As filed with the Securities and Exchange Commission on September 24, 1999
Registration No. 33-55152
811-7368
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 Pre-Effective Amendment
No.
Post-Effective Amendment No. 10 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 11|X|
SEPARATE ACCOUNT VA-2LNY
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW
YORK (formerly called, First Transamerica Life
Insurance Company)
(Name of Depositor)
100 Manhattanville Road, Purchase, NY 10577
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (914) 701-6000
Name and Address of Agent for Service: Copy to:
James W. Dederer, Esquire Frederick R. Bellamy, Esquire
Chairman of the Board, General Counsel and Sutherland, Asbill & Brennan L.L.P.
Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Life Insurance Company of New York Washington, D.C. 20004-2404
100 Manhattanville Road
Purchase, NY 10577
Approximate date of proposed sale to the public: As soon as practicable
after effectiveness of the Registration Statement.
Title of securities being registered:
Variable Annuity Contracts
It is proposed that this filing will become effective:
|_| immediately upon filing pursuant to paragraph (b)
|X| on October 1, 1999 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(i)
|_|on pursuant to paragraph (a)(i)
If appropriate, check the following box:
[] this Post-Effective Amendment designates a
new effective date for a previously filed
Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Definitions
3. Synopsis................................................. Summary
4. Condensed Financial Information.......................... Not Applicable
5. General
(a) Depositor Transamerica Occidental Life
Insurance Company;
Additional Information about
Transamerica
Occidental Life Insurance Company;
(b) Registrant The Variable Account
(c) Portfolio Company The Funds
(d) Fund Prospectus The Funds
(e) Voting Rights Voting Rights
6. Deductions and Expenses..................................
(a) General Charges and Deductions
(b) Sales Load % Contingent Deferred Sales Load
(c) Special Purchase Plan Not Applicable
(d) Commissions Distribution of the Contracts
(e) Fund Expenses The Funds
(f) Operating Expenses Variable Account Fee Table
7. Contracts
(a) Persons with Rights The Contract; Cash
Withdrawals; Death Benefit;
Voting Rights
(b) (i) Allocation of Premium
Payments..................................... Allocation of Purchase Payments
(ii) Transfers.................................... Transfers
(iii) Exchanges.................................... Federal Tax Matters
(c) Changes Addition, Deletion, or
Substitution
(d) Inquiries Summary; Available Information
8. Annuity Period........................................... Annuity Payments
9. Death Benefit............................................ Death Benefit
10. Purchase and Contract Balances
(a) Purchases Contract Application and
Purchase Payments
(b) Valuation Participant Account Value
(c) Daily Calculation Variable Accumulated Value
(d) Underwriter Distribution of the Contracts
11. Redemptions
(a) By Contract Owners Withdrawals; Systematic
Withdrawal Option;
Automatic Payout Option
By Annuitant....................................... Not Applicable
(b) Texas ORP Not Applicable
(c) Check Delay Cash Withdrawals
(d) Lapse Not Applicable
(e) Free Look Definitions; Summary; Contract
Application and
................................................... Purchase Payments
12. Taxes.............................................. Federal Tax Matters
13. Legal Proceedings.................................. Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information................................... Statement of Additional Information Table
of
Contents
PART B
Item of Form N-4 Statement of Additional
Information Caption
15. Cover Page......................................... Cover Page
16. Table of Contents.................................. Table of Contents
17. General Information
and History.............................................. (Prospectus) Transamerica Occidental Life
Insurance Company; (Prospectus)
Additional
Information About Transamerica
Occidental Life
Insurance Company
18. Services...........................................
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Account Fee Table;
(Prospectus) The Funds
(b) Management Contracts (Prospectus) Third Party
Administration
(c) Custodian Records and Reports;
Safekeeping of Account
Assets
Independent Auditors ............................. (Prospectus) Accountants
(d) Assets of Registrant Not Applicable
(e) Affiliated Person Not Applicable
(f) Principal Underwriter Not Applicable
19. Purchase of Securities
Being Offered............................................ (Prospectus) The Contract
Offering Sales Load...................................... (Prospectus) Contingent Deferred Sales
Load
20. Underwriters....................................... (Prospectus) Distribution of the Contracts
21. Calculation of Performance
Data..................................................... (Prospectus) Performance Data; Calculation of
Yields and Total Returns
22. Annuity Payments................................... (Prospectus) Annuity Payments; Annuity
Period
23. Financial Statements............................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits............................................. Financial Statements and Exhibits
(a) Financial Statements Financial Statements
(b) Exhibits Exhibits
25. Directors and Officers of
the Depositor............................................ Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant Persons Controlled By or
Under Common Control
with the Depositor or Registrant
27. Number of Contract Owners.......................... Number of Contract Owners
28. Indemnification.................................... Indemnification
29. Principal Underwriters............................. Principal Underwriters
30. Location of Accounts
and Records.............................................. Location of Accounts and Records
31. Management Services................................ Management Services
32. Undertakings....................................... Undertakings
Signature Page........................................... Signature Page
</TABLE>
<PAGE>
Dreyfus/Transamerica Triple Advantage(R)
Variable and Fixed Annuity
Issued by
Transamerica Life Insurance Company of New York
Separate Account VA-2LNY
Supplement Dated October 1, 1999
To
Prospectus Dated May 1, 1999
The following information supplements the Profile. You should read it together
with the Profile.
1. Item 4 is changed to read as follows:
Investment Options - VARIABLE ACCOUNT: You can invest in any of the
sub-accounts corresponding to the following 23 Portfolios:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Money Market Capital Appreciation International Value Core Value
Special Value Stock Index Disciplined Stock MidCap Stock
Zero Coupon 2000 Socially Responsible Growth Small Company Stock Founders Growth
Quality Bond Growth and Income Balanced Founders Passport
Small Cap International Equity Limited Term High Income Founders International Equity
Technology Growth European Equity Transamerica Growth
</TABLE>
These Portfolios are described in their own prospectuses. You can earn or
lose money in any of these Portfolios.
FIXED ACCOUNT: You can also invest in a fixed account option, where we guarantee
the principal invested plus at least 3% annual interest.
2. Item 5 entitled "Expenses" on page 2 is changed, in its entirety, to read
as follows: -------
5. Expenses. The contract provides many benefits and features that you do
not get with a regular mutual fund. It costs us money to provide these
benefits, so there are charges in connection with the contract. If you
withdraw your money within seven years of investing it, there may be a
withdrawal charge of up to 6% of the amount invested. Once each contract
year we deduct an account fee of no more than $30 (there is no fee if
your account value is over $50,000). Insurance and administrative charges
of 1.40% per year are charged against your average daily value in the
variable account and a $10 fee for transfers over 18 in one year.
Advisory fees are also deducted by the portfolios' managers, and the
portfolios pay other expenses which, in total, vary from 0. 26% to 4.67%
per year of the amounts in the portfolios. Finally, there might be
premium taxes ranging from 0 to 3.5% of your investment and/or on amounts
you use to purchase annuity benefits (depending on your state's law).
