SUPPLEMENT TO THE
OVERTURE ANNUITY III
PROSPECTUS
THIS SUPPLEMENT IS A REVISED APPENDIX C, TO REPLACE THE
APPENDIX C IN YOUR PROSPECTUS.
THE DATE OF THIS SUPPLEMENT IS JANUARY 2, 1997.
APPENDIX C
QUALIFIED DISCLOSURES
* Information Statement For:
408(b) IRA Plans
408(k) SEP Plans
408(p) SIMPLE Plans (if available)
* Information Statement For:
401(a) Pension/Profit Sharing Plans
403(b) ERISA Plans
403(b) Tax Sheltered Annuity (TSA) Plans-Withdrawal
Restrictions
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
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If this annuity is being purchased as a qualified plan as defined under
specified sections of the Internal Revenue Code, as purchaser (owner) or
fiduciary of an Employee Benefit Plan purchasing the annuity, you should
carefully review the Information Statement for your specific plan.
Depending on the type of plan, we are required to provide this disclosure to you
to meet the requirements of the Internal Revenue Service (IRS) and/or the
Employee Retirement Income Security Act of 1974 (ERISA).
Acknowledgment of your receipt of the required disclosure is included within the
application language above your signature.
Table of Contents
Information Statement
408(b) Individual Retirement Annuity (IRA) Plans
408(k) Simplified Employee Pension (SEP) Plans
408(p) Savings Incentive Match (SIMPLE) Plans (if available).... QD-1
Information Statement
401(a) Pension/Profit Sharing Plans............................. QD-7
403(b) ERISA Plans
403(b) Tax Sheltered Annuity (TSA) Plans - Withdrawal Restrictions
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AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
INFORMATION STATEMENT
408(B) INDIVIDUAL RETIREMENT ANNUITY (IRA) PLANS
408(K) SIMPLIFIED EMPLOYEE PENSION (SEP) PLANS
408(P) SAVINGS INCENTIVE MATCH (SIMPLE) PLANS (IF AVAILABLE)
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For purchasers of a 408(b) Individual Retirement Annuity (IRA) Plan, 408(k)
Simplified Employee Pension (SEP) Plan, or 408(p) Savings Incentive Match
(SIMPLE) Plan (if available), please review the following:
PART 1. PROCEDURE FOR REVOKING THE IRA PLAN:
After you establish an IRA Plan with Ameritas Variable Life Insurance Company
(AVLIC), you are able to revoke your IRA within a limited time and receive a
full refund of the initial premium paid, if any. The period for revocation will
not be less than the legal minimum of seven (7) days following the date your IRA
is established with AVLIC.
To revoke your IRA, you should send a signed and dated written notice to:
Ameritas Variable Life Insurance Company, Policyholder Service Department, P.O.
Box 82550, Lincoln, NE 68501.
If your IRA contract was delivered to you, the contract should accompany your
notice of revocation. Your notice of revocation will be considered mailed on the
date of the postmark (or certification or registration, if applicable), if sent
by United States mail, properly addressed and by first class postage prepaid.
To obtain further information about the revocation procedure, contact your AVLIC
Representative or call 1-800-745-1112.
PART II. PROVISIONS OF THE IRA LAW:
AVLIC's OVERTURE ANNUITY III (Form 4784), can be used for a Regular IRA, a
Rollover IRA, a Spousal IRA Arrangement, a Simplified Employee Pension Plan
(SEP) or for a salary reduction Simplified Employee Pension Plan (SARSEP)
established prior to January 1, 1997. A separate policy must be purchased for
each individual under each plan. In addition, AVLIC's OVERTURE Annuity III, at
some point after December 31 1996, may be made available for use as a SIMPLE
IRA, if AVLIC determines such use is appropriate under applicable law.
While provisions of the IRA law are similar for all such plans, any major
differences are set forth under the appropriate topics below.
ELIGIBILITY:
REGULAR IRA PLAN: Any employee under age 70 1/2 and earning income from
personal services, is eligible to establish an IRA Plan although deductibility
of the contributions is determined by adjusted gross income and whether the
employee (or employee's spouse) participates in a qualified employer-sponsored
retirement plan.
ROLLOVER IRA: This is an IRA plan purchased with your distributions from
another IRA (including a SEP, SARSEP or SIMPLE IRA), a Section 401(a)
Qualified Retirement Plan, or a Section 403(b) Tax Sheltered Annuity (TSA).
Amounts transferred as Rollover Contributions are not taxable in the year of
distribution provided the rules for Rollover treatment are satisfied and may
or may not be subject to withholding. Rollover Contributions are not
deductible.
SPOUSAL IRA ARRANGEMENT: A Spousal IRA, consisting of a contract for each
spouse, may be set up provided a joint return is filed, the "nonworking
spouse" has less taxable compensation, if any, for the tax year than the
working spouse, and is under age 70 1/2 at the end of the tax year.
Divorced spouses can continue a spousal IRA or start a Regular IRA based on
the standard IRA eligibility rules. All taxable alimony received by the
divorced spouse under a decree of divorce or separate maintenance is treated
as compensation for purposes of the IRA deduction limit.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP): An employee is eligible to participate
in a SEP Plan based on eligibility requirements set forth in form 5305-SEP or
the plan document provided by the employer.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SARSEP): An employee is
eligible to participate in a SARSEP plan based on eligibility requirements set
forth in form 5305A-SEP or the plan document provided by the employer. New
SARSEP plans may not be established after December 31, 1996. SARSEP's
established prior to January 1, 1997, may continue to receive contributions
after 1996, and new employees hired after 1996 are also permitted to
participate in such plan if it was established prior to 1997.
