. However, federal income tax
rules treat earnings under your contract as withdrawn first. See "Tax
information."
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the withdrawal charge from your account
value. Any amount deducted to pay a withdrawal charge is also subject to a
withdrawal charge. We deduct the charge in proportion to the amount of the
withdrawal subtracted from each investment option. The withdrawal charge helps
cover our sales expenses.
The withdrawal charge does not apply in the circumstances described below.
15% free withdrawal amount. Each contract year you can withdraw up to 15% of
your account value without paying a withdrawal charge. The 15% free withdrawal
amount is determined using your account value on the most recent contract date
anniversary, minus any other withdrawals made during the contract year. The 15%
free withdrawal amount does not apply if you surrender your contract.
The free withdrawal amount is 10% of your account value under the Assured
Payment Option and APO Plus.
Note the following special rule for NQ contracts issued to a charitable
remainder trust, the free withdrawal amount will equal the greater of: (1) the
current account value, less contributions that have not been withdrawn
(earnings in the contract), and (2) the 15% free withdrawal amount defined
above.
Minimum distributions. The withdrawal charge does not apply to withdrawals
taken under our minimum distribution withdrawal option. However, those
withdrawals are counted towards the 15% free withdrawal amount if you also make
a lump sum withdrawal in any contract year.
Disability, terminal illness or confinement to nursing home. The withdrawal
charge also does not apply if:
o The annuitant has qualified to receive Social Security disability benefits
as certified by the Social Security Administration; or
o We receive proof satisfactory to us (including certification by a licensed
physician) that the annuitant's life expectancy is six months or less; or
o The annuitant has been confined to a nursing home for more than 90 days (or
such other period, as required in your state) as verified by a licensed
physician. A nursing home for this purpose means one that is (a) approved by
Medicare as a provider of skilled nursing care service, or (b) licensed as a
skilled nursing home by the state or territory in which it is located (it
must be within the United States,
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48 Charges and expenses
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Puerto Rico, or U.S. Virgin Islands) and meets all of the following:
- its main function is to provide skilled, intermediate, or custodial
nursing care;
- it provides continuous room and board to three or more persons;
- it is supervised by a registered nurse or licensed practical nurse;
- it keeps daily medical records of each patient;
- it controls and records all medications dispensed; and
- its primary service is other than to provide housing for residents.
We reserve the right to impose a withdrawal charge, in accordance with your
contract and applicable state law, if the disability is caused by a preexisting
condition or a condition that began within 12 months of the contract date. Some
states may not permit us to waive the withdrawal charge in the above
circumstances, or may limit the circumstances for which the withdrawal charge
may be waived. Your Equitable associate can provide more information or you may
contact our Processing Office.
baseBUILDER benefits charge
If you elect the baseBUILDER combined guaranteed minimum income benefit and
guaranteed minimum death benefit, we deduct a charge annually from your account
value on each contract date anniversary. The charge is equal to 0.30% of the
benefit base in effect on the contract date anniversary.
We will deduct this charge from your value in the variable investment options
on a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
options in order of the earliest maturity date(s) first. A market value
adjustment may apply.
Charges for state premium and other applicable taxes
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout. 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).
Annuity administrative fee
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges,
please refer to the prospectuses for The Hudson River Trust and EQ Advisors
Trust following this 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 also may change the guaranteed minimum income
benefit and the guaranteed minimum death benefit,
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or offer variable investment options that invest in shares of The Hudson River
Trust or EQ Advisors Trust that 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 IRA contracts. Sponsored arrangements
include those in which an employer allows us to sell contracts 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, such as requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy contracts
or that have been in existence less than six months will not qualify for
reduced charges.
We also may establish different rates to maturity for the fixed maturity
options under different classes of contracts for group or sponsored
arrangements.
We will make these and any similar reductions according to our rules in effect
when we approve a contract 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 federal income tax rules,
ERISA, or both. We make no representations with regard to the impact of these
and other applicable laws on such programs. We recommend that employers,
trustees, and others purchasing or making contracts available for purchase
under such programs seek the advice of their own legal and benefits advisers.
OTHER DISTRIBUTION ARRANGEMENTS
We may reduce or eliminate charges when sales are made in a manner that result
in savings of sales and administrative expenses, such as sales through persons
who are compensated by clients for recommending investments and who receive no
commission or reduced commissions in connection with the sale of the contracts.
We will not permit a reduction or elimination of charges where it would be
unfairly discriminatory.
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50 Payment of death benefit
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6
Payment of death benefit
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YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for the change is signed. Under jointly owned contracts, the
surviving owner is considered the beneficiary, and will take the place of any
other beneficiary. You may be limited as to the beneficiary you can designate
in a Rollover TSA contract. In a QP contract, the beneficiary must be the
trustee.
The death benefit is equal to your account value, or, if greater, the
guaranteed minimum death benefit. The guaranteed minimum death benefit is part
of your contract, whether you select the combined baseBUILDER benefit or not.
We determine the amount of the death benefit as of the date we receive
satisfactory proof of the annuitant's death and any required instructions for
the method of payment. Under Rollover TSA contracts we will deduct the amount
of any outstanding loan plus accrued interest from the amount of the death
benefit.
The death benefit payable under the Assured Payment Option or APO Plus is
described earlier in this prospectus. See "Assured Payment Option and APO
Plus."
Effect of the annuitant's death
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you
cannot have a successor owner/annuitant.
For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a
surviving spouse may be able to have limited ownership.
When an NQ contract owner dies before the annuitant
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the person named to receive the death benefit upon the annuitant's death
to be the successor owner, you should name a successor owner. You may name a
different person that will become the successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes
the sole contract owner. This person will be considered the "beneficiary" for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a
joint ownership situation, the surviving spouse of the first owner to die) is
the successor owner for this purpose, the entire interest in the contract must
be distributed under the following rules:
o The cash value of the contract 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).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new owner's
life expectancy). Payments must begin no later than December 31st following
the calendar year of the non-annuitant owner's death. Unless this
alternative is elected, we will pay any cash value on December 31st of the
fifth calendar year following the year of your death (or the death of the
first owner to die).
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o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long as
the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have not chosen an annuity payout option
as of the time of the annuitant's death, the beneficiary will receive the death
benefit in a single sum. However, subject to any exceptions in the contract,
our rules and any applicable requirements under federal income tax rules, the
beneficiary may elect to apply the death benefit to one or more annuity payout
options we offer at the time. See "Choosing your annuity payout options"
earlier in this prospectus. Please note that if you are both the contract owner
and the annuitant, you may elect only a life annuity or an annuity that does
not extend beyond the life expectancy of the beneficiary.
Successor owner and annuitant
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current guaranteed minimum death benefit, if it is higher than the
account value. In determining whether the guaranteed minimum death benefit will
continue to grow, we will use your surviving spouse's age (as of the contract
date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA
CONTRACTS
Upon your death under a Rollover IRA or Flexible Premium IRA contract, a
non-spouse beneficiary may generally elect to keep the contract in your name
and receive distributions under the contract instead of the death benefit being
paid in a single sum.
If you die AFTER the "required beginning date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract;
and
(b) the pattern of minimum distribution withdrawals you chose was based in
part on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the "required beginning date" (and therefore you were not
taking minimum distribution withdrawals under the contract), the beneficiary
may begin taking minimum distribution withdrawals under the contract. We will
increase the account value to equal the death benefit if the death benefit is
greater than the account value. That amount will be used to provide the
withdrawals. These withdrawals will begin by December 31st of the calendar year
following your death and will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used.
The designated beneficiary must be a natural person and of legal age at the
time of election. The beneficiary must elect this option within 30 days
following the date we receive proof of your death. This option may not be
elected if the Assured Payment Option or APO Plus were in effect at the time of
your death.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the guaranteed minimum income benefit and the death benefit
(including the guaranteed minimum death benefit)
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provisions will no longer be in effect. Although the only withdrawals that will
be permitted are minimum distribution withdrawals, the beneficiary may choose
at any time to withdraw all of the account value and no withdrawal charges will
apply.
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7
Tax information
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator contracts owned by United States
taxpayers. The tax rules can differ, depending on the type of contract, whether
NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Flexible Premium
Roth IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each
type of contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state
income and other state taxes, federal income tax and withholding rules for
non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the
contract, rights under the contract, or payments under the contract may be
subject to gift or estate taxes. You should not rely only on this document, but
should consult your tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides
tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover
TSA), you should do so for the contract's features and benefits other than tax
deferral. In such situations, the tax deferral of the contract does not provide
additional benefits.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TRANSFERS AMONG INVESTMENT OPTIONS
You can make transfers among investment options inside the contract without
triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
Contributions
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
Contract earnings
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
o if a contract fails investment diversification requirements as specified in
federal income tax rules (these rules are based on or are similar to those
specified for mutual funds under the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that we issue to you during the
same calendar year are linked together and treated as one contract for
calculating the taxable amount of any distribution from any of those contracts.
Annuity payments
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your "investment in the contract." Generally, your investment in the contract
equals the contributions you made, less any amounts you previously withdrew
that were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount of the payment. For variable annuity payments, your
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investment in the contract divided by the number of expected payments is your
tax-free portion of each payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any
unrecovered investment in the contract.
Payments made before annuity payments begin
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the
contract. If you withdraw an amount which is more than the earnings in the
contract as of the date of the withdrawal, the balance of the distribution is
treated as a return of your investment in the contract and is not taxable.
Contracts purchased through exchanges
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator NQ contract (if you are using a life insurance or
endowment contract the owner and the insured must be the same on both sides
of the exchange transaction).
The tax basis of the source contract carries over to the Equitable Accumulator
NQ contract.
Surrenders
If you surrender or cancel the contract, the distribution is taxable as
ordinary income (not capital gain) to the extent it exceeds your investment in
the contract.
Death benefit payments made to a beneficiary after your death
For the rules applicable to death benefits, see "Payment of death benefit" and
"When an NQ contract owner dies before the annuitant" earlier in this
prospectus. The tax treatment of a death benefit taken as a single sum is
generally the same as the tax treatment of a withdrawal from or surrender of
your contract. The tax treatment of a death benefit taken as annuity payments
is generally the same as the tax treatment of annuity payments under your
contract.
Early distribution penalty tax
If you take distributions before you are age 59 1/2 a penalty tax of 10% of
the taxable portion of your distribution applies in addition to the income tax.
The extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN
PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract 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 from the
contract for each tax return. Puerto Rico generally provides a credit against
Puerto Rico tax for U.S. tax paid. Depending on your
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)
General
"IRA" stands for individual retirement arrangement. There are two basic types
of such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds
the assets for the benefit of the IRA owner. The assets can include mutual
funds and certificates of deposit. In an individual retirement annuity, an
insurance company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "Traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required
to combine IRA values or contributions for tax purposes. For further
information about individual retirement arrangements, you can read Internal
Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)").
This publication is usually updated annually, and can be obtained from any IRS
district office or the IRS website (http://www.irs.ustreas.gov).
The Equitable Accumulator IRA contract is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Internal Revenue Code. You may
purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we
offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth
IRA available are the Roth Conversion IRA and Flexible Premium Roth IRA. This
prospectus contains the information that the IRS requires you to have before
you purchase an IRA. This section of the prospectus covers some of the special
tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs
are not discussed in this prospectus because they are not available in
individual retirement annuity form.
The Equitable Accumulator IRA contract has been approved by the IRS as to form
for use as a traditional IRA. We expect to submit the Roth IRA version for
formal IRS approval in 1999. This IRS approval is a determination only as to
the form of the annuity. It does not represent a determination of the merits of
the annuity as an investment. The IRS approval does not address every feature
possibly available under the Equitable Accumulator IRA contract.
Cancellation
You can cancel an Equitable Accumulator IRA contract by following the
directions under "Your right to cancel within a certain number of days" earlier
in the prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA
contract issued as a result of a full conversion of an Equitable Accumulator
Rollover IRA or Flexible Premium IRA contract by following the instructions in
the request for full conversion form. The form is available from our Processing
Office or your registered representative. If you cancel an IRA contract, we may
have to withhold tax, and we must report the transaction to the IRS. A contract
cancellation could have an unfavorable tax impact.
Traditional individual retirement annuities (traditional IRAs)
Contributions to traditional IRAs
Individuals may make three different types of contributions to a traditional
IRA:
o regular contributions out of earned income or compensation; or
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o tax-free "rollover" contributions; or
o direct custodian-to-custodian transfers from other traditional IRAs ("direct
transfers").
Regular traditional IRA, direct transfer, and rollover contributions may be
made to a Flexible Premium IRA contract. We only permit direct transfer and
rollover contributions under a Rollover IRA contract. See "Rollovers and
transfers" below.
Regular contributions to traditional IRAs
Limits on contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. When your earnings are below $2,000,
your earned income or compensation for the year is the most you can contribute.
This $2,000 limit does not apply to rollover contributions or direct
custodian-to-custodian transfers into a traditional IRA. You cannot make
regular traditional IRA contributions for the tax year in which you reach age
70 1/2 or any tax year after that.
Special rules for spouses
If you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make 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 earned income is 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 IRAs. Each spouse
owns his or her traditional IRAs and Roth IRAs even if the other spouse funded
the contributions. A working spouse age 70 1/2 or over can contribute up to
the lesser of $2,000 or 100% of "earned income" to a traditional IRA for a
nonworking spouse until the year in which the nonworking spouse reaches age
70 1/2.
Deductibility of contributions
The amount of traditional IRA contributions that you can deduct for a tax year
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan, as defined under special federal income tax rules. Your Form
W-2 will indicate whether or not you are covered by such a retirement plan.
IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you
can make fully deductible contributions to your traditional IRAs for each tax
year up to $2,000 or, if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT
RANGE, you can make fully deductible contributions to your traditional IRAs.
For each tax year, your fully deductible contribution can be up to $2,000 or,
if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE
CONTRIBUTIONS to your traditional IRAs.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct
any of your regular contributions to your traditional IRAs.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for IRA contributions phases out with AGI between
$31,000 and $41,000 in 1999. This range will increase every year until 2005
when the range is $50,000-$60,000.
If you are married and file a joint return, and you are covered by a retirement
plan during any part of the taxable year, the deduction for traditional IRA
contributions phases out with
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AGI between $51,000 and $61,000 in 1999. This range will increase every year
until 2007 when the range is $80,000-$100,000.
Married individuals filing separately and living apart at all times are not
considered 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 in 1999, you determine
AGI and subtract $31,000 if you are single, or $51,000 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:
times $2,000 (or earned Equals the adjusted
($10,000-excess AGI) x income, if less) = deductible
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divided by $10,000 limit
Nondeductible regular contributions
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 combined deductible and
nondeductible contributions to your traditional IRA (or the nonworking spouse's
traditional IRA) may not, however, exceed the maximum $2,000 per person limit.
See "Excess contributions" below. You must keep your own records of deductible
and nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Withdrawals, payments and
transfer of funds out of traditional IRAs" 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 distributions 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.
When you can make regular contributions
If you file your tax returns on a calendar year basis like most taxpayers, you
have until the April 15 return filing deadline (without extensions) of the
following calendar year to make your regular traditional IRA contributions for
a tax year.
Excess contributions
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000; or
o regular contributions of more than earned income for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age
70 1/2; or
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income.
It is also not subject to the 10% additional penalty tax on early
distributions, discussed below under "Early distribution penalty tax." You do
have to withdraw any earnings that are attributed to the excess contribution.
The withdrawn earnings would be included in your gross income and could be
subject to the 10% penalty tax.
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Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
Rollovers and transfers
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
Any amount contributed to a traditional IRA after you reach 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.
Rollovers from qualified plans or TSAs
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll it
over to a traditional IRA within 60 days after the date you receive the
funds. The distribution from your qualified plan or TSA will be net of 20%
mandatory federal income tax withholding. If you want, you can replace the
withheld funds yourself and roll over the full amount.
o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to
send the distribution directly to your traditional IRA issuer. Direct
rollovers are not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o "required minimum distributions" after age 70 1/2 or separation from
service; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary; or
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
Rollovers from traditional IRAs to traditional IRAs
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently
than once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases,
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traditional IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Withdrawals, payments and transfers of funds out of traditional IRAs
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a traditional IRA at any time.
You do not need to wait for a special event like retirement.
Taxation of payments
Earnings in traditional IRAs are not subject to federal income tax until you or
your beneficiary receives them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any traditional IRA
(it does not have to be to this particular traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. At the end of any year in
which you have received a distribution from any traditional IRA, you calculate
the ratio of your total nondeductible traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
traditional IRAs you own at the end of the year plus all traditional IRA
distributions made during the year. Multiply this by all distributions from the
traditional IRA during the year to determine the nontaxable portion of each
distribution.
In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA that
accepts rollover contributions. To get this "conduit" traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must have
been a rollover contribution from a qualified plan, and
o 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to
roll over these eligible rollover distribution contributions and earnings to
another qualified plan or TSA at a future date. The Rollover IRA contract can
be used as a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
Required minimum distributions
Lifetime required minimum distributions
You must start taking annual distributions from your traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the
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calendar year you actually reach age 70 1/2, or to delay taking it until the
first three-month period in the next calendar year (January 1 - April 1).
Distributions must start no later than your "required beginning date," which is
April 1st of the calendar year after 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 each year.
How you can calculate required minimum distributions
There are two approaches to taking required minimum distributions -
"account-based" or "annuity-based."
Account-based method. If you choose an "account-based" method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by
a life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of
you and another individual. You can decide to "recalculate" your life
expectancy every year by using your current life expectancy factor. You can
decide instead to use the "term certain" method, where you reduce your life
expectancy by one every year after the initial year. If your spouse is your
designated beneficiary for the purpose of calculating annual account-based
required minimum distributions, you can also annually "recalculate" your
spouse's life expectancy if you want. If you choose someone who is not your
spouse as your designated beneficiary for the purpose of calculating annual
account-based required minimum distributions, you have to use the "term
certain" method of calculating that person's life expectancy. If you pick a
nonspouse designated beneficiary, you may also have to do another special
calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). 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.
Annuity-based method. If you choose an "annuity-based" method, you do not have
to do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your traditional IRA based on
the method you choose?
No, unless you affirmatively select an annuity payout option or an
account-based withdrawal option such as our minimum distribution withdrawal
option. Because the options we offer do not cover every option permitted under
federal income tax rules, you may prefer to do your own required minimum
distribution calculations for one or more of your traditional IRAs.
What if you take more than you need to for any year?
The required minimum distribution amount for your traditional IRAs is
calculated on a year-by-year basis. There are no carry-back or carry-forward
provisions. Also, you cannot apply required minimum distribution amounts you
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take from your qualified plans to the amounts you have to take from your
traditional IRAs and vice-versa. However, the IRS will let you calculate the
required minimum distribution for each traditional IRA that you maintain, using
the method that you picked for that particular IRA. You can add these required
minimum distribution amount calculations together. As long as the total amount
you take out every year satisfies your overall traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50%
penalty tax on the shortfall (required amount for traditional IRAs less amount
actually taken). It is your responsibility to meet the required minimum
distribution rules. We will remind you when our records show that your age
70 1/2 is approaching. If you do not select a method with us, we will assume
you are taking your required minimum distribution from another traditional IRA
that you own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values
in the contract at least as rapidly as under the distribution method before
your death. In some circumstances, your surviving spouse may elect to become
the owner of the traditional IRA and halt distributions until he or she reaches
age 70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract within five years after your death. Payments to a
designated beneficiary over the beneficiary's life or over a period certain
that does not extend beyond the beneficiary's life expectancy are also
permitted, if these payments start within one year of your death. A surviving
spouse beneficiary can also (a) delay starting any payments until you would
have reached age 70 1/2 or (b) roll over your traditional IRA into his or her
own traditional IRA.
Successor annuitant and owner
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
Payments to a beneficiary after your death
IRA death benefits are taxed the same as IRA distributions.
Required minimum distributions under the Assured Payment Option and APO Plus
Although the life contingent annuity portion of the Assured Payment Option and
APO Plus does not have a cash value, it will be assigned a value for tax
purposes. This value will generally be changed each year. When you determine
the amount of account-based required minimum distributions from your
traditional IRA this value must be included. This must be done even though the
life contingent annuity may not be providing a source of funds to satisfy the
required minimum distribution.
You will generally be required to determine your required minimum distribution
by annually recalculating your life expectancy. The Assured Payment Option and
APO Plus will not be available if you have previously made a different
election. Recalculation is no longer required once the only payments you or
your spouse receive are under the life contingent annuity.
If you surrender your contract, or withdraw any remaining account value before
your payments under the life contingent annuity begin, it may be necessary for
you to satisfy your required minimum distribution by moving forward the start
date of payments under your life contingent annuity. Or to the extent
available, you have to take distributions from other traditional IRA funds you
may have. Or, you may convert your traditional IRA life contingent annuity
under the contract to a nonqualified life
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contingent annuity. This would be viewed as a distribution of the value of the
life contingent annuity from your traditional IRA, and therefore, would be a
taxable event. However, since the life contingent annuity would no longer be
part of the traditional IRA, you would not have to include its value when
determining future required minimum distributions.
If you have elected a joint and survivor form of the life contingent annuity,
the joint annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. The Assured Payment Option and APO Plus will not
be available if you have previously made a different election. Once the only
payments you or your spouse are receiving are under the life contingent annuity
recalculation is no longer required. In the event of your death or the death of
your spouse the value of such annuity will change. For this reason, it is
important that someone tell us if you or your spouse dies before the life
contingent annuity has started payments so that a lower valuation can be made.
Otherwise, a higher tax value may result in an overstatement of the amount that
would be necessary to satisfy your required minimum distribution amount.
Allocation of funds to the life contingent annuity may prevent the contract
from later receiving conduit IRA treatment.
Borrowing and loans are prohibited transactions
You cannot get loans from a traditional IRA. You cannot use a traditional IRA
as collateral for a loan or other obligation. If you borrow against your IRA or
use it as collateral, its tax-favored status will be lost as of the first day
of the tax year in which this prohibited event occurs. If this happens, you
must include the value of the traditional IRA in your federal gross income.
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.
Early distribution penalty tax
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition); or
o used to pay certain higher education expenses (special federal income tax
definition); or
o in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy), or over the joint lives of you and
your beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10%
penalty tax, they are taxable as discussed in "Withdrawals, payments and
transfers of funds out of traditional IRAs" above. Once substantially equal
withdrawals or Income Manager annuity payments begin, the distributions should
not be stopped or changed until the later of your reaching 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
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contract as changing your pattern of substantially equal withdrawals or Income
Manager payments for purposes of determining whether the penalty applies.
Roth individual retirement annuities (Roth IRAs)
This section of the prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth
individual retirement annuity under Sections 408A and 408(b) of the Internal
Revenue Code.
Contributions to Roth IRAs
Individuals may make four different types of contributions to a Roth IRA:
o regular after-tax contributions out of earnings; or
o taxable "rollover" contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers").
Regular after-tax, direct transfer, and rollover contributions may be made to a
Flexible Premium Roth IRA contract. We only permit direct transfer and rollover
contributions under the Roth Conversion IRA contract. See "Rollovers and direct
transfers" below. If you use the forms we require, we will also accept
traditional IRA funds which are subsequently recharacterized as Roth IRA funds
following special federal income tax rules.
Regular contributions to Roth IRAs
Limits on regular contributions
Generally, $2,000 is the maximum amount that you may contribute to all IRAs
(including Roth IRAs) in any taxable year. This $2,000 limit does not apply to
rollover contributions or direct custodian-to-custodian transfers into a Roth
IRA. Any contributions to Roth IRAs reduce your ability to contribute to
traditional IRAs and vice versa. When your earnings are below $2,000, your
earned income or compensation for the year is the most you can contribute. If
you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make to Roth IRAs and traditional IRAs. See the discussion
above under traditional IRAs.
With a Roth IRA, you can make regular contributions when you reach 70 1/2, as
long as you have sufficient earnings. But, you cannot make contributions for
any year that:
o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is over $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is over $110,000.
However, you can make regular Roth IRA contributions in reduced amounts when:
o your federal income tax filing status is "married filing jointly" and your
adjusted gross income is between $150,000 and $160,000; or
o your federal income tax filing status is "single" and your adjusted gross
income is between $95,000 and $110,000.
If you are married and filing separately and your adjusted gross income is
between $0 and $10,000 the amount of regular contribution you are permitted to
make is phased out. If your adjusted gross income is more than $10,000 you
cannot make a regular Roth IRA contribution.
When you can make contributions
Same as traditional IRAs.
Deductibility of contributions
Roth IRA contributions are not tax deductible.
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Rollovers and direct transfers
What is the difference between rollover and direct transfer transactions?
You may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under
Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of
the Internal Revenue Code. You may make direct transfer contributions to a Roth
IRA only from another Roth IRA.
The difference between a rollover transaction and a direct transfer transaction
is the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. You can make direct transfer
transactions only between identical plan types (for example, Roth IRA to Roth
IRA). You can also make rollover transactions between identical plan types.
However, you can only use rollover transactions between different plan types
(for example, traditional IRA to Roth IRA).
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover
transactions only once in any 12-month period for the same funds.
Trustee-to-trustee or custodian-to-custodian direct transfers can be made more
frequently than once a year. Also, if you send us the rollover contribution to
apply it to a Roth IRA, you must do so within 60 days after you receive the
proceeds from the original IRA to get rollover treatment.
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. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Conversion contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) 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 considered to
have received) the traditional IRA proceeds. Unlike a rollover from a
traditional IRA to another traditional IRA, the conversion rollover transaction
is not tax-free. Instead, the distribution from the traditional IRA is
generally fully taxable. For this reason, we are required to withhold 10%
federal income tax from the amount converted unless you elect out of such
withholding. (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.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age
59 1/2.
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
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subject to the annual required minimum distribution rule applicable to
traditional IRAs beginning at age 70 1/2.
Withdrawals, payments and transfers of funds out of Roth IRAs
No federal income tax law 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.
Distributions from Roth IRAs
Distributions include withdrawals from your contract, surrender of your
contract and annuity payments from your contract. Death benefits are also
distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o Return of excess contributions or amounts recharacterized to a traditional
IRA.
Qualified distributions from Roth IRAs
Qualified distributions from Roth IRAs made because of one of the following
four qualifying events or reasons are not includable in income:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-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). It is not possible to
have a tax-free qualified distribution before the year 2003 because of the
five-year aging requirement.
Nonqualified distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are distributions that do not meet
the qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all
of your Roth IRAs is taxable. You have to reduce the amount of contributions to
all of your Roth IRAs to reflect any previous tax-free recoveries.
You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records pertaining to such
contributions and distributions until your interests in all Roth IRAs are
distributed.
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.
Required minimum distributions at death
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
Payments to a beneficiary after your death
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
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Borrowing and loans are prohibited transactions
Same as traditional IRA.
Excess contributions
Same as traditional IRA, except that regular contributions made after age
70 1/2 are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions 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).
You can withdraw or recharacterize any contribution to a Roth IRA before the
due date (including extensions) for filing your federal income tax return for
the tax year. If you do this, you must also withdraw or recharacterize any
earnings attributable to the contribution.
Early distribution penalty tax
Same as traditional IRA.
For Roth IRAs, special penalty rules may apply to amounts withdrawn
attributable to 1998 conversion rollovers.
SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS
Under QP contracts your plan administrator or trustee notifies you as to tax
consequences. See Appendix II.
TAX SHELTERED ANNUITY CONTRACTS (TSAS)
General
This section of the prospectus covers some of the special tax rules that apply
to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If
the rules are the same as those that apply to another kind of contract, for
example, traditional IRAs, we will refer you to the same topic under
"traditional IRAs."
Contributions to TSAs
There are two ways you can make contributions to this Equitable Accumulator
Rollover TSA contract:
o a rollover from another TSA contract or arrangement that meets the
requirements of Section 403(b) of the Internal Revenue Code, or
o a full or partial direct transfer of assets ("direct transfer") from another
contract or arrangement that meets the requirements of Section 403(b) of the
Internal Revenue Code by means of IRS Revenue Ruling 90-24.
With appropriate written documentation satisfactory to us, we will accept
rollover contributions from "conduit IRAs" for TSA funds.
If you make a direct transfer, you must fill out our transfer form.
Employer-remitted contributions
The Equitable Accumulator Rollover TSA contract does not accept
employer-remitted contributions. However, we provide the following discussion
as part of our description of restrictions on the distribution of funds
directly transferred, which include employer-remitted contributions to other
TSAs.
Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
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Rollover or direct transfer contributions
You may make rollover contributions to your Equitable Accumulator Rollover TSA
contract from TSAs under Section 403(b) of the Internal Revenue Code.
Generally, you may make a rollover contribution to a TSA when you have a
distributable event from an existing TSA as a result of your:
o termination of employment with the employer who provided the TSA funds; or
o reaching age 59 1/2 even if you are still employed; or
o disability (special federal income tax definition).
A transfer occurs when changing the funding vehicle, even if there is no
distributable event. Under a direct transfer, you do not receive a
distribution. We accept direct transfers of TSA funds under Revenue Ruling
90-24 only if:
o you give us acceptable written documentation as to the source of the funds,
and
o the Equitable Accumulator contract receiving the funds has provisions at
least as restrictive as the source contract.
Before you transfer funds to an Equitable Accumulator Rollover TSA contract,
you may have to obtain your employer's authorization or demonstrate that you do
not need employer authorization. For example, the transferring TSA may be
subject to Title I of ERISA, if the employer makes matching contributions to
salary reduction contributions made by employees. In that case, the employer
must continue to approve distributions from the plan or contract.
Your contribution to the Equitable Accumulator Rollover TSA must be net of the
required minimum distribution for the tax year in which we issue the contract
if:
o you are or will be at least age 70 1/2 in the current calendar year, and
o you have separated from service with the employer who provided the funds to
purchase the TSA you are transferring or rolling over to the Equitable
Accumulator Rollover TSA.
This rule applies regardless of whether the source of funds is a:
o rollover by check of the proceeds from another TSA; or
o direct rollover from another TSA; or
o direct transfer under Revenue Ruling 90-24 from another TSA.
Further, you must use the same elections regarding recalculation of your life
expectancy (and if applicable, your spouse's life expectancy) if you have
already begun to receive required minimum distributions from or with respect to
the TSA from which you are making your contribution to the Equitable
Accumulator Rollover TSA. You must also elect or have elected a minimum
distribution calculation method requiring recalculation of your life expectancy
(and if applicable, your spouse's life expectancy) if you elect an annuity
payout for the funds in this contract subsequent to this year.
Distributions from TSAs
General
Depending on the terms of the employer plan and your employment status, you may
have to get your employer's consent to take a loan or withdrawal. Your employer
will tell us this when you establish the TSA through a direct transfer.
Withdrawal restrictions
If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts
transferred to this contract and any future earnings on the amount transferred
as not eligible for withdrawal until one of the following events happens:
o you are separated from service with the employer who provided the funds to
purchase the TSA you are transferring to the Equitable Accumulator Rollover
TSA;
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
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o you take a "hardship" withdrawal (special federal income tax definition).
If any portion of the funds directly transferred to your TSA contract is
attributable to amounts that you invested in a 403(b)(7) custodial account,
such amounts, including earnings, are subject to withdrawal restrictions. With
respect to the portion of the funds that were never invested in a 403(b)(7)
custodial account, these restrictions apply to the salary reduction (elective
deferral) contributions to a TSA annuity contract you made and any earnings on
them. These restrictions do not apply to the amount directly transferred to
your TSA contract that represents your December 31, 1988 account balance
attributable to salary reduction contributions to a TSA annuity contract and
earnings. To take advantage of this grandfathering you must properly notify us
in writing at our Processing Office of your December 31, 1988 account balance
if you have qualifying amounts transferred to your TSA contract.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur:
(1) the requirements for minimum distribution (discussed under "Required
minimum distributions" below) are met; or
(2) death; or
(3) retirement; or
(4) termination of employment in all Texas public institutions of higher
education.
For you to make a withdrawal, we must receive a properly completed written
acknowledgement from the employer. If a distributable event occurs before you
are vested, we will refund to the employer any amounts provided by an
employer's first-year matching contribution. We reserve the right to change
these provisions without your consent, but only to the extent necessary to
maintain compliance with applicable law. Loans are not permitted under Texas
Optional Retirement Programs.
Tax treatment of distributions
Amounts held under TSAs are generally not subject to federal income tax until
benefits are distributed. Distributions include withdrawals from your TSA
contract and annuity payments from your TSA contract. Death benefits paid to a
beneficiary are also taxable distributions. Unless an exception applies,
amounts distributed from TSAs are includable in gross income as ordinary
income. Distributions from TSAs may be subject to 20% federal income tax
withholding. See "Federal and state income tax withholding and information
reporting" below. In addition, TSA distributions may be subject to additional
tax penalties.
If you have made after-tax contributions, you will have a tax basis in your TSA
contract, which will be recovered tax-free. Since we do not track your
investment in the contract, if any, it is your responsibility to determine how
much of the distribution is taxable.
Distributions before annuity payments begin. On a total surrender, the amount
received in excess of the investment in the contract is taxable. We will report
the total amount of the distribution. The amount of any partial distribution
from a TSA prior to the annuity starting date is generally taxable, except to
the extent that the distribution is treated as a withdrawal of after-tax
contributions. Distributions are normally treated as pro rata withdrawals of
after-tax contributions and earnings on those contributions.
Annuity payments. If you elect an annuity payout option, you will recover any
investment in the contract as each payment is received by dividing the
investment in the contract by an expected return determined under an IRS table
prescribed for qualified annuities. The amount of each payment not excluded
from income under this exclusion ratio is fully taxable. The full amount of the
payments received after your investment in the contract is recovered is fully
taxable. If you (and your beneficiary under a joint and survivor annuity) die
before recovering the full investment in the contract, a deduction is allowed
on your (or your beneficiary's) final tax return.
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Payments to a beneficiary after your death
Death benefit distributions from a TSA generally receive the same tax treatment
as distributions during your lifetime. In some instances, distributions from a
TSA made to your surviving spouse may be rolled over to a traditional IRA.
Loans from TSAs
You may take loans from a TSA unless restricted by the employer (for example,
under an employer plan subject to ERISA). If you cannot take a loan, or cannot
take a loan without approval from the employer who provided the funds, we will
have this information in our records based on what you and the employer who
provided the TSA funds told us when you purchased your contract.
Loans are generally not treated as a taxable distribution. If the amount of the
loan exceeds permissible limits under federal income tax rules when made, the
amount of the excess is treated (solely for tax purposes) as a taxable
distribution. Additionally, if the loan is not repaid at least quarterly,
amortizing (paying down) interest and principal, the amount not repaid when due
will be treated as a taxable distribution. Under Proposed Treasury Regulations
the entire unpaid balance of the loan is includable in income in the year of
the default.
TSA loans are subject to federal income tax limits and may also be subject to
the limits of the plan from which the funds came. Federal income tax rule
requirements apply even if the plan is not subject to ERISA. For example, loans
offered by TSAs are subject to the following conditions:
o The amount of a loan to a participant, when combined with all other loans to
the participant from all qualified plans of the employer, cannot exceed the
lesser of (1) the greater of $10,000 or 50% of the participant's
nonforfeitable accrued benefits and (2) $50,000 reduced by the excess (if
any) of the highest outstanding loan balance over the previous twelve months
over the outstanding loan balance of plan loans on the date the loan was
made.
o In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence. Equitable Accumulator
Rollover TSA contracts have a term limit of 10 years for loans used to
acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level payments
over the term of the loan, with payments being made at least quarterly.
The amount borrowed and not repaid may be treated as a distribution if:
o the loan does not qualify under the conditions above,
o the participant fails to repay the interest or principal when due, or
o in some instances, the participant separates from service with the employer
who provided the funds or the plan is terminated.
In this case, the participant may have to include the unpaid amount due as
ordinary income. In addition, the 10% early distribution penalty tax may apply.
The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as
a distribution.
Tax-deferred rollovers and direct transfers
You may roll over any "eligible rollover distribution" from a TSA into another
eligible retirement plan, either directly or within 60 days of your receiving
the distribution. To the extent rolled over, a distribution remains
tax-deferred.
You may roll over a distribution from a TSA to another TSA or to a traditional
IRA. A spousal beneficiary may roll over death benefits only to a traditional
IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under federal income tax rules. Distributions that you
cannot roll over generally include periodic payments for life or for a period
of 10 years or more, hardship withdrawals, and required minimum distributions
under federal income tax rules.
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Direct transfers of TSA funds from one TSA to another under Revenue Ruling
90-24 are not distributions.
Required minimum distributions
Same as traditional IRA with these differences:
When you have to take the first required minimum distribution
The minimum distribution rules force TSA participants to start calculating and
taking annual distributions from their TSAs by a required date. Generally, you
must take the first required minimum distribution for the calendar year in
which you turn age 70 1/2. You may be able to delay the start of required
minimum distributions for all or part of your account balance until after age
70 1/2, as follows:
o For TSA participants who have not retired from service with the employer who
provided the funds for the TSA by the calendar year the participant turns
age 70 1/2, the required beginning date for minimum distributions is
extended to April 1 following the calendar year of retirement.
o TSA plan participants may also delay the start of required minimum
distributions to age 75 of the portion of their account value attributable
to their December 31, 1986 TSA account balance, even if retired at age
70 1/2. We will know whether or not you qualify for this exception
because it will only apply to people who establish their Equitable
Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfers. If you
do not give us the amount of your December 31, 1986 account balance that
is being transferred to the Equitable Accumulator Rollover TSA on the form
used to establish the TSA, you do not qualify.
Spousal consent rules
This will only apply to you if you establish your Equitable Accumulator
Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell
us on the form used to establish the TSA whether or not you need to get spousal
consent for loans, withdrawals, or other distributions. If you do, you will
need such consent if you are married when you request a withdrawal under the
TSA contract. In addition, unless you elect otherwise with the written consent
of your spouse, the retirement benefits payable under the plan must be paid in
the form of a qualified joint and survivor annuity. A qualified joint and
survivor annuity is payable for the life of the annuitant with a survivor
annuity for the life of the spouse in an amount not less than one-half of the
amount payable to the annuitant during his or her lifetime. In addition, if you
are married, the beneficiary must be your spouse, unless your spouse consents
in writing to the designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments
will be made to your surviving spouse in the form of a life annuity unless at
the time of your death a contrary election was in effect. However, your
surviving spouse may elect, before payments begin, to receive payments in any
form permitted under the terms of the TSA contract and the plan of the employer
who provided the funds for the TSA.
Early distribution penalty tax
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a TSA before you reach age 59 1/2. This is in addition to
any income tax. There are exceptions to the extra penalty tax. No penalty tax
applies to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o to pay for certain extraordinary medical expenses (special federal income
tax definition); or
o if you are separated from service, any form of payout after you are age 55;
or
o only if you are separated from service, a payout in the form of
substantially equal periodic payments made at least annually over your life
(or your life expectancy), or over the joint lives of you and your
beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
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FEDERAL AND STATE INCOME TAX WITHHOLDING
AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable.
The rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this
purpose. You cannot elect out of withholding unless you provide us with your
correct Taxpayer Identification Number and a United States residence address.
You cannot elect out of withholding if we are sending the payment out of the
United States.
You should note the following special situations:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of traditional
IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA
and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or in
part.
Special withholding rules apply to foreign recipients and United States
citizens residing outside the United States. We do not discuss these rules
here. Certain states have indicated that state income tax withholding will also
apply to payments from the contracts made to residents. In some states, you may
elect out of state withholding, even if federal withholding applies. 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.
Federal income tax withholding on periodic annuity payments
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective
unless and until you revoke it. You may revoke or change your withholding
election at any time.
Federal income tax withholding on non-periodic annuity payments (withdrawals)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We apply that rate to the taxable amount
in the case of nonqualified contracts, and to the payment amount in the case of
IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
Mandatory withholding from TSA and qualified plan distributions
Unless you have the distribution go directly to the new plan, eligible rollover
distributions from qualified plans and TSAs are subject to mandatory 20%
withholding. An eligible
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rollover distribution from a TSA can be rolled over to another TSA or a
traditional IRA. An eligible rollover distribution from a qualified plan can be
rolled over to another qualified plan or traditional IRA. All distributions
from a TSA or qualified plan are eligible rollover distributions unless they
are on the following list of exceptions:
o any after-tax contributions you made to the plan; or
o any distributions which are "required minimum distributions" after age
70 1/2 or separation from service; or
o hardship withdrawals; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and your designated beneficiary; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
A death benefit payment to your surviving spouse, or a qualified domestic
relations order distribution to your current or former spouse, may be a
distribution subject to mandatory 20% withholding.
IMPACT OF TAXES TO EQUITABLE LIFE
The contracts provide that we may charge Separate Account No. 45 for taxes. We
do not now, but may in the future set up reserves for such taxes.
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ABOUT OUR SEPARATE ACCOUNT NO. 45
Each variable investment option is a subaccount of our Separate Account No. 45.
We established Separate Account No. 45 in 1994 under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable annuity contracts, including these
contracts. We are the legal owner of all of the assets in Separate Account No.