The following chart shows these charges (except transfer fees premium
taxes). The $30 annual account fee is not included in the first column
because the fee is waived for account values over $50,000 and the
approximate average account value is over $50,000. The third column is
the sum of the first two. The examples in the last two columns show the
total amounts you would be charged, in dollars, if you invested $1,000,
the investment grew 5% each year, and you withdrew your entire investment
after one year or ten years. Year one includes the withdrawal charge and
year ten does not.
<TABLE>
<CAPTION>
Page 1 of 5
EXAMPLES:
Annual Annual Total Annual Total Expenses Total Expenses
Portfolio/ Insurance Portfolio Charges at end of at end of
-------
Sub-Account Charges Charges One Year Ten Years
----------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.56% 1.96% $71 $229
Special Value 1.40% 0.83% 2.23% $74 $256
Zero Coupon 2000 1.40% 0.59% 1.99% $71 $232
Quality Bond 1.40% 0.73% 2.13% $73 $246
Small Cap 1.40% 0.77% 2.17% $73 $250
Capital Appreciation 1.40% 0.81% 2.21% $73 $254
Stock Index 1.40% 0.26% 1.66% $68 $197
Socially Responsible 1.40% 0.80% 2.20% $73 $253
Growth and Income 1.40% 0.78% 2.18% $73 $251
International Equity 1.40% 0.99% 2.39% $75 $273
International Value 1.40% 1.29% 2.69% $78 $302
Disciplined Stock 1.40% 0.88% 2.28% $74 $262
Small Company 1.40% 0.98% 2.38% $75 $272
Balanced 1.40% 0.87% 2.27% $74 $261
Limited Term High Income 1.40% 1.09% 2.49% $76 $283
Transamerica Growth 1.40% 0.96% 2.36% $75 $270
CoreValue 1.40% 2.10% 3.50% $86 $377
MidCap Stock 1.40% 1.89% 3.29% $84 $359
Founders Growth 1.40% 2.20% 3.60% $87 $386
Founders Passport 1.40% 2.67% 4.07% $92 $426
European Equity 1.40% 1.25% 2.65% $78 $298
Technology Growth 1.40% 1.00% 2.40% $75 $274
Founders International Equity 1.40% 4.67% 6.07% $111 $575
</TABLE>
Expense information regarding the portfolios has been provided by the
funds. We have no reason to doubt the accuracy of the information, but
have not verified those figures. In preparing the table above, we have
relied on the figures provided by the funds. These figures are for the
year ended December 31, 1998, except that the figures for the European
Equity and Technology Growth Portfolios are estimates for the 1999 fiscal
year. Actual expenses in future years may be higher or lower than the
figures given above.
3. The following replaces the paragraph on page 4 following the Past Investment
Performance table:
Data is for full years only. The Transamerica Growth, Core Value and
MidCap Stock sub-accounts were not in operation for all of 1998, and the
Technology Growth, European Equity, Founders Growth, Founders Passport
and Founders International Equity sub-accounts began operations in 1999,
therefore no performance is reported for these sub-accounts.
Page 2 of 5
The following information supplements the Prospectus. You should read it
together with the Prospectus.
1. Three Sub-Accounts are added to the variable account options. Wherever
reference is made to the number of variable investment options available,
the number "20" is changed to "23".
The three Portfolios which relate to these new Sub-Accounts are the
European Equity Portfolio, the Technology Growth Portfolio and the
Founders International Equity Portfolio of the Dreyfus Investment
Portfolios.
<TABLE>
<CAPTION>
2. The following changes are made to the Portfolio Annual Expenses table on page
5:
------------------------------------------- -------------- ---------------- --------------------
Management Other Total Portfolio
Portfolios Fee Expenses Annual Expense
------------------------------------------- -------------- ---------------- --------------------
------------------------------------------- -------------- ---------------- --------------------
<S> <C> <C> <C>
Transamerica Growth 0.64% 0.21% 0.85%
------------------------------------------- -------------- ---------------- --------------------
------------------------------------------- -------------- ---------------- --------------------
European Equity 1.00% 0.25% 1.25%
------------------------------------------- -------------- ---------------- --------------------
------------------------------------------- -------------- ---------------- --------------------
Technology Growth 0.75% 0.25% 1.00%
------------------------------------------- -------------- ---------------- --------------------
------------------------------------------- -------------- ---------------- --------------------
Founders International Equity 1.00% 0.50% 1.50%
------------------------------------------- -------------- ---------------- --------------------
</TABLE>
3. Item 6 in the Notes to Fee Table on page 6 is changed to read:
6. From time to time, each portfolio's investment adviser, in its sole
discretion, may waive all or part of its fees and/or voluntarily assume
certain portfolio expenses. The expenses shown in the above portfolio
annual expenses table reflect the portfolio's adviser's waiver of fees or
reimbursement of expenses, if applicable, for calendar year 1998. Without
such waivers or reimbursements, the management fee, other expenses and
total portfolio annual expenses for 1998 would have been, as a percentage
of assets, 0.75%, 0.21% and 0.96% for Transamerica Growth Fund; 0.75%,
1.35% and 2.10% for Core Value; 0.75%, 1.14% and 1.89% for MidCap Stock;
0.75%, 1.45% and 2.20% for Founders Growth; 1.00%, 1.67% and 2.67% for
Founders Passport and 1.00%, 3.67% and 4.67% for Founders International
Equity Portfolios. The figures in the table for the European Equity and
Technology Growth Portfolios are estimates for the 1999 fiscal year.
4. The following changes are made to the tables in the Examples shown on pages
6 through 8:
Example 1
<TABLE>
<CAPTION>
If you surrender the certificate at the end of the applicable time
period, you would pay the following expenses on a $1,000 initial premium
assuming a 5% annual return on assets:
<S> <C> <C> <C> <C>
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Transamerica Growth Fund $75 $116 $160 $270
Core Value $86 $150 $216 $377
MidCap Stock $84 $144 $206 $359
Founders Growth $87 $153 $220 $386
Founders Passport $92 $166 $242 $426
European Equity $78 $125 $175 $298
Technology Growth $75 $117 $162 $274
Founders International Equity $111 $222 $329 $575
Example 2
If you do not surrender and you do not annuitize the certificate, you
would pay the following expenses on a $1,000 initial premium assuming a
5% annual return on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Transamerica Growth Fund $24 $74 $126 $270
Core Value $35 $107 $182 $377
MidCap Stock $33 $101 $172 $359
Founders Growth $36 $110 $186 $386
Founders Passport $41 $124 $208 $426
European Equity $27 $82 $141 $298
Technology Growth $24 $75 $128 $274
Founders International Equity $60 $179 $295 $575
Page 3 of 5
Example 3
If you elect to annuitize at the end of the applicable period under an
annuity form with life contingencies,** you would pay the following
expenses on a $1,000 initial premium assuming a 5% annual return on
assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Transamerica Growth Fund $75 $74 $126 $270
Core Value $86 $107 $182 $377
MidCap Stock $84 $101 $172 $359
Founders Growth $87 $110 $186 $386
Founders Passport $92 $124 $208 $426
European Equity $78 $82 $141 $298
Technology Growth $75 $75 $128 $274
Founders International Equity $111 $179 $295 $575
</TABLE>
**For annuitization under a form that does not include life
contingencies, a contingent deferred sales load may apply.