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES OF SMALL EMPLOYERS (SIMPLE PLAN)
(IF AVAILABLE): An employee is eligible to participate in a SIMPLE Plan based
on eligibility requirements set forth in Form 5305-SIMPLE or the plan document
provided by the employer.
NONTRANSFERABILITY: You may not transfer, assign or sell your IRA Plan to
anyone (except in the case of transfer incident to divorce).
NONFORFEITABILITY: The value of your IRA Plan belongs to you at all times,
without risk of forfeiture.
PREMIUM: The annual premium (if applicable) of your IRA Plan may not exceed
the lesser of $2,000, or 100% of compensation for the year (or for Spousal
IRA's, the combined compensation of the spouses reduced by any deductible IRA
contribution made by the working spouse). Any premium in excess of or in
addition to $2,000 will be permitted only as a "Rollover Contribution." Your
contribution must be made in cash. For IRA's established under Simplified
Employee Pension Plans (SEP's), premiums are limited to the lesser of $30,000
or 15% of the first $150,000 of compensation (adjusted for cost of living
increases). In addition, if the IRA is under a salary reduction Simplified
Employee Pension (SARSEP) established prior to January 1, 1997, premiums made
by salary reduction are limited to $7,000 (adjusted for cost of living
increases). Also, if the Company determines that the contract can be used as a
SIMPLE IRA under applicable law, premiums under such plan will be limited to
permissible levels of annual employee elective contributions ($6,000 adjusted
for cost of living increases) plus the applicable percentage of employer
matching contributions (up to 3% of compensation) or employer non-elective
contributions (2% of compensation for each eligible employee subject to the
cap under Section 401(a)(17) as adjusted for cost of living increases).
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ANNUITY III:12/96
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MAXIMUM CONTRIBUTIONS:
REGULAR IRA PLAN: In any year that your annuity is maintained under the rules
for a Regular IRA Plan, your maximum contribution is limited to 100% of your
compensation or $2,000, whichever is less. The amount of permissible
contributions to your IRA may or may not be deductible. Whether IRA
contributions (other than Rollovers) are deductible depends on whether you (or
your spouse, if married) are an active participant in an employer-sponsored
plan and whether your adjusted gross income is above the "phase-out level."
SEE DEDUCTIBLE CONTRIBUTIONS, PART III.
ROLLOVER IRA: A Plan to Plan Rollover is a method for accomplishing continued
tax deferral on otherwise taxable distributions from certain plans. Rollover
contributions are not subject to the contribution limits on regular IRA
contributions, but also are not tax deductible.
There are two ways to make a rollover to an IRA:
(1) PARTICIPANT ROLLOVERS are available to participants, surviving spouses
or former spouses who receive eligible rollover distributions from
401(a) Qualified Retirement Plans, TSAs or IRAs (including SEP's,
SARSEP's, and SIMPLE IRA's). Participant Rollovers are accomplished by
contributing part or all of the eligible amounts (which includes amounts
withheld for federal income tax purposes) to your new IRA within 60 days
following receipt of the distribution. IRA to IRA Rollovers are limited
to one per distributing plan per 12 month period, while direct IRA to
IRA Transfers are not subject to this limitation. Distributions from a
SIMPLE IRA may not be rolled over to an IRA (which isn't a SIMPLE IRA)
during the 2 year period following the date you first participate in any
qualified salary reduction arrangement under a SIMPLE Plan maintained by
your employer.
(2) DIRECT ROLLOVERS are available to participants, surviving spouses and
former spouses who receive eligible rollover distributions from 401(a)
Qualified Retirement Plans or TSAs. Direct Rollovers are made by
instructing the plan trustee, custodian or issuer to pay the eligible
portion of your distribution directly to the trustee, custodian or
issuer of the receiving IRA. Direct Rollover amounts are not subject to
mandatory federal income tax withholding.
Certain distributions are NOT considered to be eligible for Rollover and
include: (1) distributions which are part of a series of substantially equal
periodic payments (made at least annually) for 10 years or more; (2)
distributions attributable to after-tax employee contributions to a 401(a)
Qualified Retirement Plan or TSA, or attributable to non-deductible IRA
contributions; (3) required minimum distributions made during or after the year
you reach age 70 1/2 or, if later and applicable, the year in which you retire;
(4) amounts in excess of the cash (except for certain loan offset amounts) or in
excess of the proceeds from the sale of property distributed.
At the time of a Rollover, you must irrevocably designate in writing that the
transfer is to be treated as a Rollover Contribution. Eligible amounts which are
not rolled over are normally taxed as ordinary income in the year of
distribution. If a Rollover Contribution is made to an IRA from a Qualified
Retirement Plan, you may later be able to roll the value of the IRA into a new
employer's plan provided you made no contributions to the IRA from other than
the first employer's plan. This is known as "Conduit IRA," and you should
designate your annuity as such when you complete your application.
SPOUSAL IRA ARRANGEMENT: In any year that your annuity is maintained under the
rules for a Spousal IRA, the maximum combined contribution to the Spousal IRA
and "working spouse's" IRA for tax years after 1996, is the lesser of 100% of
the combined compensation of both spouses which is includable in gross income,
reduced by the amount allowed as a deduction to the "working" spouse for
contribution to his or her own IRA or $4,000. No more than $2,000 may be
contributed to either spouse's IRA. Whether the contribution is deductible or
non-deductible depends on whether either spouse is an active participant in an
employer-sponsored plan for the year, and whether the adjusted gross income of
the couple is above the phase out level.