45 and may withdraw any amounts that exceed our reserves and other liabilities
with respect to variable investment options under our contracts. The results of
Separate Account No. 45's operations are accounted for without regard to
Equitable Life's other operations.
Separate Account No. 45 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 45.
Each subaccount (variable investment option) within Separate Account No. 45
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors Trust.
We reserve the right subject to compliance with laws that apply:
(1) to add variable investment options to, or to remove variable investment
options from, Separate Account No. 45, or to add other separate accounts;
(2) to combine any two or more variable investment options;
(3) to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment
option to another variable investment option;
(4) to operate Separate Account No. 45 or any variable investment option as a
management investment company under the Investment Company Act of 1940
(in which case, charges and expenses that otherwise would be assessed
against an underlying mutual fund would be assessed against Separate
Account No. 45 or a variable investment option directly);
(5) to deregister Separate Account No. 45 under the Investment Company Act of
1940;
(6) to restrict or eliminate any voting rights as to Separate Account No. 45;
and
(7) to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the
Investment Company Act of 1940. They are classified as "open-end management
investment companies," more commonly called mutual funds. Each trust issues
different shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Board of Trustees
of The Hudson River Trust and EQ Advisors Trust may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their
investment objectives, policies, restrictions, risks, expenses, their Rule
12b-1 Plans relating to their Class IB shares, and other aspects of their
operations, appears in their prospectuses, or in their SAIs which are available
upon request.
Proposed substitution of Portfolios. We are asking the SEC to approve the
substitution of 14 newly created Portfolios of the EQ Advisors Trust for The
Hudson River Trust Portfolios currently available under the variable investment
options (the "Substitution"). The EQ Advisors Trust Portfolios will have
substantially identical investment objectives, strategies, and policies as
those of The Hudson River Trust Portfolios they would replace. The assets of
any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of variable investment options with similar advisory
structures. You also will have a single EQ Advisors Trust prospectus for all
the Portfolios, rather than the two separate prospectuses you now receive. EQ
Financial Consultants Inc. will be the manager of the new EQ Advisors Trust
Portfolios, and Alliance Capital Management L.P. will continue to provide the
day-to-day advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution transaction.
o The management fees for the new Portfolios will be the same as those for the
corresponding Portfolios of The Hudson River Trust. Certain of the new EQ
Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this
prospectus. It contains more information about the EQ Advisors Trust, including
its management structure, advisory arrangements, and general fees and expenses
that will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval, and again when the
Substitution is complete.
ABOUT OUR FIXED MATURITY OPTIONS
How we determine the market value adjustment
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
(a) We determine the fixed maturity amount that would be payable on
the maturity date, using the rate to maturity for the fixed
maturity option.
(b) We determine the period remaining in your fixed maturity option
(based on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity
option.
(d) We determine the present value of the fixed maturity amount
payable at the maturity date, using the period determined in (b)
and the rate determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be
positive or negative.
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Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
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If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment
that would have applied if you had withdrawn the entire value in that fixed
maturity option. This percentage is equal to the percentage of the value in the
fixed maturity option that you are withdrawing. Any withdrawal charges that are
deducted from a fixed maturity option will result in a market value adjustment
calculated in the same way. See Appendix III for an example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) would apply,
we will use the rate at the next closest maturity date. If we are no longer
offering new fixed maturity options, the "current rate to maturity" will be
determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
Investments under the fixed maturity options
Under New York Insurance Law, the portion of the separate account's assets
equal to the reserves and other contract liabilities relating to the contracts
are not chargeable with liabilities from any other business we may conduct. We
own the assets of the separate account, as well as any favorable investment
performance on those assets. You do not participate in the performance of the
assets held in this separate account. We may, subject to state law that
applies, transfer all assets allocated to the separate account to our general
account. We guarantee all benefits relating to your value in the fixed maturity
options, regardless of whether assets supporting fixed maturity options are
held in a separate account or our general account.
We have no specific formula for establishing the rates to maturity for the
fixed maturity options. We expect the rates to be influenced by, but not
necessarily correspond to, among other things, the yields that we can expect to
realize on the separate account's investments from time to time. Our current
plans are to invest 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 fixed maturity
options.
Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the
contracts, we are not obligated to invest those assets according to any
particular plan except as we may be required to by state insurance laws. We
will not determine the rates to maturity we establish by the performance of the
nonunitized separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options and the account for
special dollar cost averaging, as well as our general obligations. Amounts
applied to the life contingent annuity become part of 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
exemptions and exclusionary provisions that apply, interests in the general
account have not been registered under the Securities Act of 1933, nor is the
general account an investment company under the Investment Company Act of 1940.
However, the market value adjustment interests under the contracts are
registered under the Securities Act of 1933.
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We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests) and the life contingent annuity. The disclosure with
regard to the general account, however, may be subject to certain provisions of
the federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
Automatic investment program -- for NQ, Flexible Premium IRA, and Flexible
Premium Roth IRA contracts only
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution
into an NQ, Flexible Premium IRA or Flexible Premium Roth IRA contract on a
monthly or quarterly basis. AIP is not available for Rollover IRA, Roth
Conversion IRA, QP or Rollover TSA contracts. It is also not available under
the Assured Payment Option or APO Plus.
For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300
quarterly. Under Flexible Premium IRA and Flexible Premium Roth IRA contracts,
the minimum amount is $50. AIP additional contributions may be allocated to any
of the variable investment options and available fixed maturity options, but
not the account for special dollar cost averaging. You choose the day of the
month you wish to have your account debited as long as it is not later than the
28th day of the month.
You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
Business day
Our business day is any day the New York Stock Exchange is open for trading.
Each business day ends at the time trading on the exchange closes (or is
suspended) for the day. We calculate unit values for our variable investment
options as of the end of each business day. This usually is 4:00 p.m., Eastern
Time. Contributions will be applied and any other transaction requests will be
processed when they are received along with all the required information.
o If your contribution, transfer or any other transaction request, containing
all the required information, reaches us on a non-business day or after 4:00
p.m. on a business day, we will use the next business day.
o A loan request under your Rollover TSA contract will be processed on the
first business day of the month following the date on which the properly
completed loan request form is received.
o If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then the
transaction will occur on either the 28th day of the month or the 1st day of
the next month, whichever is the closest business day.
o When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
Contributions and transfers
o Contributions allocated to the variable investment options are invested at
the value next determined after the close of the business day.
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o Contributions allocated to a fixed maturity option will receive the rate to
maturity in effect for that fixed maturity option on that business day.
o Initial contributions allocated to the account for special dollar cost
averaging receive the interest rate in effect on that business day. At
certain times, we may offer the opportunity to lock in the interest rate for
an initial contribution to be received under Section 1035 exchanges and
trustee to trustee transfers. Your registered representative can provide
information or you can call our Processing Office.
o Transfers to or from variable investment options will be made at the value
next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the rate to maturity
in effect for that fixed maturity option on the business day of the
transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o The election of trustees.
o The formal approval of independent auditors selected for each trust.
o Any other matters described in the prospectuses for the trusts or requiring
a shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is
taken. If we do not receive instructions in time from all contract 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 a Portfolio in the same
proportions that contract owners vote.
Voting rights of others
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River
Trust 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 contract
owners, we currently do not foresee any disadvantages because of this. The
Hudson River Trust Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that may arise and to determine
what action, if any, should be taken in response. If we believe that a response
to any of those events insufficiently protects our contract owners, we will see
to it that appropriate action is taken.
Separate Account No. 45 voting rights
If actions relating to Separate Account No. 45 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount
of reserves we are holding for that annuity in a variable investment option
divided by the annuity unit value for that option. We will cast votes
attributable to any amounts we have in the variable investment options in the
same proportion as votes cast by contract 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
published 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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ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and
services, including those considered to be mission- critical, to be confirmed
as year 2000 compliant, renovated, replaced or the subject of contingency
plans, by June 30, 1999, except for one investment accounting system that is
scheduled to be replaced by August 31, 1999 and confirmed as year 2000
compliant by September 30, 1999. Additionally, Equitable Life will be
supplementing its existing business continuity and disaster recovery plans to
cover certain categories of contingencies that could arise as a result of year
2000 related failures. Year 2000 specific contingency plans are anticipated to
be in place by June 30, 1999.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is
a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon Separate Account No. 45, our ability to meet our obligations under the
contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity
payments begin. We will continue to treat you as the owner until we receive
notification of any change at our Processing Office. You cannot assign your NQ
contract as collateral or security for a loan. Loans are also not available
under your NQ contract. In some cases, an assignment or change of ownership may
have adverse tax consequences. See "Tax information."
You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract
except by surrender to us. Loans are not available and you cannot assign IRA
and QP contracts as security for a loan or other obligation. If the employer
that
<PAGE>
- --------------------------------------------------------------------------------
More information 79
- --------------------------------------------------------------------------------
provided the funds does not restrict them, loans are available under a Rollover
TSA contract.
For limited transfers of ownership after the owner's death see "Payment of
death benefit" and "Beneficiary continuation option for Rollover IRA and
Flexible Premium IRA contracts." You may direct the transfer of the values
under your IRA, QP or Rollover TSA contract to another similar arrangement.
Under federal income tax rules, in the case of such a transfer, we will impose
a withdrawal charge, if one applies.
DISTRIBUTION OF THE CONTRACTS
EQ Financial Consultants, Inc. ("EQF"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 45. During 1999, EQF
plans to change its name to AXA Advisors, Inc. EQF serves as the principal
underwriter of Separate Account No. 45. EQF is registered with the SEC as a
broker-dealer and is a member of the National Association of Securities
Dealers, Inc. EQF's principal business address is 1290 Avenue of the Americas,
New York, New York 10104. Pursuant to a Distribution and Servicing Agreement
between EQF, Equitable Life, and certain of Equitable Life's separate accounts,
including Separate Account No. 45, Equitable Life paid EQF distribution fees of
$325,380 for 1998, as the distributor of certain contracts and as the principal
underwriter of certain separate accounts including Separate Account No. 45.
Before May 1, 1998, Equitable Distributors, Inc. ("EDI"), also an indirect,
wholly owned subsidiary of Equitable Life, served as the distributor of the
contracts and the principal underwriter of Separate Account No. 45. Pursuant to
a Distribution Agreement between Equitable Life, certain of Equitable Life's
separate accounts, including Separate Account No. 45, and EDI, Equitable Life
paid EDI distribution fees of $9,444,621 for 1997 and $888,486 for 1996 as the
distributor of certain contracts and as the principal underwriter of certain
separate accounts including Separate Account No. 45.
The contracts will be sold by registered representatives of EQF and its
affiliates, who are also our licensed insurance agents. EQF may also receive
compensation and reimbursement for its marketing services under the terms of
its distribution agreement with Equitable Life. The offering of the contracts
is intended to be continuous.
<PAGE>
- --------------------------------------------------------------------------------
80 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9
Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. The results shown reflect past performance. They do not
indicate how the variable investment options may perform in the future. They
also do not represent the results earned by any particular investor. Your
results will differ.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the
variable investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into
account all fees and charges under the contract, including the withdrawal
charge, the optional baseBUILDER benefits charge, the annual administrative
charge under Flexible Premium IRA and Flexible Premium Roth IRA contracts, but
do not take the charges for any applicable taxes such as premium taxes or any
applicable annuity administrative fee into account.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the
withdrawal charge, the optional baseBUILDER benefits charge, the annual
administrative charge or the charges for any applicable taxes such as premium
taxes or any applicable annuity administrative fee. If the charges were
reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest.
In some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted
the results of the Portfolios to reflect the charges under the contracts that
would have applied had the investment options and/or contracts been available.
The contracts were first offered on May 1, 1998.
In addition, we have adjusted the results prior to October 1996, when The
Hudson River Trust Class IB shares were not available, to reflect the 12b-1
fees currently imposed. Finally, the results shown for the Alliance Money
Market and Alliance Common Stock options for periods before March 22, 1985
reflect the results of the variable investment options that preceded them. The
"Since inception" figures for these options are based on the date of inception
of the preceding variable investment options. We have adjusted these results to
reflect the maximum investment advisory fee payable for the Portfolios, as well
as an assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as 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. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charges, or any withdrawal or optional benefit charge. Comparisons with these
benchmarks, therefore, may be 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. The benchmarks include:
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 81
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard
& Poor's Mid-Cap Total Return Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond Composite Index and
30% Standard & Poor's 500 Index.
ALLIANCE EQUITY INDEX: Standard & Poor's 500 Index.
ALLIANCE GLOBAL: Morgan Stanley Capital International World Index.
ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index and 25% Value Line
Convertibles Index.
ALLIANCE GROWTH INVESTORS: 70% Standard & Poor's 500 Index and 30% Lehman
Government/Corporate Bond Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman Intermediate Government
Bond Index.
ALLIANCE INTERNATIONAL: Morgan Stanley Capital International Europe, Australia,
Far East Index.
ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe,
Australia, Far East Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index.
CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index.
EQ/EVERGREEN: Russell 2000 Index.
EQ/EVERGREEN FOUNDATION: 60% Standard & Poor's 500 Index/40% Lehman Brothers
Aggregate Bond Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: 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: Morgan Stanley Capital International
Emerging Markets Free Price Return Index.
EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40% Lehman Government/
Corporate Bond Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index.
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index.
T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital International Europe,
Australia, Far East Index.
WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index.
LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) 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.
<PAGE>
- --------------------------------------------------------------------------------
82 Investment performance
- --------------------------------------------------------------------------------
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
----------------------------------
1 3 5
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Aggressive Stock (8.60)% 7.09% 8.76%
- --------------------------------------------------------------------------------
Alliance Common Stock 20.02% 24.05% 19.18%
- --------------------------------------------------------------------------------
Alliance Conservative Investors 4.77% 7.00% 6.64%
- --------------------------------------------------------------------------------
Alliance Equity Index 18.73% 24.05% -
- --------------------------------------------------------------------------------
Alliance Global 12.56% 12.27% 11.55%
- --------------------------------------------------------------------------------
Alliance Growth & Income 11.64% 18.96% 15.09%
- --------------------------------------------------------------------------------
Alliance Growth Investors 9.93% 12.51% 11.18%
- --------------------------------------------------------------------------------
Alliance High Yield (13.96)% 7.72% 7.28%
- --------------------------------------------------------------------------------
Alliance Intermediate Government Securities (1.27)% 2.49% 2.60%
- --------------------------------------------------------------------------------
Alliance International 1.51% 1.81% -
- --------------------------------------------------------------------------------
Alliance Money Market (3.64)% 1.59% 2.40%
- --------------------------------------------------------------------------------
Alliance Small Cap Growth (13.03)% - -
- --------------------------------------------------------------------------------
BT Equity 500 Index 16.14% - -
- --------------------------------------------------------------------------------
BT International Equity Index 11.17% - -
- --------------------------------------------------------------------------------
BT Small Company Index (10.93)% - -
- --------------------------------------------------------------------------------
MFS Emerging Growth Companies 25.40% - -
- --------------------------------------------------------------------------------
MFS Research 15.13% - -
- --------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity 2.78% - -
- --------------------------------------------------------------------------------
Merrill Lynch World Strategy (1.92)% - -
- --------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (35.31)% - -
- --------------------------------------------------------------------------------
EQ/Putnam Balanced 3.00% - -
- --------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 4.00% - -
- --------------------------------------------------------------------------------
T. Rowe Price Equity Income 0.30% - -
- --------------------------------------------------------------------------------
T. Rowe Price International Stock 4.86% - -
- --------------------------------------------------------------------------------
Warburg Pincus Small Company Value (18.52)% - -
- --------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------
SINCE SINCE PORTFOLIO
10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEARS INCEPTION* INCEPTION DATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Alliance Aggressive Stock 16.79% - - 1/27/86
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Alliance Common Stock 16.35% - - 1/13/76
- ---------------------------------------------------------------------------------------------------
Alliance Conservative Investors - 8.58% 7.08% 10/2/89
- ---------------------------------------------------------------------------------------------------
Alliance Equity Index - 23.15% 20.82% 3/1/94
- ---------------------------------------------------------------------------------------------------
Alliance Global 12.58% 12.90% 9.65% 8/27/97
- ---------------------------------------------------------------------------------------------------
Alliance Growth & Income - 18.15% 12.26% 10/1/93
- ---------------------------------------------------------------------------------------------------
Alliance Growth Investors - 13.87% 12.68% 10/2/89
- ---------------------------------------------------------------------------------------------------
Alliance High Yield 8.93% - - 1/2/87
- ---------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities - 3.78% 4.71% 4/1/91
- ---------------------------------------------------------------------------------------------------
Alliance International - 3.67% 4.00% 4/3/95
- ---------------------------------------------------------------------------------------------------
Alliance Money Market 3.35% - - 7/13/81
- ---------------------------------------------------------------------------------------------------
Alliance Small Cap Growth - 5.51% 5.51% 5/1/97
- ---------------------------------------------------------------------------------------------------
BT Equity 500 Index - 16.14% 16.14% 12/31/97
- ---------------------------------------------------------------------------------------------------
BT International Equity Index - 11.17% 11.17% 12/31/97
- ---------------------------------------------------------------------------------------------------
BT Small Company Index - (10.93)% (10.93)% 12/31/97
- ---------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies - 24.05% 24.05% 5/1/97
- ---------------------------------------------------------------------------------------------------
MFS Research - 15.64% 15.64% 5/1/97
- ---------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity - 9.86% 9.86% 5/1/97
- ---------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy - 1.19% 1.19% 5/1/97
- ---------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity - (35.31)% (28.99)% 8/20/97
- ---------------------------------------------------------------------------------------------------
EQ/Putnam Balanced - 8.69% 8.69% 5/1/97
- ---------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value - 10.08% 10.08% 5/1/97
- ---------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income - 11.02% 11.02% 5/1/97
- ---------------------------------------------------------------------------------------------------
T. Rowe Price International Stock - 1.23% 1.23% 5/1/97
- ---------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value - (1.03)% (1.03)% 5/1/97
- ---------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* The since inception dates for the variable investment options are as
follows: Alliance Aggressive Stock, Alliance Common Stock, Alliance
Conservative Investors, Alliance Equity Index, Alliance Global, Alliance
Growth & Income, Alliance Growth Investors, Alliance High Yield, Alliance
Intermediate Government Securities, Alliance International, Alliance Money
Market, Alliance Small Cap Growth, BT Equity 500 Index, BT International
Equity Index, BT Small Company Index, EQ/Putnam Balanced, EQ/Putnam Growth
& Income Value, MFS Emerging Growth Companies, MFS Research, Merrill Lynch
Basic Value Equity, Merrill Lynch World Strategy, Morgan Stanley Emerging
Markets Equity, T. Rowe Price Equity Income, T. Rowe Price International
Stock, and Warburg Pincus Small Company Value (May 1, 1998).
The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are:
EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income (December
31, 1998); EQ/Alliance Premier Growth, Capital Guardian Research, and
Capital Guardian U.S. Equity (May 1, 1999).
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 83
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
-------------------------------------------------------------------------
SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Aggressive Stock $ 914.00 $1,228.21 $1,521.63 $4,719.54 -
- ----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock $1,200.20 $1,908.73 $2,404.59 $4,547.90 -
- ----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors $1,047.70 $1,225.00 $1,379.44 - $1,982.04
- ---------------------------------------------------------------------------------------------------------------------
Alliance Equity Index $1,187.30 $1,908.72 - - $2,574.27
- ---------------------------------------------------------------------------------------------------------------------
Alliance Global $1,125.60 $1,414.94 $1,726.85 $3,269.70 $3,019.33
- ---------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income $1,116.40 $1,683.32 $2,019.39 - $2,001.59
- ---------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors $1,099.30 $1,424.03 $1,698.74 - $3,300.32
- ---------------------------------------------------------------------------------------------------------------------
Alliance High Yield $ 860.40 $1,250.11 $1,421.32 $2,352.06 -
- ---------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities $ 987.30 $1,076.51 $1,137.21 - $1,444.69
- ---------------------------------------------------------------------------------------------------------------------
Alliance International $1,015.10 $1,055.26 - - $1,169.83
- ----------------------------------------------------------------------------------------------------------------------
Alliance Money Market $ 963.60 $1,048.36 $1,126.12 $1,390.07 -
- ----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 869.70 - - - $1,113.16
- ----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index $1,161.40 - - - $1,161.40
- ----------------------------------------------------------------------------------------------------------------------
BT International Equity Index $1,111.70 - - - $1,111.70
- ----------------------------------------------------------------------------------------------------------------------
BT Small Company Index $ 890.70 - - - $ 890.70
- ----------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $1,254.00 - - - $1,538.76
- ----------------------------------------------------------------------------------------------------------------------
MFS Research $1,151.30 - - - $1,337.29
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $1,027.80 - - - $1,206.83
- ----------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy $ 980.80 - - - $1,023.94
- ----------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 646.90 - - - $ 504.25
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced $1,030.00 - - - $1,181.35
- ----------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value $1,040.00 - - - $1,211.78
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income $1,003.00 - - - $1,232.45
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock $1,048.60 - - - $1,024.67
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value $ 814.80 - - - $ 979.50
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
84 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -----------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% - 15.88%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% - 13.69%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% - 14.78%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 12.07% 8.93% 7.65% - - 8.24%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% - - 12.55%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 14.45% 13.37% - - 12.08%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 26.03% 25.56% - - - 22.35%
- -----------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 28.05% 27.67% - - - 24.31%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% - - - 24.79%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 19.86% 14.05% 12.43% 12.97% - 10.76%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 14.67% 11.98% 11.21% - 9.64%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 17.77% 15.68% 10.66% - 9.55%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 18.94% 20.57% 15.93% - - 14.97%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 21.25% 18.35% - - 17.89%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 23.99% 21.07% - - 20.48%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 17.23% 14.28% 12.08% - - 14.21%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% - - 12.55%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% - - 15.55%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% - 8.73%
- -----------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% - 8.97%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% - 10.72%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 6.03% 4.56% 3.71% - - 5.41%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Government 7.68% 6.21% 5.91% - - 7.25%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 6.74% 6.45% - - 7.60%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.81% 3.90% - - - 5.76%
- -----------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 9.94% - - - 10.74%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 9.00% - - - 9.68%
- -----------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% - 5.38%
- -----------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% - 6.77%
- -----------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% - 6.76%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 85
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.73)% - - - - 10.53%
- --------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% - - - - 16.72%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% - - - - 16.58%
- --------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% - - - - 23.44%
- --------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% - - - - 26.78%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- --------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% - - - - 18.47%
- --------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 12.17%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 20.00%
- --------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% - - - - (3.63)%
- --------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.53%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- --------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% - - - - 33.03%
- --------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% - - - - 22.72%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 14.53%
- --------------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.43% - - - - 22.75%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 28.73%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- --------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.08% - - - - 15.76%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 21.32%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- --------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.38% - - - - 5.50%
- --------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% - - - - 11.15%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% - - - - 20.00%
- --------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.01)% - - - - (33.62)%
- --------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% - - - - (36.28)%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% - - - - (28.92)%
- --------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.30% - - - - 14.38%
- --------------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% - - - - 17.83%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 21.36% - - - - 23.48%
- --------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.30% - - - - 16.03%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 21.32%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
86 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
T. ROWE PRICE EQUITY INCOME 7.60% - - - - 17.14%
- --------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% - - - - 19.07%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 31.63%
- --------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK 12.16% - - - - 5.57%
- --------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 9.06%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 13.43%
- --------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE (11.22)% - - - - 2.84%
- --------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 16.77%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 14.53%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 87
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -----------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% - 572.32%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% - 448.32%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% - 494.67%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 12.07% 29.27% 44.55% - - 107.87%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 55.28% 97.15% - - 202.48%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 49.92% 87.28% - - 187.40%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 26.03% 97.97% - - - 165.205
- -----------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 28.05% 108.12% - - - 186.34%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% - - - 192.17%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 19.86% 48.36% 79.63% 238.62% - 218.67%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 51.58% 77.94% 194.96% - 188.08%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 63.34% 107.19% 175.31% - 181.57%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 18.94% 75.29% 109.41% - - 108.03%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 79.05% 133.95% - - 139.10%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 90.62% 160.09% - - 166.00%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 17.23% 49.26% 76.90% - - 241.78%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 55.28% 97.15% - - 202.48%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 84.68% 148.41% - - 280.88%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% - 172.86%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% - 182.21%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% - 239.69%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 6.03% 14.30% 19.96% - - 50.39%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Government 7.68% 19.84% 33.36% - - 72.35%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 21.61% 36.71% - - 76.55%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.81% 12.15% - - - 23.33%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 33.62% - - - 47.74%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 29.52% - - - 41.40%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% - 149.59%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% - 214.68%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% - 214.45%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
88 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE SMALL CAP GROWTH (5.73)% - - - - 18.19%
- --------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% - - - - 28.98%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% - - - - 29.23%
- --------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.44% - - - - 23.44%
- -------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% - - - - 26.78%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 28.58%
- --------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.47% - - - - 18.47%
- --------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 12.23%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 20.00%
- --------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.63)% - - - - (3.63)%
- --------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 1.49%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - (2.54)%
- --------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.70% - - - - 60.99%
- --------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% - - - - 42.16%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 25.40%
- --------------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.43% - - - - 40.79%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% - - - - 52.86%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- --------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 10.08% - - - - 27.65%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 15.59%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- --------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.38% - - - - 9.34%
- --------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% - - - - 19.41%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% - - - - 33.33%
- --------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY (28.01)% - - - - (42.83)%
- --------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% - - - - (45.67)%
- --------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% - - - - (36.71)%
- --------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.30% - - - - 25.12%
- --------------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% - - - - 31.59%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 21.36% - - - - 42.22%
- --------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME
VALUE 11.30% - - - - 28.16%
- --------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% - - - - 38.49%
- --------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 89
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
T. ROWE PRICE EQUITY INCOME 7.60% - - - - 30.21%
- --------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% - - - - 33.92%
- --------------------------------------------------------------------------------------------------------------
Benchmark 28.58% - - - - 57.60%
- --------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL
STOCK 12.16% - - - - 9.46%
- --------------------------------------------------------------------------------------------------------------
Lipper International 12.17% - - - - 15.88%
- --------------------------------------------------------------------------------------------------------------
Benchmark 20.00% - - - - 23.42%
- --------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY
VALUE (11.22)% - - - - 4.79%
- --------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% - - - - 29.95%
- --------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% - - - - 25.40%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
90 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89%
- --------------------------------------------------------------------------------------------------------------
Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83%
- --------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 2.67% 4.66% 17.97% 4.03% 9.04%
- --------------------------------------------------------------------------------------------------------------
Alliance Equity Index - - - - -
- --------------------------------------------------------------------------------------------------------------
Alliance Global 24.72% (7.58)% 28.47% (2.10)% 30.01%
- --------------------------------------------------------------------------------------------------------------
Alliance Growth & Income - - - - (0.66)%
- --------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 3.42% 8.89% 46.53% 3.22% 13.43%
- --------------------------------------------------------------------------------------------------------------
Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19%
- --------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities - - 10.92% 3.90% 8.78%
- --------------------------------------------------------------------------------------------------------------
Alliance International - - - - -
- --------------------------------------------------------------------------------------------------------------
Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32%
- --------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth - - - - -
- --------------------------------------------------------------------------------------------------------------
BT Equity 500 Index - - - - -
- --------------------------------------------------------------------------------------------------------------
BT International Equity Index - - - - -
- --------------------------------------------------------------------------------------------------------------
BT Small Company 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 - - - - -
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Alliance Aggressive Stock (5.35)% 29.54% 20.24% 9.04% (1.30)%
- --------------------------------------------------------------------------------------------------------------
Alliance Common Stock (3.70)% 30.34% 22.28% 27.16% 27.32%
- --------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors (5.63)% 18.49% 3.52% 11.43% 12.07%
- --------------------------------------------------------------------------------------------------------------
Alliance Equity Index (0.26)% 34.31% 20.42% 30.45% 26.03%
- --------------------------------------------------------------------------------------------------------------
Alliance Global 3.56% 16.92% 12.76% 9.77% 19.86%
- --------------------------------------------------------------------------------------------------------------
Alliance Growth & Income (2.16)% 22.10% 18.16% 24.73% 18.94%
- --------------------------------------------------------------------------------------------------------------
Alliance Growth Investors (4.70)% 24.36% 10.80% 14.92% 17.23%
- --------------------------------------------------------------------------------------------------------------
Alliance High Yield (4.33)% 18.01% 20.91% 16.58% (6.66)%
- --------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities (5.90)% 11.52% 2.11% 5.58% 6.03%
- --------------------------------------------------------------------------------------------------------------
Alliance International - 9.97% 8.04% (4.60)% 8.81%
- --------------------------------------------------------------------------------------------------------------
Alliance Money Market 2.36% 4.06% 3.64% 3.74% 3.66%
- --------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth - - - 25.38%+ (5.73)%
- --------------------------------------------------------------------------------------------------------------
BT Equity 500 Index - - - - 23.44%
- --------------------------------------------------------------------------------------------------------------
BT International Equity Index - - - - 18.47%
- --------------------------------------------------------------------------------------------------------------
BT Small Company Index - - - - (3.63)%
- --------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies - - - 21.32%+ 32.70%
- --------------------------------------------------------------------------------------------------------------
MFS Research - - - 14.99%+ 22.43%
- --------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity - - - 15.97%+ 10.08%
- --------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy - - - 3.76%+ 5.38%
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity - - - (20.59)%+ (28.01)%
- --------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced - - - 13.43%+ 10.30%
- --------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value - - - 15.15%+ 11.30%
- --------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income - - - 21.01%+ 7.60%
- --------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock - - - (2.41)%+ 12.16%
- --------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value - - - 18.04%+ (11.22)%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Returns for these Portfolios represent less than 12 months of performance. The
returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 91
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements or
other communications that include evaluations of a variable investment option or
Portfolio by nationally recognized financial publications. Examples of such
publications are:
Barron's Money Management Letter
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
Business Week National Underwriter
Forbes Pension & Investments
Fortune USA Today
Institutional Investor Investor's Business Daily
Money The New York Times
Kiplinger's Personal Finance The Wall Street Journal
Financial Planning The Los Angeles Times
Investment Adviser The Chicago Tribune
Investment Management Weekly
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types of
fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts; and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
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 level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
Yield information
Current yield for the Alliance Money Market option 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
option and Alliance Intermediate Government Securities option 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 similar manner, 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 option. The yields and
effective yields assume the deduction of all contract charges and expenses
other than the withdrawal charge, the optional baseBUILDER benefits charge, the
annual administrative charge, and any charge for taxes such
<PAGE>
- --------------------------------------------------------------------------------
92 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
as premium tax. The yields and effective yields for the Alliance Money Market
option, when used for the special dollar cost averaging program, assume that no
contract charges are deducted. For more information, see "Yield Information for
the Alliance Money Market Option, Alliance High Yield Option, and Alliance
Intermediate Government Securities Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
Incorporation of certain documents by reference 93
- --------------------------------------------------------------------------------
10
Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December
31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to
be a part of this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of
the securities under this prospectus, all documents or reports we file with the
SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be
considered to become part of this prospectus because they are incorporated by
reference.
Any statement contained in a document that is or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each
person to whom this prospectus is delivered, a copy of any or all of the
documents considered to be part of this prospectus because they are incorporated
herein. This does not include exhibits not specifically incorporated by
reference into the text of such documents. Requests for 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).
<PAGE>
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information A-1
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information
- --------------------------------------------------------------------------------
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE
INVESTMENT OPTION
FOR THE YEAR ENDING
DEC. 31, 1998
------------------------
THE HUDSON RIVER TRUST OPTIONS
- ------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
- ------------------------------------------------------------------------------
Unit value $69.37
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 293
- ------------------------------------------------------------------------------
ALLIANCE COMMON STOCK
- ------------------------------------------------------------------------------
Unit value $37.18
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 550
- ------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
- ------------------------------------------------------------------------------
Unit value $21.20
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 659
- ------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX
- ------------------------------------------------------------------------------
Unit value $26.73
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 2
- ------------------------------------------------------------------------------
ALLIANCE GLOBAL
- ------------------------------------------------------------------------------
Unit value $32.58
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 354
- ------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME
- ------------------------------------------------------------------------------
Unit value $20.99
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,853
- ------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS
- ------------------------------------------------------------------------------
Unit value $34.84
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 694
- ------------------------------------------------------------------------------
ALLIANCE HIGH YIELD
- ------------------------------------------------------------------------------
Unit value $27.96
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 801
- ------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES
- ------------------------------------------------------------------------------
Unit value $15.25
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 929
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
A-2 Appendix I: Condensed financial information
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
FOR THE YEAR ENDING
DEC. 31, 1998
------------------------
ALLIANCE INTERNATIONAL
- ------------------------------------------------------------------------------
Unit value $12.40
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 166
- ------------------------------------------------------------------------------
ALLIANCE MONEY MARKET
- ------------------------------------------------------------------------------
Unit value $25.92
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,566
- ------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH
- ------------------------------------------------------------------------------
Unit value $11.82
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 775
- ------------------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- ------------------------------------------------------------------------------
BT EQUITY 500 INDEX
- ------------------------------------------------------------------------------
Unit value $12.34
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 2,426
- ------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX
- ------------------------------------------------------------------------------
Unit value $11.85
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 242
- ------------------------------------------------------------------------------
BT SMALL COMPANY INDEX
- ------------------------------------------------------------------------------
Unit value $ 9.64
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 284
- ------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES
- ------------------------------------------------------------------------------
Unit value $16.10
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,942
- ------------------------------------------------------------------------------
MFS RESEARCH
- ------------------------------------------------------------------------------
Unit value $14.08
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,479
- ------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY
- ------------------------------------------------------------------------------
Unit value $12.76
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,009
- ------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY
- ------------------------------------------------------------------------------
Unit value $10.94
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 140
- ------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY
- ------------------------------------------------------------------------------
Unit value $ 5.72
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 177
- ------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Appendix I: Condensed financial information A-3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR THE YEAR ENDING
DEC. 31, 1998
------------------------
EQ/PUTNAM BALANCED
- ------------------------------------------------------------------------------
Unit value $12.51
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,136
- ------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE
- ------------------------------------------------------------------------------
Unit value $12.82
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 867
- ------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME
- ------------------------------------------------------------------------------
Unit value $13.02
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 1,059
- ------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK
- ------------------------------------------------------------------------------
Unit value $10.95
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 705
- ------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE
- ------------------------------------------------------------------------------
Unit value $10.48
- ------------------------------------------------------------------------------
Number of units outstanding (000s) 560
- ------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts B-1
- --------------------------------------------------------------------------------
Appendix II: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
Trustees who are considering the purchase of an Equitable Accumulator QP
contract should discuss with their tax advisers 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 contract, 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 federal income tax rules. The QP contract and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
Assuming continued plan qualification and operation, earnings on qualified plan
assets will accumulate value on a tax-deferred basis even if the plan is not
funded by the Equitable Accumulator QP contract or another annuity. Therefore,
you should purchase an Equitable Accumulator QP Contract to fund a plan for the
contract's features and benefits other than tax deferral. This QP contract
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" that can be funded by a QP
contract is 80%. The account value under a QP contract 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 account value under a QP contract 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 contract may be required. A withdrawal
charge and/or market value adjustment may apply.
Further, Equitable Life will not perform or provide any plan recordkeeping
services with respect to the QP contracts. 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 contracts, 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. Given
that required minimum distributions must commence from the plan for annuitants
after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan
funds) trustees should consider whether the QP contract is an appropriate
purchase for annuitants approaching or over age 70 1/2.
Finally, because the method of purchasing the QP contract and the features of
the QP contract may appeal more to plan participants/employees who are older and
tend to be highly paid, and because certain features of the QP contract 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 contract would cause the plan to engage in
prohibited discrimination in contributions, benefits or otherwise.
<PAGE>
- --------------------------------------------------------------------------------
Appendix III: Market value adjustment example C-1
- --------------------------------------------------------------------------------
Appendix III: 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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a
maturity value at the maturity date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later on February 15, 2004.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004
---------------------------------------------
5.00% 9.00%
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
- -----------------------------------------------------------------------------------------------
(1) Market adjusted amount $144,048 $119,487
- -----------------------------------------------------------------------------------------------
(2) Fixed maturity amount $131,080 $131,080
- -----------------------------------------------------------------------------------------------
(3) Market value adjustment:
(1) - (2) $ 12,968 $(11,593)
- -----------------------------------------------------------------------------------------------
ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL)
- -----------------------------------------------------------------------------------------------
(4) Portion of market value adjustment associated with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $ (4,851)
- -----------------------------------------------------------------------------------------------
(5) Reduction in fixed maturity amount:
[$50,000 - (4)] $ 45,499 $ 54,851
- -----------------------------------------------------------------------------------------------
(6) Fixed maturity amount: (2) - (5) $ 85,581 $ 76,229
- -----------------------------------------------------------------------------------------------
(7) Maturity value $120,032 $106,915
- -----------------------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 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% (right column), 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% (left column), a portion of a positive
market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example D-1
- --------------------------------------------------------------------------------
Appendix IV: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
The death benefit under the contracts is equal to the account value or, if
greater, the guaranteed minimum death benefit.
The following illustrates the guaranteed minimum death benefit calculation.
Assuming $100,000 is allocated to the variable investment options (with no
allocation to the Alliance Money Market option, Alliance Intermediate Government
Securities option or the fixed maturity options), no additional contributions,
no transfers and no withdrawals, and no loans under a Rollover TSA contract, the
guaranteed minimum death benefit for an annuitant age 45 would be calculated
as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
5% ROLL UP TO
END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED
CONTRACT GUARANTEED MINIMUM MINIMUM
YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $105,000 $105,000(1) $105,000(3)
- ------------------------------------------------------------------------------------------
2 $115,500 $110,250(2) $115,500(3)
- ------------------------------------------------------------------------------------------
3 $129,360 $115,763(2) $129,360(3)
- ------------------------------------------------------------------------------------------
4 $103,488 $121,551(1) $129,360(4)
- ------------------------------------------------------------------------------------------
5 $113,837 $127,628(1) $129,360(4)
- ------------------------------------------------------------------------------------------
6 $127,497 $134,010(1) $129,360(4)
- ------------------------------------------------------------------------------------------
7 $127,497 $140,710(1) $129,360(4)
- ------------------------------------------------------------------------------------------
</TABLE>
The account values for contract years 1 through 7 are based on hypothetical
rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We
are using these rates solely to illustrate how the benefit is determined. The
return rates bear no relationship to past or future investment results.
5% ROLL UP TO AGE 80
(1) At the end of contract year 1, and again at the end of contract years 4
through 7, the death benefit will be equal to the guaranteed minimum death
benefit.
(2) At the end of contract years 2 and 3, the death benefit will be equal to
the current account value since it is higher than the current guaranteed
minimum death benefit.
ANNUAL RATCHET TO AGE 80
(3) At the end of contract years 1 through 3, the guaranteed minimum death
benefit is equal to the current account value.
(4) At the end of contract years 4 through 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 account
value.
<PAGE>
- --------------------------------------------------------------------------------
Appendix V: Example of payments under the Assured Payment
Option and APO Plus E-1
- --------------------------------------------------------------------------------
Appendix V: Example of payments under the Assured Payment Option and APO Plus
- --------------------------------------------------------------------------------
The second column in the chart below illustrates the payments for a male age 70
who purchased the Assured Payment Option on February 14, 1997 with a single
contribution of $100,000, with increasing annual payments. The payments are to
commence on February 15, 1998. It assumes that the fixed period is 15 years and
that the life contingent annuity will provide payments on a single life basis.
Based on the rates to maturity for the fixed maturity options and the current
purchase rate for the life contingent annuity, on February 14, 1997, the initial
payment would be $6,730.77 and would increase in each three-year period to a
final payment of $9,854.53. The first payment under the life contingent annuity
would be $10,839.98.
The the rates to maturity as of February 14, 1997 for fixed maturity options
maturing on February 15, 1998 through 2012 are: 4.40%, 4.69%, 4.86%, 5.00%,
5.11%, 5.22%, 5.32%, 5.41%, 5.50%, 5.57%, 5.56%, 5.56%, 5.56%, 5.56% and 5.56%,
respectively.
Alternatively as shown in the third and fourth columns, this individual could
purchase APO Plus with the same $100,000 contribution, with the same fixed
period and the life contingent annuity on a single life basis. Assuming election
of the Alliance Common Stock option based on the rates to maturity for the fixed
maturity options and the current purchase rate for the life contingent annuity,
on February 14, 1997, the same initial payment of $6,730.77 would be purchased
under APO Plus. However, unlike the payment under the Assured Payment Option
that will increase every three years, this initial payment under APO Plus is not
guaranteed to increase. Therefore, only $78,949.12 is needed to purchase the
initial payment stream, and the remaining $21,050.87 is invested in the variable
investment options. Any future increase in payments under APO Plus will depend
on the investment performance in the Alliance Common Stock option.