5. The following information is added to the Service Providers to the Funds
section on page 16:
Newton Capital Management Limited provides sub-investment advisory
services for the European Equity Portfolio of the Dreyfus Investment
Portfolios.
Founders Asset Management LLC provides sub-investment advisory
services for the Founders Growth, Founders Passport and Founders
International Equity Portfolios of the Dreyfus Investment Portfolios.
6. The following descriptions of the European Equity Portfolio, the
Technology Growth Portfolio and the Founders International Equity
Portfolio are added:
European Equity Portfolio
The European Equity Portfolio seeks long-term capital growth. It
generally invests at least 80% of its total assets in stocks included
within the universe of the 300 largest European companies. It may invest
up to 10% of its total assets in the stocks of non-European companies.
The Portfolio's stock investments may include common stocks, preferred
stocks and convertible securities. In choosing stocks, the Portfolio
Manager identifies and forecasts: key trends in economic variables, such
as gross domestic product, inflation and interest rates; investment
themes, such as the impact of new technologies and the globalization of
industries and brands; relative values of equity securities, bonds and
cash; and long-term trends in currency movements. Within markets and
sectors determined to be relatively attractive, the Portfolio Manager
seeks what she believes to be attractively priced companies that possess
a sustainable competitive advantage in their market or sector. The
investment advisory fee is payable monthly at the annual rate of 1.00% of
the value of the Portfolio's average daily net assets. The Dreyfus
Corporation pays Newton Capital Management Limited to provide the
day-to-day management of the Portfolio's investments.
Technology Growth Portfolio
The Technology Growth Portfolio seeks capital appreciation. To pursue
this goal, it invests primarily in the stocks of growth companies of any
size that The Dreyfus Corporation believes to be leading producers or
beneficiaries of technological innovation. Up to 25% of the Portfolio's
assets may be invested in foreign securities. In choosing stocks, the
Portfolio looks for sectors in technology that are expected to outperform
on a relative scale. Although the Portfolio looks for companies with the
potential for strong earnings growth rates, some of its investments may
currently be experiencing losses. It may also invest in small-, mid- and
large-cap securities in all available trading markets, including initial
public offerings and the aftermarket. The investment advisory fee is
payable monthly at the annual rate of 0.75% of the value of the
Portfolio's average daily net assets.
Page 4 of 5
Founders International Equity Portfolio
The Founders International Equity Portfolio seeks long-term growth of
capital. To pursue this goal, it invests primarily in the stocks of
foreign issuers which are characterized as "growth" companies. The
Portfolio Manager will seek investment opportunities for the Portfolio,
generally, in companies which he believes have fundamental strengths that
indicate the potential for growth in earnings per share. The Portfolio
Manager focuses on individual stock selection (a "bottom-up" approach)
rather than on forecasting stock market trends (a "top-down" approach).
The Portfolio will invest primarily in foreign issuers from at least
three foreign countries with established or emerging economies, but will
not invest more than 50% of its assets in issuers in any one foreign
country. The Portfolio's stock investments may include common stocks,
preferred stocks and convertible securities. An investment advisory fee
is payable monthly to The Dreyfus Corporation at an annual rate of 1.00%
of the value of the Portfolio's average daily net assets. The Dreyfus
Corporation pays Founders Asset Management LLC to provide the day-to-day
management of the Portfolio's investments.
Page 5 of 5
<PAGE>
PROFILE of The
DREYFUS/TRANSAMERICA
TRIPLE ADVANTAGE(R)
VARIABLE ANNUITY
Issued By
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
May 1, 1999
This profile is a summary of some of the more important points that you should
know and consider before purchasing a certificate. The certificate is more fully
described in the full prospectus which accompanies this profile. Please read the
prospectus carefully.
1. The Annuity Certificate. The Dreyfus/Transamerica Triple Advantage
("certificate") is an annuity certificate or a contract between you and
Transamerica Life Insurance Company of New York. In the certificate you can
invest in your choice of 20 sub-accounts corresponding to 20 funds
("portfolios") in the variable account and the fixed account. You could gain or
lose money you invest in the portfolios.
The certificate is a deferred annuity, which means it has two phases: the
accumulation phase and the annuity phase. During the accumulation phase you can
invest additional premiums in the certificate, transfer your money among the
portfolios, and withdraw some or all of your investment. During this phase,
earnings accumulate on a tax-deferred basis for individuals, but if you withdraw
money, some or all of it may be taxable. Tax deferral is not available for
corporations and some trusts.
During the annuity phase we will make periodic payments to you. The dollar
amount of the payments may depend on the amount of money invested and earned
during the accumulation phase (and other factors, such as age and sex).
2. The Annuity Payments. You can generally decide when to end the accumulation
phase and begin receiving annuity payments from us. You can choose fixed annuity
payments, where the dollar amount of each payment generally stays the same, or
variable payments that go up or down in dollar amount based on the investment
performance of the portfolios you select. You can choose among payments for the
lifetime of an individual, or payments for the longer of one lifetime or a
guaranteed period of 10, 15, or 20 years, or payments for one lifetime and the
lifetime of another individual.
3. Purchasing a Certificate. Generally, you must invest at least $5,000 to
purchase a certificate, and then you can make more investments of at least $500
each ($100 each if made under the automatic payment plan and deducted from your
bank account). You may cancel your certificate during the free look period
explained in item 10 on page 5 of this profile.
The Triple Advantage is designed for long-term tax-deferred accumulation of
assets, generally for retirement or other long-term goals. People in high tax
brackets get the most benefit from the tax deferral feature. You should not make
an investment in the certificate for short-term purposes or if you cannot take
the risk of losing some of your investment.
4. Investment Options. VARIABLE ACCOUNT: You can invest in any of the
sub-accounts corresponding to the following 20 portfolios: -------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money Market Capital Appreciation International Value Transamerica Growth
Special Value Stock Index Disciplined Stock Core Value
Zero Coupon 2000 Socially Responsible Growth Small Company Stock MidCap Stock
Quality Bond Growth and Income Balanced Founders Passport
Small Cap International Equity Limited Term High Income Founders Growth
</TABLE>
These portfolios are described in their own prospectuses. You can earn
or lose money in any of these portfolios.
FIXED ACCOUNT: You can also invest in a fixed account option, where we guarantee
the principal invested plus at least 3% annual interest.
5. Expenses. The certificate provides many benefits and features that you do not
get with a regular mutual fund. It costs us money to provide these benefits, so
there are charges in connection with the certificate. If you withdraw your money
within seven years of investing it, there may be a withdrawal charge of up to 6%
of the amount invested. Once each year we deduct a certificate fee of no more
than $30 (there is no fee if your certificate value is over $50,000). Insurance
and administrative charges of 1.40% per year are charged against the average
daily value of your certificate and a $10 fee for transfers over 18 in one year.