The contribution limit for divorced spouses is the lesser of $2,000 or the total
of the taxpayer's taxable compensation and alimony received for the year.
SEP PLAN: In any year that your annuity is maintained under the rules for a
Simplified Employee Pension Plan, the employer's maximum contribution is the
lesser of $30,000 or 15% of your first $150,000 of compensation (adjusted for
cost-of-living increases) or as changed under Section 415 of the Code. You may
also be able to make contributions to your SEP-IRA the same as you do to a
Regular IRA, however, you will be considered an active participant for purposes
of determining your deduction limit. In addition to the above limits, if your
annuity is maintained under the rules for a salary reduction Simplified Employee
Pension Plan (SARSEP), the maximum amount of employee pre-tax contributions
which can be made is $7,000, adjusted for cost of living increases. After
December 31, 1996, new SARSEP plans may not be established. Employees may,
however, continue to make salary reductions to a SARSEP plan established prior
to January 1, 1997. In addition, employees hired after December 31, 1996 may
participate in SARSEP plans established by their employers prior to 1997.
SIMPLE IRA: Contributions to a SIMPLE IRA (if available) may not exceed the
permissible amounts of employee elective contributions and required employer
matching contributions or non-elective contributions. Annual employee elective
contributions must be expressed as a percentage of compensation and may not
exceed $6,000 (adjusted for cost of living increases). If an employer elects a
matching contribution formula, employers are generally required to match
employee contributions dollar for dollar up to 3% of the employee's compensation
for the year. An employer may elect a lower percentage match (not below 1%) for
a year, provided certain notice requirements are satisfied and the employer's
election will not result in the matching percentage being lower than 3% in more
than 2 of the 5 years in the 5-year period ending with that calendar year.
Alternatively, an employer may elect to make non-elective contributions of 2% of
compensation for all employees eligible to participate in the plan and who have
at least $5,000 in compensation for the year. The employer must notify employees
of this election within specified timeframes. "Compensation" for purposes of the
2% non-elective contribution option may not exceed the limit on compensation
under Code Section 401(a)(17) ($150,000, adjusted for cost of living increases).
DISTRIBUTIONS: Payment to you from your IRA Plan must begin no later than the
April 1 following the close of the calendar year in which you attain age 70 1/2,
the Required Beginning Date (RBD). If you have not already withdrawn your entire
balance by this date, you may elect to receive the entire value of your IRA Plan
on or before the RBD in one lump sum; arrange for an income to be paid over your
lifetime, your expected lifetime, or over the lifetimes or expected lifetimes of
you and your beneficiary.
RATE OF DISTRIBUTION: If you arrange for the value of your IRA Plan to be paid
to you as retirement income rather than as one lump sum, then you must abide by
IRS rules governing how quickly the value of your IRA plan must be paid out to
you. Generally, it is acceptable to have an insurance company annuity pay income
to you for as long as you live, or for as long as you and your beneficiary live.
IRA/SEP QD-2
ANNUITY III; 12/96
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MINIMUM DISTRIBUTION REQUIREMENTS: Once you reach your RBD, you must withdraw a
minimum amount each year or be subject to a 50% non-deductible excise tax on the
difference between the minimum required distribution and the amount distributed.
To determine the required minimum distribution, divide your entire interest in
your IRA (as of December 31 of your age 70 1/2 year) by your life expectancy or
the joint life expectancies of you and your beneficiary. Your single or joint
life expectancy is determined by using IRS life expectancy tables. See IRS
Publications 575 and 590.
Your life expectancy (and that of your spousal beneficiary, if applicable) will
be recalculated annually, unless you irrevocably elect otherwise by the time
distributions are required to begin. With the recalculation method, if a person
whose life expectancy is recalculated dies, his or her life expectancy will be
zero in all subsequent years. The life expectancy of a non-spouse beneficiary
cannot be recalculated. Where life expectancy is not recalculated, it is reduced
by one year for each year after your 70 1/2 year to determine the applicable
remaining life expectancy. Also, if your benefit is payable in the form of a
joint and survivor annuity, a larger minimum distribution amount may be required
under IRS regulations, unless your spouse is the designated beneficiary.
If you die after the RBD, amounts undistributed at your death must be
distributed at least as rapidly as under the method being used at the time of
your death. If you die before the RBD, your entire interest must be distributed
within 5 years of your death if no beneficiary is designated; or if a
beneficiary is designated, over the life expectancy of the beneficiary if the
beneficiary so elects by December 31 of the year following the year of your
death. If the beneficiary fails to make an election, the entire benefit will be
paid to the beneficiary no later than December 31, of the calendar year
containing the fifth anniversary of the Annuitant's death. Also, if a designated
beneficiary is the spouse, the life annuity distribution must begin by the later
of December 31 of the calendar year following the calendar year of the
Annuitant's death or December 31 of the year in which you would have attained
age 70 1/2. If your designated beneficiary is not your spouse, life annuity
distributions must begin by December 31 of the year following your death.
PART III. RESTRICTIONS AND TAX CONSIDERATIONS:
TIMING OF CONTRIBUTIONS: Once you establish an IRA, contributions (deductible or
non-deductible) must be made by the due date, not including extensions, for
filing your tax return. (Participant Rollovers must be made within 60 days of
your receipt of the distribution.) A CONTRIBUTION MADE BETWEEN JANUARY 1 AND THE
FILING DUE DATE FOR YOUR RETURN, MUST BE SUBMITTED WITH WRITTEN DIRECTION THAT
IT IS BEING MADE FOR THE PRIOR PLAN YEAR OR IT WILL BE TREATED AS MADE FOR THE
CURRENT YEAR. SEP contributions must be made by the due date of the Employer's
tax return (including extensions). SIMPLE IRA contributions, if permitted, must
be made by the tax return due date for the employer (including extensions) for
the year for which the contribution is made. Note, an employer is required to
make SIMPLE plan contributions attributable to employee elective contributions
as soon as it is administratively feasible to segregate these contributions from
the employer's general assets, but in no event later than the 30th day of the
month following the month in which the amounts would have otherwise been payable
to the employee in cash.