Assuming hypothetical average annual rates of return of 0% and 8% (after
deduction of charges) for the variable investment option, the value in the
variable investment option would grow to $21,050.87 and $26,518.03 respectively
after three years. A portion of this amount is used to purchase the increase in
the payments at the beginning of the fourth year. The remainder will stay in the
variable investment option to be drawn upon for the purchase of increases in
payments at the end of each third year thereafter during the fixed period and at
the end of the fixed period under the life contingent annuity. Based on the
rates to maturity for the fixed maturity options and purchase rates for the life
contingent annuity as of February 14, 1997, the third and fourth columns
illustrate the increasing payments that would be purchased under APO Plus
assuming 0% and 8% rates of return respectively.
Under both options, while you are living payments increase annually after the
16th year under the life contingent annuity based on the increase, if any, in
the Consumer Price Index, but in no event greater than 3% per year.
ANNUAL PAYMENTS
- -----------------------------------------------------------------------------
GUARANTEED INCREASING ILLUSTRATIVE ILLUSTRATIVE
PAYMENTS PAYMENTS PAYMENTS
UNDER THE UNDER UNDER
YEARS ASSURED PAYMENT OPTION APO PLUS AT 0% APO PLUS AT 8%
- -----------------------------------------------------------------------------
1-3 $ 6,730.77 $6,730.77 $ 6,730.77
- -----------------------------------------------------------------------------
4-6 $ 7,403.85 $7,100.57 $ 7,520.00
- -----------------------------------------------------------------------------
7-9 $ 8,144.23 $7,483.79 $ 8,345.92
- -----------------------------------------------------------------------------
10-12 $ 8,958.66 $7,868.31 $ 9,191.42
- -----------------------------------------------------------------------------
13-15 $ 9,854.53 $8,217.67 $10,010.94
- -----------------------------------------------------------------------------
16 $10,839.98 $8,475.41 $10,731.67
- -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
E2 Appendix V: Example of payments under the Assured Payment
Option and APO Plus
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As described above, a portion of the illustrated contribution is applied to the
life contingent annuity. This amount will generally be larger under the Assured
Payment Option than under APO Plus. Also, a larger portion of the contribution
will be allocated to fixed maturity options under the former than the latter. In
this illustration, $80,458.33 is allocated under the Assured Payment Option to
the fixed maturity options and under APO Plus, $68,020.34 is allocated to the
fixed maturity options. In addition, under APO Plus $21,050.87 is allocated to
the variable investment option. The balance of the $100,000 ($19,541.67 and
$10,928.78, respectively) is applied to the life contingent annuity.
The rates of return of 0% and 8% are for illustrative purposes only and are not
intended to represent an expected or guaranteed rate of return. Your investment
results will vary. Payments will also depend on the the rates to maturity and
life contingent annuity purchase rates in effect on the day the contribution is
applied. It is assumed that no lump sum withdrawals are taken.
<PAGE>
- --------------------------------------------------------------------------------
Appendix VI: Assured Payment Option and APO Plus contracts
issued in the state of Maryland F-1
- --------------------------------------------------------------------------------
Appendix VI: Assured Payment Option and APO Plus contracts issued in the state
of Maryland
- --------------------------------------------------------------------------------
THE FOLLOWING INFORMATION SPECIFIES THE VARIATIONS THAT RELATE TO THE ASSURED
PAYMENT OPTION AND APO PLUS CONTRACTS ISSUED IN MARYLAND.
The Assured Payment Option and APO Plus (available only as traditional IRAs) are
issued as separate contracts rather than as a distribution option under a
Rollover IRA or Flexible Premium IRA contract.
You may purchase an Assured Payment Option of APO Plus contract with a minimum
single contribution of $10,000. You may also choose to apply the account value
from a Flexible Premium IRA or Rollover IRA contract to purchase an Assured
Payment Option or APO Plus contract. Your account value will be applied as a
single contribution.
We will allocate your single contribution in the same manner as described under
"Assured Payment Option and APO Plus" earlier in this prospectus. You are not
permitted to make additional contributions under the Assured Payment Option and
APO Plus.
PAYMENTS. Your payments must begin within 13 months after the contract date.
You may not elect to defer your payments.
DEATH BENEFIT. If you die during the fixed period, we will continue payments to
your designated beneficiary. Your beneficiary may choose to discontinue the
payments and receive a lump sum amount. If the lump sum is elected within one
year of your death, the amount will be equal the death benefit payable under the
Assured Payment Option and APO Plus.
TERMINATING THE CONTRACT. You may choose to terminate the contract by
surrendering the contract as described under "Surrendering your contract to
receive its cash value." We will return the contract to you with a notation that
the life contingent annuity is still in effect. The date payments are to start
under the life contingent annuity will be moved forward.
TAX INFORMATION. The Assured Payment Option and APO Plus contracts have not been
submitted to the IRS for approval as to form for use as a traditional IRA.
<PAGE>
- --------------------------------------------------------------------------------
Statement of additional information
- --------------------------------------------------------------------------------
Statement of additional
information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market Option, Alliance High Yield Option,
and Alliance Intermediate Government Securities Option 3
Long-Term Market Trends 4
Key Factors in Retirement Planning 6
Financial Statements 9
</TABLE>
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Accumulator
P.O. Box 1547
Secaucus, NJ 07096-1547
Please send me an Equitable Accumulator SAI for Separate Account No. 45 dated
May 1, 1999.
- ------------------------------------------------------------------------------
Name:
- ------------------------------------------------------------------------------
Address:
- ------------------------------------------------------------------------------
City State Zip
(AGENTSAI)
<PAGE>
Equitable Accumulator(SM)
Select
A combination variable and fixed deferred annuity contract
PROSPECTUS DATED MAY 1, 1999
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing or taking any other action
under your contract. Also, at the end of this prospectus you will find attached
the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain
important information about their Portfolios.
- --------------------------------------------------------------------------------
WHAT IS THE EQUITABLE ACCUMULATOR SELECT?
Equitable Accumulator Select is a deferred annuity contract issued by The
Equitable Life Assurance Society of the United States. It provides for the
accumulation of retirement savings and for income. The contract offers income
and death benefit protection. It also offers a number of payout options. You
invest to accumulate value on a tax-deferred basis in one or more of our
variable investment options or fixed maturity options ("investment options").
There is no withdrawal charge under the contract. However, we deduct a
distribution charge calculated as a percentage of the amounts in the variable
investment options. We deduct this charge for the life of the contract. This
contract is not available in New York.
- --------------------------------------------------------------------------------
Variable investment options
- --------------------------------------------------------------------------------
Fixed Income Options:
- --------------------------------------------------------------------------------
Domestic Fixed Income Aggressive Fixed Income
- --------------------------------------------------------------------------------
o Alliance Money Market o Alliance High Yield
o Alliance Intermediate
Government Securities
- --------------------------------------------------------------------------------
Equity Options:
- --------------------------------------------------------------------------------
Domestic Equity International Equity
- --------------------------------------------------------------------------------
o T. Rowe Price Equity Income o Alliance Global
o EQ/Putnam Growth & Income o Alliance International
Value o T. Rowe Price International
o Alliance Growth & Income Stock
o MFS Growth with Income o Morgan Stanley Emerging
o BT Equity 500 Index Markets Equity
o Merrill Lynch Basic Value Equity o BT International Equity Index
o Alliance Common Stock
o MFS Research
o EQ/Alliance Premier Growth
o Capital Guardian Research
o Capital Guardian U.S. Equity
- --------------------------------------------------------------------------------
Aggressive Equity
- --------------------------------------------------------------------------------
o BT Small Company Index o Alliance Small Cap Growth
o Alliance Aggressive Stock o MFS Emerging Growth
o EQ/Evergreen Companies
o Warburg Pincus Small Company
Value
- --------------------------------------------------------------------------------
Asset Allocation Options:
- --------------------------------------------------------------------------------
o Alliance Conservative Investors o Alliance Growth Investors
o EQ/Putnam Balanced o Merrill Lynch World Strategy
o EQ/Evergreen Foundation
- --------------------------------------------------------------------------------
You may allocate amounts to any of the variable investment options. They, in
turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson
River Trust or EQ Advisors Trust. Your investment results in a variable
investment option will depend on the investment performance of the related
Portfolio. Each variable investment option is a subaccount of our Separate
Account No. 45.
FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity
options. These amounts will receive a fixed rate of interest for a specified
period. Interest is earned at a guaranteed rate we set. We make a market value
adjustment (up or down) if you make transfers or withdrawals from a fixed
maturity option before its maturity date.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An annuity which is an investment vehicle for a qualified defined
contribution or defined benefit plan ("QP").
o An individual retirement annuity ("IRA"), either traditional IRA ("Rollover
IRA") or Roth IRA ("Roth Conversion IRA").
o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") -
("Rollover TSA").
A contribution of at least $25,000 is required to purchase a contract.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The statement of additional
information ("SAI") dated May 1, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our
Processing Office or calling 1-800-789-7771. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be obtained
from the SEC's website at http://www.sec.gov. The table of contents for the SAI
appears at the back of this prospectus.
The SEC has not approved or disapproved these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense. The contracts 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.
<PAGE>
- --------------------------------------------------------------------------------
2 Contents of this prospectus
- --------------------------------------------------------------------------------
Contents of this prospectus
- --------------------------------------------------------------------------------
EQUITABLE ACCUMULATOR(SM) SELECT
- ---------------------------------------------------------------
Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Equitable Accumulator Select at a glance - key features 8
- ---------------------------------------------------------------
FEE TABLE 10
- ---------------------------------------------------------------
Example 13
- ---------------------------------------------------------------
CONTRACT FEATURES AND BENEFITS 15
- ---------------------------------------------------------------
How you can purchase and contribute to your contract 15
Owner and annuitant requirements 17
How you can make your contributions 17
What are your investment options under the contract? 17
Portfolios of The Hudson River Trust 18
Portfolios of EQ Advisors Trust 18
Allocating your contributions 21
Our baseBUILDER option 22
Guaranteed minimum death benefit 25
Your right to cancel within a certain number of days 26
- ---------------------------------------------------------------
DETERMINING YOUR CONTRACT'S VALUE 27
- ---------------------------------------------------------------
Your account value 27
Your contract's value in the variable investment options 27
Your contract's value in the fixed maturity options 27
- --------------------------------------------------------------------------------
"We," "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
Contents of this prospectus
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
<PAGE>
- --------------------------------------------------------------------------------
Contents of this prospectus 3
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------
TRANSFERRING YOUR MONEY AMONG
INVESTMENT OPTIONS 28
- -------------------------------------------------------------------
Transferring your account value 28
Rebalancing your account value 28
- -------------------------------------------------------------------
ACCESSING YOUR MONEY 29
- -------------------------------------------------------------------
Withdrawing your account value 29
How withdrawals are taken from your account value 30
How withdrawals affect your guaranteed minimum
income benefit and guaranteed minimum death
benefit 30
Loans under Rollover TSA contracts 31
Surrendering your contract to receive its cash value 32
When to expect payments 32
Choosing your annuity payout options 32
- -------------------------------------------------------------------
CHARGES AND EXPENSES 35
- -------------------------------------------------------------------
Charges that Equitable Life deducts 35
Charges that the trusts deduct 36
Group or sponsored arrangements 36
- -------------------------------------------------------------------
PAYMENT OF DEATH BENEFIT 37
- -------------------------------------------------------------------
Your beneficiary and payment of benefit 37
How death benefit payment is made 37
Beneficiary continuation option for Rollover IRA contracts 38
- -------------------------------------------------------------------
TAX INFORMATION 39
- -------------------------------------------------------------------
Overview 39
Transfers among investment options 39
Taxation of nonqualified annuities 39
Special rules for NQ contracts issued in Puerto Rico 40
Individual retirement arrangements (IRAs) 41
Special rules for nonqualified contracts in qualified plans 49
Tax Sheltered Annuity contracts (TSAs) 49
Federal and state income tax withholding and
information reporting 54
Impact of taxes to Equitable Life 55
- -------------------------------------------------------------------
MORE INFORMATION 56
- -------------------------------------------------------------------
About our Separate Account No. 45 56
About The Hudson River Trust and EQ Advisors Trust 56
About our fixed maturity options 57
About the general account 59
About other methods of payment 59
Dates and prices at which contract events occur 59
About your voting rights 60
About our year 2000 progress 61
About legal proceedings 61
About our independent accountants 61
Transfers of ownership, collateral assignments, loans,
and borrowing 61
Distribution of the contracts 62
- -------------------------------------------------------------------
INVESTMENT PERFORMANCE 63
- -------------------------------------------------------------------
Benchmarks 63
Communicating performance data 72
- -------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 74
- -------------------------------------------------------------------
Appendices
I - Purchase considerations for QP contracts A-1
II - Market value adjustment example B-1
III - Guaranteed minimum death benefit example C-1
- -------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- -------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
4 Index of key words and phrases
- --------------------------------------------------------------------------------
Index of key words and phrases
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
Page in
Term Prospectus
account value 27
annuitant 15
baseBUILDER 22
beneficiary 37
benefit base 23
business day 59
cash value 27
conduit IRA 44
contract date 16
contract date anniversary 16
contract year 16
contributions to Roth IRAs 47
rollover contributions 47
conversion contributions 47
direct custodian-to-custodian
transfers 47
contributions to traditional IRAs 41
rollover contributions 42
direct custodian-to-custodian
transfers 42
ERISA 31
fixed maturity amount 20
fixed maturity options 20
guaranteed minimum death benefit 25
guaranteed minimum income benefit 23
IRA 41
IRS 39
investment options 17
loan reserve account 31
market adjusted amount 20
market value adjustment 20
maturity value 20
NQ 39
participant 17
payout option 32
Portfolio cover
Processing Office 6
QP 49
rate to maturity 20
recharacterized 42
required beginning date 44
Rollover IRA cover
Rollover TSA cover
Roth IRA 46
Roth Conversion IRA cover
SAI cover
SEC cover
TOPS 6
TSA 49
traditional IRA 41
unit 27
variable investment options 17
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in this prospectus as in the
contract. Your Equitable associate can provide further explanation about your
contract or supplemental materials.
----------------------------------------------------------------------
Prospectus Contract or Supplemental Materials
----------------------------------------------------------------------
fixed maturity options Guarantee Periods (GIROs in supplemental
materials)
variable investment options Investment Funds
account value Annuity Account Value
rate to maturity Guaranteed Rates
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 5
- --------------------------------------------------------------------------------
Who is Equitable Life?
- --------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a wholly owned subsidiary of The Equitable
Companies Incorporated ("Equitable Companies"), whose majority shareholder is
AXA, a French holding company for an international group of insurance and
related financial services companies. As a majority shareholder, and under its
other arrangements with Equitable Life and Equitable Life's parent, AXA
exercises significant influence over the operations and capital structure of
Equitable Life and its parent. No company other than Equitable Life, however,
has any legal responsibility to pay amounts that Equitable Life owes under the
contracts. During 1999, Equitable Companies plans to change its name to AXA
Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are licensed
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located
at 1290 Avenue of the Americas, New York, N.Y. 10104.
<PAGE>
- --------------------------------------------------------------------------------
6 Who is Equitable Life?
- --------------------------------------------------------------------------------
HOW TO REACH US
You may communicate with our Processing Office as listed below for any of the
following purposes:
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
P.O. Box 13014
Newark, NJ 07188-0014
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
c/o First Chicago National Processing Center
300 Harmon Meadow Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR
REQUIRED NOTICES) SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Accumulator Select
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
REPORTS WE PROVIDE:
- --------------------------------------------------------------------------------
o written confirmation of financial transactions;
o statement of your contract values at the close of each calendar quarter
(four per year);
o annual statement of your contract values as of the close of the contract
year.
- --------------------------------------------------------------------------------
TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM
- --------------------------------------------------------------------------------
TOPS is designed to provide you with up-to-date information via touch-tone
telephone. You can obtain information on:
o your current account value;
o your current allocation percentages;
o the number of units you have in the variable investment options;
o rates to maturity for the fixed maturity options; and
o the daily unit values for the variable investment options.
You can also:
o change your allocation percentages and/or transfer among the investment
options; and
o change your personal identification number (PIN).
TOPS is normally available seven days a week, 24 hours a day, by calling
toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service
may sometimes be unavailable.
We have established procedures to reasonably confirm that the instructions
communicated by telephone are genuine. For example, we will require certain
personal identification information before we will act on telephone instructions
and we will provide written confirmation of your transfers. We will not be
liable for following telephone instructions we reasonably believe to be genuine.
- --------------------------------------------------------------------------------
BY INTERNET:
- --------------------------------------------------------------------------------
You can also access information about your contract on the Internet. Please
visit our website at http://www.equitable.com, and click on EQAccess.
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVE:
- --------------------------------------------------------------------------------
You may also use our toll-free number (1-800-789-7771) to speak with one of our
customer service representatives. Our customer service representatives are
available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time.
You should send all contributions, notices, and requests to our Processing
Office at the address above.
WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE
PROVIDE FOR THAT PURPOSE:
(1) conversion of a traditional IRA to a Roth Conversion IRA contract;
(2) cancellation of your Roth Conversion IRA contract and return to a Rollover
IRA contract;
(3) election of the automatic investment program;
(4) election of the rebalancing program;
(5) to obtain a PIN required for TOPS;
(6) requests for loans under Rollover TSA contracts;
(7) spousal consent for loans under Rollover TSA contracts;
(8) tax withholding election; and
(9) beneficiary continuation option election.
WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF
REQUESTS:
(1) address changes;
(2) beneficiary changes;
(3) transfers between investment options;
(4) withdrawal requests;
(5) contract surrender; and
(6) requests to exercise your guaranteed minimum income benefit.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION
GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION:
(1) automatic investment program;
(2) general dollar cost averaging;
(3) rebalancing;
(4) special dollar cost averaging;
(5) substantially equal withdrawals;
(6) systematic withdrawals; and
(7) the date annuity payments are to begin.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
<PAGE>
- --------------------------------------------------------------------------------
8 Equitable Accumulator Select at a glance - key features
- --------------------------------------------------------------------------------
Equitable Accumulator Select at a glance - key features
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Professional Equitable Accumulator Select's variable investment
investment options invest in 30 different Portfolios
management managed by professional investment advisers.
- --------------------------------------------------------------------------------
Fixed maturity o 10 fixed maturity options with maturities ranging from
options approximately 1 to 10 years.
o Each fixed maturity option offers a guarantee of
principal and interest rate if you hold it to
maturity.
o Principal guarantees.
- If you make withdrawals or transfers from a fixed
maturity option before maturity, there will be a
market value adjustment due to differences in
interest rates. This may increase or decrease any
value that you have left in that fixed maturity
option. If you surrender your contract, a market
value adjustment may also apply.
- --------------------------------------------------------------------------------
Tax advantages o On earnings inside the No tax on any dividends,
contract interest or capital gains
until you make withdrawals
from your contract or receive
annuity payments.
---------------------------------------------------------
o On transfers inside the No tax on transfers among
contract investment options.
---------------------------------------------------------
If you are buying a contract to fund a retirement plan
that already provides tax deferral under sections of the
Internal Revenue Code (IRA, QP, and Rollover TSA), you
should do so for the contract's features and benefits
other than tax deferral. In such situations, the tax
deferral of the contract does not provide additional
benefits.
- --------------------------------------------------------------------------------
baseBUILDER(Reg. TM) baseBUILDER combines a guaranteed minimum income benefit
protection with a guaranteed minimum death benefit. This optional
feature provides income protection for you while the
annuitant lives, as well as a death benefit for the
beneficiary should the annuitant die.
- --------------------------------------------------------------------------------
Contribution amounts o Initial minimum: $25,000
o Additional minimum: $ 1,000
$100 monthly and $300 quarterly
under our automatic investment
program (NQ contracts)
---------------------------------------------------------
Maximum investment limitations may apply.
- --------------------------------------------------------------------------------
Access to your money o Lump sum withdrawals
o Several withdrawal options on a periodic basis
o Loans under Rollover TSA contracts
o Contract surrender
You may incur income tax and a tax penalty.
- --------------------------------------------------------------------------------
Payout alternatives o Annuity payout options
o Income Manager(Reg. TM) payout annuity options
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Equitable Accumulator Select at a glance - key features 9
- --------------------------------------------------------------------------------
Additional features o Dollar cost averaging
o Automatic investment program
o Account value rebalancing (quarterly, semiannually,
and annually)
o Unlimited free transfers
- --------------------------------------------------------------------------------
Fees and charges
o Daily charges on amounts invested in variable
investment options for mortality and expense risks,
administrative, and distribution charges at an annual
rate of 1.60%.
o Annual 0.30% benefit base charge for the optional
baseBUILDER benefit. The benefit base is described
under "Your guaranteed minimum income benefit under
baseBUILDER." No additional charge if you want a
guaranteed minimum death benefit only.
o No sales charge deducted at the time you make
contributions, no withdrawal charge, and no annual
contract fee.
o We also deduct a charge for taxes such as premium
taxes that may be imposed in your state. This charge
is generally deducted from the amount applied to an
annuity payout option.
o We generally deduct a $350 annuity administrative fee
from amounts applied to purchase certain life annuity
payment options.
o Annual expenses of The Hudson River Trust and EQ
Advisors Trust Portfolios are calculated as a
percentage of the average daily net assets invested in
each Portfolio. These expenses include management and
advisory fees ranging from 0.25% to 1.15% annually,
12b-1 fees of 0.25% and other expenses.
- --------------------------------------------------------------------------------
Annuitant issue ages NQ: 0-85
Rollover IRA, Roth Conversion IRA, and Rollover
TSA: 20-85
QP: 20-75
- --------------------------------------------------------------------------------
The above is not a complete description of all material provisions of the
contract. In some cases restrictions or exceptions apply. Also, all features of
the contract are not necessarily available in your state or at certain ages.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
Equitable associate, or call us, if you have any questions.
<PAGE>
- --------------------------------------------------------------------------------
10 Fee table
- --------------------------------------------------------------------------------
Fee table
- --------------------------------------------------------------------------------
The fee table below will help you understand the various charges and expenses
that apply to your contract. The table reflects charges you will directly incur
under the contract, as well as charges and expenses of the Portfolios that you
will bear indirectly. Charges for taxes, such as premium taxes, may also apply.
Also, an administrative fee may apply when your annuity payments are to begin.
Each of the charges and expenses is more fully described under "Charges and
expenses" later in this prospectus. For a complete description of Portfolio
charges and expenses, please see the attached prospectuses for The Hudson River
Trust and EQ Advisors Trust.
The fixed maturity options are not covered by the fee table and examples. A
market value adjustment (up or down) may apply as a result of a withdrawal,
transfer or surrender of amounts from a fixed maturity option.
- --------------------------------------------------------------------------------
Charges we deduct from your variable investment options expressed
as an annual percentage of daily net assets
- --------------------------------------------------------------------------------
Mortality and expense risks(1) 1.10%
Administrative(2) 0.25%
Distribution 0.25%
----
Total annual expenses 1.60%
- --------------------------------------------------------------------------------
Charges we deduct from your account value each year if you elect the
optional benefit
- --------------------------------------------------------------------------------
baseBUILDER benefits charge (calculated as a percentage of
the benefit base. Deducted annually on each contract date
anniversary)(3) 0.30%
- --------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Total
Annual
Investment Expenses(4)
Management & Other (After expense
Advisory Fees 12b-1 Fees(4) Expenses limitation)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Aggressive Stock(5) 0.54% 0.25% 0.03% 0.82%
Alliance Common Stock(5) 0.36% 0.25% 0.03% 0.64%
Alliance Conservative Investors(5) 0.48% 0.25% 0.05% 0.78%
Alliance Global(5) 0.64% 0.25% 0.07% 0.96%
Alliance Growth & Income(5) 0.55% 0.25% 0.03% 0.83%
Alliance Growth Investors(5) 0.51% 0.25% 0.04% 0.80%
Alliance High Yield(5) 0.60% 0.25% 0.03% 0.88%
Alliance Intermediate Government
Securities(5) 0.50% 0.25% 0.05% 0.80%
Alliance International(5) 0.90% 0.25% 0.16% 1.31%
Alliance Money Market(5) 0.35% 0.25% 0.02% 0.62%
Alliance Small Cap Growth(5) 0.90% 0.24% 0.06% 1.20%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Fee table 11
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS
IN EACH PORTFOLIO)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Total
Other Annual
Investment Expenses(6) Expenses(6)
Management & (After expense (After expense
Advisory Fees 12b-1 Fees(4) limitation) limitation)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ/Alliance Premier Growth(6) 0.90% 0.25% 0.00% 1.15%
BT Equity 500 Index(6) 0.25% 0.25% 0.05% 0.55%
BT International Equity Index(6) 0.35% 0.25% 0.40% 1.00%
BT Small Company Index(6) 0.25% 0.25% 0.25% 0.75%
Capital Guardian Research(6) 0.65% 0.25% 0.05% 0.95%
Capital Guardian U.S. Equity(6) 0.65% 0.25% 0.05% 0.95%
EQ/Evergreen(6) 0.75% 0.25% 0.05% 1.05%
EQ/Evergreen Foundation(6) 0.63% 0.25% 0.07% 0.95%
MFS Emerging Growth Companies(6) 0.55% 0.25% 0.05% 0.85%
MFS Growth with Income(6) 0.55% 0.25% 0.05% 0.85%
MFS Research(6) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity(6) 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy(6) 0.70% 0.25% 0.25% 1.20%
Morgan Stanley Emerging Markets
Equity(6) 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Balanced(6) 0.55% 0.25% 0.10% 0.90%
EQ/Putnam Growth & Income
Value(6) 0.55% 0.25% 0.05% 0.85%
T. Rowe Price Equity Income(6) 0.55% 0.25% 0.05% 0.85%
T. Rowe Price International Stock(6) 0.75% 0.25% 0.20% 1.20%
Warburg Pincus Small Company 0.65% 0.25% 0.10% 1.00%
Value(6)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
Notes:
(1) A portion of this charge is for providing the guaranteed minimum death
benefit.
(2) We reserve the right to increase this charge to a maximum annual rate of
0.35%.
(3) The benefit base is described under "Your guaranteed minimum income benefit
under baseBUILDER."
(4) Portfolio shares are all subject to fees imposed under distribution plans
(the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors
Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. The 12b-1 fee will not be increased for the life of the contracts.
The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio 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 equaling 1.20%. Absent the expense limitation, the total annual
expenses for 1998 for the Alliance Small Cap Growth Portfolio would have
been 1.21%.
<PAGE>
- --------------------------------------------------------------------------------
12 Fee table
- --------------------------------------------------------------------------------
(5) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fees for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The maximum
investment management and advisory fees, however, cannot be increased
without a vote of that Portfolio's shareholders. See the prospectus for The
Hudson River Trust. The other direct operating expenses will also fluctuate
from year to year depending on actual expenses.
(6) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF 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 average daily
net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier
Growth; 0.30% for BT Equity 500 Index; 0.75% for BT International Equity
Index; 0.50% for BT Small Company Index; 0.70% for Capital Guardian
Research and Capital Guardian U.S. Equity; 0.80% for EQ/Evergreen; 0.70%
for EQ/Evergreen Foundation; 0.60% for MFS Emerging Growth Companies, MFS
Growth with Income, MFS Research, and Merrill Lynch Basic Value Equity;
0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging
Markets Equity; 0.65% for EQ/Putnam Balanced; 0.60% for EQ/Putnam Growth &
Income Value and T. Rowe Price Equity Income; 0.95% for T. Rowe Price
International Stock; and 0.75% for Warburg Pincus Small Company Value. The
expenses shown for the BT International Equity Index and BT Small Company
Index Portfolios reflect an increase effective on May 1, 1999.
Absent the expense limitation, the "Other Expenses" for 1998 on an
annualized basis for each of the Portfolios would have been as follows:
0.33% for BT Equity 500 Index; 0.89% for BT International Equity Index;
1.31% for BT Small Company Index; 0.24% for MFS Emerging Growth Companies;
0.25% for MFS Research; 0.26% for Merrill Lynch Basic Value Equity; 0.66%
for Merrill Lynch World Strategy; 1.23% for Morgan Stanley Emerging Markets
Equity; 0.45% for EQ/Putnam Balanced; 0.24% for EQ/Putnam Growth & Income
Value; 0.24% for T. Rowe Price Equity Income; 0.40% for T. Rowe Price
International Stock; and 0.27% for Warburg Pincus Small Company Value. For
the following Portfolios, the "Other Expenses" for 1999, absent the expense
limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier
Growth, Capital Guardian Research, and Capital Guardian U.S. Equity; 0.76%
for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; 0.59% for MFS Growth
with Income. Initial seed capital was invested on December 31, 1998 for the
EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income
Portfolios. The EQ/Alliance Premier Growth, Capital Guardian Research, and
Capital Guardian U.S. Equity Portfolios commenced operations on May 1,
1999.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF 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.
<PAGE>
- --------------------------------------------------------------------------------
Fee table 13
- --------------------------------------------------------------------------------
EXAMPLE
The example below shows the expenses that a hypothetical contract owner (who has
elected baseBUILDER) would pay in the situation illustrated. We assume that a
$1,000 contribution is invested in one of the variable investment options listed
and a 5% annual return is earned on the assets in that option.(1)
The example should not be considered a representation of past or future expenses
for each option. Actual expenses may be greater or less than those shown.
Similarly, the annual rate of return assumed in the example is not an estimate
or guarantee of future investment performance.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
At the end of each
period shown, the
expenses would be:
------------------------
1 year 3 years
- ------------------------------------------------------------------------
The Hudson River Trust Options
- ------------------------------------------------------------------------
<S> <C> <C>
Alliance Aggressive Stock $ 27.68 $ 85.16
Alliance Common Stock $ 25.90 $ 79.81
Alliance Conservative Investors $ 27.29 $ 83.98
Alliance Global $ 29.07 $ 89.31
Alliance Growth & Income $ 24.63 $ 81.98
Alliance Growth Investors $ 27.49 $ 84.57
Alliance High Yield $ 28.28 $ 86.95
Alliance Intermediate Government Securities $ 27.49 $ 84.57
Alliance International $ 32.55 $ 99.64
Alliance Money Market $ 25.70 $ 79.22
Alliance Small Cap Growth $ 31.45 $ 96.40
- ------------------------------------------------------------------------
EQ Advisors Trust Options
- ------------------------------------------------------------------------
EQ/Alliance Premier Growth $ 30.96 $ 94.93
BT Equity 500 Index $ 25.01 $ 77.13
BT International Equity Index $ 29.47 $ 90.50
BT Small Company Index $ 26.99 $ 83.08
Capital Guardian Research $ 28.97 $ 89.02
Capital Guardian U.S. Equity $ 28.97 $ 89.02
EQ/Evergreen $ 29.97 $ 91.97
EQ/Evergreen Foundation $ 28.97 $ 89.02
EQ/Putnam Balanced $ 28.48 $ 87.53
EQ/Putnam Growth & Income Value $ 27.98 $ 86.05
MFS Emerging Growth Companies $ 27.98 $ 86.05
MFS Growth with Income $ 27.98 $ 86.05
MFS Research $ 27.98 $ 86.05
Merrill Lynch Basic Value Equity $ 27.98 $ 86.05
Merrill Lynch World Strategy $ 31.45 $ 96.40
Morgan Stanley Emerging Markets Equity $ 36.91 $ 112.51
T. Rowe Price Equity Income $ 27.98 $ 86.05
T. Rowe Price International Stock $ 31.45 $ 96.40
Warburg Pincus Small Company Value $ 29.47 $ 90.50
- ------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
14 Fee table
- --------------------------------------------------------------------------------
- ----------
(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity payout option at the end of any of the periods shown
in the examples. This is because if the amount applied to purchase an
annuity payout option is less than $2,000, or the initial payment is less
than $20, we may pay the amount to you in a single sum instead of as
payments under an annuity payout option. See "Accessing your money."
If you elect an annuity payout option:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the example would, in
each case, be increased by $4.43 based on the average amount applied to annuity
payout options in 1998. See "Annuity administrative fee" under "Charges and
expenses."
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 15
- --------------------------------------------------------------------------------
Contract features and benefits
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT
You may purchase a contract by making payments to us we call "contributions."
We require a minimum initial contribution of $25,000 for you to purchase a
contract. You may make additional contributions of at least $1,000 each,
subject to limitations noted below. The following table summarizes our rules
regarding contributions to your contract. All ages in the table refer to the
age of the annuitant named in the contract.
- --------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Available
Contract for annuitant Limitations on
type issue ages Source of contributions contributions
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NQ 0 through 85 o After-tax money. o No additional contributions after
age 86.
o Paid to us by check or transfer
of contract value in a tax-deferred
exchange under Section 1035 of the
Internal Revenue Code.
- --------------------------------------------------------------------------------------------------------
Rollover IRA 20 through 85 o Rollovers from a qualified plan. o No additional rollover or direct
transfer contributions after
o Rollovers from a TSA. age 86.
o Rollovers from another o Contributions after age 70 1/2
traditional individual retirement must be net of required
arrangement. minimum distributions.
o Direct custodian-to-custodian o Regular IRA contributions are
transfers from another not permitted.
traditional individual retirement
arrangement.
- --------------------------------------------------------------------------------------------------------
Roth 20 through 85 o Rollovers from another Roth o No additional rollover or direct
Conversion IRA. transfer contributions after
IRA age 86.
o Conversion rollovers from a
traditional IRA. o Conversion rollovers after
age 70 1/2 must be net of
o Direct transfers from another required minimum distributions
Roth IRA. for the traditional IRA you are
rolling over.
o You cannot roll over funds from
a traditional IRA if your adjusted
gross income is $100,000 or
more.
o Regular after-tax contributions
are not permitted.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
16 Contract features and benefits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Available
Contract for annuitant Limitations on
type issue ages Source of contributions contributions
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
QP 20 through 75 o Only transfer contributions from o Regular ongoing payroll
an existing qualified plan trust contributions are not permitted.
as a change of investment
vehicle under the plan. o Only one additional contribution
may be made during a contract
o The plan must be qualified year.
under Section 401(a) of the
Internal Revenue Code. o No additional transfer
contributions after age 76.
o For 401(k) plans, transferred
contributions may only include o For defined benefit plans,
employee pre-tax contributions. employee contributions are not
permitted.
o Contributions after age 70 1/2
must be net of any required
minimum distributions.
- --------------------------------------------------------------------------------------------------------
Rollover TSA 20 through 85 o Rollovers from another TSA o No additional rollover or direct
contract or arrangement. transfer contributions after
age 86.
o Rollovers from a traditional IRA
which was a "conduit" for TSA o Contributions after age 70 1/2
funds previously rolled over. must be net of required
minimum distributions.
o Direct transfers from another
contract or arrangement under
Section 403(b) of the Internal
Revenue Code, complying with
IRS Revenue Ruling 90-24.
- --------------------------------------------------------------------------------------------------------
</TABLE>
See "Tax information" for a more detailed discussion of sources of
contributions and certain contribution limitations. We may refuse to accept any
contribution if the sum of all contributions under all Equitable Accumulator
contracts 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 contracts that you own would then total more than
$2,500,000.
- --------------------------------------------------------------------------------
The 12-month period beginning on your contract date and each 12-month period
after that date is a "contract year." The end of each 12-month period is your
"contract date anniversary." The "contract date" is the effective date of a
contract. This usually is the business day we receive your initial contribution.
Your contract date will be shown in your contract.
- --------------------------------------------------------------------------------
For information on when contributions are credited under your contract see
"Dates and prices at which contract events occur" later in this prospectus.
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER AND ANNUITANT REQUIREMENTS
Under NQ contracts, the annuitant can be different than the owner. A joint owner
may also be named. Only natural persons can be joint owners. This means that an
entity such as a corporation cannot be a joint owner.
Under Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts, the owner
and annuitant must be the same person.
Under QP contracts, the owner must be the trustee of the qualified plan and the
annuitant must be the plan participant/employee. See Appendix I for more
information on QP contracts.
- --------------------------------------------------------------------------------
A participant is an individual who is currently, or was formerly participating
in an eligible employer's QP or TSA plan.
- --------------------------------------------------------------------------------
HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
Additional contributions may also be made under our automatic investment
program. This method of payment is discussed in detail under "More information"
later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing or
unclear, we will try to obtain that information. If we are unable to obtain all
of the information we require within five business days after we receive an
incomplete application or form, we will inform the Equitable associate
submitting the application on your behalf. We will then return the contribution
to you unless you specifically direct us to keep your contribution until we
receive the required information.
- --------------------------------------------------------------------------------
Our "business day" is any day the New York Stock Exchange is open for trading.
- --------------------------------------------------------------------------------
SECTION 1035 EXCHANGES
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Equitable Accumulator
Select NQ contract in a tax-free exchange if you follow certain procedures as
shown in the form that we require you to use. Also see "Tax information" later
in this prospectus.
WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT?
Your investment options are the variable investment options and the fixed
maturity options.
VARIABLE INVESTMENT OPTIONS
Your investment results in any one of the 30 variable investment options will
depend on the investment performance of the underlying Portfolios. Listed below
are the currently available Portfolios, their investment objectives, and their
advisers.
- --------------------------------------------------------------------------------
You can choose among 30 variable investment options.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
18 Contract features and benefits
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF THE HUDSON RIVER TRUST
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Name Objective Adviser
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P.
income
- ----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors High total return without, in the adviser's Alliance Capital Management L.P.
opinion, undue risk to principal
- ----------------------------------------------------------------------------------------------------------------------
Alliance Global Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income High total return through a combination of Alliance Capital Management L.P.
current income and capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors High total return consistent with the adviser's Alliance Capital Management L.P.
determination of reasonable risk
- ----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income Alliance Capital Management L.P.
and, to the extent consistent with that
objective, capital appreciation
- ----------------------------------------------------------------------------------------------------------------------
Alliance Intermediate High current income consistent with relative Alliance Capital Management L.P.
Government Securities stability of principal
- ----------------------------------------------------------------------------------------------------------------------
Alliance International Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Money Market High level of current income while preserving Alliance Capital Management L.P.
assets and maintaining liquidity
- ----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Name Objective Adviser
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P.
- ----------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Standard & Poor's 500
Composite Stock Price Index
- ----------------------------------------------------------------------------------------------------------------------
BT International Equity Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Morgan Stanley Capital
International Europe, Australia, Far East Index
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 19
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Name Objective Adviser
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BT Small Company Index Replicate as closely as possible (before Bankers Trust Company
deduction of Portfolio expenses) the total
return of the Russell 2000 Index
- --------------------------------------------------------------------------------------------------------------------------------
Capital Guardian Research* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------------------------
Capital Guardian U.S. Equity* Long-term growth of capital Capital Guardian Trust Company
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Capital appreciation Evergreen Asset Management Corp.
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp.
conservation of capital, and capital appreciation
- --------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company
Companies
- --------------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company
growth of capital and income
- --------------------------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management
Markets Equity
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced Balanced investment Putnam Investment Management, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc.
Value objective
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Substantial dividend income and also capital T. Rowe Price Associates, Inc.
appreciation
- --------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Long-term growth of capital Rowe Price-Fleming International, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Long-term capital appreciation Warburg Pincus Asset Management, Inc.
Value
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* May not currently be available in all states.
<PAGE>
- --------------------------------------------------------------------------------
20 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Other important information about the Portfolios is included in the separate
prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the
end of this prospectus.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the variable investment options.
FIXED MATURITY OPTIONS
We offer fixed maturity options with maturity dates ranging from one to ten
years. You can allocate your contributions to one or more of these fixed
maturity options. These amounts become part of our general account assets. They
will accumulate interest at the "rate to maturity" for each fixed maturity
option. The total amount you allocate to and accumulate in each fixed maturity
option is called the "fixed maturity amount." The fixed maturity options are not
available in contracts issued in Maryland.
- --------------------------------------------------------------------------------
Fixed maturity options ranging from one to ten years to maturity.
- --------------------------------------------------------------------------------
The rate to maturity you will receive for each fixed maturity option is the rate
to maturity in effect for new contributions allocated to that fixed maturity
option on the date we apply your contribution. If you make any withdrawals or
transfers from a fixed maturity option before the maturity date, we will make a
"market value adjustment" that may increase or decrease any fixed maturity
amount you have left in that fixed maturity option. We discuss the market value
adjustment below and in greater detail later in this prospectus under "More
information."
On the maturity date of a fixed maturity option your fixed maturity amount,
assuming you have not made any withdrawals or transfers, will equal your
contribution to that fixed maturity option plus interest, at the rate to
maturity for that contribution, to the date of the calculation. This is the
fixed maturity option's "maturity value." Before maturity, the current value we
will report for your fixed maturity amounts will reflect a market value
adjustment. It will reflect the market value adjustment that we would make if
you were to withdraw all of your fixed maturity amounts on the date of the
report. We call this your "market adjusted amount."
FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity
options ending on February 15th for each of the maturity years 2000 through
2009. Not all of these fixed maturity options will be available for annuitant
ages 76 and older. See "Allocating your contributions" below. As fixed maturity
options expire, we expect to add maturity years so that generally 10 are
available at any time.