Advisory fees are also deducted by the portfolios' manager and the portfolios
pay other expenses which in total, vary from 0.26% to 2.10% per year of the
amounts in the portfolios.
Although New York currently has no premium tax on annuities, depending
on where you live during the time you hold this certificate, there might be
premium taxes ranging from 0 to 5% of your investment and/or on amounts you use
to purchase annuity benefits.
The following chart shows these charges (except transfer fees and
premium taxes). The $30 annual certificate fee is not included in the first
column because the fee is waived for certificate values over $50,000 and the
approximate average certificate value is over $50,000. The third column is the
sum of the first two. The examples in the last two columns show the total
amounts you would be charged, in dollars, if you invested $1,000, the investment
grew 5% each year, and you withdrew your entire investment after one year or ten
years. Year One includes the withdrawal charge and Year Ten does not.
<TABLE>
<CAPTION>
EXAMPLES:
Annual Annual Total Expenses Total Expenses
Portfolio/ Insurance Portfolio Total Annual at end of at end of
Sub-Account Charges Charges Charges One Year Ten Years
- ----------- ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Money Market 1.40% 0.56% 1.96% $71 $229
Special Value 1.40% 0.83% 2.23% $74 $256
Zero Coupon 2000 1.40% 0.59% 1.99% $71 $232
Quality Bond 1.40% 0.73% 2.13% $73 $246
Small Cap 1.40% 0.77% 2.17% $73 $250
Capital Appreciation 1.40% 0.81% 2.21% $73 $254
Stock Index 1.40% 0.26% 1.66% $68 $197
Socially Responsible 1.40% 0.80% 2.20% $73 $253
Growth and Income 1.40% 0.78% 2.18% $73 $251
International Equity 1.40% 0.99% 2.39% $75 $273
International Value 1.40% 1.29% 2.69% $78 $302
Disciplined Stock 1.40% 0.88% 2.28% $74 $262
Small Company 1.40% 0.98% 2.38% $75 $272
Balanced 1.40% 0.87% 2.27% $74 $261
Limited Term High Income 1.40% 1.09% 2.49% $76 $283
Transamerica Growth 1.40% 0.85% 2.25% $74 $258
CoreValue 1.40% 1.00% 2.40% $75 $274
MidCap Stock 1.40% 1.00% 2.90% $75 $274
Founders Growth 1.40% 1.00% 2.40% $75 $274
Founders Passport 1.40% 1.50% 2.90% $80 $322
</TABLE>
Expense information regarding the portfolios has been provided by the funds. We
have no reason to doubt the accuracy of the information, but have not verified
those figures. In preparing the table above and the examples that follow, We
have relied on the figures provided by the funds. These figures are for the year
ended December 31, 1998. Actual expenses in future years may be higher or lower
than the figures given above.
6. Federal Income Taxes. Individuals generally are not taxed on increases in the
certificate value until a distribution occurs (e.g., a withdrawal or annuity
payment) or is deemed to occur (e.g., a pledge, loan, or assignment of the
certificate). If you withdraw money, earnings come out first and are taxed.
Generally, some portion (sometimes all) of any distribution or deemed
distribution is taxable as ordinary income. In some cases, income taxes will be
withheld from distributions. If you are under age 59 1/2 when you withdraw
money, an additional 10% federal tax penalty may apply to the withdrawn
earnings. Certain owners that are not individuals may be currently taxed on
increases in the certificate, whether distributed or not.
7. Access to Your Money. You can generally take money out at any time during the
accumulation phase. A withdrawal charge of up to 6% of a premium may be assessed
us, but no withdrawal charge will be assessed on money that has been in the
certificate for seven years. In addition, after the first certificate year, you
may withdraw the greater of accumulated earnings or 10% of premiums received at
least one but less than seven years ago. Additionally, at any time you can
withdraw accumulated earnings on your premiums not previously withdrawn without
a withdrawal charge.
You may have to pay taxes on amounts you withdraw and there may also be a 10%
tax penalty if you make withdrawals before you are 59 1/2 years old.
8. Past Investment Performance. The value of the money you allocate to the
sub-accounts will go up or down, depending on the investment performance of the
portfolios you pick. The following chart shows the past investment performance
on a year by year basis for each sub-account. These figures have already been
reduced by the insurance charges, the certificate fee, the fund manager's fee
and all the expenses of the mutual fund portfolio, but these figures do not
include the withdrawal charge, which would reduce performance if it applied.
Remember, past performance is no guarantee of future performance or earnings.
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR
PORTFOLIO/
SUB-ACCOUNT 1998 1997 1996 1995 1994 1993 1992 1991 1990
- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market(1) 3.59% 3.66% 3.53% 4.21% 3.00% 1.86% 2.71% 4.54% N/A
Special Value(1) 14.02% 21.36% (5.67%) (0.48%) (3.48%) 26.74% (0.41%) 8.99% N/A
Zero Coupon 5.71% 5.45% 1.10% 16.35% (5.41%) 13.52% 7.29% 17.14% 6.28%
2000(1)
Quality Bond(1) 3.96% 7.83% 1.63% 18.91% (6.17%) 13.66% 10.45% 12.47% N/A
Small Cap(1) (4.86%) 15.06% 15.06% 28.84% 4.95% 65.77% 68.98% 156.07% N/A
Capital 28.34% 26.21% 22.71% 32.82% 1.45% N/A N/A N/A N/A
Appreciation(2)
Stock Index(1) 26.37% 31.05% 19.80% 35.92% (0.60%) 7.75% 5.55% 27.98% (6.52%)
Socially 27.52% 26.59% 19.00% 33.67% (0.08%) N/A N/A N/A N/A
Responsible(3)
Growth and 10.19% 14.53% 18.63% 59.58% N/A N/A N/A N/A N/A
Income(4)
International 2.97% 8.02% 9.82% 6.62% N/A N/A N/A N/A N/A
Equity(4)
International 7.16% 7.13% N/A N/A N/A N/A N/A N/A N/A
Value(5)
Disciplined 24.90% 29.62% N/A N/A N/A N/A N/A N/A N/A
Stock(5)
Small Company (7.35%) 20.01% N/A N/A N/A N/A N/A N/A N/A
Stock(5)
Balanced(6) 20.57% N/A N/A N/A N/A N/A N/A N/A N/A
Limited Term (1.17%) N/A N/A N/A N/A N/A N/A N/A N/A
High
Income(6)
Transamerica N/A N/A N/A N/A N/A N/A N/A N/A N/A
Growth(7)
Core Value(7) N/A N/A N/A N/A N/A N/A N/A N/A N/A
MidCap Stock(7) N/A N/A N/A N/A N/A N/A N/A N/A N/A
Founders N/A N/A N/A N/A N/A N/A N/A N/A N/A
Passport(8)
Founders N/A N/A N/A N/A N/A N/A N/A N/A N/A
Growth(8)
(1) Sub-Account Inception 1-4-93 (4) Sub-Account Inception 12-15-94 (7) Sub-Account Inception 5-1-98
(2) Sub-Account Inception 4-5-93 (5) Sub-Account Inception 5-1-96 (8) Sub-Account Inception 5-1-99
(3) Sub-Account Inception 10-7-93 (6) Sub-Account Inception 5-1-97
</TABLE>
Data is for full years only. The Transamerica Growth, Core Value, MidCap Stock,
Founders Growth and Founders Portfolios were not in operation for all of 1998,
therefore no performance is reported for these Portfolios/Sub-Accounts.