DEDUCTIBLE IRA CONTRIBUTIONS: The amount of permissible contributions to your
IRA may or may not be deductible. If you or your spouse are not active
participants in an employer sponsored retirement plan, any permissible
contribution you make to your IRA will be deductible. If you or your spouse are
an active participant in an employer-sponsored retirement plan, the size of your
deduction if any, will depend on your combined adjusted gross income (AGI). If
your combined AGI is less than $40,000, you can deduct your entire contribution.
If you are single and your AGI is less than $25,000, you may also take a full
deduction. For married couples filing joint returns, the deduction is phased out
between $40,000 and $50,000. For single individuals, the deduction is phased out
between $25,000 and $35,000. If you are married and covered by an employer plan,
but file a separate tax return from your spouse, your deduction is phased out
between $0 and $10,000 of AGI. If your AGI is not above the applicable phase out
level, a minimum contribution of $200 is permitted regardless of whether the
phase out rules provide for a lesser amount. You can elect to treat deductible
contributions as non-deductible. SEP, SARSEP and SIMPLE plan contributions are
not deductible by you.
NON-DEDUCTIBLE IRA CONTRIBUTIONS: It is possible for you to make non-deductible
contributions to your IRA (not including SIMPLE IRA's) even if you are not
eligible to make deductible contributions for the year. The amount of
non-deductible contributions you can make depends on the amount of deductible
contributions you make. The sum of your non-deductible and deductible
contributions for a year may not exceed the lesser of (1) $2,000 ($4,000
combined when a spousal IRA is also involved), or (2) 100% of your compensation
(or, if a Spousal IRA is involved, 100% of you and your spouse's combined
compensation, reduced by the amount of any deductible IRA contribution made by
the "working" spouse). IF YOU WISH TO MAKE A NON-DEDUCTIBLE CONTRIBUTION, YOU
MUST REPORT THIS ON YOUR TAX RETURN BY FILING FORM 8606 (NON-DEDUCTIBLE IRA).
REMEMBER, YOU ARE REQUIRED TO KEEP TRACK OF YOUR NON-DEDUCTIBLE CONTRIBUTIONS AS
AVLIC DOES NOT KEEP A RECORD OF THESE FOR YOU. THIS INFORMATION WILL BE
NECESSARY TO DOCUMENT THAT THE CONTRIBUTIONS WERE MADE ON A NON-DEDUCTIBLE BASIS
AND THEREFORE, ARE NOT TAXABLE UPON DISTRIBUTION.
EXCESS CONTRIBUTIONS: There is a 6% IRS penalty tax on IRA contributions in
excess of permissible contributions. However, excess contributions made in one
year may be applied against the contribution limits in a later year if the
contributions in the later year are less than the limit. This penalty tax can be
avoided if the excess amount, together with any earnings on it, is returned to
you before the due date of your tax return for the year for which the excess
amount was contributed. The penalty tax will apply to each year the excess
amount remains in the IRA Plan, until it is removed either by having it returned
to you or by making a reduced contribution in a subsequent year. To the extent
an excess contribution is absorbed in a subsequent year by contributing less
than the maximum deduction allowable for that year, the amount absorbed will be
deductible in the year applied (provided you are eligible to take a deduction).
LOANS AND PROHIBITED TRANSACTIONS: You may not borrow from your IRA Plan or
pledge it as security for a loan. This would disqualify your entire IRA Plan,
and its full value would be includable in your taxable income in the year of
violation. This amount would also be subject to the 10% penalty tax on premature
distributions. Your IRA Plan will similarly be disqualified if you or your
beneficiary engage in any transaction prohibited by Section 4975 of the Internal
Revenue Code.
TAXABILITY OF DISTRIBUTIONS: Any cash distribution from your IRA Plan is
normally taxable as ordinary income. All IRAs of an individual are treated as
one contract. All distributions during a taxable year are treated as one
distribution; and the value of the contract, income on the contract, and
investment on the contract is computed as of the close of the calendar year with
or within which the taxable year ends. If an individual withdraws an amount from
an IRA during a taxable year and the individual has previously made both
deductible and non-deductible IRA contributions, the amount excludable from
income for the taxable year is the portion of the amount withdrawn which bears
the same ratio to the amount withdrawn for the taxable year as the individual's
aggregate non-deductible IRA contributions bear to the balance of all IRAs of
the individual.
LUMP SUM DISTRIBUTION: If you decide to receive the entire value of your IRA
Plan in one lump sum, the full amount is taxable when received (except as to
non-deductible contributions), and is not eligible for the special tax rules on
lump sum distributions which are used with other types of Qualified Retirement
Plans.