We will not accept allocations to a fixed maturity option if on the date the
contribution is to be applied:
o the fixed maturity option's maturity date is within the current calendar
year; or
o the rate to maturity is 3%; or
o for annuitants ages 76 or older, the fixed maturity option's maturity date
is later than the February 15th immediately following the date annuity
payments are to begin.
OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the
year before each of your fixed maturity options is scheduled to mature. At that
time, you may choose to have one of the following options take place on the
maturity date, as long as none of the conditions listed above or in "Allocating
your contributions," below would apply:
(a) transfer the maturity value into another available fixed maturity option,
or into any of the variable investment options; or
(b) withdraw the maturity value.
<PAGE>
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Contract features and benefits 21
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If we do not receive your choice on or before the fixed maturity option's
maturity date, we will automatically transfer your maturity value into the fixed
maturity option that will mature next.
MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers,
surrender of your contract or when we make deductions for charges) from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that you originally allocate an
amount to a fixed maturity option to the time that you take a withdrawal, the
market value adjustment will be negative. Likewise, if interest rates drop at
the end of that time, the market value adjustment will be positive. Also, the
amount of the market value adjustment, either up or down, will be greater the
longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment could greatly reduce
your value in the fixed maturity options, particularly in the fixed maturity
options with later maturity dates.
We provide an illustration of the market adjusted amount of specified maturity
values, an explanation of how we calculate the market value adjustment, and
information concerning our general account and investments purchased with
amounts allocated to the fixed maturity options, under "More information" later
in this prospectus. Appendix II of this prospectus provides an example of how
the market value adjustment is calculated.
ALLOCATING YOUR CONTRIBUTIONS
You may choose from among three ways to allocate your contributions under your
contract: self-directed, principal assurance or dollar cost averaging.
SELF-DIRECTED ALLOCATION
You may allocate your contributions to one or more, or all, of the variable
investment options and fixed maturity options. Allocations must be in whole
percentages and you may change your allocations at any time. However, the total
of your allocations must equal 100%. If the annuitant is age 76 or older, you
may allocate contributions to fixed maturity options if their maturities are
five years or less. Also, you may not allocate amounts to fixed maturity options
with maturity dates that are later than the February 15th immediately following
the date annuity payments are to begin.
PRINCIPAL ASSURANCE ALLOCATION
Under this allocation program you select a fixed maturity option. We specify the
portion of your initial contribution to be allocated to that fixed maturity
option in an amount that will cause the maturity value to equal the amount of
your entire initial contribution on the fixed maturity option's maturity date.
The maturity date you select generally may not be later than 10 years, or
earlier than seven years from your contract date. You allocate the rest of your
contribution to the variable investment options however you choose.
For example, if your initial contribution is $10,000, and on April 1, 1999 you
chose the fixed maturity option with a maturity date of February 15, 2009, since
the rate to maturity was 4.72% on April 1, 1999, we would have allocated
$6,338.82 to that fixed maturity option and the balance to your choice of
variable investment options. On the maturity date your value in the fixed
maturity option would be $10,000.
The principal assurance allocation is only available for annuitant ages 75 or
younger when the contract is issued. If you are purchasing a Rollover IRA, QP or
Rollover TSA contract, before you select a maturity year that would extend
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22 Contract features and benefits
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- --------------------------------------------------------------------------------
beyond the year in which you will reach age 70 1/2, you should consider whether
your value in the variable investment options, or your other traditional IRA or
TSA funds are sufficient to meet your required minimum distributions. See "Tax
information."
DOLLAR COST AVERAGING
We offer two dollar cost averaging programs. Each program allows you to
gradually transfer amounts from the Alliance Money Market option to the other
variable investment options by periodically transferring approximately the same
dollar amount to the other variable investment options you select. This will
cause you to purchase more units if the unit's value is low and fewer units if
the unit's value is high. Therefore, you may get a lower average cost per unit
over the long term. These plans of investing, however, do not guarantee that you
will earn a profit or be protected against losses.
- --------------------------------------------------------------------------------
Units measure your value in each variable investment option.
- --------------------------------------------------------------------------------
SPECIAL DOLLAR COST AVERAGING PROGRAM. You may dollar cost average from the
Alliance Money Market option into any of the other variable investment options.
You must allocate your entire initial contribution into the Alliance Money
Market option. We will transfer your value in the Alliance Money Market option
into the other variable investment options that you select over the next 12
months. The transfer date will be the same day of the month as the contract
date, but not later than the 28th. All amounts will be transferred out by the
end of the first contract year. Under this program we will not deduct the
mortality and expense risks, administrative, and distribution charges from
assets in the Alliance Money Market option. You may not allocate additional
contributions to the Alliance Money Market option under this program.
The only amounts that should be transferred from the Alliance Money Market
option are your regularly scheduled monthly transfers to the other variable
investment options. If you request to transfer or withdraw any other amounts, we
will transfer all of the value that you have remaining in the Alliance Money
Market option to the other investment options according to the allocation
percentages we have on file for you. As a result, you will no longer be able to
participate in the special dollar cost averaging program. You may also ask us to
cancel your participation at any time.
GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money
Market option is at least $5,000, you may choose, at any time, to have a
specified dollar amount or percentage of your value transferred from that option
to the other variable investment options. You can select to have transfers made
on a monthly, quarterly or annual basis. The transfer date will be the same
calendar day of the month as the contract date, but not later than the 28th day
of the month.
The minimum amount that we will transfer each time is $250. The maximum amount
we will transfer is equal to your value in the Alliance Money Market option at
the time the program is elected, divided by the number of transfers scheduled.
If, on any transfer date, your value in the Alliance Money Market option is
equal to or less than the amount you have elected to have transferred, the
entire amount will be transferred. The general dollar cost averaging program
will then end. You may change the transfer amount once each contract year, or
cancel this program at any time.
----------------------------------------
You may not elect dollar cost averaging if you are participating in the
rebalancing program. See "Transferring your money among investment options."
OUR BASEBUILDER OPTION
The baseBUILDER option offers you a combined guaranteed minimum income benefit
and guaranteed minimum death benefit. The combined benefit is available if the
annuitant is between the ages of 20 and 75. There is an additional charge for
this benefit. See "baseBUILDER benefits charge" under "Charges and expenses."
<PAGE>
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Contract features and benefits 23
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baseBUILDER provides income protection if you elect an income payout while the
annuitant is alive and a death benefit if the annuitant dies.
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The guaranteed minimum income benefit component of baseBUILDER is described
below under "Your guaranteed minimum income benefit under baseBUILDER." As part
of baseBUILDER you have a choice of two guaranteed minimum death benefit
options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The
two options are described under "Guaranteed minimum death benefit." The
guaranteed minimum death benefit is provided under the contract even if you do
not elect baseBUILDER, and for a broader range of annuitant ages at contract
issue than those available under baseBUILDER.
YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER
The guaranteed minimum income benefit guarantees you a minimum amount of
lifetime income under our Income Manager (Life Annuity with a Period Certain)
payout annuity contract. The Income Manager (Life Annuity with a Period Certain)
payout annuity contract provides payments during a specified period of time
(called a period certain) that will continue for the rest of the annuitant's
life thereafter. If the annuitant dies before the period certain has ended,
payments will continue to the beneficiary for the time remaining in the period
certain.
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We also refer to the guaranteed minimum income benefit as the "Living Benefit."
- --------------------------------------------------------------------------------
GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE.
On the contract date, your guaranteed minimum income benefit's benefit base
("benefit base") is equal to the initial contribution. Thereafter, your benefit
base will be credited with interest each day through the annuitant's age 80. The
effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option and Alliance Intermediate
Government Securities option) and in the special dollar cost averaging program.
Amounts in the Alliance Money Market option, Alliance Intermediate Government
Securities option, fixed maturity options, and in a Rollover TSA contract loan
reserve account will be credited with interest at a 3% effective annual rate. No
interest is credited after age 80.
If you make an additional contribution to your contract, we will increase your
current benefit base by the dollar amount of the additional contribution on the
date that the contribution is allocated to your investment options. If you take
a withdrawal from your contract, we will adjust your benefit base for the
withdrawal on the date that you make the withdrawal. See "How withdrawals affect
your guaranteed minimum income benefit and guaranteed minimum death benefit"
under "Accessing your money" for more detailed information. Under Rollover TSA
contracts, we will reduce your benefit base by the amount of any outstanding
loan plus accrued interest on the date that you exercise your guaranteed minimum
income benefit.
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Your benefit base is not an account value or a cash value and is used solely for
purposes of calculating your guaranteed minimum income benefit.
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EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE.
If you exercise the guaranteed minimum income benefit, the annual lifetime
income that you will receive under the Income Manager (Life Annuity with a
Period Certain) payout annuity contract, will be the greater of (i) your
guaranteed minimum income benefit, and (ii) the income provided by applying your
actual account value at our then current annuity purchase factors.
The guaranteed minimum income benefit is based on conservative actuarial
factors. Therefore, even if your account value is less than your benefit base,
you may generate more income by applying your account value to current annuity
purchase factors. We will make this comparison for you when the need arises.
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The guaranteed minimum income benefit should be regarded as a safety net only.
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<PAGE>
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24 Contract features and benefits
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ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT.
The table below illustrates the guaranteed minimum income benefit amounts per
$100,000 of initial contribution, for a male annuitant age 60 (at issue) on the
contract date anniversaries indicated, assuming no additional contributions,
withdrawals, or loans under Rollover TSA contracts, and assuming there were no
allocations to the Alliance Money Market option, Alliance Intermediate
Government Securities option or the fixed maturity options.
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Guaranteed minimum
income benefit - annual income
Contract date payable for life with
anniversary at exercise 10 year period certain
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7 $ 8,315
10 10,341
15 14,924
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Under NQ, Rollover IRA, and Roth Conversion IRA contracts, you may exercise the
guaranteed minimum income benefit only within 30 days following the seventh or
later contract date anniversary under your contract. However, you may not
exercise the benefit before the annuitant is age 60, or after the annuitant is
age 83. There is an exception if the annuitant is between ages 20 and 44 when
your contract is issued. In this case you may exercise the benefit following the
15th or later contract date anniversary, but not after the annuitant is age 83.
See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA
contracts" below regarding exercising the benefit under QP and Rollover TSA
contracts.
Your contract will terminate when you exercise your guaranteed minimum income
benefit. You will then receive an Income Manager (Life Annuity with a Period
Certain) payout annuity contract. Your period certain will be based on the
annuitant's age at the time the benefit is exercised, as follows:
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Level payments*
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Period certain years
------------------------
Rollover IRA
and Roth
Annuitant's Conversion
age at exercise IRA NQ
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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
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* Other forms and periods certain may also be available. For Rollover IRA
contracts, please see "Minimum distributions" under "Tax information," as
to how this option may be affected if exercised after age 70 1/2.
You will begin receiving payments one payment period after the payout annuity
contract is issued. For example, if you select monthly annuity payments, we will
send your first payment to you approximately one month from the date your
contract is issued.
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 as of 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. You
must return your contract to us in order to exercise this benefit. The amount of
income you actually receive will be determined when we receive your request to
exercise the benefit.
You may also apply your cash value at any time to an Income Manager (Life
Annuity with a Period Certain) payout annuity contract, and you may always apply
your account value to any of our annuity payout options. The annuity payout
options are discussed under "Accessing your money." These options differ from
the Income Manager payout annuity contracts. They may provide higher or lower
income levels, but do not have all the features of the Income
<PAGE>
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Contract features and benefits 25
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Manager payout annuity contract. You may request an illustration of the Income
Manager payout annuity contract from your Equitable associate.
The Income Manager (Life Annuity with a Period Certain) payout annuity contracts
are offered through our prospectus for the Income Manager payout annuities. You
may obtain a copy of the most current version from your Equitable associate. You
should read it carefully before you decide to exercise your guaranteed minimum
income benefit.
SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner
(discussed under "More information" later in this prospectus) elects to continue
the contract after your death, the guaranteed minimum income benefit will
continue to be available on the contract date anniversaries specified above
based on the contract date. However, the guaranteed minimum income benefit must
be exercised based on the age of the successor annuitant/contract owner.
EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA
CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be
exercised in the same manner as described above only after the trustee of the
qualified plan directly rolls over the QP contract to a Rollover IRA contract.
In this process the ownership of the QP contract is changed to the annuitant.
The rollover to a Rollover IRA contract and change of ownership may only occur
when the annuitant will no longer be a participant in the qualified plan.
Similarly, under Rollover TSA contracts the contract owner must convert the
Rollover TSA contract in a direct rollover to a Rollover IRA contract according
to our rules. The rollover to a Rollover IRA contract may only occur when you
are eligible for a rollover distribution from a TSA. This may generally occur
when you are age 59 1/2, or you are separated from service from the employer
who provided the Rollover TSA funds. See "Rollover or direct transfer
contributions" under "Tax information" later in this prospectus.
GUARANTEED MINIMUM DEATH BENEFIT
Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through
79 at issue of Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts;
and 20 through 75 at issue of QP contracts.
You may elect either the "5% roll up to age 80" or the "annual ratchet to age
80" guaranteed minimum death benefit when you apply for a contract. Once you
have made your election, you may not change it.
5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit
equals your initial contribution. Thereafter, the guaranteed minimum death
benefit will be credited with interest each day through the annuitant's age 80.
The effective annual interest rate is 5% for amounts in the variable investment
options (other than the Alliance Money Market option and Alliance Intermediate
Government Securities option) and in the special dollar cost averaging program.
Amounts in the Alliance Money Market option, Alliance Intermediate Government
Securities option, fixed maturity options, and in a Rollover TSA contract loan
reserve account will be credited with interest at a 3% effective annual rate. No
interest is credited after the annuitant is age 80.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the additional contribution on the
date the contribution is allocated to your investment options. If you take a
withdrawal from your contract, we will adjust your guaranteed minimum death
benefit for the withdrawal on the date you take the withdrawal.
ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death
benefit equals your initial contribution. Then, on each contract date
anniversary, we will determine your guaranteed minimum death benefit by
comparing your current guaranteed minimum death benefit to your account value on
that contract date anniversary. If your account value is higher than your
guaranteed minimum death benefit, we will increase your guaranteed minimum death
benefit to equal your account value. On the other
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26 Contract features and benefits
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hand, if your account value on the contract date anniversary is less than your
guaranteed minimum death benefit, we will not adjust your guaranteed minimum
death benefit either up or down.
If you make additional contributions, we will increase your current guaranteed
minimum death benefit by the dollar amount of the contribution on the date the
contribution is allocated to your investment options. If you take a withdrawal
from your contract, we will adjust your guaranteed minimum death benefit on the
date you take the withdrawal.
Applicable for annuitant ages 80 through 85 when the contract is issued.
On the contract date, your guaranteed minimum death benefit equals your initial
contribution. Thereafter, it will be increased by the dollar amount of any
additional contributions. We will adjust your guaranteed minimum death benefit
if you take any withdrawals.
----------------------------------------
Please see "How withdrawals affect your guaranteed minimum income benefit and
guaranteed minimum death benefit" under "Accessing your money" for information
on how withdrawals affect your guaranteed minimum death benefit.
See Appendix III for an example of how we calculate the guaranteed minimum death
benefit.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it to
us for a refund. To exercise this cancellation right you must mail the contract
directly to our Processing Office within 10 days after you receive it. In some
states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract and will
reflect (i) any investment gain or loss in the variable investment options and
(ii) any positive or negative market value adjustments in the fixed maturity
options through the date we receive your contract. However, some states require
that we refund the full amount of your contribution (not reflecting (i) or (ii)
above). For any IRA contract returned to us within seven days after you receive
it, we are required to refund the full amount of your contribution.
We may require that you wait six months before you may apply for a contract with
us again if:
o you cancel your contract during the free look period; or
o you change your mind before you receive your contract whether we have
received your contribution or not.
Please see "Tax information" for possible consequences of cancelling your
contract.
If you fully convert an existing traditional IRA contract to a Roth Conversion
IRA contract, you may cancel your Roth Conversion IRA contract and return to a
Rollover IRA contract. Our Processing Office, or your Equitable associate, can
provide you with the cancellation instructions.
<PAGE>
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Determining your contract's value 27
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2
Determining your contract's value
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YOUR ACCOUNT VALUE
Your "account value" is the total of the values you have allocated to the (i)
variable investment options and (ii) fixed maturity options. These amounts are
subject to certain fees and charges discussed under "Charges and expenses."
Under Rollover TSA contracts, if you have any outstanding loan your account
value will include any amount in the loan reserve account.
Your contract also has a "cash value." At any time before annuity payments
begin, your contract's cash value is equal to the account value. If you have a
Rollover TSA contract with an outstanding loan, your cash value also is reduced
by the amount of any outstanding loan plus accrued interest. Please see
"Surrendering your contract to receive its cash value."
YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS
Each variable investment option invests in shares of a corresponding Portfolio.
Your value in each variable investment option is measured by "units." The value
of your units will increase or decrease as though you had invested it in the
corresponding Portfolio's shares directly. Your value, however, will be reduced
by the amount of the fees and charges that we deduct under the contract. Your
value will also be reduced by the dollar amount of any withdrawals that you
make.
The unit value for each variable investment option depends on the investment
performance of that option, minus daily charges for mortality and expense risks,
administrative, and distribution expenses. On any day, your value in any
variable investment option equals the number of units credited to your contract
under that option, multiplied by that day's value for one unit. The number of
your contract units in any variable investment option does not change unless you
make additional contributions, make a withdrawal, or transfer amounts between
investment options. In addition, when we deduct the baseBUILDER benefits charge
the number of units credited to your contract will be reduced. A description of
how unit values are calculated is found in the SAI.
YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS
Your value in each fixed maturity option at any time before the maturity date is
the market adjusted amount in each option. This is equivalent to your fixed
maturity amount increased or decreased by the market value adjustment. Your
value, therefore, may be higher or lower than your contributions (less
withdrawals) accumulated at the rate to maturity. At the maturity date, your
value in the fixed maturity option will equal its maturity value.
<PAGE>
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28 Transferring your money among investment options
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3
Transferring your money among investment options
- --------------------------------------------------------------------------------
TRANSFERRING YOUR ACCOUNT VALUE
At any time before the date annuity payments are to begin, you can transfer some
or all of your account value among the investment options, subject to the
following:
o You may not transfer to a fixed maturity option that matures in the current
calendar year, or if its rate to maturity is 3%.
o If the annuitant is 76 or older, you must limit your transfers to fixed
maturity options to those with maturities of five years or less. Also, the
maturity dates may be no later than the February 15th immediately following
the date annuity payments are to begin.
o If you make transfers out of a fixed maturity option other than at its
maturity date the transfer may cause a market value adjustment.
You may request a transfer in writing or by telephone using TOPS. You must send
in all written transfer requests directly to our Processing Office. Transfer
requests should specify:
(1) the contract number,
(2) the dollar amounts or percentages of your current account value to be
transferred, and
(3) the investment options to and from which you are transferring.
We may, at any time, restrict the use of market timers and other agents acting
under a power of attorney who are acting on behalf of more than one contract
owner. Any agreements to use market timing services to make transfers are
subject to our rules in effect at that time.
We will confirm all transfers in writing.
REBALANCING YOUR ACCOUNT VALUE
We currently offer a rebalancing program that you can use to automatically
reallocate your account value among the variable investment options. You must
tell us:
(a) the percentage you want invested in each variable investment option (whole
percentages only), and
(b) how often you want the rebalancing to occur (quarterly, semiannually, or
annually on a contract year basis. However, it will occur on the same day
of the month as the contract date).
While your rebalancing program is in effect, we will transfer amounts among each
variable investment option so that the percentage of your account value that you
specify is invested in each option at the end of each rebalancing date.
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Rebalancing does not assure a profit or protect against loss. You should
periodically review your allocation percentages as your needs change. You may
want to discuss the rebalancing program with your Equitable associate or other
financial adviser before electing the program.
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You may elect the rebalancing program at any time. You may also change your
allocation instructions or cancel the program at any time. If you request a
transfer while the rebalancing program is in effect, we will process the
transfer as requested and then cancel the rebalancing program.
You may not elect the rebalancing program if you are participating in a dollar
cost averaging program. Rebalancing is not available for amounts you have
allocated in the fixed maturity options.
<PAGE>
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Accessing your money 29
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4
Accessing your money
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WITHDRAWING YOUR ACCOUNT VALUE
You have several ways to withdraw your account value before annuity payments
begin. The table below shows the methods available under each type of contract.
More information follows the table. For the tax consequences of withdrawals, see
"Tax information."
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Method of withdrawal
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Substantially Minimum
Contract Lump sum Systematic equal distribution
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NQ Yes Yes No No
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Rollover IRA Yes Yes Yes Yes
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Roth
Conversion
IRA Yes Yes Yes No
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QP Yes No No Yes
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Rollover
TSA Yes* No No Yes
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* For some Rollover TSA contracts, your ability to take withdrawals, loans or
surrender your contract may be limited. You must provide withdrawal
restriction information when you apply for a contract. See "Tax information
- Tax Sheltered Annuity contracts (TSAs)."
LUMP SUM WITHDRAWALS
(All contracts)
You may take lump sum withdrawals from your account value at any time. (Rollover
TSA contracts may have restrictions.) The minimum amount you may withdraw is
$1,000. If you request to withdraw more than 90% of a contract's current cash
value we will treat it as a request to surrender the contract for its cash
value. See "Surrendering your contract to receive its cash value" below.
Under Rollover TSA contracts, if a loan is outstanding, you may only take lump
sum withdrawals as long as the cash value remaining after any withdrawal equals
at least 10% of the outstanding loan plus accrued interest.
SYSTEMATIC WITHDRAWALS
(NQ, Rollover IRA, and Roth Conversion IRA contracts only)
You may take systematic withdrawals of a particular dollar amount or a
particular percentage of your account value.
You may take systematic withdrawals on a monthly, quarterly or annual basis as
long as the withdrawals do not exceed the following percentages of your account
value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you
may take in each systematic withdrawal is $250. If the amount withdrawn would be
less than $250 on the date a withdrawal is to be taken, we will not make a
payment and we will terminate your systematic withdrawal election.
We will make the withdrawals on any day of the month that you select as long as
it is not later than the 28th day of the month. If you do not select a date, we
will make the withdrawals on the same calendar day of the month as the contract
date. You must wait at least 28 days after your contract is issued before your
systematic withdrawals can begin.
You may elect to take systematic withdrawals at any time. If you own a Rollover
IRA or Roth Conversion IRA contract, you may elect this withdrawal method only
if you are between ages 59 1/2 and 70 1/2.
You may change the payment frequency, or the amount or percentage of your
systematic withdrawals, once each contract year. However, you may not change the
amount or percentage in any contract year in which you have already taken a lump
sum withdrawal. You can cancel the systematic withdrawal option at any time.
SUBSTANTIALLY EQUAL WITHDRAWALS
(Rollover IRA and Roth Conversion IRA contracts only)
The substantially equal withdrawals option allows you to receive distributions
from your account value without triggering the 10% additional federal tax
penalty, which normally applies to distributions made before age 59 1/2. See
"Tax information." Once you begin to take substantially equal withdrawals, you
should not stop them or change the pattern of your withdrawals until the later
of age 59 1/2 or five full years after the first withdrawal. If you stop or
change the withdrawals or take a lump sum withdrawal, you may be liable for the
10% federal tax penalty that would have
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30 Accessing your money
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otherwise been due on prior withdrawals made under this option and for any
interest on those withdrawals.
You may elect to take substantially equal withdrawals at any time before age
59 1/2. We will make the withdrawal on any day of the month that you select as
long as it is not later than the 28th day of the month. You may not elect to
receive the first payment in the same contract year in which you took a lump sum
withdrawal. We will calculate the amount of your substantially equal withdrawals
based on the method you choose from the choices we offer. The payments will be
made monthly, quarterly or annually as you select. These payments will continue
until we receive written notice from you to cancel this option or you take a
lump sum withdrawal. You may elect to start receiving substantially equal
withdrawals again, but the payments may not restart in the same contract year in
which you took a lump sum withdrawal. We will calculate the new withdrawal
amount.
MINIMUM DISTRIBUTION WITHDRAWALS
(Rollover IRA, QP, and Rollover TSA contracts only - See "Tax information")
We offer the minimum distribution withdrawal option to help you meet required
minimum distributions under federal income tax rules. You may elect this option
in the year in which you reach age 70 1/2. The minimum amount we will pay out
is $250. You may elect the method you want us to use to calculate your minimum
distribution withdrawals from the choices we offer. Currently, minimum
distribution withdrawal payments will be made annually.
We will calculate your annual payment based on your account value at the end of
the prior calendar year based on the method you choose.
Under Rollover TSA contracts, you may not elect minimum distribution withdrawals
if a loan is outstanding.
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For Rollover IRA, QP, and Rollover TSA contracts, 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).
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HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE
Unless you specify otherwise, we will subtract your withdrawals on a pro rata
basis from your value in the variable investment options. If there is
insufficient value or no value in the variable investment options, any
additional amount of the withdrawal required or the total amount of the
withdrawal will be withdrawn from the fixed maturity options in order of the
earliest maturity date(s) first. A market value adjustment may apply.
HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED
MINIMUM DEATH BENEFIT
Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar
basis or on a pro rata basis as explained below:
INCOME BENEFIT
Benefit base - Your current benefit base will be reduced on a dollar-for-dollar
basis as long as the sum of your withdrawals in a contract year is 5% or less of
the guaranteed minimum death benefit on the most recent contract date
anniversary. Once you take a withdrawal that causes the sum of your withdrawals
in a contract year to exceed 5% of the guaranteed minimum death benefit on the
most recent contract date anniversary, that withdrawal and any subsequent
withdrawals in that same contract year will reduce your current benefit base on
a pro rata basis.
DEATH BENEFIT
5% roll up to age 80 - If you elect the 5% roll up to age 80 guaranteed minimum
death benefit, your current guaranteed minimum death benefit will be reduced on
a dollar-for-dollar basis as long as the sum of your withdrawals in a contract
year is 5% or less of the guaranteed minimum death benefit on the most recent
contract date anniversary. Once you take a withdrawal that causes the sum of
your withdrawals in a contract year to exceed 5% of the guaranteed minimum death
benefit on
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Accessing your money 31
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the most recent contract date anniversary, that withdrawal and any subsequent
withdrawals in that same contract year will reduce your current guaranteed
minimum death benefit on a pro rata basis.
Annual ratchet to age 80 - If you elect the annual ratchet to age 80 guaranteed
minimum death benefit, each withdrawal will always reduce your current
guaranteed minimum death benefit on a pro rata basis.
Annuitant issue ages 80 through 85 - If your contract was issued when the
annuitant was between ages 80 and 85, each withdrawal will always reduce your
current guaranteed minimum death benefit on a pro rata basis.
----------------------------------------
Reduction on a dollar-for-dollar basis means that your current benefit will be
reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis
means that we calculate the percentage of your current account value that is
being withdrawn and we reduce your current benefit by that same percentage. For
example, if your account value is $30,000 and you withdraw $12,000, you have
withdrawn 40% of your account value. If your guaranteed minimum death benefit
was $40,000 before 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 5% threshold
described above can have a significant impact on your guaranteed minimum income
benefit or guaranteed minimum death benefit.
LOANS UNDER ROLLOVER TSA CONTRACTS
You may take loans from a Rollover TSA unless restricted by the employer who
provided the Rollover TSA funds. If you cannot take a loan, or cannot take a
loan without approval from the employer who provided the funds, we will have
this information in our records based on what you and the employer who provided
the funds told us when you purchased your contract. The employer must also tell
us whether special employer plan rules of the Employee Retirement Income
Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan
while you are taking minimum distribution withdrawals.
You should read the terms and conditions on our loan request form carefully
before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may
only take a loan with the written consent of your spouse. Your contract contains
further details of the loan provision. Also, see "Tax information" for general
rules applicable to loans.
We will permit you to have only one loan outstanding at a time. The minimum loan
amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account
value, subject to any limits under the federal income tax rules. The term of a
loan is five years. However, if you use the loan to acquire your primary
residence, the term is 10 years. The term may not extend beyond the earliest of:
(1) the date annuity payments begin,
(2) the date the contract terminates, and
(3) the date a death benefit is paid (the outstanding loan will be deducted
from the death benefit amount).
Interest will accrue daily on your outstanding loan at a rate we set. The loan
interest rate will be equal to the Moody's Corporate Bond Yield Averages for the
calendar month ending two months before the day of the calendar quarter in which
the rate is determined.
LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the
amount of your loan to the loan reserve account. Unless you specify otherwise,
we will subtract your loan on a pro rata basis from your value in the variable
investment options. If there is insufficient value or no value in the variable
investment options, any additional amount of the loan will be subtracted from
the fixed maturity options in order of the earliest maturity date(s) first. A
market value adjustment may apply.
We will credit interest to the amount in the loan reserve account at a rate of
2% lower than the loan interest rate that applies for the time your loan is
outstanding. On each contract date anniversary after the date the loan is
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32 Accessing your money
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processed, we will transfer the amount of interest earned in the loan reserve
account to the variable investment options on a pro rata basis. When you make a
loan repayment, unless you specify otherwise, we will transfer the dollar amount
of the loan repaid from the loan reserve account to the investment options
according to the allocation percentages we have on our records.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time while the
annuitant is living and before you begin to receive annuity payments. (Rollover
TSA contracts may have restrictions.) For a surrender to be effective, we must
receive your written request and your contract at our Processing Office. We will
determine your cash value on the date we receive the required information. All
benefits under the contract will terminate as of that date.
You may receive your cash value in a single sum payment or apply it to one or
more of the annuity payout options. See "Choosing your annuity payout options"
below. We will usually pay the cash value within seven calendar days, but we may
delay payment as described in "When to expect payments," below. For the tax
consequences of surrenders, see "Tax information."
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments out of the variable investment
options within seven calendar days after the date of the transaction to which
the request relates. These transactions may include applying proceeds to a
variable annuity, payment of a death benefit, payment of any amount you withdraw
and, upon surrender, payment of the cash value. We may postpone such payments or
applying proceeds for any period during which:
(1) the New York Stock Exchange is closed or restricts trading,
(2) sales of securities or determination of the fair value of a variable
investment option's assets is not reasonably practicable because of an
emergency, or
(3) the SEC, by order, permits us to defer payment to protect people remaining
in the variable investment options.
We can defer payment of any portion of your value in the fixed maturity options
(other than for death benefits) for up to six months while you are living. We
also may defer payments for a reasonable amount of time (not to exceed 15 days)
while we are waiting for a contribution check to clear.
All payments are made by check and are mailed to you (or the payee named in a
tax-free exchange) by U.S. mail, unless you request that we use an express
delivery service at your expense.
CHOOSING YOUR ANNUITY PAYOUT OPTIONS
The Equitable Accumulator Select offers you several choices for receiving
retirement income. Each choice enables you to receive fixed or, in some cases,
variable annuity payments.
You can choose from among the six different annuity payout options listed below.
Restrictions apply, depending on the type of contract you own.
- -------------------------------------------------------------
Annuity payout options Life annuity
Life annuity - period
certain
Life annuity - refund
certain
Period certain annuity
- -------------------------------------------------------------
Income Manager payout Life annuity with a period
options certain
Period certain annuity
- -------------------------------------------------------------
ANNUITY PAYOUT OPTIONS
You can choose from among the following annuity payout options:
o Life annuity: An annuity that guarantees payments for the rest of the
annuitant's life. Payments end with the last monthly payment before the
annuitant's death. Because
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33 Accessing your money
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there is no continuation of benefits following the annuitant's death with this
payout option, it provides the highest monthly payment of any of the life
annuity options, so long as the annuitant is living.
o Life annuity - period certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the end of a
selected period of time ("period certain"), payments continue to the
beneficiary for the balance of the period certain. A life annuity with a
period certain of 10 years is the normal form of annuity under the
contracts. The period certain cannot extend beyond the annuitant's life
expectancy.
o Life annuity - refund certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments to the
beneficiary will continue until that amount has been recovered. This payout
option is available only as a fixed annuity.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments. Currently, this payout option is available only as a
fixed annuity.
All of the above payout options are available as fixed annuities. With fixed
annuities, we guarantee fixed annuity payments that will be based either on the
tables of guaranteed annuity payments in your contract or on our then current
annuity rates, whichever is more favorable for you.
The life annuity, life annuity - period certain, and life annuity - refund
certain payout options are available on a single life or joint and survivor life
basis. The joint and survivor life annuity guarantees payments for the rest of
the annuitant's life and, after the annuitant's death, payments continue to the
survivor.
The following annuity payout options are available as variable annuities:
o Life annuity.
o Life annuity - period certain.
o Joint and survivor life annuity (100% to survivor).
o Joint and survivor life period certain annuity (100% to survivor).
Variable annuities may be funded through your choice of variable investment
options investing in Portfolios of The Hudson River Trust. The contract also
offers a fixed annuity payout option which can be elected in combination with
the variable annuity payout options. The amount of each variable annuity payment
will fluctuate, depending upon the performance of the variable investment
options, and whether the actual rate of investment return is higher or lower
than an assumed base rate. Please see "Annuity Unit Values" in the SAI.
We may offer other payout options not outlined here. Your Equitable associate
can provide details.
SELECTING AN ANNUITY PAYOUT OPTION
When you select a payout option, we will issue you a separate written agreement
confirming your right to receive annuity payments. We require you to return your
contract before annuity payments begin.
For NQ, Rollover IRA, and Roth Conversion IRA contracts, unless you choose a
different payout option, we will pay annuity payments under a life annuity with
a certain period of 10 years. The only payout options available under QP
contracts and Rollover TSA contracts are the life annuity 10 year period certain
and the joint and survivor life annuity 10 year period certain.
You can choose the date annuity payments begin but it may not be earlier than
one year from the contract date. You can change the date your annuity payments
are to begin anytime before that date as long as you do not choose a date later
than the 28th day of any month. Also, that date may not be
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34 Accessing your money
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later than the contract date anniversary that follows the annuitant's 90th
birthday. This may be different in some states.
Before your annuity payments are to begin, we will notify you by letter that the
annuity payout options are available. Once you have selected a payout option and
payments have begun, no change can be made other than transfers (if permitted in
the future) among the variable investment options if a variable annuity is
selected.
The amount of the annuity payments will depend on the amount applied to purchase
the annuity, the type of annuity chosen and whether it is fixed or variable, in
the case of a life annuity, the annuitant's age (or the annuitant's and joint
annuitant's ages) and in certain instances, the sex of the annuitant(s).
Amounts in the fixed maturity options that are applied to a payout option before
a maturity date will result in a market value adjustment.
If, at the time you elect a payout option, 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 account value in a single sum rather than as
payments under the payout option chosen.
INCOME MANAGER PAYOUT OPTIONS
For NQ, Rollover IRA, and Roth Conversion IRA contracts, two Income Manager
payout options are also available. These are the Income Manager (Life Annuity
with a Period Certain) and the Income Manager (Period Certain).
For QP contracts, the Income Manager payout options are available only after the
trustee of the qualified plan directly rolls over the QP contract to a Rollover
IRA contract. In this process the ownership of the QP contract is changed to the
annuitant. The rollover to a Rollover IRA contract and the change of ownership
may only occur when the annuitant will no longer be a participant in the
qualified plan.
For Rollover TSA contracts, the Income Manager payout annuity options are
available only after the Rollover TSA contract is rolled over to a Rollover IRA
contract. This may generally occur when you are age 59 1/2, or you have
separated from service with the employer who provided the Rollover TSA funds.
The Income Manager (Life Annuity with a Period Certain) provides guaranteed
payments for the annuitant's life or for the annuitant's life and the life of a
joint annuitant. The Income Manager (Period Certain) provides payments for a
specified period. The contract owner and annuitant must meet the issue age and
payment requirements. Both Income Manager annuities provide guaranteed level
payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period
Certain) also provides guaranteed increasing payments (NQ contracts only).
No additional contributions will be permitted under an Income Manager (Life
Annuity with a Period Certain).
The Income Manager annuities are described in a separate prospectus. Copies of
the most current version are available from your Equitable associate. To
purchase an Income Manager annuity we also require the return of your contract.
We will issue an Income Manager annuity to put one of the payout annuities into
effect. Depending upon your circumstances, this may be done on a tax-free basis.
Please consult your tax adviser.
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35 Charges and expenses
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5
Charges and expenses
CHARGES THAT EQUITABLE LIFE DEDUCTS
We deduct the following charges each day from the net assets of each variable
investment option. These charges are reflected in the unit values of each
variable investment option:
o A mortality and expense risks charge.
o An administrative charge.
o A distribution charge.
We deduct the following charges from your account value. When we deduct these
charges from your variable investment options, we reduce the number of units
credited to your contract:
o If you elect the optional benefit a charge for the optional baseBUILDER
benefit.
o At the time annuity payments are to begin charges for state premium and
other taxes. An annuity administrative fee may also apply.
More information about these charges appears below. We will not increase these
charges for the life of your contract, except as noted. We may reduce certain
charges under group or sponsored arrangements. See "Group or sponsored
arrangements" below.
To help with your retirement planning, we may offer other annuities with
different charges, benefits, and features, including an Equitable Accumulator
contract that has a withdrawal charge but no distribution charge. This other
contract may also provide higher rates to maturity for the fixed maturity
options. A current prospectus for this other Equitable Accumulator contract may
be obtained from your Equitable associate.
MORTALITY AND EXPENSE RISKS CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the guaranteed
minimum death benefit. The daily charge is equivalent to an annual rate of 1.10%
of the net assets in each variable investment option.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, 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 contract, 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 contract. The expense risk
we assume is the risk that it will cost us more to issue and administer the
contracts than we expect.
ADMINISTRATIVE CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for administrative expenses under the contracts. The daily
charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option. We reserve the right under the contracts to increase
this charge to an annual rate of 0.35%.
DISTRIBUTION CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for a portion of our sales expenses under the contracts. The
daily charge is equivalent to an annual rate of 0.25% of the net assets in each
variable investment option.
BASEBUILDER BENEFITS CHARGE
If you elect the baseBUILDER combined guaranteed minimum income benefit and
guaranteed minimum death benefit, we deduct a charge annually from your account
value on each contract date anniversary. The charge is equal to 0.30% of the
benefit base in effect on the contract date anniversary.
We will deduct this charge from your value in the variable investment options on
a pro rata basis. If there is not enough value in the variable investment
options, we will deduct all or a portion of the charge from the fixed maturity
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36 Charges and expenses
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options in order of the earliest maturity date(s) first. A market value
adjustment may apply.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout. 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).
ANNUITY ADMINISTRATIVE FEE
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deducts charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.25% to 1.15%.
o 12b-1 fees of 0.25%.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges, please
refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust
following this prospectus.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the mortality and
expense risks charge or change the minimum initial contribution requirements. We
also may change the guaranteed minimum income benefit and the guaranteed minimum
death benefit, or offer variable investment options that invest in shares of The
Hudson River Trust or EQ Advisors Trust that 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 Rollover IRA and Roth Conversion IRA
contracts. Sponsored arrangements include those in which an employer allows us
to sell contracts 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, such as requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy contracts or
that have been in existence less than six months will not qualify for reduced
charges.
We also may establish different rates to maturity for the fixed maturity options
under different classes of contracts for group or sponsored arrangements.
We will make these and any similar reductions according to our rules in effect
when we approve a contract for issue. We may change these rules from time to
time. Any variations will reflect differences in costs or services and will not
be unfairly discriminatory.
Group or sponsored arrangements may be governed by federal income tax rules,
ERISA, or both. We make no representations with regard to the impact of these
and other applicable laws on such programs. We recommend that employers,
trustees, and others purchasing or making contracts available for purchase under
such programs seek the advice of their own legal and benefits advisers.
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37 Payment of death benefit
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6
Payment of death benefit
YOUR BENEFICIARY AND PAYMENT OF BENEFIT
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for the change is signed. Under jointly owned contracts, the
surviving owner is considered the beneficiary, and will take the place of any
other beneficiary. You may be limited as to the beneficiary you can designate in
a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee.
The death benefit is equal to your account value, or, if greater, the guaranteed
minimum death benefit. The guaranteed minimum death benefit is part of your
contract, whether you select the combined baseBUILDER benefit or not. We
determine the amount of the death benefit as of the date we receive satisfactory
proof of the annuitant's death and any required instructions for the method of
payment. Under Rollover TSA contracts we will deduct the amount of any
outstanding loan plus accrued interest from the amount of the death benefit.
EFFECT OF THE ANNUITANT'S DEATH
If the annuitant dies before the annuity payments begin, we will pay the death
benefit to your beneficiary.
Generally, the death of the annuitant terminates the contract. However, a
beneficiary who is the surviving spouse of the owner/annuitant can choose to be
treated as the successor owner/annuitant and continue the contract. Only a
spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you
cannot have a successor owner/annuitant.
For Rollover IRA contracts, a beneficiary who is not a surviving spouse may be
able to have limited ownership.
WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT
Under certain conditions the owner can change after the original owner's death.