9. Death Benefit. If you or the annuitant die during the accumulation phase, the
beneficiary will receive a death benefit.
If death occurs before age 85, the death benefit will be the greatest
of: (1) the certificate value; (2) the premiums paid, less any amounts you have
withdrawn (less any premium taxes applicable to those withdrawals); or (3) the
highest certificate anniversary value before the owner's or annuitant's 75th
birthday (adjusted for additional investments and withdrawals since that
anniversary, and less premium taxes). After age 85, the death benefit is the
certificate value.
10. Other Information. The certificate offers other features you might be
interested in. These features may not be suitable for your particular situation.
Some of these features include:
FREE LOOK. After you get your certificate, you have ten days to look it
over and decide if it is really right for you. If you decide not to keep the
certificate, you can cancel it during this period, and you will get back all the
amounts you allocated to the fixed account plus the current value of the amounts
allocated to the variable accounts (this may be more or less than your
investment) and no withdrawal charge will be deducted.
DOLLAR COST AVERAGING. You can instruct us to automatically transfer
amounts from the premiums you allocated to the Money Market, Quality Bond or
Limited Term High Income sub-accounts or the fixed account to any of the other
sub-accounts each month. Dollar Cost Averaging is intended to give you a lower
average cost per share or unit than a single, one time investment, but does not
assure a profit or protect against loss and is intended to continue for some
time period.
AUTOMATIC ASSET REBALANCING. The performance of each sub-account may
cause the allocation of value among the sub-accounts to change. You may instruct
us to periodically automatically rebalance the amounts in the sub-accounts by
reallocating amounts among them.
SYSTEMATIC WITHDRAWAL OPTION. You can arrange to have us send you money
automatically each month out of your certificate value during the accumulation
phase. There are limits on the amounts, but the withdrawal charge will not apply
(the payments may be taxable and subject to the penalty tax if you are under age
59 1/2 ).
AUTOMATIC PAYOUT OPTION. Certain pension and retirement plans require
that certain amounts be distributed from the plan at certain ages. You can
arrange to have such amounts distributed automatically during the accumulation
phase.
11. INQUIRIES. You can get more information and have your questions answered by
writing or calling:
Transamerica Annuity Service Center
P.O. Box 31728
Charlotte, North Carolina 28231-1728
800-258-4261
<PAGE>
PROSPECTUS FOR THE
Dreyfus/Transamerica Triple Advantage(R) Variable Annuity
A Flexible Premium Deferred Variable Annuity
Issued By
Transamerica Life Insurance Company of New York
Offering 20 Sub-Accounts within the Variable Account
Designated as Separate Account VA-2LNY
In Addition to:
A Fixed Account
<TABLE>
<CAPTION>
<S> <C> <C>
Variable Account Options
This prospectus contains
information you should Money Market
know before investing. Special Value
Zero Coupon 2000
Please keep this prospectus Quality Bond
for future reference. Small Cap
Capital Appreciation
You can obtain more information about Stock Index
the contract by requesting a copy of the Growth and Income
Statement of Additional Information or SAI International Equity
dated May 1, 1999. The SAI is available free International Value
by writing to Transamerica Life Insurance Disciplined Stock
Company of New York, Annuity Service Center, Small Company Stock
Balanced
P.O. Box 31728, Limited Term High Income
Charlotte, NC 28231-1728 or Core Value
by calling 800-258-4261. MidCap Stock
Founders Growth
The current SAI has been filed with the Founders Passport
Securities and Exchange Commission and is Portfolios of Dreyfus Variable Investment Fund
incorporated by reference into this Dreyfus Stock Index Fund
prospectus. The table of contents of the SAI The Dreyfus Socially Responsible Growth Fund, Inc.
is included on page 48 of this prospectus. Growth Portfolio of Transamerica Variable Insurance
Fund, Inc.
</TABLE>
The SEC's web site is
http://www.sec.gov
Transamerica's web site is
http://www.transamerica.com
Neither the SEC nor any state securities commission has approved this investment
offering or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
May 1, 1999
TABLE OF CONTENTS Page
SUMMARY 4
PERFORMANCE DATA 12
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT 14
Transamerica Life Insurance Company of New York 14
Published Ratings 14
Insurance Marketplace Standards Association 14
The Variable Account 15
THE FUNDS 15
Addition, Deletion or Substitution 20
THE FIXED ACCOUNT 21
THE CERTIFICATE 22
CERTIFICATE APPLICATION AND PREMIUMS 22
Premiums 22
Investment Option Limit 23
CERTIFICATE VALUE 23
TRANSFERS 24
Before the Annuity Date 24
Possible Restrictions 25
Dollar Cost Averaging 25
Automatic Asset Rebalancing 26
After the Annuity Date 26
CASH WITHDRAWALS 26
Withdrawals 26
Systematic Withdrawal Option 28
Automatic Payout Option 29
DEATH BENEFIT 29
Payment of Death Benefit 29
Designation of Beneficiaries 29
Death of Annuitant Before the Annuity Date 30
Death of Owner Before the Annuity Date 30
Death of Annuitant or Owner After the Annuity Date 30
CHARGES AND DEDUCTIONS 30
Contingent Deferred Sales Load/Surrender Charge 30
Administrative Charges 32
Mortality and Expense Risk Charge 32
Premium Taxes 33
Transfer Fee 33
Automatic Asset Rebalancing Option 33
Systematic Withdrawal Option 33
Taxes 33
Portfolio Expenses 33
Sales in Special Situations 33
DISTRIBUTION OF THE CERTIFICATE 34
ANNUITY PAYMENTS 34
Annuity Date 34
Annuity Payment 35
Election of Annuity Forms and Payment Options 35
Annuity Payment Options 35
Fixed Annuity Payment Option 35
Variable Annuity Payment Option 36
Annuity Forms 36
Alternate Fixed Annuity Rates 37
QUALIFIED CERTIFICATES 38
Automatic Payout Option 38
Restrictions under 403(b) Programs 39
FEDERAL TAX MATTERS 39
Introduction 39
Premiums 40
Taxation of Annuities 40
Qualified Certificates 43
Possible Changes in Taxation 45
Other Tax Consequences 45
YEAR 2000 ISSUE 45
LEGAL PROCEEDINGS 46
LEGAL MATTERS 46
ACCOUNTANTS AND FINANCIAL STATEMENTS 46
VOTING RIGHTS 46
AVAILABLE INFORMATION 47
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS 48
APPENDIX A 49
Example of Variable Accumulation Unit Value Calculations 49
Example of Variable Annuity Unit Value Calculations 49
Example of Variable Annuity Payment Calculations 49
APPENDIX B 50
Condensed Financial Information 50
APPENDIX C 54
Definitions 54
APPENDIX D 57
Disclosure Statement for Individual Retirement Annuities 57
SUMMARY
You will find a list of definitions of the terms used in this prospectus in
Appendix C on page 54.
