MOMENTUM PLUS
RETIREMENT PLANNING FROM EQUITABLE LIFE
Supplement, dated August 8, 1996, to
Prospectus, dated May 1, 1996
GROUP VARIABLE ANNUITY CONTRACT FUNDED THROUGH THE
INVESTMENT FUNDS OF SEPARATE ACCOUNT A
Issued By:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
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This supplement adds and modifies certain information to the prospectus
(PROSPECTUS) of Momentum Plus (MOMENTUM PLUS) of The Equitable Life Assurance
Society of the United States (EQUITABLE LIFE), dated May 1, 1996. The purpose of
the supplement is to offer Employers or trustees of trusts established with
respect to the below mentioned 457 plans ("Trustees") an opportunity to fund
Code Section 457 employee deferred compensation (457) plans with a Momentum Plus
group variable annuity contract issued directly to Employers or Trustees
pursuant to the terms of their respective 457 plans. The supplement describes
the material differences between the Prospectus, as it applies to the Momentum
Plus Program applicable to tax qualified defined contribution plans, and its
application to 457 plans. You should keep this supplement to the Prospectus for
future reference. You may obtain an additional copy of the Prospectus and a copy
of the Statement of Additional Information (SAI), from us, free of charge, if
you write to the Processing Office, call 1-800-528-0204, or mail in the SAI
request form located at the end of the Prospectus. Special terms used in the
Prospectus have the same meaning in this supplement unless otherwise noted.
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Copyright 1996
The Equitable Life Assurance Society of the United States,
New York, New York, 10019.
All rights reserved.
888-1118
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MOMENTUM PLUS 457 CONTRACT
GENERAL TERMS. An "Employer" is either (i) a state, political subdivision of a
state, or an agency or instrumentality of any one or more of these entities or
(ii) any other organization exempt from tax which maintains a plan for a select
group of management or highly compensated employees as described under ERISA. A
"Participant" is an employee who is a participant under a plan, adopted by the
"Employer," that is intended to meet the requirements of an eligible deferred
compensation plan under Section 457 of the Code. The "Source" of a contribution
is either (i) the Employer or (ii) participant contributions pursuant to a
deferral election or (iii) a prior plan transfer or rollover from a prior 457
plan. As the 457 Contract does not provide for loans, the definition of "Active
Loan" is not applicable.
THE MOMENTUM PLUS PROGRAM. In addition to the Momentum Plus group variable
annuity contract available to qualified retirement plans that meet the
requirements of Code Section 401(a), the Momentum Plus Program now offers the
Momentum Plus 457 group variable annuity contract ("457 Contract") as a funding
vehicle for Employers or Trustees who sponsor 457 plans. There is no Master
Plan, Master Trust or Pooled Trust applicable to 457 plans. Each Employer or
Trustee, as applicable, participates directly in the 457 Contract, using it as a
funding vehicle for the Employer's plan. The 457 Contract must be used as the
exclusive funding vehicle of the plan unless Equitable Life agrees otherwise.
Contributions to the 457 Contract on behalf of a participant can be from current
year Employer contributions or prior plan contributions transferred from another
457 plan and are limited in amount (see "Public and Tax Exempt Organization
Employee Deferred Compensation Plan (457 Plans)" below). Post-tax contributions
by a Participant may not be made under the 457 Contract. The Momentum Plus
Program currently is not available for state, political subdivision, agency or
instrumentality 457 plans in Texas.
PLAN OR CONTRACT TERMINATION BY THE EMPLOYER. The Employer or the Trustees, in
their sole discretion, may terminate the plan's 457 Contract and transfer
amounts held under the 457 Contract to some other contract or account that
serves as a funding vehicle for the 457 plan. In addition, the Employer or the
Trustees, in their sole discretion, may decide to terminate the 457 plan. If
Plan Termination occurs in the first five years that the plan has participated
in the 457 Contract, all withdrawals from the Investment Funds made on behalf of
a Participant will be subject to a contingent withdrawal charge, except those
withdrawals exempted from such contingent withdrawal charge. See "Waiver of
Withdrawal Charge" below. Withdrawals during the period from the Guaranteed
Interest Account will be subject to the contingent withdrawal charge only if the
Market Value Adjustment is less than the contingent withdrawal charge. See
"Effects of Plan or Contract Termination" in Part 4. When Contract Termination
occurs in the first five years that the plan has participated in the 457
Contract, a contingent withdrawal charge will apply to the surrendered amounts
in the Investment Funds. Surrendered amounts in the Guaranteed Interest Account
will generally be paid in installments. See "Effects of Plan or Contract
Termination" in Part 4 of the Prospectus.
CONTINGENT WITHDRAWAL CHARGE. No sales charges are deducted from contributions.