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the successor owner. If you do not
want the person named to receive the death benefit upon the annuitant's death to
be the successor owner, you should name a successor owner. You may name a
different person that will become the successor owner at any time by sending
satisfactory notice to our Processing Office. If the contract is jointly owned
and the first owner to die is not the annuitant, the surviving owner becomes the
sole contract owner. This person will be considered the "beneficiary" for
purposes of the distribution rules described in this section. The surviving
owner automatically takes the place of any other beneficiary designation.
Unless the surviving spouse of the owner who has died (or in the case of a joint
ownership situation, the surviving spouse of the first owner to die) is the
successor owner for this purpose, the entire interest in the contract must be
distributed under the following rules:
o The cash value of the contract 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).
o The successor owner may instead elect to receive the cash value as a life
annuity (or payments for a period certain of not longer than the new
owner's life expectancy). Payments must begin no later than December 31st
following the calendar year of the non-annuitant owner's death. Unless this
alternative is elected, we will pay any cash value on December 31st of the
fifth calendar year following the year of your death (or the death of the
first owner to die).
o If the surviving spouse is the successor owner or joint owner, the spouse
may elect to continue the contract. No distributions are required as long
as the surviving spouse and annuitant are living.
HOW DEATH BENEFIT PAYMENT IS MADE
We will pay the death benefit to the beneficiary in the form of the annuity
payout option you have chosen. If you have not chosen an annuity payout option
as of the time of the
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38 Payment of death benefit
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annuitant's death, the beneficiary will receive the death benefit in a single
sum. However, subject to any exceptions in the contract, our rules and any
applicable requirements under federal income tax rules, the beneficiary may
elect to apply the death benefit to one or more annuity payout options we offer
at the time. See "Choosing your annuity payout options" earlier in this
prospectus. Please note that if you are both the contract owner and the
annuitant, you may elect only a life annuity or an annuity that does not extend
beyond the life expectancy of the beneficiary.
SUCCESSOR OWNER AND ANNUITANT
If you are both the contract owner and the annuitant, and your spouse is the
sole beneficiary or the joint owner, then your spouse may elect to receive the
death benefit or continue the contract as successor owner/annuitant.
If your surviving spouse decides to continue the contract, then on the contract
date anniversary following your death, we will increase the account value to
equal your current guaranteed minimum death benefit, if it is higher than the
account value. In determining whether the guaranteed minimum death benefit will
continue to grow, we will use your surviving spouse's age (as of the contract
date anniversary).
BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA CONTRACTS
Upon your death under a Rollover IRA contract, a non-spouse beneficiary may
generally elect to keep the contract in your name and receive distributions
under the contract instead of the death benefit being paid in a single sum.
If you die AFTER the "required beginning date" (see "Tax information") for
required minimum distributions, the contract will continue if:
(a) you were receiving minimum distribution withdrawals from this contract; and
(b) the pattern of minimum distribution withdrawals you chose was based in part
on the life of the designated beneficiary.
The withdrawals will then continue to be paid to the beneficiary on the same
basis as you chose before your death. We will be able to tell your beneficiary
whether this option is available to them. You should contact our Processing
Office for further information.
If you die BEFORE the "required beginning date" (and therefore you were not
taking minimum distribution withdrawals under the contract), the beneficiary may
begin taking minimum distribution withdrawals under the contract. We will
increase the account value to equal the death benefit if the death benefit is
greater than the account value. That amount will be used to provide the
withdrawals. These withdrawals will begin by December 31st of the calendar year
following your death and will be based on the beneficiary's life expectancy. If
there is more than one beneficiary, the shortest life expectancy is used.
The designated beneficiary must be a natural person and of legal age at the time
of election. The beneficiary must elect this option within 30 days following the
date we receive proof of your death.
While the contract continues in your name, the beneficiary may make transfers
among the investment options. However, additional contributions will not be
permitted and the guaranteed minimum income benefit and the death benefit
(including the guaranteed minimum death benefit) provisions will no longer be in
effect. Although the only withdrawals that will be permitted are minimum
distribution withdrawals, the beneficiary may choose at any time to withdraw all
of the account value.
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7
Tax information
OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Equitable Accumulator Select contracts owned by United
States taxpayers. The tax rules can differ, depending on the type of contract,
whether NQ, Rollover IRA, Roth Conversion IRA, QP or Rollover TSA. Therefore, we
discuss the tax aspects of each type of contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state income
and other state taxes, federal income tax and withholding rules for non-U.S.
taxpayers, or federal gift and estate taxes. Transfers of the contract, rights
under the contract, or payments under the contract may be subject to gift or
estate taxes. You should not rely only on this document, but should consult your
tax adviser before your purchase.
If you are buying a contract to fund a retirement plan that already provides tax
deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover
TSA), you should do so for the contract's features and benefits other than tax
deferral. In such situations, the tax deferral of the contract does not provide
additional benefits.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TRANSFERS AMONG INVESTMENT OPTIONS
You can make transfers among investment options inside the contract without
triggering taxable income.
TAXATION OF NONQUALIFIED ANNUITIES
CONTRIBUTIONS
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
CONTRACT EARNINGS
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal or as an annuity
payment. However, earnings are taxable, even without a distribution:
o if a contract fails investment diversification requirements as specified in
federal income tax rules (these rules are based on or are similar to those
specified for mutual funds under the securities laws);
o if you transfer a contract, for example, as a gift to someone other than
your spouse (or former spouse);
o if you use a contract as security for a loan (in this case, the amount
pledged will be treated as a distribution); and
o if the owner is other than an individual (such as a corporation,
partnership, trust, or other non-natural person).
All nonqualified deferred annuity contracts that we issue to you during the same
calendar year are linked together and treated as one contract for calculating
the taxable amount of any distribution from any of those contracts.
ANNUITY PAYMENTS
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get back the remaining portion without paying taxes on it. This is
your "investment in the contract." Generally, your investment in the contract
equals the contributions you made, less any amounts you previously withdrew that
were not taxable.
For fixed annuity payments, the tax-free portion of each payment is determined
by (1) dividing your investment in the contract by the total amount you are
expected to receive out of the contract, and (2) multiplying the result by the
amount
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of the payment. For variable annuity payments, your investment in the contract
divided by the number of expected payments is your tax-free portion of each
payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any unrecovered
investment in the contract.
PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the contract.
If you withdraw an amount which is more than the earnings in the contract as of
the date of the withdrawal, the balance of the distribution is treated as a
return of your investment in the contract and is not taxable.
CONTRACTS PURCHASED THROUGH EXCHANGES
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Equitable Accumulator Select NQ contract (if you are using a life insurance
or endowment contract the owner and the insured must be the same on both
sides of the exchange transaction).
The tax basis of the source contract carries over to the Equitable Accumulator
Select NQ contract.
SURRENDERS
If you surrender or cancel the contract, the distribution is taxable as ordinary
income (not capital gain) to the extent it exceeds your investment in the
contract.
DEATH BENEFIT PAYMENTS MADE TO A BENEFICIARY AFTER YOUR DEATH
For the rules applicable to death benefits, see "Payment of death benefit" and
"When an NQ contract owner dies before the annuitant" earlier in this
prospectus. The tax treatment of a death benefit taken as a single sum is
generally the same as the tax treatment of a withdrawal from or surrender of
your contract. The tax treatment of a death benefit taken as annuity payments is
generally the same as the tax treatment of annuity payments under your contract.
EARLY DISTRIBUTION PENALTY TAX
If you take distributions before you are age 59 1/2 a penalty tax of 10% of the
taxable portion of your distribution applies in addition to the income tax. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and a beneficiary.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
calculation of the taxable portion of amounts distributed from a contract 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 from the contract
for each tax return. Puerto Rico generally provides a credit against Puerto Rico
tax for U.S. tax paid. Depending on your
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personal situation and the timing of the different tax liabilities, you may not
be able to take full advantage of this credit.
INDIVIDUAL RETIREMENT ARRANGEMENTS (IRAS)
GENERAL
"IRA" stands for individual retirement arrangement. There are two basic types of
such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds the
assets for the benefit of the IRA owner. The assets can include mutual funds and
certificates of deposit. In an individual retirement annuity, an insurance
company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o "Traditional IRAs," typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis; and
o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with
employer-sponsored retirement plans.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required to
combine IRA values or contributions for tax purposes. For further information
about individual retirement arrangements, you can read Internal Revenue Service
Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication
is usually updated annually, and can be obtained from any IRS district office or
the IRS website (http:// www.irs.ustreas.gov).
The Equitable Accumulator Select IRA contract is designed to qualify as an
"individual retirement annuity" under Section 408(b) of the Internal Revenue
Code. You may purchase the contract as a traditional IRA ("Rollover IRA") or
Roth IRA ("Roth Conversion IRA"). This prospectus contains the information that
the IRS requires you to have before you purchase an IRA. This section of the
prospectus covers some of the special tax rules that apply to IRAs. The next
section covers Roth IRAs. Education IRAs are not discussed in this prospectus
because they are not available in individual retirement annuity form.
The Equitable Accumulator Select IRA contract has been approved by the IRS as to
form for use as a traditional IRA. We expect to submit the Roth IRA version for
formal IRS approval in 1999. This IRS approval is a determination only as to the
form of the annuity. It does not represent a determination of the merits of the
annuity as an investment. The IRS approval does not address every feature
possibly available under the Equitable Accumulator Select IRA contract.
CANCELLATION
You can cancel an Equitable Accumulator Select IRA contract by following the
directions under "Your right to cancel within a certain number of days" earlier
in the prospectus. You can cancel an Equitable Accumulator Select Roth
Conversion IRA contract issued as a result of a full conversion of an Equitable
Accumulator Select Rollover IRA contract by following the instructions in the
request for full conversion form. The form is available from our Processing
Office or your Equitable associate. If you cancel an IRA contract, we may have
to withhold tax, and we must report the transaction to the IRS. A contract
cancellation could have an unfavorable tax impact.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
CONTRIBUTIONS TO TRADITIONAL IRAS
Individuals may make three different types of contributions to a traditional
IRA:
o tax-free "rollover" contributions; or
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o direct custodian-to-custodian transfers from other traditional IRAs
("direct transfers"); or
o regular contributions out of earned income or compensation.
We require that all of your contributions to the Equitable Accumulator Select
Rollover IRA contract must be either a rollover or a direct
custodian-to-custodian transfer. See "Rollovers and transfers" below. Since we
do not permit regular contributions under the Equitable Accumulator Select
Rollover IRA contract, we do not discuss them in great detail in this
prospectus.
EXCESS CONTRIBUTIONS
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000; or
o regular contributions of more than earned income for the year, if that
amount is under $2,000; or
o regular contributions to a traditional IRA made after you reach age
70 1/2; or
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income. It
is also not subject to the 10% additional penalty tax on early distributions,
discussed below under "Early distribution penalty tax." You do have to withdraw
any earnings that are attributed to the excess contribution. The withdrawn
earnings would be included in your gross income and could be subject to the 10%
penalty tax.
Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a traditional IRA from these sources:
o qualified plans;
o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other traditional IRAs.
You may also change your mind about amounts contributed as Roth IRA funds to
traditional IRA funds, in accordance with special federal income tax rules, if
you use the forms we prescribe. This is referred to as having "recharacterized"
your contribution.
Any amount contributed to a traditional IRA after you reach 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.
ROLLOVERS FROM QUALIFIED PLANS OR TSAS
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll it over
to a traditional IRA within 60 days after the date you receive the funds. The
distribution from your qualified plan or TSA will be net of 20% mandatory
federal income tax withholding. If you want, you can replace the withheld funds
yourself and roll over the full amount.
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o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to
send the distribution directly to your traditional IRA issuer. Direct
rollovers are not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions, unless the distribution is:
o only after-tax contributions you made to the plan; or
o "required minimum distributions" after age 70 1/2 or separation from
service; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary; or
o a hardship withdrawal; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS
You may roll over amounts from one traditional IRA to one or more of your other
traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently than
once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited traditional IRA to one or more other traditional
IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free
basis between spouses or former spouses as a result of a court ordered divorce
or separation decree.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a traditional IRA at any time.
You do not need to wait for a special event like retirement.
Taxation of payments
Earnings in traditional IRAs are not subject to federal income tax until you or
your beneficiary receives them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any traditional IRA (it
does not have to be to this particular traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to traditional IRAs. At the end of any year in which
you have received a distribution from any traditional IRA, you calculate the
ratio of your total nondeductible traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
traditional IRAs you own at the end of the year plus all traditional IRA
distributions made during the year. Multiply this by all distributions from the
traditional IRA during the year to determine the nontaxable portion of each
distribution.
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In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above; or
o the entire amount received is rolled over to another traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA
that accepts rollover contributions. To get this "conduit" traditional IRA
treatment:
o the source of funds you used to establish the traditional IRA must
have been a rollover contribution from a qualified plan, and
o 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to roll
over these eligible rollover distribution contributions and earnings to another
qualified plan or TSA at a future date. The Rollover IRA contract can be used as
a conduit IRA if amounts are not commingled.
Distributions from a traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
Lifetime required minimum distributions
You must start taking annual distributions from your traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the calendar year you actually reach age 70 1/2, or to
delay taking it until the first three-month period in the next calendar year
(January 1 - April 1). Distributions must start no later than your "required
beginning date," which is April 1st of the calendar year after 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 each
year.
How you can calculate required minimum distributions
There are two approaches to taking required minimum distributions -
"account-based" or "annuity-based."
Account-based method. If you choose an "account-based" method, you divide the
value of your traditional IRA as of December 31st of the past calendar year by a
life expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of you
and another individual. You can decide to "recalculate" your life expectancy
every year by using your current life expectancy factor. You can decide instead
to use the "term certain" method, where you reduce your life expectancy by one
every year after the initial year. If your spouse is your designated beneficiary
for the purpose of calculating annual account-based required minimum
distributions, you can also annually "recalculate" your spouse's life expectancy
if you want. If you choose someone who is not your spouse as your designated
beneficiary for the purpose of calculating annual
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account-based required minimum distributions, you have to use the "term certain"
method of calculating that person's life expectancy. If you pick a nonspouse
designated beneficiary, you may also have to do another special calculation.
You can later apply your traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity). 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.
Annuity-based method. If you choose an "annuity-based" method, you do not have
to do annual calculations. You apply the account value to an annuity payout for
your life or the joint lives of you and a designated beneficiary, or for a
period certain not extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your traditional IRA based on
the method you choose?
No, unless you affirmatively select an annuity payout option or an account-based
withdrawal option such as our minimum distribution withdrawal option. Because
the options we offer do not cover every option permitted under federal income
tax rules, you may prefer to do your own required minimum\ distribution
calculations for one or more of your traditional IRAs.
What if you take more than you need to for any year?
The required minimum distribution amount for your traditional IRAs is calculated
on a year-by-year basis. There are no carry-back or carry-forward provisions.
Also, you cannot apply required minimum distribution amounts you take from your
qualified plans to the amounts you have to take from your traditional IRAs and
vice-versa. However, the IRS will let you calculate the required minimum
distribution for each traditional IRA that you maintain, using the method that
you picked for that particular IRA. You can add these required minimum
distribution amount calculations together. As long as the total amount you take
out every year satisfies your overall traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50% penalty
tax on the shortfall (required amount for traditional IRAs less amount actually
taken). It is your responsibility to meet the required minimum distribution
rules. We will remind you when our records show that your age 70 1/2 is
approaching. If you do not select a method with us, we will assume you are
taking your required minimum distribution from another traditional IRA that you
own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values in
the contract at least as rapidly as under the distribution method before your
death. In some circumstances, your surviving spouse may elect to become the
owner of the traditional IRA and halt distributions until he or she reaches age
70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal income tax rules require complete distribution of your entire
value in the contract
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within five years after your death. Payments to a designated beneficiary over
the beneficiary's life or over a period certain that does not extend beyond the
beneficiary's life expectancy are also permitted, if these payments start within
one year of your death. A surviving spouse beneficiary can also (a) delay
starting any payments until you would have reached age 70 1/2 or (b) roll over
your traditional IRA into his or her own traditional IRA.
Successor annuitant and owner
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
IRA death benefits are taxed the same as IRA distributions.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
You cannot get loans from a traditional IRA. You cannot use a traditional IRA as
collateral for a loan or other obligation. If you borrow against your IRA or use
it as collateral, its tax-favored status will be lost as of the first day of the
tax year in which this prohibited event occurs. If this happens, you must
include the value of the traditional IRA in your federal gross income. 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.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o used to pay certain extraordinary medical expenses (special federal income
tax definition); or
o used to pay medical insurance premiums for unemployed individuals (special
federal income tax definition); or
o used to pay certain first-time home buyer expenses (special federal income
tax definition); or
o used to pay certain higher education expenses (special federal income tax
definition); or
o in the form of substantially equal periodic payments made at least annually
over your life (or your life expectancy), or over the joint lives of you
and your beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
To meet this last exception, you could elect to apply your contract value to an
Income Manager (Life Annuity with a Period Certain) payout annuity contract
(level payments version). You could also elect the substantially equal
withdrawals option. We will calculate the substantially equal annual payments
under a method we select based on guidelines issued by the IRS (currently
contained in IRS Notice 89-25, Question and Answer 12). Although substantially
equal withdrawals and Income Manager payments are not subject to the 10% penalty
tax, they are taxable as discussed in "Withdrawals, payments and transfers of
funds out of traditional IRAs" above. Once substantially equal withdrawals or
Income Manager annuity payments begin, the distributions should not be stopped
or changed until the later of your reaching 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 contract as changing your pattern of
substantially equal withdrawals or Income Manager payments for purposes of
determining whether the penalty applies.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS)
This section of the prospectus covers some of the special tax rules that apply
to Roth IRAs. If the rules are the same as those that apply to the traditional
IRA, we will refer you to the same topic under "traditional IRAs."
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The Equitable Accumulator Select Roth Conversion IRA contract is designed to
qualify as a Roth individual retirement annuity under Sections 408A and 408(b)
of the Internal Revenue Code.
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to a Roth IRA:
o taxable "rollover" contributions from traditional IRAs ("conversion"
contributions); or
o tax-free rollover contributions from other Roth IRAs; or
o tax-free direct custodian-to-custodian transfers from other Roth IRAs
("direct transfers"); or
o regular after-tax contributions out of earnings.
Since we only permit direct transfer and rollover contributions under the
Equitable Accumulator Select Roth Conversion IRA contract, we do not discuss
regular after-tax contributions here. If you use the forms we require, we will
also accept traditional IRA funds which are subsequently recharacterized as Roth
IRA funds following special federal income tax rules.
ROLLOVERS AND DIRECT TRANSFERS
What is the difference between rollover and direct transfer transactions?
You may make rollover contributions to a Roth IRA from only two sources:
o another Roth IRA ("tax-free rollover contribution"); or
o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable
"conversion" rollover ("conversion contribution").
You may not make contributions to a Roth IRA from a qualified plan under Section
401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the
Internal Revenue Code. You may make direct transfer contributions to a Roth IRA
only from another Roth IRA.
The difference between a rollover transaction and a direct transfer transaction
is the following: in a rollover transaction you actually take possession of the
funds rolled over, or are considered to have received them under tax law in the
case of a change from one type of plan to another. In a direct transfer
transaction, you never take possession of the funds, but direct the first Roth
IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly
to Equitable Life, as the Roth IRA issuer. You can make direct transfer
transactions only between identical plan types (for example, Roth IRA to Roth
IRA). You can also make rollover transactions between identical plan types.
However, you can only use rollover transactions between different plan types
(for example, traditional IRA to Roth IRA).
You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to
Roth IRA direct transfer transactions. This can be accomplished on a completely
tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions
only once in any 12-month period for the same funds. Trustee-to-trustee or
custodian-to-custodian direct transfers can be made more frequently than once a
year. Also, if you send us the rollover contribution to apply it to a Roth IRA,
you must do so within 60 days after you receive the proceeds from the original
IRA to get rollover treatment.
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. In some
cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses as a result of a court ordered divorce or separation decree.
Conversion contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are considered to have
withdrawn) 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 considered to
have received) the traditional IRA proceeds. Unlike a rollover from a
traditional IRA to another traditional IRA, the conversion rollover transaction
is not tax exempt. Instead, the distribution from the traditional IRA is
generally fully taxable.
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For this reason, we are required to withhold 10% federal income tax from the
amount converted unless you elect out of such withholding. (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-free.)
There is, however, no early distribution penalty tax on the traditional IRA
withdrawal that you are converting to a Roth IRA, even if you are under age
59 1/2.
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 calculated 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.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
No federal income tax law 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.
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your contract, surrender of your contract
and annuity payments from your contract. Death benefits are also distributions.
The following distributions from Roth IRAs are free of income tax:
o Rollovers from a Roth IRA to another Roth IRA;
o Direct transfers from a Roth IRA to another Roth IRA;
o "Qualified Distributions" from Roth IRAs; and
o Return of excess contributions or amounts recharacterized to a traditional
IRA.
Qualified distributions from Roth IRAs
Qualified distributions from Roth IRAs made because of one of the following four
qualifying events or reasons are not includable in income:
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o your distribution is a "qualified first-time homebuyer distribution"
(special federal income tax definition; $10,000 lifetime total limit for
these distributions from all of your traditional and Roth IRAs).
You also have to meet a five-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). It is not possible to have a
tax-free qualified distribution before the year 2003 because of the five-year
aging requirement.
Nonqualified distributions from Roth IRAs
Nonqualified distributions from Roth IRAs are distributions that do not meet the
qualifying event and five-year aging period tests described above. Such
distributions are potentially taxable as ordinary income. Nonqualified
distributions receive return-of-investment-first treatment. Only the difference
between the amount of the distribution and the amount of contributions to all of
your Roth IRAs is taxable. You have to reduce the amount of contributions to all
of your Roth IRAs to reflect any previous tax-free recoveries.
You must keep your own records of regular and conversion contributions to all
Roth IRAs to assure appropriate taxation. You may have to file information on
your contributions to and distributions from any Roth IRA on your tax return.
You may have to retain all income tax returns and records
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pertaining to such contributions and distributions until your interests in all
Roth IRAs are distributed.
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.
REQUIRED MINIMUM DISTRIBUTIONS AT DEATH
Same as traditional IRA under "What are the required minimum distribution
payments after you die?" Lifetime required minimum distributions do not apply.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Distributions to a beneficiary generally receive the same tax treatment as if
the distribution had been made to you.
BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
Same as traditional IRA.
EXCESS CONTRIBUTIONS
Same as traditional IRA, except that regular contributions made after age 70 1/2
are not "excess contributions."
Excess rollover contributions to Roth IRAs are contributions 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).
You can withdraw or recharacterize any contribution to a Roth IRA before the due
date (including extensions) for filing your federal income tax return for the
tax year. If you do this, you must also withdraw or recharacterize any earnings
attributable to the contribution.
EARLY DISTRIBUTION PENALTY TAX
Same as traditional IRA.
For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable
to 1998 conversion rollovers.
SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS
Under QP contracts your plan administrator or trustee notifies you as to tax
consequences. See Appendix I.
TAX SHELTERED ANNUITY CONTRACTS (TSAS)
GENERAL
This section of the prospectus covers some of the special tax rules that apply
to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If
the rules are the same as those that apply to another kind of contract, for
example, traditional IRAs, we will refer you to the same topic under
"traditional IRAs."
CONTRIBUTIONS TO TSAS
There are two ways you can make contributions to this Equitable Accumulator
Select Rollover TSA contract:
o a rollover from another TSA contract or arrangement that meets the
requirements of Section 403(b) of the Internal Revenue Code, or
o a full or partial direct transfer of assets ("direct transfer") from
another contract or arrangement that meets the requirements of Section
403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24.
With appropriate written documentation satisfactory to us, we will accept
rollover contributions from "conduit IRAs" for TSA funds.
If you make a direct transfer, you must fill out our transfer form.
Employer-remitted contributions
The Equitable Accumulator Select Rollover TSA contract does not accept
employer-remitted contributions. However, we provide the following discussion as
part of our description of restrictions on the distribution of funds directly
transferred, which include employer-remitted contributions to other TSAs.
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Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
Rollover or direct transfer contributions
You may make rollover contributions to your Equitable Accumulator Select
Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue
Code. Generally, you may make a rollover contribution to a TSA when you have a
distributable event from an existing TSA as a result of your:
o termination of employment with the employer who provided the TSA funds; or
o reaching age 59 1/2 even if you are still employed; or
o disability (special federal income tax definition).
A transfer occurs when changing the funding vehicle, even if there is no
distributable event. Under a direct transfer, you do not receive a distribution.
We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if:
o you give us acceptable written documentation as to the source of the funds,
and
o the Equitable Accumulator Select contract receiving the funds has
provisions at least as restrictive as the source contract.
Before you transfer funds to an Equitable Accumulator Select Rollover TSA
contract, you may have to obtain your employer's authorization or demonstrate
that you do not need employer authorization. For example, the transferring TSA
may be subject to Title I of ERISA, if the employer makes matching contributions
to salary reduction contributions made by employees. In that case, the employer
must continue to approve distributions from the plan or contract.
Your contribution to the Equitable Accumulator Select TSA must be net of the
required minimum distribution for the tax year in which we issue the contract
if:
o you are or will be at least age 70 1/2 in the current calendar year,
and
o you have separated from service with the employer who provided the funds to
purchase the TSA you are transferring or rolling over to the Equitable
Accumulator Select Rollover TSA.
This rule applies regardless of whether the source of funds is a:
o rollover by check of the proceeds from another TSA; or
o direct rollover from another TSA; or
o direct transfer under Revenue Ruling 90-24 from another TSA.
Further, you must use the same elections regarding recalculation of your life
expectancy (and if applicable, your spouse's life expectancy), if you have
already begun to receive required minimum distributions from or with respect to
the TSA from which you are making your contribution to the Equitable Accumulator
Select Rollover TSA. You must also elect or have elected a minimum distribution
calculation method requiring recalculation of your life expectancy (and if
applicable, your spouse's life expectancy) if you elect an annuity payout for
the funds in this contract subsequent to this year.
DISTRIBUTIONS FROM TSAS
General
Depending on the terms of the employer plan and your employment status, you may
have to get your employer's
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consent to take a loan or withdrawal. Your employer will tell us this when you
establish the TSA through a direct transfer.
Withdrawal restrictions
If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts
transferred to this contract and any future earnings on the amount transferred
as not eligible for withdrawal until one of the following events happens:
o you are separated from service with the employer who provided the funds to
purchase the TSA you are transferring to the Equitable Accumulator Select
Rollover TSA;
o you reach age 59 1/2; or
o you die; or
o you become disabled (special federal income tax definition); or
o you take a "hardship" withdrawal (special federal income tax definition).
If any portion of the funds directly transferred to your TSA contract is
attributable to amounts that you invested in a 403(b)(7) custodial account, such
amounts, including earnings, are subject to withdrawal restrictions. With
respect to the portion of the funds that were never invested in a 403(b)(7)
custodial account, these restrictions apply to the salary reduction (elective
deferral) contributions to a TSA annuity contract you made and any earnings on
them. These restrictions do not apply to the amount directly transferred to your
TSA contract that represents your December 31, 1988 account balance attributable
to salary reduction contributions to a TSA annuity contract and earnings. To
take advantage of this grandfathering you must properly notify us in writing at
our Processing Office of your December 31, 1988 account balance if you have
qualifying amounts transferred to your TSA contract.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur:
(1) the requirements for minimum distribution (discussed under "Required
minimum distributions" below) are met; or
(2) death; or
(3) retirement; or
(4) termination of employment in all Texas public institutions of higher
education.
For you to make a withdrawal, we must receive a properly completed written
acknowledgement from the employer. If a distributable event occurs before you
are vested, we will refund to the employer any amounts provided by an employer's
first-year matching contribution. We reserve the right to change these
provisions without your consent, but only to the extent necessary to maintain
compliance with applicable law. Loans are not permitted under Texas Optional
Retirement Programs.
Tax treatment of distributions
Amounts held under TSAs are generally not subject to federal income tax until
benefits are distributed. Distributions include withdrawals from your TSA
contract and annuity payments from your TSA contract. Death benefits paid to a
beneficiary are also taxable distributions. Unless an exception applies, amounts
distributed from TSAs are includable in gross income as ordinary income.
Distributions from TSAs may be subject to 20% federal income tax withholding.
See "Federal and state income tax withholding and information reporting" below.
In addition, TSA distributions may be subject to additional tax penalties.
If you have made after-tax contributions, you will have a tax basis in your TSA
contract, which will be recovered tax-free. Since we do not track your
investment in the contract, if any, it is your responsibility to determine how
much of the distribution is taxable.
Distributions before annuity payments begin. On a total surrender, the amount
received in excess of the investment in the contract is taxable. We will report
the total amount of the distribution. The amount of any partial distribution
from a TSA prior to the annuity starting date is generally taxable,
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except to the extent that the distribution is treated as a withdrawal of
after-tax contributions. Distributions are normally treated as pro rata
withdrawals of after-tax contributions and earnings on those contributions.
Annuity payments. If you elect an annuity payout option, you will recover any
investment in the contract as each payment is received by dividing the
investment in the contract by an expected return determined under an IRS table
prescribed for qualified annuities. The amount of each payment not excluded from
income under this exclusion ratio is fully taxable. The full amount of the
payments received after your investment in the contract is recovered is fully
taxable. If you (and your beneficiary under a joint and survivor annuity) die
before recovering the full investment in the contract, a deduction is allowed on
your (or your beneficiary's) final tax return.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
Death benefit distributions from a TSA generally receive the same tax treatment
as distributions during your lifetime. In some instances, distributions from a
TSA made to your surviving spouse may be rolled over to a traditional IRA.
LOANS FROM TSAS
You may take loans from a TSA unless restricted by the employer (for example,
under an employer plan subject to ERISA). If you cannot take a loan, or cannot
take a loan without approval from the employer who provided the funds, we will
have this information in our records based on what you and the employer who
provided the TSA funds told us when you purchased your contract.
Loans are generally not treated as a taxable distribution. If the amount of the
loan exceeds permissible limits under federal income tax rules when made, the
amount of the excess is treated (solely for tax purposes) as a taxable
distribution. Additionally, if the loan is not repaid at least quarterly,
amortizing (paying down) interest and principal, the amount not repaid when due
will be treated as a taxable distribution. Under Proposed Treasury Regulations
the entire unpaid balance of the loan is includable in income in the year of the
default.
TSA loans are subject to federal income tax limits and may also be subject to
the limits of the plan from which the funds came. Federal income tax rule
requirements apply even if the plan is not subject to ERISA. For example, loans
offered by TSAs are subject to the following conditions:
o The amount of a loan to a participant, when combined with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the lesser of (1) the greater of $10,000 or 50% of the participant's
nonforfeitable accrued benefits and (2) $50,000 reduced by the excess (if
any) of the highest outstanding loan balance over the previous twelve
months over the outstanding loan balance of plan loans on the date the loan
was made.
o In general, the term of the loan cannot exceed five years unless the loan
is used to acquire the participant's primary residence. Equitable
Accumulator Select Rollover TSA contracts have a term limit of 10 years for
loans used to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly.
The amount borrowed and not repaid may be treated as a distribution if:
o the loan does not qualify under the conditions above,
o the participant fails to repay the interest or principal when due, or
o in some instances, the participant separates from service with the employer
who provided the funds or the plan is terminated.
In this case, the participant may have to include the unpaid amount due as
ordinary income. In addition, the 10% early distribution penalty tax may apply.
The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a
distribution.
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TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS
You may roll over any "eligible rollover distribution" from a TSA into another
eligible retirement plan, either directly or within 60 days of your receiving
the distribution. To the extent rolled over, a distribution remains
tax-deferred.
You may roll over a distribution from a TSA to another TSA or to a traditional
IRA. A spousal beneficiary may roll over death benefits only to a traditional
IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under federal income tax rules. Distributions that you
cannot roll over generally include periodic payments for life or for a period of
10 years or more, hardship withdrawals, and required minimum distributions under
federal income tax rules.
Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24
are not distributions.
REQUIRED MINIMUM DISTRIBUTIONS
Same as traditional IRA with these differences:
When you have to take the first required minimum distribution
The minimum distribution rules force TSA participants to start calculating and
taking annual distributions from their TSAs by a required date. Generally, you
must take the first required minimum distribution for the calendar year in which
you turn age 70 1/2. You may be able to delay the start of required minimum
distributions for all or part of your account balance until after age
70 1/2, as follows:
o For TSA participants who have not retired from service with the employer
who provided the funds for the TSA by the calendar year the participant
turns age 70 1/2, the required beginning date for minimum distributions
is extended to April 1 following the calendar year of retirement.
o TSA plan participants may also delay the start of required minimum
distributions to age 75 of the portion of their account value attributable
to their December 31, 1986 TSA account balance, even if retired at age
70 1/2. We will know whether or not you qualify for this exception because
it will only apply to people who establish their Equitable Accumulator
Select Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not
give us the amount of your December 31, 1986 account balance that is being
transferred to the Equitable Accumulator Select Rollover TSA on the form
used to establish the TSA, you do not qualify.
SPOUSAL CONSENT RULES
This will only apply to you if you establish your Equitable Accumulator Select
Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us
on the form used to establish the TSA whether or not you need to get spousal
consent for loans, withdrawals, or other distributions. If you do, you will need
such consent if you are married when you request a withdrawal under the TSA
contract. In addition, unless you elect otherwise with the written consent of
your spouse, the retirement benefits payable under the plan must be paid in the
form of a qualified joint and survivor annuity. A qualified joint and survivor
annuity is payable for the life of the annuitant with a survivor annuity for the
life of the spouse in an amount not less than one-half of the amount payable to
the annuitant during his or her lifetime. In addition, if you are married, the
beneficiary must be your spouse, unless your spouse consents in writing to the
designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments will
be made to your surviving spouse in the form of a life annuity unless at the
time of your death a contrary election was in effect. However, your surviving
spouse may elect, before payments begin, to receive payments in any form
permitted under the terms of the TSA contract and the plan of the employer who
provided the funds for the TSA.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a TSA before you reach age 59 1/2. This is in addition to
any income tax. There are exceptions to the extra penalty tax. No penalty tax
applies to pre-age 59 1/2 distributions made:
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o on or after your death; or
o because you are disabled (special federal income tax definition); or
o to pay for certain extraordinary medical expenses (special federal income
tax definition); or
o if you are separated from service, any form of payout after you are age 55;
or
o only if you are separated from service, a payout in the form of
substantially equal periodic payments made at least annually over your life
(or your life expectancy), or over the joint lives of you and your
beneficiary (or your joint life expectancy) using an IRS-approved
distribution method.
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable. The
rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this purpose.
You cannot elect out of withholding unless you provide us with your correct
Taxpayer Identification Number and a United States residence address. You cannot
elect out of withholding if we are sending the payment out of the United States.
You should note the following special situations:
o We might have to withhold on amounts we pay under a free look or
cancellation.
o We are generally required to withhold on conversion rollovers of
traditional IRAs to Roth IRAs, as it is considered a withdrawal from the
traditional IRA and is taxable.
o We are required to withhold on the gross amount of a distribution from a
Roth IRA unless you elect out of withholding. This may result in tax being
withheld even though the Roth IRA distribution is not taxable in whole or
in part.
Special withholding rules apply to foreign recipients and United States citizens
residing outside the United States. We do not discuss these rules here. Certain
states have indicated that state income tax withholding will also apply to
payments from the contracts made to residents. In some states, you may elect out
of state withholding, even if federal withholding applies. 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.
FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999, your payments will generally be exempt from federal income tax
withholding. You could specify a different choice of withholding exemption or
request that tax be withheld. Your withholding election remains effective unless
and until you revoke it. You may revoke or change your withholding election at
any time.
FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS)
For a non-periodic distribution (total surrender or partial withdrawal), we
generally withhold at a flat 10% rate. We
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apply that rate to the taxable amount in the case of nonqualified contracts, and
to the payment amount in the case of IRAs and Roth IRAs.
You cannot elect out of withholding if the payment is an "eligible rollover
distribution" from a qualified plan or TSA. If a non-periodic distribution from
a qualified plan or TSA is not an "eligible rollover distribution" then the 10%
withholding rate applies.
MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS
Unless you have the distribution go directly to the new plan, eligible rollover
distributions from qualified plans and TSAs are subject to mandatory 20%
withholding. An eligible rollover distribution from a TSA can be rolled over to
another TSA or a traditional IRA. An eligible rollover distribution from a
qualified plan can be rolled over to another qualified plan or traditional IRA.
All distributions from a TSA or qualified plan are eligible rollover
distributions unless they are on the following list of exceptions:
o any after-tax contributions you made to the plan; or
o any distributions which are "required minimum distributions" after age
70 1/2 or separation from service; or
o hardship withdrawals; or
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancy) of you
and your designated beneficiary; or
o substantially equal periodic payments made for a specified period of 10
years or more; or
o corrective distributions which fit specified technical tax rules; or
o loans that are treated as distributions; or
o a death benefit payment to a beneficiary who is not your surviving spouse;
or
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
A death benefit payment to your surviving spouse, or a qualified domestic
relations order distribution to your current or former spouse, may be a
distribution subject to mandatory 20% withholding.
IMPACT OF TAXES TO EQUITABLE LIFE
The contracts provide that we may charge Separate Account No. 45 for taxes. We
do not now, but may in the future set up reserves for such taxes.
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ABOUT OUR SEPARATE ACCOUNT NO. 45
Each variable investment option is a subaccount of our Separate Account No. 45.
We established Separate Account No. 45 in 1994 under special provisions of the
New York Insurance Law. These provisions prevent creditors from any other
business we conduct from reaching the assets we hold in our variable investment
options for owners of our variable annuity contracts, including these contracts.
We are the legal owner of all of the assets in Separate Account No. 45 and may
withdraw any amounts that exceed our reserves and other liabilities with respect
to variable investment options under our contracts. The results of Separate
Account No. 45's operations are accounted for without regard to Equitable Life's
other operations.
Separate Account No. 45 is registered under the Investment Company Act of 1940
and is classified by that act as a "unit investment trust." The SEC, however,
does not manage or supervise Equitable Life or Separate Account No. 45.
Each subaccount (variable investment option) within Separate Account No. 45
invests solely in class IB shares issued by the corresponding Portfolio of The
Hudson River Trust and EQ Advisors Trust.
We reserve the right subject to compliance with laws that apply:
(1) to add variable investment options to, or to remove variable investment
options from, Separate Account No. 45, or to add other separate accounts;
(2) to combine any two or more variable investment options;
(3) to transfer the assets we determine to be the shares of the class of
contracts to which the contracts belong from any variable investment option
to another variable investment option;
(4) to operate Separate Account No. 45 or any variable investment option as a
management investment company under the Investment Company Act of 1940 (in
which case, charges and expenses that otherwise would be assessed against
an underlying mutual fund would be assessed against Separate Account No. 45
or a variable investment option directly);
(5) to deregister Separate Account No. 45 under the Investment Company Act of
1940;
(6) to restrict or eliminate any voting rights as to Separate Account No. 45;
and
(7) to cause one or more variable investment options to invest some or all of
their assets in one or more other trusts or investment companies.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the Investment
Company Act of 1940. They are classified as "open-end management investment
companies," more commonly called mutual funds. Each trust issues different
shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Board of Trustees
of The Hudson River Trust and EQ Advisors Trust may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their investment
objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans
relating to their Class IB shares, and other aspects of their operations,
appears in their prospectuses, or in their SAIs which are available upon
request.
PROPOSED SUBSTITUTION OF PORTFOLIOS. We are asking the SEC to approve the
substitution of 14 newly created Portfolios of the EQ Advisors Trust for The
Hudson River Trust Portfolios currently available under the variable investment
options (the "Substitution"). The EQ Advisors Trust Portfolios will have
substantially identical investment objectives, strategies, and policies as those
of The Hudson River Trust Portfolios they would replace. The assets of any
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Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of variable investment options with similar advisory
structures. You also will have a single EQ Advisors Trust prospectus for all the
Portfolios, rather than the two separate prospectuses you now receive. EQ
Financial Consultants Inc. will be the manager of the new EQ Advisors Trust
Portfolios, and Alliance Capital Management L.P. will continue to provide the
day-to-day advisory services to each of the new Portfolios.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your account value and
contributions will remain unchanged until you direct us otherwise.
o We will bear all expenses directly relating to the Substitution
transaction.
o The management fees for the new Portfolios will be the same as those for
the corresponding Portfolios of The Hudson River Trust. Certain of the new
EQ Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your account value
(i.e., the units you own) in the variable investment options will be the
same as before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus that accompanies this prospectus.
It contains more information about the EQ Advisors Trust, including its
management structure, advisory arrangements, and general fees and expenses that
will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the fall
of 1999. It will affect everyone who has a balance in The Hudson River Trust
Portfolios at that time. Of course, you may transfer your account value among
the investment options, as usual.
We will notify you when we receive SEC approval, and again when the Substitution
is complete.
ABOUT OUR FIXED MATURITY OPTIONS
RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE
We can determine the amount required to be allocated to one or more fixed
maturity options in order to produce specified maturity values. For example, we
can tell you how much you need to allocate per $100 of maturity value.
