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SUPPLEMENT TO PROSPECTUS
THE MANUFACTURERS LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT A
DATED MAY 1, 1997
ROTH IRAs
Recently enacted Section 408A of the Code permits eligible individuals to
contribute to a type of IRA known as a "Roth IRA." Roth IRAs differ from other
IRAs in several respects. Among the differences is that, although contributions
to a Roth IRA are not deductible, "qualified distributions" from a Roth IRA will
be excludable from income. Additionally, the eligibility and mandatory
distribution requirements for Roth IRAs differ from non-Roth IRAs.
CONTRIBUTIONS: The maximum amount of contributions allowable for any
taxable year to all Roth IRAs maintained for an individual (the "contribution
limit") generally is the lesser of $2,000 and 100% of compensation for the
taxable year. The contribution limit is reduced by the amount of any deductible
and non-deductible contributions to a non-Roth IRA. For individuals who file a
joint return and receive less compensation for the taxable year than their
spouse, special rules apply.
For taxpayers with adjusted gross incomes in excess of certain limits no
contribution (or only a reduced contribution) to a Roth IRA is allowed. For
married individuals filing a joint return, the contribution limit is phased out
for adjusted gross income between $150,000 and $160,000. (Special rules apply to
married individuals filing separate returns.) For single individuals, the
contribution limit is phased out for adjusted gross incomes between $95,000 and
$110,000.
ROLLOVERS: A rollover may be made to a Roth IRA only if it is a "qualified
rollover contribution." A "qualified rollover contribution" is a rollover
contribution to a Roth IRA from another Roth IRA or from a non-Roth IRA, but
only if such rollover contribution meets the rollover requirements for IRAs
under Section 408(d)(3) of the Code. In addition, a transfer may be made to a
Roth IRA directly from another Roth IRA or from a non-Roth IRA. Persons with
adjusted gross incomes in excess of $100,000 or who are married and file a
separate return are not eligible to make a qualified rollover contribution or a
transfer in a taxable year from a non-Roth IRA to a Roth IRA.
In the case of a qualified rollover contribution or a transfer from a
non-Roth IRA to a Roth IRA, any portion of the amount rolled over which would be
includible in gross income were it not part of a qualified rollover contribution
or a nontaxable transfer will be includible in gross income. However, the 10
percent penalty tax on premature distributions generally will not apply. If such
a rollover occurs before January 1, 1999, any portion of the amount rolled over
which is required to be included in gross income must be included ratably over
the 4-taxable year period beginning with the taxable year in which the rollover
is made.
CONVERSIONS: All or part of amounts in a non-Roth IRA may be converted into
a Roth IRA. Such a conversion can be made without taking an actual distribution
from the IRA. For example, an individual may make a conversion by notifying the
IRA issuer or trustee, whichever is applicable. The conversion of an IRA to a
Roth IRA is a special type of qualified rollover distribution. Hence, the IRA
participant must be eligible to make a qualified rollover distribution in order
to convert an IRA to a Roth IRA. A conversion typically will result in the
inclusion of some or all of the IRA value in gross income, as described above.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLLOVER, TRANSFER, OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. WHETHER AN OWNER SHOULD DO
SO WILL DEPEND ON THE IRA OWNER'S PARTICULAR FACTS AND CIRCUMSTANCES, INCLUDING,
BUT NOT LIMITED TO, SUCH FACTORS AS WHETHER THE
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OWNER IS QUALIFIED TO MAKE SUCH A ROLLOVER, TRANSFER, OR CONVERSION, HIS OR HER
FINANCIAL SITUATION, AGE, CURRENT AND FUTURE INCOME NEEDS, YEARS TO RETIREMENT,
CURRENT AND FUTURE TAX RATES, ABILITY AND DESIRE TO PAY TAXES WITH RESPECT TO
AMOUNTS ROLLED OVER, TRANSFERRED, OR CONVERTED, AND WHETHER SUCH TAXES MIGHT
NEED TO BE PAID WITH WITHDRAWALS FROM OWNER'S ROTH IRA (SEE DISCUSSIONS BELOW OF
"NONQUALIFIED DISTRIBUTIONS" AND "PENDING LEGISLATION.") PERSONS CONSIDERING A
ROLLOVER, TRANSFER, OR CONVERSION SHOULD CONSULT A QUALIFIED TAX ADVISOR.
QUALIFIED DISTRIBUTIONS: Any "qualified distribution" from a Roth IRA is
excludible from gross income. A "qualified distribution" is a payment or
distribution which satisfies two requirements. First, the payment or
distribution must be (a) made after the Owner attains age 59 1/2, (b) made after
the Owner's death, (c) attributable to the Owner being disabled, or (d) a
qualified first-time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code. Second, the payment or distribution must be made in a
taxable year that is at least five years after (a) the first taxable year for
which a contribution was made to any Roth IRA established for the Owner, or (b)
in the case of a payment or distribution properly allocable to a qualified
rollover contribution from a non-Roth IRA (or income allocable thereto), the
taxable year in which the rollover contribution was made.
NONQUALIFIED DISTRIBUTIONS: A distribution from a Roth IRA which is not a
qualified distribution is generally taxed in the same manner as a distribution
from non-Roth IRAs. However, such a distribution will be treated as made first
from contributions to the Roth IRA to the extent that such distribution, when
added to all previous distributions from the Roth IRA, does not exceed the
aggregate amount of contributions to the Roth IRA. Generally, all Roth IRAs are
aggregated to determine the tax treatment of distributions.
MANDATORY DISTRIBUTIONS: Distributions from a Roth IRA need not commence at
age 70 1/2. However, if the Owner dies before the entire interest in a Roth IRA
is distributed, any remaining interest in the Contract must be distributed by
December 31 of the calendar year containing the fifth anniversary of the Owner's
death, subject to certain exceptions.
PENDING LEGISLATION: Pending legislation may modify these rules
retroactively to January 1, 1998. In particular, this legislation may provide
that if amounts rolled over, transferred, or converted from a non-Roth IRA (a
"conversion") are withdrawn from a Roth IRA within the 5-year period beginning
with the date of conversion, then amounts withdrawn which were includible in
income due to the conversion would be subject to the 10-percent penalty tax on
premature distributions and, if the 4-year income inclusion rule applied to the
conversion, an additional 10-percent tax.
As described in "Federal Tax Matters," there is some uncertainty regarding
the proper characterization of the Contract's death benefit for purposes of the
tax rules governing IRAs (which include Roth IRAs). Persons intending to use the
Contract in connection with a Roth IRA should seek competent advice.
SUPPLEMENT DATED JANUARY 21, 1998
V9.SUPP198