The Certificate
We designed the flexible premium deferred variable annuity, the certificate
described in this prospectus, to aid individuals in long-term financial planning
for retirement or other purposes. You may use the certificate:
* with non-qualified plans;
* as an individual retirement annuity that qualifies for special tax treatment
under Code Section 408, IRA; or
* as an individual retirement annuity that qualifies for special tax treatment
under Code Section 408A, Roth IRA.
Additionally, with our prior approval, you may use the certificate:
* as an annuity under Code Section 403(b); and
* with various types of qualified pension and profit-sharing plans under Section
401(a) of the Code.
Variable Account Fee Table
The purpose of the following table is to help you understand the various costs
and expenses that you, as the owner will bear directly and indirectly. The table
reflects expenses of the variable account as well as of the portfolios. The
table assumes that the entire certificate value is in the variable account. The
information set forth should be considered together with the narrative provided
under the heading Charges and Deductions on page 30 of this prospectus, and with
the funds' prospectuses. In addition to the expenses listed below, premium taxes
may be applicable.
Certificate Transaction Expenses(1)
Sales Charge Imposed on Premiums 0
Maximum Contingent Deferred Sales Load(2) 6%
Range of Contingent Deferred Sales Load Over Time
Certificate Years Since Contingent Deferred
Premiums Receipt Sales Load
Less than 2 years 6%
2 years but less than 4 years 5%
4 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more 0%
Other Certificate Expenses
Transfer Fee (first 18 per Certificate Year)(3) 0
Systematic Withdrawal Fee 0
Certificate Fee(4) $30
Variable Account Annual Expenses(1)
Mortality and Expense Risk Charges 1.25%
Administrative Expense Charge(5) 0.15%
Other Fees and Expenses of the Variable Account 0.00%
Total Variable Account Annual Expenses 1.40%
Portfolio Annual Expenses
(as a percentage of assets after fee waiver and/or expense reimbursement)(6)
<TABLE>
<CAPTION>
- ------------------------------------------ -------------- ---------------- --------------------
Management Other Total Portfolio
Portfolios Fee Expenses Annual Expense
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
<S> <C> <C> <C>
Money Market 0.50% 0.06% 0.56%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Special Value 0.75% 0.08% 0.83%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Zero Coupon 2000 0.45% 0.14% 0.59%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Quality Bond 0.65% 0.08% 0.73%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Small Cap 0.75% 0.02% 0.77%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Capital Appreciation 0.75% 0.06% 0.81%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Stock Index Fund 0.25% 0.01% 0.26%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Socially Responsible Growth Fund 0.75% 0.05% 0.80%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Growth and Income 0.75% 0.03% 0.78%
- ------------------------------------------ -------------- ---------------- --------------------
International Equity 0.75% 0.24% 0.99%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
International Value 1.00% 0.29% 1.29%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Disciplined Stock 0.75% 0.13% 0.88%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Small Company Stock 0.75% 0.23% 0.98%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Balanced 0.75% 0.12% 0.87%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Limited Term High Income 0.65% 0.44% 1.09%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Transamerica Growth 0.75% 0.10% 0.85%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Core Value 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
MidCap Stock 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Founders Growth 0.75% 0.25% 1.00%
- ------------------------------------------ -------------- ---------------- --------------------
- ------------------------------------------ -------------- ---------------- --------------------
Founders Passport 1.00% 0.50% 1.50%
- ------------------------------------------ -------------- ---------------- --------------------
</TABLE>
Expense information regarding the portfolios has been provided by the funds. We
have no reason to doubt the accuracy of the information, but have not verified
those figures. In preparing the table above and the examples that follow, we
have relied on the figures provided by the funds. These figures are for the year
ended December 31, 1998. Actual expenses in future years may be higher or lower
than the figures given above.
Notes to Fee Table:
1. The certificate transaction expenses apply to each certificate, regardless
of how the certificate value is allocated between the variable account and
the fixed account. The variable account annual expenses do not apply to the
fixed account.
2. You may withdraw a portion of the premiums each year after the first
certificate year without any contingent deferred sales load, or CDSL. After
we have held a premium for seven certificate years, you may withdraw the
remaining premium payments without any contingent deferred sales load. You
may always withdraw accumulated earnings without a CDSL.
3. We may charge a transfer fee equal to the lesser of $10 or 2% of the amount
transferred for each transfer in excess of 18 in a certificate year. We may
also charge a fee of up to $25 per year if you elect the systematic
withdrawal option.
4. The current annual certificate fee per certificate year is the lesser of
$30 or 2% of the certificate value. We may change the fee annually, but it
will not exceed the lesser of $60, or 2% of the certificate value.
5. The current annual administrative expense charge is 0.15%. We may increase it
to 0.25%.
6. From time to time, each portfolio's investment adviser, in its sole
discretion, may waive all or part of its fees and/or voluntarily assume
certain portfolio expenses. The expenses shown in the above portfolio
annual expenses table reflect the portfolio's adviser's waiver of fees or
reimbursement of expenses, if applicable, for calendar year 1998. Without
such waivers or reimbursements, the management fee, other expenses and
total portfolio annual expenses for 1998 would have been, as a percentage
of assets, 0.75%, 0.21% and 0.96% for Transamerica Growth Fund; 0.75%,
1.35% and 2.10% for Core Value, 0.75%, 1.14% and 1.89% foro MidCap Stock;
0.75%, 1.45% and 2.20% for Founders Growth and 1.00%, 1.67% and 2.67% for
Founders Passport Portfolios.
Examples*
The following three examples reflect no account fee deduction because the
approximate average account value is more than $50,000. The account fee is
waived for account values over $50,000. The examples assume that the entire
account value is allocated to the variable account.
These examples all assume that no transfer fees, systematic withdrawal fee or
premium tax have been assessed. Premium taxes may be applicable. See Premium
Taxes on page 33.
These examples show expenses without reflecting fee waivers and reimbursements
for 1998.