However, to assist us in defraying the various sales and promotional expenses
incurred in connection with selling the Momentum Plus Program, we assess a
contingent withdrawal charge described at pages 33 and 34 of the Prospectus. The
contingent withdrawal charge does not apply after the Employer's 457 plan has
participated in the Momentum Plus Program for five years.
WAIVER OF WITHDRAWAL CHARGE. Exceptions to the contingent withdrawal charge are
described in the Prospectus, at pages 33 and 34, amended, however, as follows:
The third sub-paragraph on page 34 of the Prospectus does not apply to the 457
Contract and is replaced by the following:
o the amount withdrawn is an amount in excess of the amount that may be
contributed under Section 457 of the Code, including income thereon, and is
refunded within one month of the date the amount was remitted as a
contribution.
The following exception is added:
o the amount withdrawn is a result of a request of a Participant faced with
an "unforeseen emergency" pursuant to Section 457(d)(1)(A)(iii) of the
Code.
Also, the fourth, fifth and seventh sub-paragraphs on page 34 of the Prospectus
do not apply to the 457 Contract.
PLAN LOANS NOT AVAILABLE. The 457 Contract does not provide for plan loans to
Participants. Accordingly, the information in the Prospectus relating to plan
loans and plan loan setup and recordkeeping charges does not apply to the 457
Contracts.
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FULL SERVICE PLAN RECORDKEEPING OPTIONS NOT AVAILABLE. The full service plan
recordkeeping option described in the Prospectus at pages 30 and 31 are not
available under the 457 Contract. The annual charge for these services,
therefore, will not apply under the 457 Contract.
FEES AND CHARGES. Except as described above, the fees and charges applicable to
the 457 Contract are the same as those described in the Prospectus for Momentum
Plus contracts used to fund qualified defined contribution plans. See "Fee
Table" in Part 1, and Part 6, of the Prospectus.
DISTRIBUTION REQUIREMENTS. The 457 Contract is subject to the Code's minimum
distribution requirements for qualified plans. Generally, distributions from the
contracts must commence by April 1 of the calendar year following the calendar
year in which the Participant attains age 70 1/2. Subsequent distributions must
be made by December 31st of each calendar year. If the Automatic Minimum
Withdrawal is not made, a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn may apply. See "Code Section 457 Tax Matters," below for a discussion
of various special rules concerning the minimum distribution requirements.
AUTOMATIC MINIMUM WITHDRAWAL OPTION. We offer a payment option, which we call
"Automatic Minimum Withdrawal Option," which is intended to meet the minimum
distribution requirements applicable to 457 plans. As a Participant you may
elect the Automatic Minimum Withdrawal Option if you are at least age 70 1/2 and
your Retirement Account Value in the Investment Funds is at least $2,000.
Participants can elect the Automatic Minimum Withdrawal Option by filing the
proper election form provided by the Employer. If you elect the Automatic
Minimum Withdrawal Option, we will pay out of the Retirement Account Value in
the Investment Funds an amount which the Code requires to be distributed from
the 457 Contract. In performing this calculation, we assume that the only funds
subject to the Code's minimum distribution requirements are those held for the
Participant under the 457 Contract. We calculate the Automatic Minimum
Withdrawal Option amount based on information the Employer or Trustees give us
and on certain assumptions. Currently, the Automatic Minimum Withdrawal Option
payments will be made annually. We are not responsible for errors that result
from inaccuracies in the information provided to us.
The Automatic Minimum Withdrawal Option, if elected, will be subject to our
rules then in effect. This election is not revocable. Generally, electing this
option does not restrict making partial withdrawals or subsequently electing an
annuity distribution option. However, you must consult with your tax advisor
before making any partial withdrawal or electing an annuity distribution,
because the Internal Revenue Code and Treasury Regulations generally require
that payments under 457 plans have to be substantially equal in amount.
The minimum check that will be sent is $300, or, if less, the Participant's
Retirement Account Value. If, after the deduction of the amount of the minimum
distribution, the total Retirement Account Value of a Participant is less than
$500, we may pay that amount.
BENEFICIARY. Under the 457 Contract, the Employer or the Trustees must be the
beneficiary of all Participants under the 457 plan. Each Participant's actual
beneficiary designation will be maintained by the Employer or Trustees. Upon our
receipt of due proof of the death of a Participant, Equitable Life may, at the
request of the Employer or Trustees, change the beneficiary designation and pay
a death benefit to the then designated beneficiary. The amount of the death
benefit will be equal to the Retirement Account Value as of the applicable
Transaction Date. The beneficiaries may elect any of the methods of disposition,
described under "Death Benefit" in Part 5 of the Prospectus.