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ANNUITY III; 12/96
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PREMATURE IRA DISTRIBUTIONS: There is a 10% penalty tax on amounts distributed
prior to the attainment of age 59 1/2, except for: (1) distributions made to a
beneficiary on or after the owner's death; (2) distributions attributable to the
owner's being disabled: (3) distributions that are part of a series of
substantially equal periodic payments (made at least annually) for the life of
the annuitant or the joint lives of the annuitant and his beneficiary; (4)
distributions made on or after January 1, 1997 for medical expenses which exceed
7.5% of the annuitant's adjusted gross income; or (5) distributions made on or
after January 1, 1997, to purchase health insurance for the individual and/or
his or her spouse and dependents if he or she: has received unemployment
compensation for 12 consecutive weeks or more; the distributions are made during
the tax year that the unemployment compensation is paid or the following tax
year; and the individual has not been re-employed for 60 days or more. The part
of a distribution attributable to non-deductible contributions is not includable
in income and is not subject to the 10% penalty. In addition, distributions from
a SIMPLE Plan during the two-year period beginning on the date the employee
first participated in the employer's SIMPLE Plan will be subject to a 25%
(rather than 10%) premature distribution penalty tax.
MINIMUM REQUIRED DISTRIBUTION: SEE PART II, MINIMUM DISTRIBUTION REQUIREMENTS.
An IRA Plan which is not totally distributed to you by April 1 of the year
following the year in which you attain age 70 1/2, must be distributed over one
of the following periods: 1) the entire life of the annuitant; 2) the lives of
the annuitant and his beneficiary; or 3) a period certain not extending beyond
the life expectancy of the annuitant or the joint life and last survivor
expectancy of the annuitant and his beneficiary. Payments must be made in
intervals which do not exceed one year. Payments must be non-increasing or may
increase only as provided in Q & A F-3 of Section 1.401(a)(9)-1 of the Proposed
Income Tax Regulations. If the minimum distribution is not made, the excess, in
any taxable year, of the amount that should have been distributed over the
amount that was actually distributed is subject to an excise tax of 50%.
MAXIMUM DISTRIBUTION: Generally, an excess distribution is an annual
distribution in excess of the annual indexed ceiling ($160,000 in 1997). Excess
distributions are subject to a 15% excise tax. The tax is reduced by any payment
of the 10% excise tax on early withdrawals. Among the items excluded from the
excise tax are distributions after the death of the participant, distributions
payable (and taxable) to an alternate payee under a qualified domestic relations
order (if taxable to the alternate payee), distributions attributable to
after-tax employee contributions, and distributions not includable in income by
reason of a Rollover Contribution. Also, a 15% excise tax is imposed on your
excess retirement accumulation at the time of your death. This amount is the
excess of the value of all accrued benefits under all your IRAs, Qualified
Retirement Plans, and TSAs, over the present value of a single life annuity with
payments equal to the annual ceiling ($160,000 in 1997), payable over your life
expectancy prior to death.
UNDER FEDERAL LEGISLATION SIGNED INTO LAW IN 1996, THE EXCESS DISTRIBUTION
PENALTY TAX DESCRIBED ABOVE IS SUSPENDED FOR DISTRIBUTIONS MADE IN 1997, 1998
AND 1999. DISTRIBUTIONS DURING THIS 3-YEAR "HOLIDAY" WILL BE TREATED AS MADE
FIRST FROM "NON-GRANDFATHERED" AMOUNTS. THIS SUSPENSION DOES NOT APPLY TO THE
EXCESS ACCUMULATION PENALTY TAX WHICH MAY APPLY AT YOUR DEATH.
TAX FILING: You are not required to file a special IRA tax form for any taxable
year (1) for which no penalty tax is imposed with respect to the IRA Plan, and
(2) in which the only activities engaged in, with respect to the IRA Plan, are
making deductible contributions and receiving permissible distributions.
Information regarding such contributions or distributions will be included on
your regular Form 1040. For further information, consult the instructions for
Form 5329 (Additional Taxes Attributable to Qualified Retirement Plans
(including IRA's), Annuities, and Modified Endowment Contracts), Form 8606 and
IRS Publication 590.
TAX ADVICE: AVLIC is providing this general information as required by
regulations issued under the Internal Revenue Code and assumes no responsibility
for its application to your particular tax situation. Please consult your
personal tax advisor regarding specific questions you may have.
ADDITIONAL INFORMATION: You may obtain more information about IRA Plans from any
district office of the IRS and IRS Publication 590.
PART IV. STATUS OF AMERITAS IRA PLAN:
INTERNAL REVENUE SERVICE APPROVAL LETTER: AVLIC will re-apply, due to changes in
the law effective January 1, 1997, for approval from the Internal Revenue
Service as to the form of OVERTURE ANNUITY III (Form 4784), for use in funding
IRA plans. Such approval, when received, is a determination only as to the form
of the Annuity Contract, and does not represent a determination of the merits of
the annuity.
PART V. FINANCIAL DISCLOSURE:
The following is a general description and required financial disclosure
information for the variable annuity product, OVERTURE ANNUITY III (Form 4784)
offered by AVLIC, hereafter referred to as the policy.
In order for you to achieve your retirement objectives, you should be prepared
to make your IRA Plan a long term savings program. An IRA is not suited to
short-term savings, nor was it intended to be by Congress, as indicated by the
penalties on withdrawal before age 59 1/2 (except for death or disability).
However, you should be aware of the values in your IRA Plan during the early
years as well as at retirement.
Prior to the annuity date, the policy allows you to accumulate funds based on
the investment experience of the assets underlying the policy in the Separate
Account or the Fixed Account. Currently, the assets which underlie the Separate
Account are invested exclusively in shares of mutual funds, the "Funds", managed
or administered by several fund managers. Each of the Subaccounts of the
Separate Account invest solely in the corresponding portfolio of the Funds. The
assets of each portfolio are held separately from the other portfolios and each
has distinct investment objectives which are described in the accompanying
prospectus for the Funds which you would have received when making an
application for your annuity. The accumulation value of your IRA Plan allocated
to the Separate Account will vary in accordance with the investment performance
of the Subaccounts you selected. Therefore, for assets in the Separate Account,
you bear the entire investment risk prior to the annuity date.