The rates to maturity for new allocations as of April 1, 1999 and the related
price per $100 of maturity value were as follows:
- -----------------------------------------------------------------
Fixed maturity
options
with February 15th Rate to maturity Price
maturity date of as of per $100 of
maturity year April 1, 1999 maturity value
2000 3.00% $ 97.44
2001 3.79% $ 93.25
2002 4.08% $ 89.12
2003 4.21% $ 85.22
2004 4.27% $ 81.54
2005 4.42% $ 77.54
2006 4.52% $ 73.77
2007 4.54% $ 70.47
2008 4.62% $ 66.95
2009 4.72% $ 63.39
- -----------------------------------------------------------------
HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT
We use the following procedure to calculate the market value adjustment (up or
down) we make if you withdraw all of your value from a fixed maturity option
before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
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58 More information
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(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option (based
on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity option.
(d) We determine the present value of the fixed maturity amount payable at
the maturity date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be positive
or negative.
- --------------------------------------------------------------------------------
Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
- --------------------------------------------------------------------------------
If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment that
would have applied if you had withdrawn the entire value in that fixed maturity
option. This percentage is equal to the percentage of the value in the fixed
maturity option that you are withdrawing. See Appendix II for an example.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) above would
apply, we will use the rate at the next closest maturity date. If we are no
longer offering new fixed maturity options, the "current rate to maturity" will
be determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
INVESTMENTS UNDER THE FIXED MATURITY OPTIONS
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. Under New York
Insurance Law, the portion of the separate account's assets equal to the
reserves and other contract liabilities relating to the contracts are not
chargeable with liabilities from any other business we may conduct. We own the
assets of the separate account, as well as any favorable investment performance
on those assets. You do not participate in the performance of the assets held in
this separate account. We may, subject to state law that applies, transfer all
assets allocated to the separate account to our general account. We guarantee
all benefits relating to your value in the fixed maturity options, regardless of
whether assets supporting fixed maturity options are held in a separate account
or our general account.
We have no specific formula for establishing the rates to maturity for the fixed
maturity options. We expect the rates to be influenced by, but not necessarily
correspond to, among other things, the yields that we can expect to realize on
the separate account's investments from time to time. Our current plans are to
invest 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 fixed maturity options.
Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options under the contracts,
we are not
<PAGE>
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59 More information
- --------------------------------------------------------------------------------
obligated to invest those assets according to any particular plan except as we
may be required to by state insurance laws. We will not determine the rates to
maturity we establish by the performance of the nonunitized separate account.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options, as well as our general
obligations.
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 exemptions
and exclusionary provisions that apply, interests in the general account have
not been registered under the Securities Act of 1933, nor is the general account
an investment company under the Investment Company Act of 1940. However, the
market value adjustment interests under the contracts are registered under the
Securities Act of 1933.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account (other than market value
adjustment interests). The disclosure with regard to the general account,
however, may be subject to certain provisions of the federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
ABOUT OTHER METHODS OF PAYMENT
AUTOMATIC INVESTMENT PROGRAM - FOR NQ CONTRACTS ONLY
You may use our automatic investment program, or "AIP," to have a specified
amount automatically deducted from a checking account, money market account, or
credit union checking account and contributed as an additional contribution into
an NQ contract on a monthly or quarterly basis. AIP is not available for
Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts.
The minimum amounts we will deduct are $100 monthly and $300 quarterly. AIP
additional contributions may be allocated to any of the variable investment
options and available fixed maturity options. You choose the day of the month
you wish to have your account debited as long as it is not later than the 28th
day of the month.
You may cancel AIP at any time by notifying our Processing Office. We are not
responsible for any debits made to your account before the time written notice
of cancellation is received at our Processing Office.
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
We describe below the general rules for when, and at what prices, events under
your contract will occur. Other portions of this prospectus describe
circumstances that may cause exceptions. We generally do not repeat those
exceptions below.
BUSINESS DAY
Our business day is any day the New York Stock Exchange is open for trading.
Each business day ends at the time trading on the exchange closes (or is
suspended) for the day. We calculate unit values for our variable investment
options as of the end of each business day. This is usually 4:00 p.m., Eastern
Time. Contributions will be applied and any other transaction requests will be
processed when they are received along with all the required information.
o If your contribution, transfer or any other transaction request, containing
all the required information, reaches us on a non-business day or after
4:00 p.m. on a business day, we will use the next business day.
o A loan request under your Rollover TSA contract will be processed on the
first business day of the month following the date on which the properly
completed loan request form is received.
o If your transaction is set to occur on the same day of the month as the
contract date and that date is the 29th, 30th or 31st of the month, then
the transaction will occur on
<PAGE>
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60 More information
- --------------------------------------------------------------------------------
either the 28th day of the month or the 1st day of the next month, whichever is
the closest business day.
o When a charge is to be deducted on a contract date anniversary that is a
non-business day, we will deduct the charge on the next business day.
CONTRIBUTIONS AND TRANSFERS
o Contributions allocated to the variable investment options are invested at
the value next determined after the close of the business day.
o Contributions allocated to a fixed maturity option will receive the rate to
maturity in effect for that fixed maturity option on that business day.
o Transfers to or from variable investment options will be made at the value
next determined after the close of the business day.
o Transfers to a fixed maturity option will be based on the rate to maturity
in effect for that fixed maturity option on the business day of the
transfer.
ABOUT YOUR VOTING RIGHTS
As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we
have the right to vote on certain matters involving the Portfolios, such as:
o The election of trustees.
o The formal approval of independent auditors selected for each trust.
o Any other matters described in the prospectuses for the trusts or requiring
a shareholders' vote under the Investment Company Act of 1940.
We will give contract owners the opportunity to instruct us how to vote the
number of shares attributable to their contracts if a shareholder vote is taken.
If we do not receive instructions in time from all contract 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 a Portfolio in the same proportions that contract
owners vote.
VOTING RIGHTS OF OTHERS
Currently, we control each trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River Trust
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 contract owners, we
currently do not foresee any disadvantages because of this. The Hudson River
Trust Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts that may arise and to determine what action,
if any, should be taken in response. If we believe that a response to any of
those events insufficiently protects our contract owners, we will see to it that
appropriate action is taken.
SEPARATE ACCOUNT NO. 45 VOTING RIGHTS
If actions relating to Separate Account No. 45 require contract owner approval,
contract owners will be entitled to one vote for each unit they have in the
variable investment options. Each contract owner who has elected a variable
annuity payout option may cast the number of votes equal to the dollar amount of
reserves we are holding for that annuity in a variable investment option divided
by the annuity unit value for that option. We will cast votes attributable to
any amounts we have in the variable investment options in the same proportion as
votes cast by contract 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
published under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of
<PAGE>
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61 More information
- --------------------------------------------------------------------------------
insurance companies, we reserve the right to proceed in accordance with those
laws or regulations.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and services,
including those considered to be mission- critical, to be confirmed as year 2000
compliant, renovated, replaced or the subject of contingency plans, by June 30,
1999, except for one investment accounting system that is scheduled to be
replaced by August 31, 1999 and confirmed as year 2000 compliant by September
30, 1999. Additionally, Equitable Life will be supplementing its existing
business continuity and disaster recovery plans to cover certain categories of
contingencies that could arise as a result of year 2000 related failures. Year
2000 specific contingency plans are anticipated to be in place by June 30, 1999.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is a
"Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information
and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon Separate Account No. 45, our ability to meet our obligations under the
contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
You can transfer ownership of an NQ contract at any time before annuity payments
begin. We will continue to treat you as the owner until we receive written
notification of any change at our Processing Office. You cannot assign your NQ
contract as collateral or security for a loan. Loans are also not available
under your NQ contract. In some cases, an assignment or change of ownership may
have adverse tax consequences. See "Tax information."
You cannot assign or transfer ownership of Rollover IRA, Roth Conversion IRA, QP
or Rollover TSA contract except by
<PAGE>
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62 More information
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surrender to us. Loans are not available and you cannot assign Rollover IRA,
Roth Conversion IRA and QP contracts as security for a loan or other obligation.
If the employer that provided the funds does not restrict them, loans are
available under a Rollover TSA contract.
For limited transfers of ownership after the owner's death see "Payment of death
benefit" and "Beneficiary continuation option for Rollover IRA contracts." You
may direct the transfer of the values under your Rollover IRA, Roth Conversion
IRA, QP or Rollover TSA contract to another similar arrangement.
DISTRIBUTION OF THE CONTRACTS
EQ Financial Consultants, Inc. ("EQF"), an indirect, wholly owned subsidiary of
Equitable Life, is the distributor of the contracts and has responsibility for
sales and marketing functions for Separate Account No. 45. During 1999, EQF
plans to change its name to AXA Advisors, Inc. EQF serves as the principal
underwriter of Separate Account No. 45. EQF is registered with the SEC as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. EQF's principal business address is 1290 Avenue of the Americas, New York,
New York 10104. Pursuant to a Distribution and Servicing Agreement between EQF,
Equitable Life, and certain of Equitable Life's separate accounts, including
Separate Account No. 45, Equitable Life paid EQF distribution fees of $325,380
for 1998, as the distributor of certain contracts and as the principal
underwriter of certain separate accounts including Separate Account No. 45.
Before May 1, 1998, Equitable Distributors, Inc. ("EDI"), also an indirect,
wholly owned subsidiary of Equitable Life, served as the distributor of the
contracts and the principal underwriter of Separate Account No. 45. Pursuant to
a Distribution Agreement between Equitable Life, certain of Equitable Life's
separate accounts, including Separate Account No. 45, and EDI, Equitable Life
paid EDI distribution fees of $9,444,621 for 1997 and $888,486 for 1996 as the
distributor of certain contracts and as the principal underwriter of certain
separate accounts including Separate Account No. 45.
The contracts will be sold by registered representatives of EQF and its
affiliates, who are also our licensed agents. EQF may also receive compensation
and reimbursement for its marketing services under the terms of its distribution
agreement with Equitable Life. The offering of the contracts is intended to be
continuous.
<PAGE>
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63 Investment performance
- --------------------------------------------------------------------------------
9
Investment performance
We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT
INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY
ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR
RESULTS WILL DIFFER.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the variable
investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1 and 2 take into account
all fees and charges under the contract, including the optional baseBUILDER
benefits charge, but do not take the charges for any applicable taxes such as
premium taxes or any applicable annuity administrative fee into account.
Tables 3, 4, and 5 show the rates of return of the variable investment options
on an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the optional
baseBUILDER benefits charge or the charges for any applicable taxes such as
premium taxes or any applicable annuity administrative fee. If the charges were
reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest.
Since the contracts are being offered for the first time as of the date of this
prospectus, we adjusted the results of the Portfolios to reflect the charges
under the contracts that would have applied had the investment options and/or
contracts been available.
In addition, we have adjusted the results prior to October 1996, when The Hudson
River Trust Class IB shares were not available, to reflect the 12b-1 fees
currently imposed. Finally, the results shown for the Alliance Money Market and
Alliance Common Stock options for periods before March 22, 1985 reflect the
results of the variable investment options that preceded them. The "Since
inception" figures for these options are based on the date of inception of the
preceding variable investment options. We have adjusted these results to reflect
the maximum investment advisory fee payable for the Portfolios, as well as an
assumed charge of 0.06% for direct operating expenses.
EQ Advisors Trust commenced operations on May 1, 1997.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as 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. Also, they do not reflect other
contract charges such as the mortality and expense risks charge, administrative
charge, distribution charge or optional benefit charge. Comparisons with these
benchmarks, therefore, may be 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. The benchmarks include:
<PAGE>
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64 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond
Composite Index and 30% Standard & Poor's 500 Index.
ALLIANCE GLOBAL: Morgan Stanley Capital International World Index.
ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index
and 25% Value Line Convertibles Index.
ALLIANCE GROWTH INVESTORS: 70% Standard & Poor's 500 Index
and 30% Lehman Government/Corporate Bond Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman
Intermediate Government Bond Index.
ALLIANCE INTERNATIONAL: Morgan Stanley Capital International
Europe, Australia, Far East Index.
ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index.
BT EQUITY 500 INDEX: Standard & Poor's 500 Index.
BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital
International Europe, Australia, Far East Index.
BT SMALL COMPANY INDEX: Russell 2000 Index.
Capital Guardian Research: Standard & Poor's 500 Index.
Capital Guardian U.S. Equity: Standard & Poor's 500 Index.
EQ/EVERGREEN: Russell 2000 Index.
EQ/EVERGREEN FOUNDATION: 60% Standard & Poor's 500
Index/40% Lehman Brothers Aggregate Bond Index
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MFS GROWTH WITH INCOME: Standard & Poor's 500 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: 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: Morgan Stanley
Capital International Emerging Markets Free Price Return Index.
EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40%
Lehman Government/ Corporate Bond Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500
Index.
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index.
T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital
International Europe, Australia, Far East Index.
WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index.
- --------------------------------------------------------------------------------
LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) 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 Select performance relative
to other variable annuity products.
<PAGE>
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65 Investment performance
- --------------------------------------------------------------------------------
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Length of investment period
-------------------------------------------------------------------
Since Portfolio
1 3 5 10 portfolio inception
Variable investment options year years years years inception date
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Aggressive Stock (1.55)% 8.51% 9.16% 16.54% -- 1/27/86
- -------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 27.00% 25.05% 19.42% 16.22% -- 1/13/76
- -------------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 11.79% 8.44% 7.11% -- 7.07% 10/2/89
- -------------------------------------------------------------------------------------------------------------------------
Alliance Global 19.56% 13.55% 11.90% 12.46% 9.59% 8/27/87
- -------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income 18.63% 20.07% 15.39% -- 12.46% 10/1/93
- -------------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 16.93% 13.78% 11.55% -- 12.59% 10/2/89
- -------------------------------------------------------------------------------------------------------------------------
Alliance High Yield (6.90)% 9.11% 7.72% 8.85% -- 1/2/87
- -------------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities 5.76% 4.08% 3.17% -- 4.70% 4/1/91
- -------------------------------------------------------------------------------------------------------------------------
Alliance International 8.53% 3.42% -- -- 4.90% 4/3/95
- -------------------------------------------------------------------------------------------------------------------------
Alliance Money Market 3.40% 3.20% 2.97% 3.34% -- 7/13/81
- -------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth (5.97)% -- -- -- 8.35% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index 23.13% -- -- -- 23.13% 12/31/97
- -------------------------------------------------------------------------------------------------------------------------
BT International Equity Index 18.17% -- -- -- 18.17% 12/31/97
- -------------------------------------------------------------------------------------------------------------------------
BT Small Company Index (3.87)% -- -- -- (3.87)% 12/31/97
- -------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies 32.37% -- -- -- 26.45% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
MFS Research 22.12% -- -- -- 18.24% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity 9.80% -- -- -- 2.01% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy 5.11% -- -- -- 4.18% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (28.19)% -- -- -- (24.67)% 8/20/97
- -------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced 10.02% -- -- -- 11.46% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value 11.02% -- -- -- 12.82% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income 7.33% -- -- -- 13.72% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock 11.88% -- -- -- 4.24% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value (11.45)% -- -- -- 2.01% 5/1/97
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
The inception dates for the Portfolios that became available on or after
December 31, 1998 and are therefore not shown in the tables are: EQ/Evergreen,
EQ/Evergreen Foundation, and MFS Growth with Income (December 31, 1998);
EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S.
Equity (May 1, 1999).
<PAGE>
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66 Investment performance
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TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Length of investment period
-----------------------------------------------------------------------
Since
1 3 5 10 portfolio
Variable investment options year years years years inception*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Aggressive Stock $ 984.50 $ 1,277.63 $ 1,549.85 $ 4,619.71 --
- --------------------------------------------------------------------------------------------------------------------
Alliance Common Stock $ 1,270.00 $ 1,955.50 $ 2,428.99 $ 4,494.80 --
- --------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors $ 1,117.90 $ 1,275.32 $ 1,410.03 -- $ 1,979.28
- --------------------------------------------------------------------------------------------------------------------
Alliance Global $ 1,195.60 $ 1,464.22 $ 1,754.46 $ 3,235.83 $ 3,001.81
- --------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income $ 1,186.30 $ 1,731.03 $ 2,045.73 -- $ 2,023.23
- --------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors $ 1,169.30 $ 1,473.15 $ 1,727.10 -- $ 3,272.51
- --------------------------------------------------------------------------------------------------------------------
Alliance High Yield $ 931.00 $ 1,299.09 $ 1,450.09 $ 2,335.95 --
- --------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities $ 1,057.60 $ 1,127.36 $ 1,169.06 -- $ 1,444.19
- --------------------------------------------------------------------------------------------------------------------
Alliance International $ 1,085.30 $ 1,106.18 -- -- $ 1,210.96
- --------------------------------------------------------------------------------------------------------------------
Alliance Money Market $ 1,034.00 $ 1,099.25 $ 1,157.42 $ 1,388.83 --
- --------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 940.30 -- -- -- $ 1,173.92
- --------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index $ 1,231.30 -- -- -- $ 1,231.30
- --------------------------------------------------------------------------------------------------------------------
BT International Equity Index $ 1,181.70 -- -- -- $ 1,181.70
- --------------------------------------------------------------------------------------------------------------------
BT Small Company Index $ 961.30 -- -- -- $ 961.30
- --------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $ 1,323.70 -- -- -- $ 1,598.96
- --------------------------------------------------------------------------------------------------------------------
MFS Research $ 1,221.20 -- -- -- $ 1,398.09
- --------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $ 1,098.00 -- -- -- $ 1,267.70
- --------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy $ 1,051.10 -- -- -- $ 1,085.42
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 718.10 -- -- -- $ 567.48
- --------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced $ 1,100.20 -- -- -- $ 1,242.40
- --------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value $ 1,110.20 -- -- -- $ 1,272.79
- --------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income $ 1,073.30 -- -- -- $ 1,293.27
- --------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock $ 1,118.80 -- -- -- $ 1,086.52
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value $ 885.50 -- -- -- $ 1,040.68
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
67 Investment performance
- --------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Since
1 year 3 years 5 years 10 years 20 years inception*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.55)% 8.69% 9.39% 16.69% -- 15.59%
- -------------------------------------------------------------------------------------------------------------------
Lipper Mid--Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.00% 25.24% 19.66% 16.44% 16.42% 14.24%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 11.79% 8.66% 7.37% -- -- 7.96%
- -------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 14.45% 13.37% -- -- 12.08%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 19.56% 13.76% 12.14% 12.69% -- 10.47%
- -------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 14.67% 11.98% 11.21% -- --
- -------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 17.77% 11.98% 11.21% -- 9.55%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 18.63% 20.27% 15.64% -- -- 14.68%
- -------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 21.25% 18.35% -- -- 17.89%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 20.48%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 16.93% 13.99% 11.80% -- -- 13.93%
- -------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55 %
- -------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 15.55 %
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.90)% 9.30% 7.96% 9.11% -- 8.45%
- -------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 5.76% 4.29% 3.44% -- -- 5.14%
- -------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Government 7.68% 6.21% 5.91% -- -- 7.25%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 6.74% 6.45% -- -- 7.60 %
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.53% 3.63% -- -- -- 5.49%
- -------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 9.94% -- -- -- 10.74 %
- -------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 9.00% -- -- -- 9.68 %
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.40% 3.42% 3.23% 3.63% -- 5.11%
- -------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76%
- -------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.97)% -- -- -- -- 10.25%
- -------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- 16.72%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 16.58%
- -------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.13% -- -- -- -- 23.13%
- -------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- 26.78%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- -------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17%
- -------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 12.17%
- -------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 20.00%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
68 Investment performance
- --------------------------------------------------------------------------------
TABLE 3 (CONTINUED)
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Since
1 year 3 years 5 years 10 years 20 years inception*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 12.17%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 20.00%
- -----------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.87)% -- -- -- -- (3.87)%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.53%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- -----------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.37% -- -- -- -- 32.69%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Mid--Cap 15.97% -- -- -- -- 22.72%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- -----------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.12% -- -- -- -- 22.44%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 28.73%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 9.80% -- -- -- -- 15.46%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.11% -- -- -- -- 5.23%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- 20.00%
- -----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.19)% -- -- -- -- (33.79)%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (28.92)%
- -----------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.02% -- -- -- -- 14.09%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% -- -- -- -- 17.83%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 21.36% -- -- -- -- 23.48%
- -----------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.02% -- -- -- -- 15.74%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -----------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME 7.33% -- -- -- -- 16.85%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% -- -- -- -- 19.07%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- -----------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK 11.88% -- -- -- -- 5.30%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 9.06%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 13.43%
- -----------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE (11.45)% -- -- -- -- 2.58%
- -----------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 16.77%
- -----------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
69 Investment performance
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Since
1 year 3 years 5 years 10 years 20 years inception*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.55)% 28.42% 56.67% 368.05% -- 550.62%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Mid--Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.00% 96.46% 145.35% 358.29% 1,991.24% 2,026.84%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 11.79% 28.29% 42.73% -- -- 103.05%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 14.45% 13.37% -- -- 12.08%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 19.56% 47.23% 77.37% 230.13% -- 209.63%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 14.67% 11.98% 11.21% -- --
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 17.77% 11.98% 11.21% -- 9.55%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 18.63% 73.96% 196.77% -- -- 105.27%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 21.25% 18.35% -- -- 17.89%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 20.48%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 16.93% 48.12% 74.67% -- -- 233.85%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 15.55%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.90)% 30.56% 46.65% 139.11% -- 164.68%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62 -- 182.21%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 5.76% 13.43% 18.44% -- -- 47.46%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Intermediate Government 7.68% 6.21% 5.91% -- -- 7.25%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 6.74% 6.45% -- -- 7.60%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.53% 11.30% -- -- -- 22.17%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 9.94% -- -- -- 10.74%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 9.00% -- -- -- 9.68%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.40% 10.60% 17.22% 42.89% -- 138.78%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45%
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.97)% -- -- -- -- 17.69%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Small Company Growth (0.33)% -- -- -- -- 28.98%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 29.23%
- -------------------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX 23.13% -- -- -- -- 23.13%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 26.78% -- -- -- -- 26.78%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 28.58%
- -------------------------------------------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 12.23%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 20.00%
- -------------------------------------------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX (3.87)% -- -- -- -- (3.87)%
- -------------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 1.49%
- -------------------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- (2.54)%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
70 Investment performance
- --------------------------------------------------------------------------------
TABLE 4 (CONTINUED)
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Since
1 year 3 years 5 years 10 years 20 years inception*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MFS EMERGING GROWTH COMPANIES 32.37% -- -- -- -- 60.31%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Mid--Cap 15.97% -- -- -- -- 42.16%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 25.40%
- ----------------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.12% -- -- -- -- 40.19%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 52.86%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- ----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 9.80% -- -- -- -- 27.11%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ----------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.11% -- -- -- -- 8.88%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- 20.00%
- ----------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY (28.19)% -- -- -- -- (43.02)%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (36.71)%
- ----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.02% -- -- -- -- 24.59%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% -- -- -- -- 17.83%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 21.36% -- -- -- -- 23.48%
- ----------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.02% -- -- -- -- 27.62%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 38.49%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- ----------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME 7.33% -- -- -- -- 29.66%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% -- -- -- -- 19.07%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ----------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK 7.33% -- -- -- -- 29.66%
- ----------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 9.06%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 13.43%
- ----------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE (11.45)% -- -- -- -- 4.35%
- ----------------------------------------------------------------------------------------------------------------------
Lipper Small Cap 1.53% -- -- -- -- 16.77%
- ----------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolio inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
71 Investment performance
- --------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Aggressive Stock 40.86% 6.16% 83.43% (4.95)% 14.59% (5.59)% 29.21% 19.93% 8.77% (1.55)%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 23.28% (9.82)% 35.34% 1.31% 22.52% (3.94)% 30.01% 21.97% 26.84% 27.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 2.61% 4.40% 17.67% 3.76% 8.77% (5.86)% 18.19% 3.25% 11.15% 11.79%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Global 24.41% (7.81)% 28.15% (2.35)% 29.68% 3.29% 16.63% 12.47% 9.49% 19.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income -- -- -- -- (0.72)% (2.41)% 21.79% 17.86% 24.42% 18.63%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 3.35% 8.61% 46.16% 2.96% 13.15% (4.94)% 24.05% 10.51% 14.63% 16.93%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield 3.20% (2.95)% 22.17% 10.23% 20.88% (4.58)% 17.71% 20.60% 16.28% (6.90)%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government
Securities -- -- 10.71% 3.64% 8.50% (6.13)% 11.24% 1.85% 5.31% 5.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance International -- -- -- -- -- -- 9.76% 7.77% (4.84)% 8.53%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Money Market 7.18% 6.23% 4.23% 1.65% 1.06% 2.10% 3.80% 3.37% 3.48% 3.40%
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.16%+ (5.97)%
- ------------------------------------------------------------------------------------------------------------------------------------
BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.13%
- ------------------------------------------------------------------------------------------------------------------------------------
BT International Equity Index -- -- -- -- -- -- -- -- -- 18.17%
- ------------------------------------------------------------------------------------------------------------------------------------
BT Small Company Index -- -- -- -- -- -- -- -- -- (3.87)%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.11%+ 32.37%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Research -- -- -- -- -- -- -- -- 14.80%+ 22.12%
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity -- -- -- -- -- -- -- -- 15.77%+ 9.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy -- -- -- -- -- -- -- -- 3.58%+ 5.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.66)%+ (28.19)%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced -- -- -- -- -- -- -- -- 13.24%+ 10.02%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 14.96%+ 11.02%
- ------------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income -- -- -- -- -- -- -- -- 20.81%+ 7.33%
- ------------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock -- -- -- -- -- -- -- -- (2.57)%+ 11.88%
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value -- -- -- -- -- -- -- -- 17.84%+ (11.45)%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Returns for these Portfolios represent less than 12 months of performance. The
returns are as of each Portfolio inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
72 Investment performance
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options, and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present or prospective contract owners advertisements or
other communications that include evaluations of a variable investment option or
Portfolio by nationally recognized financial publications. Examples of such
publications are:
- ---------------------------------------------------------------------------
Barron's Money Management Letter
- ---------------------------------------------------------------------------
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
- ---------------------------------------------------------------------------
Business Week National Underwriter
- ---------------------------------------------------------------------------
Forbes Pension & Investments
- ---------------------------------------------------------------------------
Fortune USA Today
- ---------------------------------------------------------------------------
Institutional Investor Investor's Business Daily
- ---------------------------------------------------------------------------
Money The New York Times
- ---------------------------------------------------------------------------
Kiplinger's Personal Finance The Wall Street Journal
- ---------------------------------------------------------------------------
Financial Planning The Los Angeles Times
- ---------------------------------------------------------------------------
Investment Adviser The Chicago Tribune
- ---------------------------------------------------------------------------
Investment Management Weekly
- ---------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types of
fees in performance data:
o The separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts; and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
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 level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
YIELD INFORMATION
Current yield for the Alliance Money Market option 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 option
and Alliance Intermediate Government Securities option 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 similar manner, 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 option. The yields and effective
yields assume the deduction of all contract charges and expenses other than the
optional baseBUILDER benefits charge and any charge for taxes such
<PAGE>
- --------------------------------------------------------------------------------
73 Investment performance
- --------------------------------------------------------------------------------
as premium tax. The yields and effective yields for the Alliance Money Market
option, when used for the special dollar cost averaging program, assume that no
contract charges are deducted. For more information, see "Yield Information for
the Alliance Money Market Option, Alliance High Yield Option, and Alliance
Intermediate Government Securities Option" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
74 Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
10
Incorporation of certain documents by reference
- --------------------------------------------------------------------------------
Equitable Life's annual report on Form 10-K for the year ended December 31, 1998
and a current report on Form 8-K dated April 9, 1999, are considered to be a
part of this prospectus because they are incorporated by reference.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to
become part of this prospectus because they are incorporated by reference.
Any statement contained in a document that is or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each person to
whom this prospectus is delivered, a copy of any or all of the documents
considered to be part of this prospectus because they are incorporated herein.
This does not include exhibits not specifically incorporated by reference into
the text of such documents. Requests for 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).
<PAGE>
- --------------------------------------------------------------------------------
A-1 Appendix I: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
Appendix I: Purchase considerations for QP contracts
- --------------------------------------------------------------------------------
Trustees who are considering the purchase of an Equitable Accumulator Select QP
contract should discuss with their tax advisers 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 contract, 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 federal income tax rules. The QP contract and this prospectus should be
reviewed in full, and the following factors, among others, should be noted.
Assuming continued plan qualification and operation, earnings on qualified plan
assets will accumulate value on a tax-deferred basis even if the plan is not
funded by the Equitable Accumulator Select QP contract or another annuity.
Therefore, you should purchase an Equitable Accumulator QP contract to fund a
plan for the contract's features and benefits other than tax deferral. This QP
contract 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" that can be funded by a QP
contract is 80%. The account value under a QP contract 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 account value under a QP contract 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 contract may be required. A market value
adjustment may apply.
Further, Equitable Life will not perform or provide any plan recordkeeping
services with respect to the QP contracts. 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 contracts, 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. Given
that required minimum distributions must commence from the plan for annuitants
after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan
funds) trustees should consider whether the QP contract is an appropriate
purchase for annuitants approaching or over age 70 1/2.
Finally, because the method of purchasing the QP contract and the features of
the QP contract may appeal more to plan participants/employees who are older and
tend to be highly paid, and because certain features of the QP contract 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 contract would cause the plan to engage in
prohibited discrimination in contributions, benefits or otherwise.
<PAGE>
- --------------------------------------------------------------------------------
B-1 Appendix II: Market value adjustment example
- --------------------------------------------------------------------------------
Appendix II: 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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a
maturity value at the maturity date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later on February 15, 2004.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Assumed rate to maturity on February 15, 2004
---------------------------------------------
5.00% 9.00%
- -------------------------------------------------------------------------------------------------------------
As of February 15, 2004 (before withdrawal)
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
(1) Market adjusted amount $144,048 $ 119,487
- -------------------------------------------------------------------------------------------------------------
(2) Fixed maturity amount $131,080 $ 131,080
- -------------------------------------------------------------------------------------------------------------
(3) Market value adjustment:
(1) - (2) $ 12,968 $ (11,593)
- -------------------------------------------------------------------------------------------------------------
On February 15, 2004 (after withdrawal)
- -------------------------------------------------------------------------------------------------------------
(4) Portion of market value adjustment associated with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $ (4,851)
- -------------------------------------------------------------------------------------------------------------
(5) Reduction in fixed maturity amount:
[$50,000 - (4)] $ 45,499 $ 54,851
- -------------------------------------------------------------------------------------------------------------
(6) Fixed maturity amount: (2) - (5) $ 85,581 $ 76,229
- -------------------------------------------------------------------------------------------------------------
(7) Maturity value $120,032 $ 106,915
- -------------------------------------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 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% (right column), 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% (left column), a portion of a positive
market value adjustment is realized.
<PAGE>
- --------------------------------------------------------------------------------
C-1 Appendix III: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
Appendix III: Guaranteed minimum death benefit example
- --------------------------------------------------------------------------------
The death benefit under the contracts is equal to the account value or, if
greater, the guaranteed minimum death benefit.
The following illustrates the guaranteed minimum death benefit calculation.
Assuming $100,000 is allocated to the variable investment options (with no
allocation to the Alliance Money Market option, Alliance Intermediate Government
Securities option or the fixed maturity options), no additional contributions,
no transfers and no withdrawals, and no loans under a Rollover TSA contract, the
guaranteed minimum death benefit for an annuitant age 45 would be calculated as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
5% roll up to
End of age 80 Annual ratchet to age 80 guaranteed
contract guaranteed minimum minimum
year Account value death benefit(1) death benefit
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 $105,000 $ 105,000(1) $ 105,000(3)
- -----------------------------------------------------------------------------------------------
2 $115,500 $ 110,250(2) $ 115,500(3)
- -----------------------------------------------------------------------------------------------
3 $129,360 $ 115,763(2) $ 129,360(3)
- -----------------------------------------------------------------------------------------------
4 $103,488 $ 121,551(1) $ 129,360(4)
- -----------------------------------------------------------------------------------------------
5 $113,837 $ 127,628(1) $ 129,360(4)
- -----------------------------------------------------------------------------------------------
6 $127,497 $ 134,010(1) $ 129,360(4)
- -----------------------------------------------------------------------------------------------
7 $127,497 $ 140,710(1) $ 129,360(4)
- -----------------------------------------------------------------------------------------------
</TABLE>
The account values for contract years 1 through 7 are based on hypothetical
rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We
are using these rates solely to illustrate how the benefit is determined. The
return rates bear no relationship to past or future investment results.
5% ROLL UP TO AGE 80
(1) At the end of contract year 1, and again at the end of contract years 4
through 7, the death benefit will be equal to the guaranteed minimum death
benefit.
(2) At the end of contract years 2 and 3, the death benefit will be equal to
the current account value since it is higher than the current guaranteed
minimum death benefit.
ANNUAL RATCHET TO AGE 80
(3) At the end of contract years 1 through 3, the guaranteed minimum death
benefit is equal to the current account value.
(4) At the end of contract years 4 through 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 account value.
<PAGE>
Statement of additional
information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Unit Values 2
Annuity Unit Values 2
Custodian and Independent Accountants 3
Yield Information for the Alliance Money Market Option, Alliance High Yield
Option, and Alliance Intermediate Government Securities option 3
Long-Term Market Trends 4
Key Factors in Retirement Planning 6
Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR SELECT STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT NO. 45
Send this request form to:
Equitable Accumulator Select
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
Please send me an Equitable Accumulator Select SAI for Separate Account No. 45
dated May 1, 1999:
- ------------------------------------------------------------------------------
Name
- ------------------------------------------------------------------------------
Address
- ------------------------------------------------------------------------------
City State Zip
(AGTSELSAI)
<PAGE>
Income Manager(Reg. TM)
Payout annuity contracts
Please read and keep this prospectus for future reference. It contains important
information that you should know before purchasing or taking any other action
under your contract.
PROSPECTUS DATED MAY 1, 1999
- --------------------------------------------------------------------------------
WHAT IS INCOME MANAGER?
Income Manager contracts are payout annuity contracts issued by THE EQUITABLE
LIFE ASSURANCE SOCIETY OF THE UNITED STATES. They are designed to provide
retirement income. We offer two versions of the Income Manager payout annuity
contract from which you may choose to receive your retirement income. You may
choose to receive income payable for a specified period ("period certain"). Or,
you may choose to receive lifetime income payable for at least a specified
period ("life annuity with a period certain"). Under the life annuity with a
period certain contract you may choose whether payments are made on a single
life or a joint and survivor life basis.
TYPES OF CONTRACTS. We offer the contracts for use as:
o A nonqualified annuity ("NQ") for after-tax contributions only.
o An individual retirement annuity ("IRA"). There are two types of IRAs,
Traditional IRAs or Roth IRAs. Because Roth IRAs were newly introduced in
1998 and have a five year aging period before distributions should begin,
we do not expect to offer payout annuity Roth IRA contracts before the year
2003.
A contribution of at least $10,000 is required to purchase a contract.
FIXED MATURITY OPTIONS. We allocate your contributions to a series of fixed
maturity options to provide your income payments during the period certain.
Amounts allocated to these fixed maturity options will receive a fixed rate of
interest during the period certain. Interest is earned at a guaranteed rate we
set ("rate to maturity"). We make a market value adjustment (up or down) if you
make a withdrawal from a fixed maturity option before its maturity date.
A registration statement relating to this offering has been filed with the
Securities and Exchange Commission ("SEC"). This prospectus can be obtained from
the SEC's website at http://www.sec.gov.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE CONTRACTS 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.
<PAGE>
- --------------------------------------------------------------------------------
2 Contents of this prospectus
- --------------------------------------------------------------------------------
Contents of this prospectus
- --------------------------------------------------------------------------------
INCOME MANAGER(Reg. TM)
- --------------------------------------------------------------------------------
Index of key words and phrases 4
Who is Equitable Life? 5
How to reach us 6
Income Manager at a glance - key features 7
- --------------------------------------------------------------------------------
1
CONTRACT FEATURES AND BENEFITS 10
- --------------------------------------------------------------------------------
How you can purchase and contribute to your contract 10
Source of contributions 10
Owner and annuitant requirements 10
What are your investments under the contract? 10
What are your contract choices? 12
Life annuity with a period certain contract 12
Period certain contract 18
- --------------------------------------------------------------------------------
2
OTHER BENEFITS AND FEATURES OF THE
CONTRACTS 20
- --------------------------------------------------------------------------------
How you can make your contributions 20
Your right to cancel within a certain number of days 20
Surrendering your contract to receive its cash value 20
When to expect payments 20
- --------------------------------------------------------------------------------
"We", "our" and "us" refer to Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your," we mean the person who has the right or responsibility that the
prospectus is discussing at that point. This is usually the contract owner.
When we use the word "contract" it also includes certificates that are issued
under group contracts in some states.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Contents of this prospectus 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
CHARGES 21
- --------------------------------------------------------------------------------
Withdrawal charges 21
Amounts applied from other contracts issued by Equitable
Life 21
Charges for state premium and other applicable taxes 22
Group or sponsored arrangements 22
Other distribution arrangements 22
- --------------------------------------------------------------------------------
4
PAYMENT OF DEATH BENEFIT 23
- --------------------------------------------------------------------------------
Your beneficiary 23
Choosing annuity payout options 23
- --------------------------------------------------------------------------------
5
TAX INFORMATION 24
- --------------------------------------------------------------------------------
Overview 24
Taxation of nonqualified annuities 24
Special rules for NQ contracts issued in Puerto Rico 25
Individual retirement arrangements (IRAs) 26
Traditional individual retirement annuities (Traditional IRAs) 26
Federal and state income tax withholding and information reporting 33
- --------------------------------------------------------------------------------
6
MORE INFORMATION 35
- --------------------------------------------------------------------------------
About our fixed maturity options 35
About the separate account for the fixed maturity options 35
About our general account 36
Other methods of payment 36
About payments under period certain contracts 36
Dates and prices at which contract events occur 37
About our year 2000 progress 37
About legal proceedings 38
About our independent accountants 38
Transfers of ownership, collateral assignments, loans,
and borrowing 38
Distribution of contracts 38
- --------------------------------------------------------------------------------
7
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX: MARKET VALUE ADJUSTMENT
EXAMPLE A-1
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
4 Index of key words and phrases
- --------------------------------------------------------------------------------
Index of key words and phrases
- --------------------------------------------------------------------------------
This index should help you locate more information on the terms used in this
prospectus.
Page
account value 15
annuitant 10
beneficiary 23
business day 37
cash value 15
contract date 8
contract year 8
contribution 10
deferral period 13
fixed maturity amount 10
fixed maturity options 10
IRA cover
IRS 23
joint and survivor 12
joint owners 10
life annuity with a period certain 12
life contingent annuity 13
market adjusted amount 11
market value adjustment 11
maturity value 11
off maturity date 11
NQ 25
payout option 23
period certain 7
Processing Office 6
rate to maturity 10
SEC cover
separate account 35
single life 12
traditional IRA 26
To make this prospectus easier to read, we sometimes use different words than in
the contract or supplemental materials. This is illustrated below. Although we
use different words, they have the same meaning in the prospectus as in the
contract or supplemental materials. Your Equitable associate can provide further
explanation about your contract.
-------------------------------------------------------------------------
PROSPECTUS CONTRACT ON SUPPLEMENTAL MATERIALS
-------------------------------------------------------------------------
fixed maturity amount Guaranteed Period Amount
-------------------------------------------------------------------------
fixed maturity options Guarantee Periods
(Guaranteed Interest Rate Options ("GIRO's")
in supplemental materials)
-------------------------------------------------------------------------
off maturity date payments Model Payment Portion
-------------------------------------------------------------------------
market adjusted amount annuity account value
-------------------------------------------------------------------------
maturity date Expiration Date
-------------------------------------------------------------------------
rate to maturity Guaranteed Rate
-------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Who is Equitable Life? 5
- --------------------------------------------------------------------------------
Who is Equitable Life?
- --------------------------------------------------------------------------------
We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing business
since 1859. Equitable Life is a wholly owned subsidiary of The Equitable
Companies, Incorporated ("Equitable Companies"), whose majority shareholder is
AXA, a French holding company for an international group of insurance and
related financial services companies. As a majority shareholder, and under its
other arrangements with Equitable Life and Equitable Life's parent, AXA
exercises significant influence over the operations and capital structure of
Equitable Life and its parent. No company other than Equitable Life, however,
has any legal responsibility to pay amounts that Equitable Life owes under the
contract. During 1999, Equitable Companies plans to change its name to AXA
Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are licensed
to sell life insurance and annuities in all fifty states, the District of
Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located
at 1290 Avenue of the Americas, New York, NY 10104.