CODE SECTION 457 TAX MATTERS
Note: Except for the text on page 36 of the Prospectus preceding "Tax Aspects
of Contributions to a Plan" and "Impact of Taxes to Equitable Life" on
page 40, "Part 8: Federal Tax and ERISA Matters" in the Prospectus does
not apply to 457 plans and is replaced by the addition of this section.
PUBLIC AND TAX-EXEMPT ORGANIZATION EMPLOYEE DEFERRED COMPENSATION PLANS (457
PLANS). Employees and independent contractors who perform services for a state
(including any subdivision, agency or instrumentality) or other tax-exempt
employer may exclude from Federal gross income certain salary reduction amounts.
To qualify, the employer must maintain a 457 plan satisfying the requirements of
Section 457 of the Code. The contracts used to fund 457 plans must be owned by
the Employer or the Trustees, and, in any event, are subject to the claims of
the employer's general creditors. However, the 457 plan may permit the employee
to choose among various investment options. Tax-exempt, non-governmental
employers are generally subject to ERISA, and may be required by the provisions
of that Act to limit participation in a 457 plan to a select group of management
or highly compensated employees.
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Generally, the maximum contribution amount that can be excluded from gross
income in any tax year under a 457 plan is 33 1/3% of the employee's "includable
compensation," up to $7,500. Special rules may permit "catch-up" contributions
during the three years preceding normal retirement age under the 457 plan.
In general, no amounts may be withdrawn from a 457 plan prior to the calendar
year in which the employee attains age 70 1/2, separates from service or in the
event of an unforeseen emergency. Income or gains on contributions under a 457
plan are subject to Federal income tax when amounts are distributed or made
available to the employee or beneficiary.
Distributions from 457 plans generally must commence no later than April 1st of
the calendar year following the calendar year in which the employee attains age
70 1/2. Special rules apply, however, to employees in 457 plans which are
governmental plans. There is no 10% penalty tax imposed on distributions prior
to age 59 1/2.
If the participant in a 457 plan does not commence minimum distributions in the
calendar year in which he or she attains age 70 1/2, and waits until the three
month (January 1 - April 1) period in the next calendar year to commence minimum
distributions, then the participant must take two required minimum distributions
in that calendar year.
Distributions from a 457 plan may not be rolled over or transferred to an IRA.
Distributions to a 457 plan participant are characterized as "wages" for income
tax reporting and withholding purposes. No election out of withholding is
possible. See "Federal and State Income Tax Withholding," below. These amounts
are not subject to FICA tax, if FICA tax was withheld by the employer when wages
were deferred. In certain circumstances, receipt of payments from a 457 plan may
result in a reduction of an employee's Social Security benefits.
If the 457 plan so provides, a deceased employee's beneficiary may be able to
elect to receive death benefits in installments instead of a lump sum, and will
be taxed as the payments are received. However, the death benefits must be
received within 15 years of the date of the deceased employee's death (or within
the period of life expectancy of the surviving spouse if the spouse is the
designated beneficiary).
Due to unrelated business income tax rules, the 457 Contracts may not be an
appropriate funding vehicle for a 457 plan maintained by an organization exempt
from tax under the following Code Sections: 501(c)(7) (social club); 501(c)(9)
(VEBA); 501(c)(17) (supplemental unemployment compensation benefit plan trust);
or 501(c)(20) (legal services plan trust). Please contact your tax adviser to
see if these limits may apply to your 457 plan.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS. Failure to make required
distributions may cause the disqualification of the 457 plan. Disqualification
results in current taxation of the Participant's entire benefit. In addition, a
50% penalty tax is imposed on the difference between the required distribution
amount and the amount actually distributed, if any. We do not automatically make
distributions from a 457 Contract before the retirement date unless a request
has been made. We will notify you when our records show that your age 70 1/2 is
approaching. You should consult with your tax adviser concerning these rules and
their proper application to your situation.
FEDERAL AND STATE INCOME TAX WITHHOLDING. Payments under 457 plans are subject
to mandatory federal income tax withholding rules applicable to wages; no
election out is permitted. State income tax withholding generally also applies.
The Employer (and not Equitable Life) is generally responsible for such wage
withholding.
TAX CHANGES. The United States Congress has in the past considered, and may in
the future consider, legislation that, if enacted, could change the tax
treatment of 457 plans. In addition, the Treasury Department may amend existing
regulations, issue new regulations, or adopt new interpretations of existing
laws. State tax laws or, if you are not a United States resident, foreign tax
laws, may affect the tax consequences to you or the beneficiary. These laws may
change from time to time without notice and, as a result, the tax consequences
may be altered. There is no way of predicting whether, when or in what form any
such change would be adopted. Any such change could have retroactive effects
regardless of the date of enactment. We suggest you consult your legal or tax
adviser.
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