<TABLE>
<CAPTION>
Example 1
If you surrender the certificate at the end of the applicable time period, you
would pay the following expenses on a $1,000 initial premium assuming a 5%
annual return on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $71 $104 $140 $229
Special Value $74 $112 $153 $256
Zero Coupon 2000 $71 $105 $141 $232
Quality Bond $73 $109 $148 $246
Small Capital $73 $110 $150 $250
Capital Appreciation $73 $112 $152 $254
Stock Index $68 $95 $124 $197
Socially Responsible Growth $73 $111 $152 $253
Growth and Income $73 $111 $151 $251
International Equity $75 $117 $162 $273
International Value $78 $126 $176 $302
Disciplined Stock $74 $114 $156 $262
Small Company Stock $75 $117 $161 $272
Balanced Fund $74 $113 $156 $261
Limited Term High Income $76 $120 $167 $283
Transamerica Growth Fund $74 $113 $154 $258
Core Value $75 $117 $162 $274
MidCap Stock $75 $117 $162 $274
Founders Growth $75 $117 $162 $274
Founders Passport $80 $132 $187 $322
<PAGE>
Example 2
If you do not surrender and you do not annuitize the certificate, you would pay
the following expenses on a $1,000 initial premium assuming a 5% annual return
on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Money Market $20 $62 $106 $229
Special Value $23 $70 $119 $256
Zero Coupon 2000 $20 $62 $107 $232
Quality Bond $22 $67 $114 $246
Small Capital $22 $68 $116 $250
Capital Appreciation $22 $69 $118 $254
Stock Index $17 $52 $90 $197
Socially Responsible Growth $22 $69 $118 $253
Growth and Income $22 $68 $117 $251
International Equity $24 $75 $128 $273
International Value $27 $84 $142 $302
Disciplined Stock $23 $71 $122 $262
Small Company Stock $24 $74 $127 $272
Balanced Fund $23 $71 $122 $261
Limited Term High Income $25 $78 $133 $283
Transamerica Growth Fund $23 $70 $120 $258
Core Value $24 $75 $128 $274
MidCap Stock $24 $75 $128 $274
Founders Growth $24 $75 $128 $274
Founders Passport $29 $90 $153 $322
Example 3
If you elect to annuitize at the end of the applicable period under an annuity
form with life contingencies,** you would pay the following expenses on a $1,000
initial premium assuming a 5% annual return on assets:
Variable Sub-Accounts 1 Year 3 Years 5 Years 10 Years
Money Market $71 $62 $106 $229
Special Value $74 $70 $119 $256
Zero Coupon 2000 $71 $62 $107 $232
Quality Bond $73 $67 $114 $246
Small Capital $73 $68 $116 $250
Capital Appreciation $73 $69 $118 $254
Stock Index $68 $52 $90 $197
Socially Responsible. Growth $73 $69 $118 $253
Growth and Income $73 $68 $117 $251
International Equity $75 $75 $128 $273
International Value $78 $84 $142 $302
Disciplined Stock $74 $71 $122 $262
Small Company Stock $75 $74 $127 $272
Balanced Fund $74 $71 $122 $261
Limited Term High Income $76 $78 $133 $283
Transamerica Growth Fund $74 $70 $120 $258
Core Value $75 $75 $128 $274
MidCap Stock $75 $75 $128 $274
Founders Growth $75 $75 $128 $274
Founders Passport $80 $90 $153 $322
</TABLE>
*In preparing the examples above, we have relied on the data provided by the
funds. We have no reason to doubt the accuracy of that information. However,
we have not verified those figures.
**For annuitization under a form that does not include life contingencies, a
contingent deferred sales load may apply.
You should not consider these examples to represent past or future expenses.
Actual expenses paid may be greater or less than those shown, subject to the
guarantees in the certificate. The assumed 5% annual return is only
hypothetical. It is not a representation of past or future returns. Actual
returns could be greater or less than this assumed rate.
Condensed Financial Information
You will find condensed financial information on each sub-account in Appendix B
on page 50. You will find the full financial statements and reports of
independent auditors for the variable account in the Statement of Additional
Information.
The Issuer
The certificate is issued by Transamerica Life Insurance Company of New York,
Transamerica, a stock life insurance company incorporated under the laws of the
State of New York on February 5, 1986. Transamerica is a wholly-owned subsidiary
of Transamerica Occidental Life Insurance Company. Our principal office is at
100 Manhattanville Road, Purchase, New York, 10577, telephone (914) 701-6000.
The certificate is only available in New York.
On February 18, 1999, Transamerica Corporation announced that it had signed a
merger agreement with AEGON N.V., one of the world's leading international
insurance groups, providing for AEGON's acquisition of all of Transamerica's
outstanding common stock for a combination of cash and AEGON stock worth $9.7
billion. The closing of the transaction is expected to occur during the summer
of 1999.
We will issue to the owner a certificate under a group annuity contract. The
contract and the certificates are available only in New York.
This prospectus does not offer the sub-accounts or the fixed account in any
jurisdiction where they are not allowed to be sold. We do not authorize any
dealer, salesperson or other person to give information or make representations
not contained in this prospectus. You should not rely on any information or
representation that is not in this prospectus.
Certificate Value
The certificate provides that the certificate value, after certain adjustments,
will be applied to an annuity form and payment option on a selected future date.
The certificate value will depend on the investment experience of each
sub-account of the variable account you select. All payments and values provided
under the certificate when based on the investment experience of the variable
account are variable and are not guaranteed as to dollar amount. Therefore,
before the annuity date you, as the owner, bear the entire investment risk under
the certificate.
There is no guaranteed or minimum cash surrender value, so the proceeds of a
surrender could be less than the total premiums.
Initial Premium
The initial premium for each certificate must generally be at least $5,000. We
will waive this minimum if the certificate is sold as a qualified certificate to
certain retirement plans. Generally, each additional premium must be at least
$500. We will waive this minimum if you select an automatic payment plan. In no
event, however, may the total of all premiums under a certificate exceed
$1,000,000 without our prior approval. The minimum net premium that may be
allocated to a sub-account with no current allocations is $500. See Certificate
Application and Premiums on page 22.
The Variable Account
The variable account is a separate account, designated as Separate Account
VA-2LNY, divided into sub-accounts. Assets of each sub-account are invested in a
specified mutual fund portfolio. Each sub-account uses its assets to purchase,
at their net asset value, shares of a specific series or portfolio of the
following funds:
* Dreyfus Variable Investment Fund;
* Dreyfus Investment Portfolios;
* Growth Portfolio of Transamerica Variable Insurance Fund, Inc.;
* Dreyfus Stock Index Fund; or
* The Dreyfus Socially Responsible Growth Fund, Inc.
The Sub-Accounts
The following 20 sub-accounts are currently available for investment in the
variable account.
* Money Market
* Special Value
* Zero Coupon 2000
* Quality Bond
* Small Cap
* Capital Appreciation
* Stock Index
* Socially Responsible Growth * Growth and Income * International Equity *
International Value * Disciplined Stock * Small Company Stock * Balanced *
Limited Term High Income * Transamerica Growth * Core Value * MidCap Stock *
Founders Growth * Founders Passport
The funds pay their investment adviser and administrators certain fees
charged against the assets of each portfolio. The certificate value, if any, and
the amount of any variable annuity payments will vary to reflect the investment
performance of all of the sub-accounts you select and the deduction of the
charges. See Charges and Deductions on page 30. For more information about the
funds see The Funds on page 15 and the accompanying funds' prospectuses.
The Fixed Account
We will credit interest to the amounts in the fixed account at a rate of
not less than 3% annually. We may credit interest at a rate in excess of 3% at
our discretion for any class. We guarantee to credit each interest rate for at
least 12 months.