<PAGE>
- --------------------------------------------------------------------------------
6 Who is Equitable Life?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HOW TO REACH US
You may communicate with our Processing Office listed below for any of the
following purposes:
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Life
Income Manager
P.O. Box 13014
Newark, NJ 07188-0014
- --------------------------------------------------------------------------------
FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Life
Income Manager
c/o First Chicago National Processing Center
300 Harmon Meadows Boulevard, 3rd Floor
Attn: Box 13014
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS, OR REQUIRED
NOTICES) SENT BY REGULAR MAIL:
- --------------------------------------------------------------------------------
Equitable Life
Income Manager
P.O. Box 1547
Secaucus, NJ 07096-1547
- --------------------------------------------------------------------------------
FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS, OR REQUIRED
NOTICES) SENT BY EXPRESS DELIVERY:
- --------------------------------------------------------------------------------
Equitable Life
Income Manager
200 Plaza Drive, 4th Floor
Secaucus, NJ 07094
- --------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVES:
- --------------------------------------------------------------------------------
During our regular business hours you may also use our toll-free number
(1-800-789-7771) to speak with one of our customer service representatives. Our
customer service representatives are available on any business day from 8:30
a.m. until 5:30 p.m., Eastern Time.
- --------------------------------------------------------------------------------
REPORTS WE PROVIDE:
o Statement of your contract values as of the last day of the calendar year;
o Three written reports of your contract values each year; and
o Written confirmation of financial transactions.
You should send all contributions, required notices, and requests to exercise
any of your rights or privileges to our Processing Office at the address above.
WE HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF
REQUESTS:
1) address changes;
2) beneficiary changes;
3) withdrawal requests; and
4) contract surrender.
You must sign and date all these requests. Any written request that is not on
one of our forms must include your name and your contract number along with
adequate details about the notice you wish to give or the action you wish us to
take.
SIGNATURES:
The proper person to sign forms, notices and requests would normally be the
owner. If there are joint owners both must sign.
<PAGE>
- --------------------------------------------------------------------------------
Income Manager at a glance - key features 7
- --------------------------------------------------------------------------------
Income Manager at a glance - key features
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
INCOME MANAGER
(LIFE ANNUITY INCOME MANAGER
WITH A PERIOD CERTAIN) (PERIOD CERTAIN)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCOME PAYMENTS NQ - Level or increasing payments. NQ and IRA - Level payments only.
IRA - Level payments only.
- --------------------------------------------------------------------------------------------------------
PERIOD CERTAIN You will receive payments for periods ranging from 7 to 15 years depending on
the age of the annuitant.
- --------------------------------------------------------------------------------------------------------
FORM OF PAYMENT Single life or joint and survivor. Single life only.
AVAILABLE
- --------------------------------------------------------------------------------------------------------
PAYMENTS AFTER THE END Payments continue while the annuitant None
OF THE PERIOD CERTAIN or joint annuitant is living.
- --------------------------------------------------------------------------------------------------------
CONTRIBUTION AMOUNTS:
INITIAL MINIMUM: o $10,000 o $10,000
ADDITIONAL MINIMUM: o $1,000 (subject to restrictions) o Not permitted
Maximum investment limitations may Maximum investment limitations may
apply. apply.
- --------------------------------------------------------------------------------------------------------
FIXED MATURITY OPTIONS o 15 fixed maturity options with maturities ranging from approximately 1 to
15 years.
o Each fixed maturity option offers a guarantee of principal and interest rate
if you hold it to maturity.
o Principal guarantees.
- If you make withdrawals from a fixed maturity option before
maturity, there will be a market value adjustment due to differences
in interest rates. This may increase or decrease any value you have
left in that fixed maturity option. If you surrender your contract,
a market value adjustment may also apply.
- --------------------------------------------------------------------------------------------------------
TAXES Generally, earnings will be taxed at your ordinary income tax rate when
distributions are made from your contract.
o NQ - A portion of each payment is generally not considered taxable
income until you have received a tax-free recovery of your investment in the
contract.
o IRA - All amounts distributed are generally taxable.
- --------------------------------------------------------------------------------------------------------
DEATH BENEFIT A death benefit is provided if the A death benefit is provided if the
annuitant dies before the end of the annuitant dies before the end of the
period certain. There is no death period certain.
benefit after the period certain.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
8 Income Manager at a glance - key features
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
INCOME MANAGER
(LIFE ANNUITY INCOME MANAGER
WITH A PERIOD CERTAIN) (PERIOD CERTAIN)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
ACCESS TO YOUR o Withdrawals. o Withdrawals.
MONEY DURING THE o Contract surrender. o Contract surrender.
PERIOD CERTAIN
A market value adjustment may apply. A market value adjustment may apply.
You may also incur income tax and a You may also incur income tax and a
penalty tax. penalty tax.
You cannot take a withdrawal from,
or surrender your life contingent
annuity.
- --------------------------------------------------------------------------------------------------------
CHARGES o We deduct a charge for taxes o We deduct a charge for taxes
such as premium taxes that may such as premium taxes that may
be imposed in your state. We be imposed in your state. We
deduct this charge from your deduct this charge from your
contributions. contributions.
o During the first seven o During the first seven contract
contract years following a years, a charge will be deducted
contribution, a charge will be from amounts that you withdraw. The
deducted from amounts that you charge begins at 7% in the first
withdraw that exceed 10% of contract year. It declines each
your account value. We use the year to 1% in the seventh contract
account value on the most year. There is no withdrawal charge
recent contract date in the eighth and later contract
anniversary to calculate the years.
10% amount available. The
charge begins at 7% in the o There is no free withdrawal
first contract year following amount.
a contribution. It declines
each year to 1% in the seventh
contract year. There is no
withdrawal charge in the
eighth and later contract
years following a contribution.
- --------------------------------------------------------------------------------------------------------
The 12-month period beginning on your contract date and each anniversary of that date is a "contract
year." The "contract date" is the effective date of a contract. This usually is the business day we
receive your initial contribution.
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
ANNUITANT NQ and IRA level payments: 45 -- 83
ISSUE AGES NQ increasing payments: 53 1/2 -- 83
Different ages may apply depending on
when annuity payments start.
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Income Manager at a glance - key features 9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE
CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF
THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES.
For more detailed information we urge you to read the contents of this
prospectus, as well as your contract. Please feel free to speak with your
Equitable associate, or call us, if you have any questions.
<PAGE>
- --------------------------------------------------------------------------------
10 Contract features and benefits
- --------------------------------------------------------------------------------
1
Contract features and benefits
- --------------------------------------------------------------------------------
HOW YOU CAN PURCHASE AND CONTRIBUTE TO
YOUR CONTRACT
You may purchase your contract by making payments to us we call "contributions."
We require a contribution of at least $10,000 for you to purchase a contract.
Under life annuity with a period certain contracts, you may make additional
contributions subject to the limitations as described under "Additional
contributions" later in this prospectus.
SOURCE OF CONTRIBUTIONS
NQ CONTRACTS. We will accept only contributions made with after-tax money. You
may make your contributions by check or by transfer of your contract value in a
tax-deferred exchange under Section 1035 of the Internal Revenue Code.
IRA CONTRACTS. Contributions may be made from:
o Rollovers from a qualified plan.
o Rollovers from a Tax Sheltered Annuity (TSA).
o Rollovers from another traditional individual retirement arrangement.
o Direct custodian-to-custodian transfers from another traditional individual
retirement arrangement.
See "Tax information" for a more detailed discussion of sources of contributions
and contribution limitations. We may refuse to accept any contribution if the
sum of all contributions under all Income Manager contracts with the same
annuitant would then total more than $1,500,000. We may also refuse to accept
any contributions if the sum of all contributions under all Equitable Life
annuity payout contracts that you own would then total more than $2,500,000.
For information on when contributions are credited see "Dates and prices at
which contract events occur" later in this prospectus.
OWNER AND ANNUITANT REQUIREMENTS
NQ CONTRACTS. The annuitant can be different from the contract owner. A joint
owner may also be named provided both owners are of legal age. Only natural
persons can be joint owners. This means that an entity such as a corporation or
a trust cannot be a joint owner.
- --------------------------------------------------------------------------------
The "annuitant" is the person who is the measuring life for determining contract
benefits. The annuitant is not necessarily the contract owner.
- --------------------------------------------------------------------------------
IRA CONTRACTS. The owner and the annuitant must be the same person. Joint owners
are not permitted. A joint annuitant may be named.
WHAT ARE YOUR INVESTMENTS UNDER THE
CONTRACT?
FIXED MATURITY OPTIONS
To provide your income payments during the period certain, we allocate your
contributions to fixed maturity options that mature in consecutive date order.
When we allocate your contributions to the fixed maturity options they become
part of our general account assets. They accumulate interest at a rate to
maturity for each fixed maturity option. The total amount allocated to and
accumulated in each fixed maturity option is called the "fixed maturity amount."
The rate to maturity you will receive for each fixed maturity amount is the
interest rate in effect for new contributions allocated to that fixed maturity
option on the date we apply your contribution. If you make any withdrawals from
a fixed maturity option before the maturity date, we will make a market value
adjustment that may increase or decrease any fixed maturity amount you have left
in that fixed maturity option. We will discuss market value adjustment below and
in greater detail later in this prospectus under "More information."
For applications we receive under certain types of transactions, we may offer
you the opportunity to lock in rates to maturity on contributions.
<PAGE>
- --------------------------------------------------------------------------------
Contract features and benefits 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On the maturity date of each of your fixed maturity options your fixed maturity
amount, assuming you have not made any withdrawals, will equal your contribution
to each fixed maturity option plus interest, at the rate to maturity for that
contribution, to the date of calculation. This is the fixed maturity option's
"maturity value." Before maturity, the current value we will report for your
fixed maturity amount will reflect a market value adjustment. It will reflect
the market value adjustment that we would make if you were to withdraw all of
your fixed maturity amount on the date of the report. We call this your "market
adjusted amount."
RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE. We can determine the
amount required to be allocated to each fixed maturity option in order to
produce specified maturity values. For example, we can tell you how much you
need to allocate per $100 of maturity value.
Guaranteed rates to maturity for new allocations as of April 1, 1999 and the
related price per $100 of maturity value were as follows:
- ------------------------------------------------------------------------
FIXED MATURITY
OPTIONS WITH
FEBRUARY 15TH RATE TO PRICE
MATURITY DATE OF MATURITY AS PER $100 OF
MATURITY YEAR OF APRIL 1, 1999 MATURITY VALUE
- ------------------------------------------------------------------------
2000 3.25% $ 97.23
2001 4.04% $ 92.83
2002 4.33% $ 88.51
2003 4.46% $ 84.43
2004 4.52% $ 80.60
2005 4.67% $ 76.45
2006 4.77% $ 72.56
2007 4.79% $ 69.16
2008 4.87% $ 65.55
2009 4.97% $ 61.91
2010 4.90% $ 59.41
2011 4.90% $ 56.63
2012 4.90% $ 53.99
2013 4.90% $ 51.46
2014 4.90% $ 49.05
- ------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT. If you make any withdrawals, (including surrender of
your contract or when we make deductions for withdrawal charges), from a fixed
maturity option before it matures we will make a market value adjustment, which
will increase or decrease any fixed maturity amount you have in that fixed
maturity option. The amount of the adjustment will depend on two factors:
(a) the difference between the rate to maturity that applies to the amount
being withdrawn and the rate to maturity in effect at that time for new
allocations to that same fixed maturity option, and
(b) the length of time remaining until the maturity date.
In general, if interest rates rise from the time that we originally allocate an
amount to a fixed maturity option to the time that you take a withdrawal, the
market value adjustment will be negative. Likewise, if interest rates drop at
the end of that time, the market value adjustment will be positive. Also, the
amount of the market value adjustment, either up or down, will be greater the
longer the time remaining until the fixed maturity option's maturity date.
Therefore, it is possible that the market value adjustment could greatly reduce
your value in the fixed maturity options, particularly in the fixed maturity
options with later maturity dates.
We provide an explanation of how we calculate the market value adjustment, and
information concerning our general account under "More information" later in
this prospectus. We provide an example of how we calculate the market value
adjustment in the Appendix to this prospectus.
SEPARATE ACCOUNT FOR THE FIXED MATURITY OPTIONS
Amounts allocated to the fixed maturity options are held in a "nonunitized"
separate account we have established under the New York Insurance Law. This
separate account provides an additional measure of assurance that we will make
full payment of amounts due under the fixed maturity options. We provide
additional information about this separate account later in this prospectus
under "More information."
OFF MATURITY DATE PAYMENTS. Under Income Manager contracts you may choose to
receive payments monthly, quarterly or annually. If you choose annual payments,
generally your payments will be made on February 15th as each fixed maturity
option matures. You may instead
<PAGE>
- --------------------------------------------------------------------------------
12 Contract features and benefits
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
choose to have your annual payments made in a month other than February. We
refer to payments we make on an annual basis in any month other than February
and monthly or quarterly payments, as payments made "off maturity dates." If you
choose to have your payments made off maturity dates, we will be required to
begin making your payments before the maturity date of a fixed maturity option.
In planning for these payments we will allocate a portion of your initial
contribution to the separate account, but not to the fixed maturity options
contained in the separate account. We will credit these amounts with interest at
rates that will not be less than 3%.
After that, as each fixed maturity option expires we will transfer your maturity
value from the expired fixed maturity option and hold the maturity value in the
separate account. We will credit interest to these amounts at the same rate as
the rate to maturity that was credited in the expired fixed maturity option.
These amounts will then be used to provide for payments off maturity dates
during the period certain.
- --------------------------------------------------------------------------------
Whether you choose monthly, quarterly, or annual payments, your payments will be
made on the 15th day of the month.
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We will not make a market value adjustment to the amounts held in the separate
account to provide for payments off maturity dates.
WHAT ARE YOUR CONTRACT CHOICES?
We offer two versions of the Income Manager payout annuity contracts from which
you may choose to receive your retirement income, a "life annuity with a period
certain" and a "period certain" annuity. We discuss both versions below.
LIFE ANNUITY WITH A PERIOD CERTAIN CONTRACT
This payout annuity contract provides you with guaranteed payments during the
period certain. When the period certain ends you will continue to receive
payments for as long as an annuitant is living. Payments based solely on the
life of one annuitant are called "single life" payments. You may also elect to
receive "joint and survivor" payments that are based on the lives of an
annuitant and a joint annuitant. These payments will continue as long as one of
the annuitants is living. Payments during the period certain are designed to pay
out your entire account value by the end of the period certain.
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"Single life" payments are made to you as long as the annuitant is living.
"Joint and survivor" payments continue as long as either annuitant is living.
For IRA contracts, if you are married, the joint annuitant must be your spouse.
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For annuitant ages at which the contracts are available see the chart under
"Your period certain" below.
ADDITIONAL CONTRIBUTIONS
If your annuity payments are set to begin on February 15, 2000 or later, and you
are age 78 or younger, you may make additional contributions of at least $1,000
at any time up until 15 days before your payments actually begin. If the
annuitant is over age 78 you can only make additional contributions during the
first contract year.
Under IRA contracts we will accept additional contributions that are "regular"
contributions, rollover contributions or direct transfers. Additional "regular"
contributions may no longer be made after you are age 70 1/2. If you make a
direct transfer or rollover contribution after you turn age 70 1/2 you must
have taken the required minimum distribution for the year before the
contribution is applied to this contract. See "Tax information" later in this
prospectus.
If you are using the proceeds from another type of contract issued by us to
purchase this contract, you will not be permitted to make additional
contributions.
HOW WE ALLOCATE YOUR CONTRIBUTIONS
We determine the allocation of your contributions based on a number of factors.
They are:
o the amount of your contribution;
o the form of payments;
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Contract features and benefits 13
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o the age and sex of the annuitant (and the age and sex of the joint
annuitant, if joint and survivor annuity payments are elected);
o the frequency of payments; and
o the period certain.
We then allocate your initial contribution among the fixed maturity options, the
separate account if we need to make payments to you off maturity dates, and the
"life contingent annuity." We will allocate your additional contributions in the
same manner. Additional contributions will increase the level of all future
payments. You may not change this allocation.
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The life contingent annuity continues the payments after the period certain
ends.
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PAYMENTS
NQ CONTRACTS. If you are age 45 or older, you may elect to receive level
payments. You will receive level payments during the period certain and under
the life contingent annuity. However, if you are younger than age 59 1/2, there
are tax issues that you should consider before you purchase a contract. If you
are age 53 1/2 or older you may instead elect to receive payments that
increase. However, your payments may not start before you are age 59 1/2. Such
payments will increase by 10% every three years during the period certain on
each third anniversary of the date annuity payments begin. After the end of the
period certain, your first payment under the life contingent annuity will be 10%
greater than the final payment made under the period certain. See "Payments
after the period certain" below.
IRA CONTRACTS. Only level payments are available under IRA contracts.
Whether you choose monthly, quarterly or annual payments, you will usually begin
receiving payments one payment period from the contract date, unless you elect
otherwise as described under "Off maturity date payments" earlier in this
prospectus. Your payments will always be made on the 15th day of the month.
However, if you are age 53 1/2 or older, you must defer the date your payments
will start until you are age 59 1/2. If you are at least age 59 1/2 you may
elect to defer the date your payments will start. Generally, you may defer
payments for a period of up to 72 months. This is called the deferral period.
Deferral of the payment start date permits you to lock in rates at a time when
you may consider current rates to be high, while permitting you to delay
receiving payments if you have no immediate need to receive income under your
contract.
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The deferral period together with the period certain may be referred to as a
"liquidity period." Unlike traditional life annuities that provide periodic
payments, you will be able to make withdrawals before the end of the period
certain. You may also choose to surrender your contract for its cash value while
keeping the life contingent annuity in effect.
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Before you decide to defer payments, you should consider the fact that the
amount of income you purchase is based on the rates to maturity in effect on the
date we allocate your contribution. Therefore, if rates rise during the deferral
period, your payments may be less than they would have been if you had purchased
a contract at a later date. Deferral of the payment start date is not available
if the annuitant is older than age 80. Under IRA contracts, if your deferred
payment start date is after you are age 70 1/2, you should consider the effect
that deferral may have on your required minimum distributions.
YOUR PERIOD CERTAIN
LEVEL PAYMENTS. Under level payments, you may select a period certain of not
less than 7 years nor more than 15 years. The maximum period certain available
based on the age of the annuitant when your contract is issued is as follows:
<PAGE>
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14 Contract features and benefits
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NQ CONTRACTS
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ANNUITANT'S AGE AT ISSUE* MAXIMUM PERIOD CERTAIN
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45 through 70 15 years
71 through 75 85 less age at issue
76 through 80 10 years
81 though 83 90 less age at issue
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IRA CONTRACTS
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ANNUITANT'S AGE AT ISSUE* MAXIMUM PERIOD CERTAIN
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45 through 70 15 years
71 through 78 85 less age at issue
79 through 83 7 years
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*For joint and survivor payments, the period certain is based on the age of
the younger annuitant.
The minimum and maximum period certain will be reduced by each year you defer
the date your payments will start.
INCREASING PAYMENTS. Under NQ contracts if you elect increasing payments, you do
not have a choice as to the period certain. Based on the age of the annuitant
when your contract is issued, your period certain will be as follows:
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ANNUITANT'S AGE AT ISSUE* PERIOD CERTAIN
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53 1/2 through 70 15 years
71 through 75 12 years
76 through 80 9 years
81 through 83 6 years
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*For joint and survivor payments, the period certain is based on the age of
the younger annuitant.
If you elect increasing payments and defer the date payments will start, your
period certain will be as follows:
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PERIOD CERTAIN BASED
ON DEFERRAL PERIOD
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ANNUITANT'S AGE 1 - 36 37-60 61-72
AT ISSUE* MONTHS MONTHS MONTHS
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59 1/2 through 70 12 years 9 years 9 years
71 through 75 9 years 9 years n/a
76 through 80 6 years 6 years n/a
81 through 83 n/a n/a n/a
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*For joint and survivor payments, the period certain is based on the age of
the younger annuitant.
The annuitant ages at issue in the above table are also the annuitant ages for
which the contracts are available. Different ages may apply if you purchase a
contract by exercising a benefit under another type of contract that we issue.
PURCHASE RESTRICTIONS FOR JOINT AND SURVIVOR ANNUITY PAYMENTS
If you elect payments on a joint and survivor basis;
o the joint annuitant must also be the beneficiary under the contract. Under
IRA contracts, the joint annuitant must be your spouse;
o neither the annuitant nor the joint annuitant can be over age 83; and
o under level payments the joint and 100% to survivor form is only available
for the longest period certain we permit.
PAYMENTS AFTER THE PERIOD CERTAIN
After the end of the period certain, we will continue your payments under the
life contingent annuity if the annuitant or joint annuitant is living. Payments
continue throughout the annuitant's lifetime (or the lifetime of the joint
annuitant, if joint and survivor payments are elected) on the same payment
schedule (either monthly, quarterly or annually) as the payments you received
during the period certain.
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The portion of your contribution allocated to the life contingent annuity does
not have a cash value or an account value and, therefore, does not provide for
withdrawals.
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THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND
PAYMENTS ARE MADE TO YOU ONLY IF THE ANNUITANT (OR JOINT ANNUITANT) IS LIVING
WHEN THE PAYMENTS ARE SCHEDULED TO BEGIN. THESE PAYMENTS ARE ONLY MADE DURING
THE ANNUITANT'S LIFETIME AND, IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT.
THEREFORE, YOU SHOULD CONSIDER THE POSSIBILITY THAT NO PAYMENTS WILL BE MADE TO
YOU UNDER THE LIFE CONTINGENT ANNUITY IF THE ANNUITANT (OR JOINT ANNUITANT) DOES
NOT SURVIVE TO THE DATE PAYMENTS ARE TO BEGIN.
<PAGE>
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Contract features and benefits 15
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Under the life contingent annuity you may elect single life or joint and
survivor payments. Joint and survivor payments are available on a 100%, one-half
or two-thirds to survivor basis. If you elect increasing payments under NQ
contracts, your first payment under the life contingent annuity will be 10%
greater than the final payment under the period certain. After the period
certain we will increase your payments annually on each anniversary of the
payment start date under the life contingent annuity. We will base this increase
on the annual increase in the Consumer Price Index, but it will never be greater
than 3% per year.
EXAMPLE OF PAYMENTS
We provide the chart below to illustrate level payments under the contract using
the following assumptions:
(1) a male age 70 (who is both the contract owner and the annuitant);
(2) single life annuity payments;
(3) a contribution of $100,000;
(4) no additional contributions; and
(5) a period certain of 15 years.
If you had a contract date of April 1, 1999, based on rates to maturity on that
date, an election of either monthly, quarterly, or annual payments with payments
starting one payment period from the contract date, the following level payments
would be provided:
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PAYMENT
PERIOD MONTHLY QUARTERLY ANNUAL
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START DATE 5/15/99 7/15/99 4/15/00
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PAYMENT $ 654 $1,971 $8,092
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WITHDRAWALS
After the first contract year and before the end of the period certain, you may
take withdrawals from your account value. You may take one withdrawal per
contract year at any time during the contract year. The minimum amount you may
withdraw at any time is $1,000. If you request to withdraw more than 90% of your
current "cash value" we will treat it as a request to surrender your contract
for its cash value. See "Surrendering your contract to receive its cash value"
later in this prospectus.
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Your account value is the sum of your market adjusted amounts in each fixed
maturity option plus your amounts held in the separate account to provide for
payments off maturity dates. Your cash value is equal to your account value
minus any withdrawal charge.
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Withdrawals in excess of a 10% free withdrawal amount may be subject to a
withdrawal charge. There is no free withdrawal amount if your contract is
surrendered for its cash value. Amounts withdrawn from a fixed maturity option
before its maturity date will result in a market value adjustment.
ALLOCATION OF WITHDRAWALS
We will subtract your withdrawal from all remaining fixed maturity options to
which your account value is allocated as well as from amounts held in the
separate account to provide for payments off maturity dates. As a result we will
reduce the amount of your payments and the length of your period certain. We
will also begin making payments to you under the life contingent annuity at an
earlier date. In order to achieve this result we will withdraw additional
amounts over the amount of the withdrawal you requested. We will withdraw these
amounts from the fixed maturity options and from amounts held in the separate
account to provide for payments off maturity dates and allocate them to the life
contingent annuity. The exact additional amount we withdraw will depend on how
much is necessary to assure that the same pattern of payments will continue in
reduced amounts for the annuitant's life, and if it applies, the life of the
joint annuitant. If you have elected increasing payments, the first increase in
your payments will take place no later than the date of the next planned
increase.
<PAGE>
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16 Contract features and benefits
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EXAMPLE
The example below illustrates the effect of a withdrawal based on:
(1) a single contribution of $100,000 made on April 1, 1999;
(2) level annual payments of $7,601 to be made on February 15th of each year;
(3) joint and two-thirds to survivor payments for a male and female, both age
70;
(4) a period certain of 15 years;
(5) a withdrawal made at the beginning of the fourth contract year of 25% of an
account value of $67,907.44 when the annuitants are age 73.
The requested withdrawal amount would be $16,976.86 ($67,907.44 x .25). In this
case, $6,790.74 ($67,907.44 x .10) would be the free withdrawal amount and could
be withdrawn free of a withdrawal charge. The balance of $10,186.12 ($16,976.86
- - $6,790.74) would be considered a withdrawal of a part of the contribution of
$100,000. This contribution would be subject to a 4.0% withdrawal charge of
$407.44 ($10,186.12 x .04). The account value after the withdrawal is $50,523.14
($67,907.44 - $16,976.86 - $407.44). The payments would be reduced to $6,254.75
and the remaining period certain would be reduced to 10 years from 12.
DEATH BENEFIT
When the annuitant dies before payments begin
Generally, when we receive satisfactory proof of the annuitant's death before
annuity payments begin we will pay the death benefit to the "beneficiary" named
in your contract. See "Your beneficiary" later in this prospectus. If the joint
owner who is also the annuitant dies, we will consider the surviving owner to be
the beneficiary, taking the place of any other beneficiary designations.
We determine the amount of the death benefit payable to your beneficiary as of
the date we receive satisfactory proof of the annuitant's death and any required
instructions for the method of payment. The death benefit is the greater of:
(1) your account value; and
(2) the sum of the fixed maturity amounts in each fixed maturity option plus
any amounts held in the separate account to provide for payments off
maturity dates.
However, if you are the annuitant and your spouse is the joint owner or the
designated beneficiary under the contract, your spouse may elect to receive the
payments instead of taking the death benefit if payments have not been deferred,
or payments are scheduled to begin within one year. The payments will then begin
on the scheduled date. We will not make any payments under the life contingent
annuity after the annuitant's death unless you have elected the joint and
survivor form of payments. If you elect joint and one-half or joint and
two-thirds to survivor payments, at the death of either annuitant, we will
reduce the payments by one-half or one-third, whichever applies.
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A death benefit is never payable under the life contingent annuity. The death
benefit applies only during the period certain.
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When the annuitant dies after the annuity payments begin
If the annuitant dies after the payments begin, we will continue to make
payments during the period certain to either the joint owner or the designated
beneficiary, whichever applies. The payments will be made on the same schedule
that was in effect before the annuitant's death. If you elected joint and
survivor payments under the life contingent annuity, the payments will be made
as long as one of the annuitants is living.
At the beneficiary's option, payments during the period certain may be
discontinued and paid in a single sum. If the single sum is elected within one
year after the annuitant's death, the single sum will be equal to the greater
of:
<PAGE>
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Contract features and benefits 17
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(1) the account value; and
(2) the sum of the fixed maturity amounts in each fixed maturity option, plus
any amounts held in the separate account to provide for payments off
maturity dates.
If a single sum is elected and there is a joint annuitant, we will begin making
payments to you under the life contingent annuity at an earlier date. These
payments will be made in reduced amounts to compensate for the earlier start
date.
When the NQ contract owner who is not the annuitant dies before the annuitant
and before the annuity payments begin
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the new contract owner. You may name
a different person that will become the owner at any time by sending an
acceptable written form to our Processing Office. If the contract is jointly
owned and the first owner to die is not the annuitant, the surviving owner
becomes the sole contract owner. This person will be considered the beneficiary
for purposes of the distribution rules described below. The surviving owner
automatically takes the place of 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 contract
must be distributed under the following rules:
o The cash value in the contract 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).
o The new owner may instead elect to receive payments 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. Unless the
alternative is elected, we will pay any cash value in the contract as a
single sum on December 31st of the fifth calendar year following the year
of your death (or the death of the first owner to die).
o If the surviving spouse is the designated beneficiary or joint owner, the
surviving spouse may elect to continue the contract. No distributions are
required as long as the surviving spouse and the annuitant are living.
When the NQ contract owner who is not the annuitant dies after the annuity
payments begin
If your death occurs after annuity payments begin, payments will continue to be
made during the period certain to the designated beneficiary, or in the case of
joint owners, to the surviving owner. In either case this person becomes the new
contract owner. The payments will be made on the same payment schedule that was
in effect before your death. After the period certain, lifetime payments will be
made under the life contingent annuity for as long the annuitant (or joint
annuitant) is living.
SURRENDERING YOUR LIFE ANNUITY WITH PERIOD CERTAIN CONTRACT
You may surrender your contract for its cash value at any time during the period
certain and receive lifetime payments after that under the life contingent
annuity. Once your contract is surrendered, the date your payments are to start
under the life contingent annuity will be moved forward to the date when you
were supposed to receive the next payment under the period certain. However,
your payments will be made in reduced amounts. Once your contract is
surrendered, we will return it to you with a notation that the life contingent
annuity is still in effect. You may not surrender the life contingent annuity.
<PAGE>
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18 Contract features and benefits
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PERIOD CERTAIN CONTRACT
You may purchase the period certain contract if you are age 59 1/2 or older.
The annuitant must be at least age 59 1/2, but not older than age 78. This
contract provides you with level guaranteed payments for a period certain that
you select. The minimum period certain you may select is 7 years and the maximum
period certain is 15 years. If the annuitant is over age 70 when the contract is
issued, the maximum period certain you may select is 85 less the annuitant's age
when the contract is issued.
ADDITIONAL CONTRIBUTIONS
Additional contributions are not permitted under the contract.
HOW WE ALLOCATE YOUR CONTRIBUTIONS
Based on the amount of your single contribution and the period certain you
select, we allocate your contribution among the fixed maturity options and, if
necessary, to the separate account to provide for payments off maturity dates.
You may not change this allocation. See "More information" for an example of
payments.
PAYMENTS
Whether you choose monthly, quarterly, or annual payments, your payments
normally will start one payment period from the contract date unless you elect
otherwise as described under "Off maturity date payments" earlier in this
prospectus. Your payments will always be made on the 15th day of the month.
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The period certain may also be referred to as the "liquidity period" because you
have access to your money through withdrawals or surrender of your contract.
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WITHDRAWALS
After the first contract year you may take withdrawals from your account value.
You may take one withdrawal per contract year at any time during the contract
year. The minimum amount you may withdraw at any time is $2,000 or 25% of your
current cash value if it produces a larger amount. If you request to withdraw
more than 90% of your current cash value we will treat it as a request for
surrender of the contract for its cash value. See "Surrendering your contract to
receive its cash value" later in this prospectus. Any amounts withdrawn from a
fixed maturity option, before its maturity date, will result in a market value
adjustment. See "Market value adjustment" earlier in this prospectus.
Withdrawals made during the first seven contract years may be subject to a
withdrawal charge. There is no free withdrawal amount under the period certain
contracts.
ALLOCATION OF WITHDRAWALS
We will subtract your withdrawals pro rata from all remaining fixed maturity
options to which your account value is allocated as well as from amounts held in
the separate account to provide for payments off maturity dates. As a result,
your payments will continue in reduced level amounts over the remaining term of
the period certain.
DEATH BENEFIT
When the annuitant dies before payments begin
Generally, when we receive satisfactory proof of the annuitant's death before
annuity payments begin we will pay the death benefit to the beneficiary named in
your contract. See "Your beneficiary" later in this prospectus. If the joint
owner who is also the annuitant dies, we will consider the surviving owner to be
the beneficiary, taking the place of any other beneficiary designations.
We determine the amount of the death benefit payable to your beneficiary as of
the date we receive satisfactory proof of the annuitant's death and any required
instructions for the method of payment. The death benefit is the greater of:
(1) your account value; and
(2) the sum of the fixed maturity amounts in each fixed maturity option plus
any amounts held in the separate account to provide for payments off
maturity dates.
However, if you are the annuitant and your spouse is the joint owner or the
designated beneficiary under the contract,
<PAGE>
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Contract features and benefits 19
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your spouse may elect to receive the payments instead of taking the death
benefit. The payments will then begin on the scheduled date.
When the annuitant dies after the annuity payments begin
If the annuitant dies after the payments begin, payments will continue to be
made during the period certain to either the joint owner or the designated
beneficiary, whichever applies. The payments will be made on the same schedule
that was in effect before the annuitant's death.
At the beneficiary's option, payments may be discontinued and paid in a single
sum. If the single sum is elected within one year after the annuitant's death,
the single sum will be equal to the greater of:
(1) the account value; and
(2) the sum of the fixed maturity amounts in each fixed maturity option plus
any amounts held in the separate account to provide for payments off
maturity dates.
When the NQ contract owner who is not the annuitant dies before the annuitant
and before the annuity payments begin
When you are not the annuitant under an NQ contract and you die before annuity
payments begin, the beneficiary named to receive the death benefit upon the
annuitant's death will automatically become the new contract owner. You may
instead name a different person to become the new contract owner at any time by
sending an acceptable written form to our Processing Office. If the contract is
jointly owned and the first owner to die is not the annuitant, the surviving
owner becomes the sole contract owner. This person will be considered the
beneficiary for purposes of the distribution rules described below. The
surviving owner automatically takes the place of 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 contract
must be distributed under the following rules:
o The cash value in the contract 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).
o The new owner may elect instead to receive payments 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. Unless this
alternative is elected, we will pay any cash value in the contract as a
single sum on December 31st of the fifth calendar year following the year
of your death (or the death of the first owner to die).
o If the surviving spouse is the designated beneficiary or joint
owner, the surviving spouse may elect to continue the contract. No
distributions are required as long as the surviving spouse and the
annuitant are living.
When the NQ contract owner who is not the annuitant dies after the annuity
payments begin
If your death occurs after annuity payments begin, payments will continue to be
made during the period certain to the designated beneficiary or in the case of
joint owners to the surviving owner. In either case, this person becomes the new
contract owner and receives the payments.
<PAGE>
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20 Other benefits and features of the contracts
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2
Other benefits and features of the contracts
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HOW YOU CAN MAKE YOUR CONTRIBUTIONS
Except as noted below, contributions must be by check drawn on a bank in the
U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. We do not accept third party checks endorsed to us
except for rollover contributions, tax-free exchanges or trustee checks that
involve no refund. All checks are subject to our ability to collect the funds.
We reserve the right to reject a payment if it is received in an unacceptable
form.
For your convenience, we will accept initial and additional contributions, if
applicable, by wire transmittal from certain broker-dealers who have agreements
with us for this purpose. These methods of payment are discussed in detail under
"More information" later in this prospectus.
Your initial contribution must generally be accompanied by an application and
any other form we need to process the payments. If any information is missing or
unclear, we will try to obtain that information. If we are unable to obtain all
of the information we require within five business days, we will inform the
Equitable associate submitting the application, on your behalf. We will then
return the contribution to you unless you specifically direct us to keep your
contribution until we receive the required information.
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Our "business day" is any day the New York Stock Exchange is open for trading.
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SECTION 1035 EXCHANGES
You may apply the value of an existing nonqualified deferred annuity contract
(or life insurance or endowment contract) to purchase an Income Manager NQ
contract in a tax-deferred exchange if you follow certain procedures as shown in
the form that we require you to use. Also see "Tax information" later in this
prospectus.
YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS
If for any reason you are not satisfied with your contract, you may return it to
us for a refund. To exercise this cancellation right you must mail the contract
directly to our Processing Office within 10 days after you receive it. In some
states, this "free look" period may be longer.
Generally, your refund will equal your account value under the contract. Your
account value reflects any positive or negative market value adjustments in the
fixed maturity options through the date we receive your contract. Under the life
annuity with a period certain your refund will also include any amount applied
to the life contingent annuity. However, some states require that we refund the
full amount of your contribution (not including any investment gain or loss).
For IRA contracts returned to us within seven days after you receive it, we are
required to refund the full amount of your contribution.
If you cancel your contract during the free look period, we may require that you
wait six months before you may apply for a contract with us again.
Please see "Tax information" for possible consequences of cancelling your
contract.
SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE
You may surrender your contract to receive its cash value at any time during the
period certain. Your cash value is equal to your account value minus any
withdrawal charge. There is no free withdrawal amount if you surrender your
contract.
For a surrender to be effective, we must receive your written request and your
contract at our Processing Office. We will determine your cash value on the date
we receive the required information. All benefits under your contract will
terminate as of that date unless you have elected the life contingent annuity.
See "Surrendering your life annuity with a period certain contract" earlier in
this prospectus.
WHEN TO EXPECT PAYMENTS
Generally, we will fulfill requests for payments within seven days of the
transaction to which the request relates. We can defer payment of any portion of
the account value (other than for death benefits) for up to six months while you
are living. We also may defer payments for any reasonable amount of time (not to
exceed 15 days) while we are waiting for a contribution check to clear.
<PAGE>
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Charges 21
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3
Charges
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WITHDRAWAL CHARGES
A withdrawal charge applies in two circumstances: (1) if you make a withdrawal
during a contract year and it exceeds any applicable free withdrawal amount,
described below, or (2) if you surrender your contract to receive its cash
value.
The withdrawal charge equals a percentage of each contribution (or single
contribution) withdrawn. The percentage that applies depends on how long each
contribution has been invested in the contract. We determine the withdrawal
charge separately for each contribution according to the following table:
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CONTRACT YEAR
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1 2 3 4 5 6 7 8+
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Percentage of
Contribution 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
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For purposes of calculating the withdrawal charge, we treat the contract year in
which we receive a contribution as "contract year 1." Amounts withdrawn up to
the free withdrawal amount are not considered withdrawal of any contribution. We
also treat contributions that have been invested the longest as being withdrawn
first. We treat contributions as withdrawn before earnings for purposes of
calculating the withdrawal charge. However, federal income tax rules treat
earnings under your contract as withdrawn first. See "Tax information."
We deduct the withdrawal charge from your account value in proportion to the
amount withdrawn from each fixed maturity option and any amounts held in the
separate account to provide for payments off maturity dates. In order to give
you the exact dollar amount of the withdrawal you request, we deduct the amount
of the withdrawal and the amount of the withdrawal charge from your account
value. Any amount deducted to pay a withdrawal charge is also subject to a
withdrawal charge.
The withdrawal charge does not apply to the 10% free withdrawal amount described
below.
10% FREE WITHDRAWAL AMOUNT APPLIES ONLY TO LIFE ANNUITY WITH A PERIOD CERTAIN
CONTRACTS. IT DOES NOT APPLY TO YOUR PERIOD CERTAIN CONTRACT OR IF YOU SURRENDER
YOUR CONTRACT TO RECEIVE ITS CASH VALUE.
Under life annuity with a period certain contracts, each contract year you can
withdraw up to 10% of your account value without paying a withdrawal charge.
This 10% free withdrawal amount is determined using your account value on the
most recent contract date anniversary.
AMOUNTS APPLIED FROM OTHER CONTRACTS ISSUED BY EQUITABLE LIFE
LIFE ANNUITY WITH A PERIOD CERTAIN CONTRACT. If you own certain types of
contracts that we issue, you may apply the account value under those contracts
to purchase the life annuity with a period certain contract provided the issue
age and payment restrictions for the new contract are met. If you apply your
account value at a time when the dollar amount of the withdrawal charge under
such other contract is greater than 2% of remaining contributions (after
withdrawals), we reserve the right to waive the remaining withdrawal charge.
However, a new withdrawal charge schedule will apply under the new contract. For
purposes of the withdrawal charge schedule, the year in which your account value
is applied under the life annuity with a period certain contract will be
"contract year 1." If you apply your account value when the dollar amount of the
withdrawal charge is 2% or less, we reserve the right to waive the withdrawal
charges under the new contract. You should consider the timing of your purchase
as it relates to the potential for withdrawal charges under the life annuity
with a period certain contract.
PERIOD CERTAIN CONTRACT. If you own certain types of contracts that we issue,
you may apply your account value to purchase the period certain contract once
any withdrawal charges are no longer in effect under the other contracts. No
withdrawal charges will apply under the period certain contract.
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22 Charges
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To purchase any Income Manager contract we require that you return your original
contract to us. A new Income Manager contract will be issued putting this
annuity into effect.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. We deduct the charge from your 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).
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the withdrawal charge
or change the minimum initial contribution requirements. We also may increase
the rates to maturity for the fixed maturity options and reduce purchase rates
for the life contingent annuity. Group arrangements include those in which a
trustee or an employer, for example, purchases contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in which an
employer allows us to sell contracts to its employees or retirees on an
individual basis. IRA contracts are not available for group arrangements.
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, such as requirements for size and number of years in existence.
Group or sponsored arrangements that have been set up solely to buy contracts or
that have been in existence less than six months will not qualify for reduced
charges.