Premium payments and subsequent allocations to the Fixed Account are placed in
the general account of AVLIC which supports insurance and annuity obligations.
Policyowners are paid interest on the amounts placed in the Fixed Account at
guaranteed rates (3.5%) or at higher rates declared by AVLIC.
ACCUMULATION VALUE: On the effective date, the accumulation value of the policy
is equal to the premium received, reduced by any applicable premium taxes.
Thereafter, the accumulation value of the policy is determined as of the close
of trading on the New York Stock Exchange on each valuation date by multiplying
the number of accumulation units for each Subaccount credited to the policy by
the current value of an accumulation unit for each Subaccount, and by adding the
amount deposited in the Fixed Account, plus interest. The current value of an
accumulation unit reflects
IRA/SEP QD-4
ANNUITY III; 12/96
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the increase or decrease in value due to investment results of the Subaccount
and certain charges, as described below. The number of accumulation units
credited to the policy is decreased by any annual administrative fee and the
annual policy fee, any withdrawals and any charges upon withdrawal and, upon
annuitization, any applicable premium taxes and charges.
A valuation period is the period between successive valuation dates. It begins
at the close of trading on the New York Stock Exchange on each valuation date
and ends at the close of trading on the next succeeding valuation date. A
valuation date is each day that the New York Stock Exchange is open for
business.
The accumulation value is expected to change from valuation period to valuation
period, reflecting the net investment experience of the selected portfolios of
the Funds, interest earned in the Fixed Account, additional premium payments,
partial withdrawals, as well as the deduction of any applicable charges under
the policy. GROWTH IN THE ACCUMULATION VALUE BASED ON INVESTMENTS IN THE ACCOUNT
IS NEITHER GUARANTEED NOR PROJECTED.
VALUE OF ACCUMULATION UNITS: The accumulation units of each Subaccount are
valued separately. The value of an accumulation unit may change each valuation
period according to the net investment performance of the shares purchased by
each Subaccount and the daily charge under the policy for mortality and expense
risks, and if applicable, any federal and state income tax charges.
CASH SURRENDER VALUE: The amount available for full or partial withdrawal, which
is the accumulation value less any contingent deferred sales charge, any
applicable premium taxes, and, in the case of a full withdrawal, the annual
policy and administrative fees.
ANNUAL POLICY FEE: An annual policy fee of $36, $30 in North Dakota is deducted
from the accumulation value on the last valuation date of each policy year and
on a full withdrawal if between policy anniversaries. This charge reimburses
AVLIC for the administrative costs of maintaining the policy on AVLIC's system.
This charge may be increased to a maximum of $50, and may be reduced or
eliminated.
ANNUAL ADMINISTRATIVE FEE: A charge of .20% of the accumulation value is
calculated and deducted from the accumulation value on the last valuation date
of each policy year or on a full withdrawal if between policy anniversaries.
This charge, which is guaranteed not to be increased, is designed to reimburse
AVLIC for administrative expenses incurred in connection with issuing the policy
and ongoing administrative expenses incurred in connection with servicing and
maintaining the policies. These expenses include the cost of processing the
application and premium payment, establishing policy records, processing and
servicing owner transactions and policy changes, recordkeeping, preparing and
mailing reports, processing death benefit claims, and overhead costs.
MORTALITY AND EXPENSE RISK CHARGE: AVLIC imposes a charge to compensate it for
bearing certain mortality and expense risks under the policies. For assuming
these risks, AVLIC makes a daily charge equal to an annual rate of 1.25% of the
value of the average daily net assets of the Account. Of that amount,
approximately .55% is charged to cover the mortality risks and .70% is charged
to cover the expense risks assumed under the policies. This charge is subtracted
when determining the daily accumulation unit value. AVLIC guarantees that this
charge will never increase. If this charge is insufficient to cover assumed
risks, the loss will fall on AVLIC. Conversely, if the charge proves more than
sufficient, any excess will be added to AVLIC's surplus. No mortality and
expense risk charge is imposed on the Fixed Account.
TAXES: AVLIC will, where such taxes are imposed by state law upon the receipt of
a premium payment, deduct premium taxes. If premium taxes are imposed upon
annuitization, AVLIC will deduct applicable premium taxes at that time.
Applicable premium tax rates depend upon such factors as the policyowner's
current state of residency, and the insurance laws and the status of AVLIC in
states where premium taxes are incurred. Currently, premium taxes range from 0%
to 3.5% of the premium paid. Applicable premium tax rates are subject to change
by legislation, administrative interpretations, or judicial acts. The owner will
be notified of any applicable premium taxes.
PARTIAL AND FULL WITHDRAWALS: The owner may make a partial or a full withdrawal
of the policy to receive part or all of the accumulation value (less any
applicable charges), at any time before the annuity date and while the annuitant
is living, by sending a written request to AVLIC. Partial withdrawals may be
either systematic or elective. Systematic withdrawals provide for an automatic
withdrawal, whereas, each elective withdrawal must be elected by the owner.