We will make these and any similar reductions according to our rules in effect
when we approve a contract 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 federal income tax rules, the
Employee Retirement Income Security Act of 1974, or both. We make no
representations with regard to the impact of these and other applicable laws on
such programs. We recommend that employers, trustees, and others purchasing or
making contracts available for purchase under such programs seek the advice of
their own legal and benefits advisers.
OTHER DISTRIBUTION ARRANGEMENTS
We may reduce or eliminate withdrawal charges when sales are made in a manner
that results in savings of sales and administrative expenses. This may include
sales through persons who are compensated by clients for recommending
investments and who receive no commission or reduced commissions in connection
with the sale of the contracts. We will not permit a reduction or elimination of
the withdrawal charge where it will be unfairly discriminatory.
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Payment of death benefit 23
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4
Payment of death benefit
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YOUR BENEFICIARY
You designate your beneficiary when you apply for your contract. You may change
your beneficiary at any time. The change will be effective on the date the
written request for change is signed.
CHOOSING ANNUITY PAYOUT OPTIONS
If you die before annuity payments begin, your beneficiary may elect to apply
the death benefit to an annuity payout option. We offer several annuity payout
options to choose from. Restrictions apply, depending on the type of contract
you own.
ANNUITY PAYOUT OPTIONS
Your beneficiary can choose from among the following annuity payout options:
o Life annuity: An annuity that 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 with this payout
option, it provides the highest monthly payment of any of the life annuity
options, so long as the annuitant is living.
o Life annuity - period certain: An annuity that guarantees payments for the
rest of the annuitant's life, and, if the annuitant dies before the end of
a selected period of time ("period certain"), payments to the beneficiary
will continue for the balance of the period certain.
o Life annuity - refund certain: An annuity that guarantees payments for the
rest of the annuitant's life. If the annuitant dies before the amount
applied to purchase the annuity option has been recovered, payments
continue to the beneficiary until that amount has been recovered.
o Period certain annuity: An annuity that guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years. This option does not
guarantee payments for the rest of the annuitant's life. It does not permit
any repayment of the unpaid principal, so you cannot elect to receive part
of the payments as a single sum payment with the rest paid in monthly
annuity payments.
The life annuity, life annuity -- period certain and the life annuity -- refund
certain are available on either single life or joint and survivor life basis.
The joint and survivor life annuity guarantees payments for the rest of the
annuitant's life and, after the annuitant's death, continuation of payments to
the survivor.
All of the above annuity payout options are available as fixed annuities. With
fixed annuities, we guarantee fixed annuity payments that will be based either
on the tables of guaranteed annuity payments in your contract or on our then
current annuity rates, whichever is more favorable for the annuitant.
When the beneficiary selects a payout option, we will issue a separate written
agreement confirming the beneficiary's right to receive annuity payments. We
require the return of the contract before annuity payments begin.
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, the
annuitant's age (or the annuitant's and joint annuitant's ages) and in certain
instances, the sex of the annuitant(s). Once a payout option has been chosen and
payments begin, no change can be made.
At the time that the beneficiary elects a payout option if 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 account value in a single
sum rather than as payments under the payout option chosen.
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24 Tax information
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5
Tax information
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OVERVIEW
In this part of the prospectus, we discuss the current federal income tax rules
that generally apply to Income Manager contracts owned by United States
taxpayers. The tax rules can differ, depending on the type of contract, whether
NQ or Traditional IRA. Therefore, we discuss the tax aspects of each type of
contract separately.
We cannot provide detailed information on all tax aspects of the contracts.
Moreover, the tax aspects that apply to a particular person's contract may vary
depending on the facts applicable to that person. We do not discuss state income
and other state taxes, federal income tax and withholding rules for non-U.S.
taxpayers, or federal gift and estate taxes. Transfers of the contract, rights
under the contract, or payments under the contract may be subject to gift or
estate taxes. You should not rely only on this document, but should consult your
tax adviser before your purchase.
Federal income tax rules include the United States laws in the Internal Revenue
Code, and Treasury Department Regulations and Internal Revenue Service ("IRS")
interpretations of the Internal Revenue Code. These tax rules may change. We
cannot predict whether, when, or how these rules could change. Any change could
affect contracts purchased before the change.
TAXATION OF NONQUALIFIED ANNUITIES
CONTRIBUTIONS
You may not deduct the amount of your contributions for a nonqualified annuity
contract.
CONTRACT EARNINGS
Generally, you are not taxed on contract earnings until you receive a
distribution from your contract, whether as a withdrawal, or as an annuity
payment. This contract is intended to be a payout annuity. However, because you
may be able to delay beginning payments, rules governing deferred annuity
contracts could apply. Earnings in a deferred annuity contract are taxable even
without a distribution if you transfer a contract, for example, as a gift to
someone other than your spouse (or former spouse).
All nonqualified deferred annuity contracts that we issue to you during the same
calendar year are linked together and treated as one contract when figuring out
the taxable amount of any distribution from any of those contracts.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the contract unless an
exception under the federal income tax rules apply. There is an exception for
immediate annuities.
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Immediate annuities are generally annuities in which payments begin within one
year from purchase and provide for a series of substantially equal payments made
at least annually.
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ANNUITY PAYMENTS
Once annuity payments begin, a portion of each payment is taxable as ordinary
income. You get the remaining portion without paying taxes on it. This is your
"investment in the contract." Generally, your investment in the contract equals
the contributions you made, less any amounts you previously withdrew that were
not taxable.
The tax-free portion of each payment is determined by (1) dividing your
investment in the contract by the total amount you are expected to receive out
of the contract, and (2) multiplying the result by the amount of the payment.
Once you have received the amount of your investment in the contract, all
payments after that are fully taxable. If payments under a life annuity stop
because the annuitant dies, there is an income tax deduction for any unrecovered
investment in the contract.
PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN
If you make withdrawals before annuity payments begin under your contract, they
are taxable to you as ordinary income if there are earnings in the contract.
Generally, earnings are your account value less your investment in the
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Tax information 25
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contract. If you withdraw an amount which is more than the earnings in the
contract as of the date of the withdrawal, the balance of the distribution is
treated as a return of your investment in the contract and is not taxable.
CONTRACTS PURCHASED THROUGH EXCHANGES
You may purchase your NQ contract through an exchange of another contract.
Normally, exchanges of contracts are taxable events. The exchange will not be
taxable under Section 1035 of the Internal Revenue Code if:
o The contract which is the source of the funds you are using to purchase the
NQ contract is another nonqualified deferred annuity contract (or life
insurance or endowment contract).
o The owner and the annuitant are the same under the source contract and the
Income Manager contract (if you are using a life insurance or endowment
contract the owner and the insured must be the same on both sides of the
exchange transaction).
The tax basis of the source contract carries over to the Income Manager NQ
contract.
SURRENDERS
If you surrender or cancel the NQ contract, the distribution is taxable as
ordinary income (not capital gain) to the extent it exceeds your investment in
the contract.
WITHDRAWALS MADE AFTER ANNUITY PAYMENTS BEGIN
If you make a withdrawal that terminates all periodic payments due, it will be
taxable as a complete surrender as discussed above. If you make a withdrawal
that does not terminate all periodic payments due, then a portion of the
remaining reduced payments will be eligible for tax-free recovery of investment.
Also, a portion of the withdrawal may not be taxable.
DEATH BENEFIT PAYMENT MADE TO A BENEFICIARY AFTER YOUR DEATH
For the rules applicable to death benefits, see "Payment of death benefit" and
"When the NQ contract owner who is not the annuitant dies before the annuitant
and before the annuity payments begin" earlier in this prospectus. The tax
treatment of a death benefit taken as a single sum is generally the same as the
tax treatment of a withdrawal from or surrender of your contract. The tax
treatment of a death benefit taken as annuity payments is generally the same as
the tax treatment of annuity payments under your contract.
EARLY DISTRIBUTION PENALTY TAX
If you take distributions before you are age 59 1/2 a penalty tax of 10% of the
taxable portion of your distribution applies in addition to the income tax. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death; or
o because you are disabled (special federal income tax definition); or
o in the form of substantially equal periodic annuity payments for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and a beneficiary; or
o payments under an immediate annuity.
Periodic annuity payments we make to you from the life annuity with a period
certain while you are under age 59 1/2 should qualify for the "substantially
equal payments for life" exception noted above. However, this exception may not
apply if you take a withdrawal, surrender your contract or change the payment
pattern in any way.
SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO
Under current law we treat income from NQ contracts 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 contracts is also subject to Puerto Rico tax. The
computation of the taxable portion of amounts distributed from a contract may
differ in the two jurisdictions. Therefore, you might have to file both U.S. and
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26 Tax information
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Puerto Rico tax returns, showing different amounts of income from the contract
for each tax return. 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.
INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS")
GENERAL
"IRA" stands for individual retirement arrangement. There are two basic types of
such arrangements, individual retirement accounts and individual retirement
annuities. In an individual retirement account, a trustee or custodian holds the
assets for the benefit of the IRA owner. The assets can include mutual funds and
certificates of deposit. In an individual retirement annuity, an insurance
company issues an annuity contract that serves as the IRA.
There are several types of IRAs, as follows:
o Traditional IRAs, typically funded on a pre-tax basis;
o Roth IRAs, first available in 1998, funded on an after-tax basis.
Regardless of the type of IRA, your ownership interest in the IRA cannot be
forfeited. You or your beneficiaries who survive you are the only ones who can
receive the IRA's benefits or payments.
You can hold your IRA assets in as many different accounts and annuities as you
would like, as long as you meet the rules for setting up and making
contributions to IRAs. However, if you own multiple IRAs, you may be required to
combine IRA values or contributions for tax purposes. For further information
about individual retirement arrangements, you can read Internal Revenue Service
Publication 590 ("Individual Retirement Arrangements (IRAs)"). This Publication
is usually updated annually, and can be obtained from any IRS district office or
the IRS website (www.irs.ustreas.gov).
The Income Manager IRA contract is designed to qualify as an "individual
retirement annuity" under Section 408(b) of the Internal Revenue Code. This
prospectus contains the information that the IRS requires you to have before you
purchase an IRA. This section of the prospectus covers some of the special tax
rules that apply to IRAs.
The Income Manager IRA contract 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. It does not represent a determination of the merits of the
annuity as an investment. The IRS approval does not address every feature
possibly available under the Income Manager IRA contract.
CANCELLATION
You can cancel an Income Manager IRA contract by following the directions under
"Your right to cancel within a certain number of days" earlier in the
prospectus. If you cancel an IRA contract, we may have to withhold tax, and we
must report the transaction to the IRS. A contract cancellation could have an
unfavorable tax impact.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS)
CONTRIBUTIONS TO TRADITIONAL IRAS
Individuals may make three different types of contributions to a Traditional
IRA:
o tax-free "rollover" contributions; or
o direct custodian-to-custodian transfers from other Traditional IRAs
("direct transfers"); or
o "regular" contributions out of earned income or compensation.
We require that your initial contribution to the Income Manager Traditional IRA
contract must be either a rollover or a direct custodian-to-custodian transfer.
See "Rollovers and transfers" below. Any additional contributions you make may
be rollovers, direct transfers, or regular Traditional IRA contributions.
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Tax information 27
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LIMITS ON CONTRIBUTIONS
Generally, $2,000 is the maximum amount that you may contribute to all IRAs in
any taxable year. When your earnings are below $2,000, your earned income or
compensation for the year is the most you can contribute. This $2,000 limit does
not apply to rollover contributions or direct custodian-to-custodian transfers
into a Traditional IRA. You cannot make regular Traditional IRA contributions
for the tax year in which you reach age 70 1/2 or any tax year after that.
SPECIAL RULES FOR SPOUSES
If you are married and file a joint income tax return, you and your spouse may
combine your compensation to determine the amount of regular contributions you
are permitted to make to Traditional IRAs. 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. The maximum amount may be less if earned income is 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 IRAs. Each
spouse owns his or her Traditional IRAs even if the other spouse funded the
contributions. A working spouse age 70 1/2 or over can contribute up to the
lesser of $2,000 or 100% of "earned income" to a Traditional IRA for a
non-working spouse until the year in which the non-working spouse reaches age
70 1/2.
DEDUCTIBILITY OF CONTRIBUTIONS
The amount of Traditional IRA contributions that you can deduct for a tax year
depends on whether you are covered by an employer-sponsored tax-favored
retirement plan, as defined under special federal income tax rules. Your Form
W-2 will indicate whether or not you are covered by such a retirement plan.
IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can
make fully deductible contributions to your Traditional IRAs for each tax year
up to $2,000 or, if less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT
RANGE, you can make fully deductible contributions to your Traditional IRAs. For
each tax year, your fully deductible contribution can be up to $2,000 or, if
less, your earned income.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE
CONTRIBUTIONS to your Traditional IRAs.
IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your
AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any
of your regular contribution to your Traditional IRAs.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for IRA contributions phases out with AGI between
$31,000 and $41,000 in 1999. This range will increase every year until 2005 when
the range is $50,000-$60,000.
If you are married and file a joint return, and you are covered by a retirement
plan during any part of the taxable year, the deduction for Traditional IRA
contributions phases out with AGI between $51,000 and $61,000 in 1999. This
range will increase every year until 2007 when the range is $80,000-$100,000.
Married individuals filing separately and living apart at all times are not
considered 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 in 1999, you determine
AGI and subtract $31,000 if you are single, or $51,000 if you are married and
file a joint return
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28 Tax information
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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:
($10,000-excess AGI) times $2,000 (or earned equals the adjusted
- --------------------- x income, if less) = deductible
divided by $10,000 contribution
limit
NONDEDUCTIBLE CONTRIBUTIONS
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 combined deductible and
nondeductible contributions to your Traditional IRA (or the non-working spouse's
Traditional IRA) may not, however, exceed the maximum $2,000 per person limit.
See "Excess contributions" below. You must keep your own records of deductible
and nondeductible contributions in order to prevent double taxation on the
distribution of previously taxed amounts. See "Withdrawals, payments and
transfer of funds out of Traditional IRAs" 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 distributions 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.
WHEN YOU CAN MAKE CONTRIBUTIONS
If you file your tax returns on a calendar year basis like most taxpayers, you
have until the April 15th return filing deadline (without extensions) of the
following calendar year to make your regular Traditional IRA contributions for a
tax year.
EXCESS CONTRIBUTIONS
Excess contributions to IRAs are subject to a 6% excise tax for the year in
which made and for each year after until withdrawn. The following are excess
contributions to IRAs:
o regular contributions of more than $2,000;
o regular contributions of more than earned income for the year, if that
amount is under $2,000;
o regular contributions to a Traditional IRA made after you reach age
70 1/2; and
o rollover contributions of 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.
You can avoid the excise tax by withdrawing an excess contribution (rollover or
regular) before the due date (including extensions) for filing your federal
income tax return for the year. If it is an excess regular Traditional IRA
contribution, you cannot take a tax deduction for the amount withdrawn. You do
not have to include the excess contribution withdrawn as part of your income. It
is also not subject to the 10% additional penalty tax on early distributions
discussed below under "Early distribution penalty tax." You do have to withdraw
any earnings that are attributed to the excess contribution. The withdrawn
earnings would be included in your gross income and could be subject to the 10%
penalty tax.
Even after the due date for filing your return, you may withdraw an excess
rollover contribution, without income inclusion or 10% penalty, if:
(1) the rollover was from a qualified retirement plan to a Traditional IRA;
(2) the excess contribution was due to incorrect information that the plan
provided; and
(3) you took no tax deduction for the excess contribution.
ROLLOVERS AND TRANSFERS
Rollover contributions may be made to a Traditional IRA from these sources:
o qualified plans;
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Tax information 29
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o TSAs (including Internal Revenue Code Section 403(b)(7) custodial
accounts); and
o other Traditional IRAs.
Any amount contributed to a Traditional IRA after you reach 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.
ROLLOVERS FROM QUALIFIED PLANS OR TSAS
There are two ways to do rollovers:
o Do it yourself
You actually receive a distribution that can be rolled over and you roll it over
to a Traditional IRA within 60 days after the date you receive the funds. The
distribution from your qualified plan or TSA will be net of 20% mandatory
federal income tax withholding. If you want, you can replace the withheld funds
yourself and roll over the full amount.
o Direct rollover
You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send
the distribution directly to your Traditional IRA issuer. Direct rollovers are
not subject to mandatory federal income tax withholding.
All distributions from a TSA or qualified plan are eligible rollover
distributions and may be rolled over tax-free to an IRA unless the distribution
is:
o only after-tax contributions you made to the plan;
o required minimum distributions after age 70 1/2 or separation from
service;
o substantially equal periodic payments made at least annually for your life
(or life expectancy) or the joint lives (or joint life expectancies) of you
and your designated beneficiary;
o substantially equal periodic payments made for a specified period of 10
years or more;
o a hardship withdrawal;
o corrective distributions which fit specified technical tax rules;
o loans that are treated as distributions;
o a death benefit payment to a beneficiary who is not your surviving spouse;
and
o a qualified domestic relations order distribution to a beneficiary who is
not your current spouse or former spouse.
ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS
You may roll over amounts from one Traditional IRA to one or more of your other
Traditional IRAs if you complete the transaction within 60 days after you
receive the funds. You may make such a rollover only once in every 12-month
period for the same funds. Trustee-to-trustee or custodian-to-custodian direct
transfers are not rollover transactions. You can make these more frequently than
once in every 12-month period.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Traditional IRA to one or more other Traditional
IRAs. Also, in some cases, Traditional IRAs can be transferred on a tax-free
basis between spouses or former spouses as a result of a court ordered divorce
or separation decree.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
No federal income tax law restrictions on withdrawals
You can withdraw any or all of your funds from a Traditional IRA at any time.
You do not need to wait for a special event like retirement.
TAXATION OF PAYMENTS
Earnings in Traditional IRAs are not subject to federal income tax until you or
your beneficiary receive them. Taxable payments or distributions include
withdrawals from your contract, surrender of your contract and annuity payments
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30 Tax information
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from your contract. Death benefits are also taxable. Except as discussed below,
the total amount of any distribution from a Traditional IRA must be included in
your gross income as ordinary income.
If you have ever made nondeductible IRA contributions to any Traditional IRA (it
does not have to be to this particular Traditional IRA contract), those
contributions are recovered tax free when you get distributions from any
Traditional IRA. You must keep permanent tax records of all of your
nondeductible contributions to Traditional IRAs. At the end of any year in which
you have received a distribution from any Traditional IRA, you calculate the
ratio of your total nondeductible Traditional IRA contributions (less any
amounts previously withdrawn tax free) to the total account balances of all
Traditional IRAs you own at the end of the year plus all Traditional IRA
distributions made during the year. Multiply this by all distributions from the
Traditional IRA during the year to determine the nontaxable portion of each
distribution.
In addition, a distribution is not taxable if:
o the amount received is a withdrawal of excess contributions, as described
under "Excess contributions" above;
o the entire amount received is rolled over to another Traditional IRA (see
"Rollovers and transfers" above); or
o in certain limited circumstances, where the Traditional IRA acts as a
"conduit," you roll over the entire amount into a qualified plan or TSA
that accepts rollover contributions. To get this "conduit" Traditional IRA
treatment:
-- the source of funds you used to establish the Traditional IRA
must have been a rollover contribution from a 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.
However, you may lose conduit treatment, if you make an eligible rollover
distribution contribution to a Traditional IRA and you commingle this
contribution with other contributions. In that case, you may not be able to roll
over these eligible rollover distribution contributions and earnings to another
qualified plan or TSA at a future date. Since the Income Manager annuity is
intended to be a payout contract, it may not be an appropriate contract if you
plan to use it as a conduit IRA.
Distributions from a Traditional IRA are not eligible for favorable five-year
averaging (or, in some cases, ten-year averaging and long-term capital gain
treatment) available to certain distributions from qualified plans.
REQUIRED MINIMUM DISTRIBUTIONS
Lifetime required minimum distributions
You must start taking annual distributions from your Traditional IRAs beginning
at age 70 1/2.
When you have to take the first required minimum distribution
The first required minimum distribution is for the calendar year in which you
turn age 70 1/2. You have the choice to take this first required minimum
distribution during the calendar year you actually reach age 70 1/2, or to
delay taking it until the first three-month period in the next calendar year
(January 1 - April 1). Distributions must start no later than your "required
beginning date," which is April 1st of the calendar year after 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 each
year.
HOW YOU CAN CALCULATE REQUIRED MINIMUM DISTRIBUTIONS
There are two approaches to taking required minimum distributions --
"account-based" or "annuity-based."
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Tax information 31
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Account based method
If you choose an "account-based" method, you divide the value of your
Traditional IRA as of December 31st of the past calendar year by a life
expectancy factor from IRS tables. This gives you the required minimum
distribution amount for that particular IRA for that year. The required minimum
distribution amount will vary each year as the account value and your life
expectancy factors change.
You have a choice of life expectancy factors, depending on whether you choose a
method based only on your life expectancy, or the joint life expectancies of you
and another individual. You can decide to "recalculate" your life expectancy
every year by using your current life expectancy factor. You can decide instead
to use the "term certain" method, where you reduce your life expectancy by one
every year after the initial year. If your spouse is your designated beneficiary
for the purpose of figuring out annual account-based required minimum
distributions, you can also annually "recalculate" your spouse's life expectancy
if you want. If you choose someone who is not your spouse as your designated
beneficiary for the purpose of figuring out annual account-based required
minimum distributions, you have to use the "term certain" method of calculating
that person's life expectancy. If you pick a nonspouse designated beneficiary,
you may also have to do another special calculation.
You can later apply your Traditional IRA funds to a life annuity-based payout.
You can only do this if you already chose to recalculate your life expectancy
annually (and your spouse's life expectancy if you select a spousal joint
annuity).
Annuity based method
If you choose an "annuity-based" method, you do not have to do annual
calculations. You apply the account value to an annuity payout for your life or
the joint lives of you and a designated beneficiary, or for a period certain not
extending beyond applicable life expectancies.
Do you have to pick the same method to calculate your required minimum
distributions for all of your Traditional IRAs and other retirement plans?
No. If you want, you can choose a different method and a different beneficiary
for each of your Traditional IRAs and other retirement plans. For example, you
can choose an annuity payout from one IRA, a different annuity payout from a
qualified plan, and an account-based annual withdrawal from another IRA.
Will we pay you the annual amount every year from your Traditional IRA based on
the method you choose?
No, we do not automatically make distributions from your contract before your
annuity payments begin.
What if you take more than you need to for any year?
The required minimum distribution amount for your Traditional IRAs is calculated
on a year-by-year basis. There are no carry-back or carry-forward provisions.
Also, you cannot apply required minimum distribution amounts you take from your
qualified plans to the amounts you have to take from your Traditional IRAs and
vice-versa. However, the IRS will let you figure out the required minimum
distribution for each Traditional IRA that you maintain, using the method that
you picked for that particular IRA. You can add these required minimum
distribution amount calculations together. As long as the total amount you take
out every year satisfies your overall Traditional IRA required minimum
distribution amount, you may choose to take your annual required minimum
distribution from any one or more Traditional IRAs that you own.
What if you take less than you need to for any year?
Your IRA could be disqualified, and you could have to pay tax on the entire
value. Even if your IRA is not disqualified, you could have to pay a 50% penalty
tax on the shortfall (required amount for Traditional IRAs less amount actually
taken). It is your responsibility to meet the required minimum distribution
rules. We will remind you when our records show that your age 70 1/2 is
approaching. If you do not select
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a method with us, we will assume you are taking your required minimum
distribution from another Traditional IRA that you own.
What are the required minimum distribution payments after you die?
If you die after either (a) the start of annuity payments, or (b) your required
beginning date, your beneficiary must receive payment of the remaining values in
the contract at least as rapidly as under the distribution method before your
death. In some circumstances, your surviving spouse may elect to become the
owner of the Traditional IRA and halt distributions until he or she reaches age
70 1/2.
If you die before your required beginning date and before annuity payments
begin, federal tax rules require complete distribution of your entire value in
the contract within five years after your death. Payments to a designated
beneficiary over the beneficiary's life or over a period certain that does not
extend beyond the beneficiary's life expectancy are also permitted, if these
payments start within one year of your death. A surviving spouse beneficiary can
also (a) delay starting any payments until you would have reached age 70 1/2 or
(b) roll over your Traditional IRA into his or her own Traditional IRA.
Important information about minimum distributions under your contract
Although the life contingent annuity portion of the life annuity with a period
certain does not have a cash value, it will be assigned a value for tax
purposes. This value will generally be changed each year. When you determine the
amount of account-based required minimum distributions from your IRA this value
must be included. This must be done before annuity payments begin even though
the life contingent annuity may not be providing a source of funds to satisfy
the required minimum distribution.
You will generally be required to determine your required minimum distribution
by annually recalculating your life expectancy. Recalculation is no longer
required once the only payments you or your spouse receive are under the life
contingent annuity.
If you surrender your contract, or withdraw any remaining account value before
your annuity payments begin, it may be necessary for you to satisfy your
required minimum distribution by moving forward the start date of payments under
your life contingent annuity. Or to the extent available, you have to take
distributions from other IRA funds you may have. Or, you may convert your IRA
life contingent annuity under the IRA contract to a nonqualified life contingent
annuity. This would be viewed as a distribution of the value of the life
contingent annuity from your IRA, and therefore, would be a taxable event.
However, since the life contingent annuity would no longer be part of the IRA,
you would not have to include its value when determining future required minimum
distributions.
If you have elected a joint and survivor form of the life contingent annuity,
the joint annuitant must be your spouse. You must determine your required
minimum distribution by annually recalculating both your life expectancy and
your spouse's life expectancy. Once the only payments you or your spouse are
receiving are under the life contingent annuity recalculation is no longer
required. In the event of your death or the death of your spouse the value of
such annuity will change. For this reason, it is important that someone tell us
if you or your spouse dies before the life contingent annuity has started
payments so that a lower valuation can be made. Otherwise, a higher tax value
may result in an overstatement of the amount that would be necessary to satisfy
your required minimum distribution amount.
Allocation of funds to the life contingent annuity may prevent the contract from
later receiving conduit IRA treatment.
SUCCESSOR ANNUITANT AND OWNER
If your spouse is the sole primary beneficiary and elects to become the
successor annuitant and owner, no death benefit is payable until your surviving
spouse's death.
PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH
IRA death benefits are taxed the same as IRA distributions.
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Tax information 33
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BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS
You cannot get loans from a Traditional IRA. You cannot use a Traditional IRA as
collateral for a loan or other obligation. If you borrow against your IRA or use
it as collateral, its tax-favored status will be lost as of the first day of the
tax year in which this prohibited event occurs. If this happens, you must
include the value of the Traditional IRA in your federal gross income. 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.
EARLY DISTRIBUTION PENALTY TAX
A penalty tax of 10% of the taxable portion of a distribution applies to
distributions from a Traditional IRA made before you reach age 59 1/2. The
extra penalty tax does not apply to pre-age 59 1/2 distributions made:
o on or after your death;
o because you are disabled (special federal income tax definition);
o used to pay certain extraordinary medical expenses (special federal
income tax definition);
o used to pay medical insurance premiums for unemployed individuals
(special federal income tax definition);
o used to pay certain first-time home buyer expenses (special federal
income tax definition);
o used to pay certain higher education expenses (special federal income
tax definition); or
o in the form of substantially equal periodic payments made at least
annually over your life (or your life expectancy), or over the joint
lives of you and your beneficiary (or your joint life expectancy)
using an IRS-approved distribution method.
WILL PAYMENTS WE MAKE TO YOU FROM THE LIFE ANNUITY WITH A PERIOD CERTAIN WHILE
YOU ARE UNDER AGE 59 1/2 QUALIFY AS SUBSTANTIALLY EQUAL PAYMENTS FOR LIFE?
Same as nonqualified annuities under "Early distribution penalty tax."
FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
We must withhold federal income tax from distributions from annuity contracts.
You may be able to elect out of this income tax withholding in some cases.
Generally, we do not have to withhold if your distributions are not taxable. The
rate of withholding will depend on the type of distribution and, in certain
cases, the amount of your distribution. Any income tax withheld is a credit
against your income tax liability. If you do not have sufficient income tax
withheld or do not make sufficient estimated income tax payments, you may incur
penalties under the estimated income tax rules.
You must file your request not to withhold in writing before the payment or
distribution is made. Our Processing Office will provide forms for this purpose.
You cannot elect out of withholding unless you provide us with your correct
Taxpayer Identification Number and a United States residence address. You cannot
elect out of withholding if we are sending the payment out of the United States.
We might have to withhold on amounts we pay under a free look or cancellation.
Special withholding rules apply to foreign recipients and United States citizens
residing outside the United States. We do not discuss these rules here. Certain
states have indicated that state income tax withholding will also apply to
payments from the contracts made to residents. In some states, you may elect out
of state withholding, even if federal withholding applies. 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 their toll-free number.
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34 Tax information
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If you are receiving periodic and/or non-periodic payments, you will be notified
of the withholding requirements and of your right to make withholding elections.
FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS
We withhold differently on "periodic" and "non-periodic" payments. For a
periodic annuity payment, for example, unless you specify a different number of
withholding exemptions, we withhold assuming that you are married and claiming
three withholding exemptions. If you do not give us your correct Taxpayer
Identification Number, we withhold as if you are single with no exemptions.
Based on the assumption that you are married and claiming three withholding
exemptions, if you receive less than $14,700 in periodic annuity payments in
1999 your payments will generally be exempt from federal income tax withholding.
You could specify a different choice of withholding exemption or request that
tax be withheld. Your withholding election remains effective unless and until
you revoke it. You may revoke or change your withholding election at any time.
FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS
For a non-periodic distribution (total surrender or partial withdrawal) we
generally withhold at a flat 10% rate. We apply that rate to the taxable amount
in the case of nonqualified contracts, and to the payment amount in the case of
IRAs.
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6
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ABOUT OUR FIXED MATURITY OPTIONS
HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT. We use the following procedure to
calculate the market value adjustment (up or down) we make if you withdraw all
of your value from a fixed maturity option before its maturity date.
(1) We determine the market adjusted amount on the date of the withdrawal as
follows:
(a) We determine the fixed maturity amount that would be payable on the
maturity date, using the rate to maturity for the fixed maturity
option.
(b) We determine the period remaining in your fixed maturity option (based
on the withdrawal 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 rate to maturity that applies on the
withdrawal date to new allocations to the same fixed maturity option.
(d) We determine the present value of the fixed maturity amount payable at
the maturity date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the fixed maturity 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 fixed maturity option, which may be positive
or negative.
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Your market adjusted amount is the present value of the maturity value
discounted at the rate to maturity in effect for new contributions to that same
fixed maturity option on the date of the calculation.
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If you withdraw only a portion of the amount in a fixed maturity option, the
market value adjustment will be a percentage of the market value adjustment that
would have applied if you had withdrawn the entire value in that fixed maturity
option. This percentage is equal to the percentage of the value in the fixed
maturity option that you are withdrawing. See the Appendix to this prospectus
for an example of how we calculate the market value adjustment.
For purposes of calculating the rate to maturity for new allocations to a fixed
maturity option (see (1)(c) above), we use the rate we have in effect for new
allocations to that fixed maturity option. We use this rate even if new
allocations to that option would not be accepted at that time. This rate will
not be less than 3%. If we do not have a rate to maturity in effect for a fixed
maturity option to which the "current rate to maturity" in (1)(c) would apply,
we will use the rate at the next closest maturity date. If we are no longer
offering new fixed maturity options, the "current rate to maturity" will be
determined in accordance with our procedures then in effect. We reserve the
right to add up to 0.25% to the current rate in (1)(c) above for purposes of
calculating the market value adjustment only.
ABOUT THE SEPARATE ACCOUNT FOR THE FIXED MATURITY OPTIONS
INVESTMENTS. Under New York Insurance law, the portion of the separate account
assets equal to the reserves and other contract liabilities relating to the
contracts are not chargeable with liabilities from any other business we may
conduct. We own the assets of the separate account, as well as any favorable
investment performance on those assets. You do not participate in the
performance of the assets held in this separate account. We may, subject to
state law which applies, transfer all assets allocated to the separate account
to our general account. We guarantee all benefits relating to your account value
in the fixed maturity options regardless of whether assets supporting fixed
maturity options are held in a separate account or our general account.
We have no specific formula for establishing the rates to maturity for the fixed
maturity options. We expect the rates to be influenced by, but not necessarily
correspond to, among other things, the yields that we can expect to realize on
the separate account's investments from time to time. Our current plans are to
invest in fixed-income obligations,
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including corporate bonds, mortgage-backed and asset-backed securities and
government and agency issues having durations in the aggregate consistent with
those of the fixed maturity options.
Although the above generally describes our plans for investing the assets
supporting our obligations under the fixed maturity options, we are not
obligated to invest those assets according to any particular plan except as we
may be required to by state insurance laws. We will not determine the rates to
maturity we establish by the performance of the nonunitized separate account.
ABOUT OUR GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the fixed maturity options, as well as our general
obligations. Amounts applied under the life contingent annuity become part of
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 exemptions
and exclusionary provisions that apply, interests in the general account have
not been registered under the Securities Act of 1933, nor is the general account
an investment company under the Investment Company Act of 1940. However, the
market value adjustment interests under the contracts are registered under the
Securities Act of 1933.
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) and the
life contingent annuity. 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.
OTHER METHODS OF PAYMENT
WIRE TRANSMITTALS
We accept initial contributions sent by wire to our Processing Office by
agreement with certain broker-dealers. The transmittals must be accompanied by
information we require to allocate your contribution. Wire orders not
accompanied by complete information may be retained as described under "How you
can make your contributions."
Even if we accept the wire order and essential information, a contract generally
will not be issued until we receive and accept a properly completed application.
In certain cases we may issue a contract based on information forwarded
electronically. Where we require a signed application, no financial transactions
will be permitted until we receive the signed application and have issued the
contract.
After your contract has been issued, additional contributions under the life
annuity with a period certain contract may be transmitted by wire.
ABOUT PAYMENTS UNDER PERIOD CERTAIN CONTRACTS
The following example illustrates a ten-year level stream of annual payments,
each in the amount of $10,000, purchased on April 1, 1999 with the first payment
on February 15, 2000. To achieve this result, a single contribution of
$78,923.30 is required, and is allocated among the fixed maturity options as
indicated below.
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FEBRUARY 15TH OF PRICE PER $100 OF ALLOCATION OF
CALENDAR YEAR PAYMENT MATURITY VALUE CONTRIBUTION
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2000 $10,000 $ 97.23 $ 9,723.50
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2001 $10,000 $ 92.83 $ 9,282.67
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2002 $10,000 $ 88.51 $ 8,850.98
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2003 $10,000 $ 84.43 $ 8,442.76
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2004 $10,000 $ 80.60 $ 8,059.67
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2005 $10,000 $ 76.45 $ 7,645.43
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2006 $10,000 $ 72.56 $ 7,256.47
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2007 $10,000 $ 69.16 $ 6,915.68
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2008 $10,000 $ 65.55 $ 6,554.98
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2009 $10,000 $ 61.91 $ 6,191.16
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Total $ 78,923.30
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DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR
BUSINESS DAY
Our "business day" is any day the New York Stock Exchange is open for trading.
Each business day ends at the time regular trading on the exchange closes (or is
suspended) for the day. Our business day ends at 4:00 p.m., Eastern Time for
purposes of determining the date when contributions are applied and any other
transaction requests are processed. Contributions will be applied and any other
transaction requests will be processed when they are received along with all the
required information unless another date applies as indicated below.
If your contribution or any other transaction request containing all the
required information, reaches us on a non-business day or after 4:00 p.m. on a
business day, we will use the next business day.
CONTRIBUTIONS
o Contributions allocated to the fixed maturity options will receive the rate
to maturity in effect for that fixed maturity option on that business day.
o Contributions allocated to the separate account to provide for payments off
maturity dates, will receive the interest rate in effect on that business
day or the same rate as the rate to maturity that applied to the expired
fixed maturity option.
o Contributions allocated to the life contingent annuity will be invested at
the purchase rates in effect on that business day.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract 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 has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and services,
including those considered to be mission-critical, to be confirmed as year 2000
compliant, renovated, replaced or the subject of contingency plans, by June 30,
1999, except for one investment accounting system that is scheduled to be
replaced by August 31, 1999 and confirmed as year 2000 compliant by September
30, 1999. Additionally, Equitable Life will be supplementing its existing
business continuity and disaster recovery plans to cover certain categories of
contingencies that could arise as a result of year 2000 related failures. Year
2000 specific contingency plans are anticipated to be in place by June 30, 1999.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is a
"Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information
and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
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ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon our obligations under the contracts, or the distribution of the contracts.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The financial statements of Equitable Life incorporated in this prospectus by
reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and
for the three years ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING
The contracts may not be assigned except through surrender to us. They may not
be borrowed against or used as collateral for a loan or other obligation.
DISTRIBUTION OF CONTRACTS
Equitable Distributors, Inc. ("EDI") and EQ Financial Consultants, Inc. ("EQF"),
indirect, wholly owned subsidiaries of Equitable Life, are the distributors of
the contracts and have responsibility for sales and marketing functions. EDI and
EQF are registered with the SEC as broker-dealers and are members of the
National Association of Securities Dealers, Inc. The principal business address
of EDI and EQF is 1290 Avenue of the Americas, New York, New York 10104. Under a
distribution agreement between Equitable Life, certain of Equitable Life's
separate accounts, including the separate account that contains the fixed
maturity options, and EDI, Equitable Life paid EDI distribution fees of $129,520
for 1998, $962,599 for 1997 and $202,400 for 1996, as the distributor of the
contracts. Under a distribution and services agreement between EQF, Equitable
Life and certain of Equitable Life's separate accounts, including the separate
account that contains the fixed maturity options, Equitable Life paid EQF
$325,380 for 1998, as the distributor for certain contracts including these
contracts. During 1999, EQF plans to change its name to AXA Advisors, Inc.
The contracts will be sold by registered representatives of EDI and EQF as well
as by affiliated and unaffiliated broker-dealers with which EDI and/or EQF has
entered into selling agreements. Broker-dealer sales compensation will generally
not exceed 5% of total contributions made under the contracts. EDI and EQF may
also receive compensation and reimbursement for its marketing services under the
terms of their distribution agreements with Equitable Life. Broker-dealers
receiving sales compensation will generally pay a portion of it to their
registered representatives as commissions related to sales of the contracts. The
offering of the contracts is intended to be continuous.
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Incorporation of certain documents by reference 39
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7
Incorporation of certain documents by reference
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Equitable Life's annual report on form 10-K for the year ended December 31, 1998
and a current report on form 8-K dated April 9, 1999, are considered to be part
of this prospectus because they are incorporated by reference.
After the date of the prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the SEC
under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to
become part of this prospectus because they are incorporated by reference.
Any statement contained in a document that is or becomes part of this
prospectus, will be considered changed or replaced for purposes of this
prospectus if a statement contained in this prospectus changes or is replaced.
Any statement that is considered to be a part of this prospectus because of its
incorporation, will be considered changed or replaced for the purpose of this
prospectus if a statement contained in any other subsequently filed document
that is considered to be part of this prospectus changes or replaces that
statement. After that, only the statement that is changed or replaced will be
considered to be part of this prospectus.
We file our exchange act documents and reports, including our annual and
quarterly reports on form 10-K and form 10-Q, electronically according to EDGAR
under CIK No. 0000727920. The SEC maintains a website 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.
Upon written or oral request, we will provide, free of charge, to each person to
whom this prospectus is delivered a copy of any or all of the documents
considered to be part of this prospectus because they are incorporated herein.
This does not include exhibits not specifically incorporated by reference into
the text of such documents. Requests for 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).
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Appendix: Market value adjustment example
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Appendix: Market value adjustment example
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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, 2000 to a fixed maturity option with a maturity date of February
15, 2009 at a rate to maturity of 7.00% resulting in a maturity value at the
maturity date of $183,846, and further assuming that a withdrawal of $50,000 was
made on February 15, 2004.
<TABLE>
<CAPTION>
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ASSUMED RATE TO MATURITY
ON FEBRUARY 15, 2004
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5.00% 9.00%
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<S> <C> <C>
AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL)
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(1) Market adjusted amount $144,048 $119,487
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(2) Fixed maturity amount $131,080 $131,080
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(3) Market value adjustment:
(1) - (2) $ 12,968 $(11,593)
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ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL)
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(4) Portion of the market adjusted amount associated with withdrawal:
(3) x [$50,000/(1)] $ 4,501 $ (4,851)
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(5) Reduction in fixed maturity amount:
[$50,000 - (4)] $ 45,499 $ 54,851
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(6) Fixed maturity amount: (2) - (5) $ 85,581 $ 76,229
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(7) Maturity value $120,032 $106,915
- -------------------------------------------------------------------------------------------------
(8) Market adjusted amount of (7) $ 94,048 $ 69,487
- -------------------------------------------------------------------------------------------------
</TABLE>
You should note that if a withdrawal is made when rates have increased from
7.00% to 9.00% (right column), 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% (left column), a portion of a positive market
value adjustment is realized.