Systematic partial withdrawals are available on a monthly, quarterly,
semi-annual or annual mode. This withdrawal right may be restricted by Section
403(b)(11) of the Internal Revenue Code if the annuity is used in connection
with a Section 403(b) retirement plan. No partial or full withdrawals may be
made after the annuity date except as permitted under the particular annuity
option. The amount available for a full or partial withdrawal (cash surrender
value) is the accumulation value at the end of the valuation period during which
the written request for withdrawal is received, less any contingent deferred
sales charge, any applicable premium taxes, and in the case of a full
withdrawal, less the annual policy and administrative fees that would be due on
the last valuation date of the policy year. The cash surrender value may be paid
in a lump sum to the owner, or, if elected, all or any part may be paid out
under an annuity income option.
CONTINGENT DEFERRED SALES CHARGE: Since no deduction for a sales charge is made
from the premium payment, a contingent deferred sales charge is imposed on
certain partial and full withdrawals, and upon certain annuitizations to cover
certain expenses relating to the distribution of the policies, including
commissions to registered representatives and other promotional expenses.
Total withdrawals in a policy year which exceed the greater of: 1) 10% of the
accumulation value at the time of the withdrawal, or 2) any portion of the
accumulation value which exceeds the total premium deposit will be subject to a
contingent deferred sales charge (withdrawal charge). Contingent deferred sales
charges are assessed only on premiums paid based upon the number of years since
the policy year in which the premiums withdrawn were paid, on a first-paid,
first-withdrawn basis.
Where a partial or full withdrawal is taken or amounts are applied under an
annuity option, the amount withdrawn or annuitized (less any amount entitled to
the free withdrawal) will be subject to a contingent deferred sales charge
expressed in the following manner:
The charge will be a percentage of the premium payments withdrawn or annuitized.
CHARGE AS A % OF EACH YEARS SINCE RECEIPT OF
PREMIUM PAYMENT EACH PREMIUM PAYMENT
6 1
6 2
6 3
5 4
4 5
3 6
2 7
0 8+
QD-5 IRA/SEP
ANNUITY III; 12/96
<PAGE>
In the case of a partial withdrawal or annuitization, the contingent deferred
sales charge will be deducted from the amounts remaining under the policy. The
charge will be allocated pro rata among the Subaccounts or the Fixed Account
based on the accumulation value in each prior to the withdrawal or annuitization
unless an owner requests a partial withdrawal or annuitization from particular
Subaccounts or the Fixed Account, in which case the charge will be allocated
among those Subaccounts or the Fixed Account in the same manner as the
withdrawal. In the case of a full withdrawal or annuitization, the contingent
deferred sales charge is deducted from the amount paid to the owner. Contingent
deferred sales charges will not be imposed on certain withdrawals if the amounts
withdrawn are applied under annuity income option c or d.
SALES COMMISSIONS: No deductions are made from the premium payments for sales
charges. Compensation to the sales force is a maximum 6.5% based on premiums
paid. To offset the costs of compensation and distribution expenses, a
contingent deferred sales charge as described above is imposed on certain
partial and full withdrawals.
IRA/SEP QD-6
ANNUITY III; 12/96
<PAGE>
AMERITAS VARIABLE LIFE INSURANCE COMPANY LOGO
EMPLOYEE BENEFIT PLAN
INFORMATION STATEMENT
401(A) PENSION/PROFIT SHARING PLANS
403(B) ERISA PLANS
- --------------------------------------------------------------------------------
For purchasers of a 401(a) Pension/Profit Sharing Plan, or 403(b) ERISA Plan,
the purpose of this statement is to inform you as an independent Fiduciary of
the Employee Benefit Plan, of the Sales Representative's relationship to and
compensation from Ameritas Variable Life Insurance Company (AVLIC), as well as
to describe certain fees and charges under the OVERTURE ANNUITY III Policy being
purchased from the Sales Representative.
The Sales Representative is appointed with AVLIC as its Sales Representative and
is a Securities Registered Representative. In this position, the Sales
Representative is employed to procure and submit to AVLIC applications for
contracts, including applications for OVERTURE ANNUITY III.
COMMISSIONS, FEES AND CHARGES
The following commissions, fees and charges apply to OVERTURE ANNUITY III
(policy):
SALES COMMISSION: No deductions are made from the premium payments for sales
charges. Compensation to the Sales Representative's Broker/Dealer is a maximum
of up to 6.5% based on premiums paid. To offset the costs of compensation and
distribution expenses, a contingent deferred sales charge as described below is
imposed on certain partial and full withdrawals.
ANNUAL POLICY AND ADMINISTRATIVE FEES: An annual policy fee of $36, $30 in North
Dakota, is deducted from the accumulation value in the policy on the last
valuation date of each policy year or on a full withdrawal if between policy
anniversaries. This charge reimburses AVLIC for the administrative costs of
maintaining the policy on AVLIC's system. This charge may be increased to a
maximum of $50 and may be reduced or eliminated. The annual administrative fee
is a charge of .20% of the accumulation value calculated and deducted from the
accumulation value on the last valuation date of each policy year or on a full
withdrawal if between policy anniversaries. This charge is guaranteed not to
increase and is designed to reimburse AVLIC for administrative expenses of
issuing, servicing and maintaining the policies. AVLIC does not expect to make a
profit on either of these fees.
MORTALITY AND EXPENSE RISK CHARGE: AVLIC imposes a charge to compensate it for
bearing certain mortality and expense risks under the policies. AVLIC makes a
daily charge equal to an annual rate of 1.25% of the value of the average daily
net assets of the Account under the policies. Of that amount, approximately .55%
is charged to cover the mortality risks and .70% is charged to cover the expense
risks assumed under the policies. This charge is subtracted when determining the
daily accumulation unit value. AVLIC guarantees that this charge will never
increase. If this charge is insufficient to cover assumed risks, the loss will
fall on AVLIC. Conversely, if the charge proves more than sufficient, any excess
will be added to AVLIC's surplus. No mortality and expense risk charge is
imposed on the Fixed Account.
PARTIAL AND FULL WITHDRAWALS: The policyowner may make a partial or a full
withdrawal of the policy to receive part or all of the accumulation value (less
any applicable charges), at any time before the annuity date and while the
annuitant is living by sending a written request to AVLIC. Partial withdrawals
may be either systematic or elective. Systematic withdrawals provide for an
automatic withdrawal, whereas, each elective withdrawal must be elected by the
owner. Systematic partial withdrawals are available on a monthly, quarterly,
semi-annual or annual mode. No partial or full withdrawals may be made after the
annuity date except as permitted under the particular annuity option. The amount
available for partial or full withdrawal (cash surrender value) is the
accumulation value at the end of the valuation period during which the written
request for withdrawal is received, less any contingent deferred sales charge,
any applicable premium taxes, and in the case of a full withdrawal, the annual
policy and administrative fees that would be due on the last valuation date of
the policy year. The cash surrender value may be paid in a lump sum to the
owner, or if elected, all or any part may be paid out under an annuity income
option.
CONTINGENT DEFERRED SALES CHARGE: Since no deduction for a sales charge is made
from the premium payment(s), a contingent deferred sales charge is imposed
unless waived on certain partial and full withdrawals, and upon certain
annuitizations to cover expenses relating to Registered Representatives and
promotional expenses.
Total withdrawals in a policy year which exceed the greater of: (1) 10% of the
accumulation value at the time of the withdrawal, or (2) any portion of the
accumulation value which exceeds the total premium deposit will be subject to a
contingent deferred sales charge. Contingent deferred sales charges are assessed
only on premiums paid based upon the number of years since the policy year in
which the premiums withdrawn were paid, on a first-paid, first-withdrawn basis.
Where a partial or full withdrawal is taken or amounts are applied under an
annuity option, the amount withdrawn or annuitized (less any amount entitled to
the free withdrawal) will be subject to a contingent deferred sales charge
expressed as a percentage of the premium payments withdrawn or annuitized as
follows:
CHARGE AS A % OF EACH YEARS SINCE RECEIPT OF
PREMIUM PAYMENT EACH PREMIUM PAYMENT
6 1
6 2
6 3
5 4
4 5
3 6
2 7
0 8 +
QD-7 Pension
<PAGE>
In the case of a partial withdrawal or annuitization, the contingent deferred
sales charge will be deducted from the amounts remaining under the policy. The
charge will be allocated pro rata among the Subaccounts or the Fixed Account
based on the accumulation value in each prior to the withdrawal or annuitization
unless an owner requests a partial withdrawal or annuitization from particular
Subaccounts or the Fixed Account, in which case the charge will be allocated
among those Subaccounts or the Fixed Account in the same manner as the
withdrawal. In the case of a full withdrawal or annuitization, the contingent
deferred sales charge is deducted from the amount paid to the owner. Contingent
deferred sales charges will not be imposed on certain withdrawals if the amounts
withdrawn are applied under annuity income option c or d.
TAXES: AVLIC will deduct premium taxes upon receipt of a premium payment or upon
annuitization depending upon the requirements of the law of the state of the
policyowner's residence. Currently, premium taxes range from 0% to 3.5% of the
premium paid, but are subject to change by legislation, administrative
interpretations, or judicial act.
FUND INVESTMENT ADVISORY FEES AND EXPENSES: At the direction of the policyowner,
the Separate Account VA-2 purchases shares of Funds which are available for
investment under this policy. The net assets of the Separate Account VA-2 will
reflect the value of the Fund shares and therefore, investment advisory fees and
other expenses of the Funds. A complete description of these fees and expenses
is contained in the Funds' Prospectuses.
403(B) TAX SHELTERED ANNUITY (TSA) PLANS-WITHDRAWAL RESTRICTIONS
- --------------------------------------------------------------------------------
For purchasers of a 403(b) Tax Sheltered Annuity (TSA) Plan, the purpose of this
statement is to inform you, as the purchaser of the annuity or as the Fiduciary
of an Employee Benefit Plan purchasing the annuity, of the following
distribution limitations, notwithstanding policy language to the contrary. If
this policy is purchased by the policyowner or his/her employer as part of a
retirement plan under Internal Revenue Code (IRC)Section 403(b), distributions
under the policy are limited as follows:
1. Distributions attributable to contributions made and interest accruing after
December 3l, 1988, pursuant to a salary reduction agreement within the
meaning of IRC Section 402(g)(3)(c) may be paid only:
(A) when the employee attains age 59 1/2, separates from service, dies, or
becomes disabled within the meaning of IRC Section 72(m)(7); or
(B) in the case of hardship. (Hardship distributions may not be made from
any income earned after December 31, 1988, which is attributable to
salary reduction contributions regardless of when the salary reduction
contributions were made).
2. Distributions attributable to funds transferred from IRC Section 403(b)(7)
custodial account may be paid or made available only:
(A) When the employee attains age 59 1/2, separates from service, dies or
becomes disabled within the meaning of IRC Section 72(m)(7); or
(B) in the case of financial hardship. Distributions on account of
financial hardship will be permitted only with respect to the following
amounts:
(i) benefits accrued as of December 31, 1988, but not earnings on those
amounts subsequent to that date.
(ii) contributions made pursuant to a salary reduction agreement within
the meaning of IRC Section 3121(a)(1)(D) after December 31, 1988,
but not as to earnings on those contributions.
QD-8 TSA