Investment Option Limit
Currently, you may not elect more than a total of 18 investment options
over the life of the certificate. Investment options include each sub-account of
the variable account and the fixed account.
Transfers Before the Annuity Date
Before the annuity date, you may make transfers among the sub-accounts.
A "transfer" is the reallocation of amounts among the sub-accounts of the
variable account.
We charge a fee of $10 for each transfer in excess of 18 per certificate year.
Transfers under certain programs, such as Dollar Cost Averaging, which will not
count towards the 18 free transfers per certificate year.
Withdrawals
You may withdraw all or part of the cash surrender value on or before the
annuity date. However, amounts you withdraw may be subject to a contingent
deferred sales load. Amounts you withdraw may be subject to a premium tax or
similar tax, depending upon the state in which the you live. Withdrawals may
further be subject to any federal, state or local income tax, and a penalty tax.
Withdrawals from qualified certificates may be subject to severe restrictions.
Except for IRAs and Roth IRAs, qualified certificates are sold only with our
prior approval. We will generally deduct the annual certificate fee on a full
surrender of a certificate. See Cash Withdrawals on page 26.
Contingent Deferred Sales Load/
Surrender Charge
We do not deduct a sales charge from premiums, although we may deduct premium
taxes.
However, if any part of the certificate value is withdrawn, a contingent
deferred sales load, or surrender charge, of up to 6% of premiums withdrawn may
be assessed by us to cover certain expenses relating to the sale of the
certificates, including commissions to registered representatives and other
promotional expenses. We guarantee that the total contingent deferred sales load
will never exceed 6% of the premiums.
After we have held a premium for seven certificate years, you, as the owner, may
withdraw the remaining premium without a contingent deferred sales
load/surrender charge. You may make withdrawals each certificate year before the
annuity date of up to the allowed amount described below without incurring a
contingent deferred sales load.
The allowed amount is equal to:
* during the first certificate year, the accumulated earnings not previously
withdrawn;
* after you have held your certificate for at least one full certificate year,
and only for the first withdrawal in a certificate year, the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
certificate years before the date of withdrawal; plus,
2. the greater of:
a) the accumulated earnings not previously withdrawn; or,
b) 10% of premiums received at least one but less than seven complete
certificate years before the date of withdrawal not reduced to take into account
any withdrawals deemed to be made from such premiums.
* after the first certificate year and after the first withdrawal in a
certificate year, the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
complete certficiate years before the date of withdrawal; plus,
2. accumulated earnings not previously withdrawn.
Withdrawals will always be made first from accumulated earnings, and then from
premiums on a first-in, first-out basis. So, accumulated earnings could be
withdrawn as part of the first withdrawal in a certificate year and, therefore,
not be available for withdrawals made later that certificate year. The
accumulated earnings, if any, in your certificate value are always available as
the allowed amount. You cannot withdraw any premium deposited by check until
that check clears. See Contingent Deferred Sales Load/Surrender Charge on page
30 and Cash Withdrawals on page 26.
Other Charges and Deductions
We deduct a daily charge referred to as the Mortality and Expense Risk Charge.
This charge is equal to a percentage of the value of the net assets in the
variable account for the mortality and expense risks assumed. The effective
annual rate of this charge is 1.25% of the value of the net assets in the
variable account attributable to your certificate. See Mortality and Expense
Risk Charge on page 32. We guarantee that this mortality and expense risk charge
will not be increased.
We also deduct a daily charge referred to as the Administrative Expense Charge
equal to a percentage of the value of the net assets in the variable account
corresponding to an effective annual rate of 0.15% to help cover some of the
costs of administering the certificate and the variable account. This charge may
change, but it is guaranteed not to exceed a maximum effective annual rate of
0.25%. See Administrative Charges on page 32.
There is also an administrative charge deducted each year for certificate
maintenance, referred to as the Certificate Fee. This fee is currently $30, or
2% of the certificate value, if less. It will not be assessed for certificate
years in which the certificate value exceeds $50,000 on the last business day of
the certificate year or as of the date the certificate is surrendered. We will
deduct the certificate fee at the end of the certificate year or when you
surrender the certificate, if earlier. We may change the certificate fee for any
certificate year. But we guarantee it will not exceed the lesser of $60 or 2% of
the certificate value.
After the annuity date this fee is referred to as the annuity fee. The annuity
fee is $30 and will not change.
A fee equal to the lesser of $10 or 2% of the amount of withdrawal is imposed
for each transfer in excess of eighteen during a certificate year. See Transfer
Fee on page 33.
Also, New York currently has no premium tax or retaliatory premium tax. If New
York imposes these taxes in the future, or if you are, or become, a resident of
a state other than New York where such taxes apply, the charges could be
deducted from premiums and/or from the annuity purchase mount upon
annuitization. See Premium Taxes on page 33.
Annuity Payments
We will make annuity payments either on a fixed basis or a variable
basis, or a combination of a fixed and variable basis, as you select. You have
flexibility in choosing the annuity date. In no event may the annuity date be
later than the first day of the month immediately preceding the month of your
85th birthday. The annuity date cannot be earlier than the first day of the
month coinciding with or immediately following the third certificate
anniversary. We will begin annuity payments on the first day of the calendar
month following the annuity date.
You have a choice of four annuity forms:
1. Life Annuity;
2. Life and Contingent Annuity;
3. Life Annuity with Period Certain; and
4. Joint and Survivor Annuity.
Payments on Death Before the Annuity Date
We pay a death benefit on the death of either the owner or annuitant
before the annuity date. If the deceased owner or annuitant, as applicable, had
not attained their 85th birthday, the death benefit is the greatest of:
(a) the certificate value;
(b) all premiums paid to the certificate less withdrawals and any premium taxes
applicable to those withdrawals; or
(c) the greatest certificate anniversary value before the earliest of the
annuitant's or owner's 75th birthday, increased by premiums paid since that
certificate anniversary, less withdrawals and any premium taxes applicable to
those withdrawals.
If the deceased owner or annuitant, as applicable, had attained age 85, the
death benefit will be the certificate value. We will generally pay the death
benefit within seven days of receipt of the required proof of death of the owner
or the annuitant. We must have sufficient information about the beneficiary to
make the payment. We must receive the beneficiary's election of the method of
settlement. If we receive no election of the settlement method, we will pay the
death benefit no later than one year from the date of death. We do not charge a
contingent deferred sales load. The beneficiary may elect to receive the death
benefit as either a lump sum or as an annuity.
Federal Income Tax Consequences
An owner who is a natural person, meaning an individual, rather than a
corporation or trust, generally should not be taxed on increases in the
certificate value until a distribution under the certificate occurs. A
withdrawal or annuity distribution, thereby triggering a taxable event. A deemed
distribution would also trigger a taxable event. Deemed distributions occur when
owners pledge, loan, or assign a certificate as collateral.
Generally, a portion, up to 100%, of any distribution or deemed distribution is
taxable as ordinary income. The taxable portion of distributions is generally
subject to income tax withholding unless the recipient elects otherwise.
Mandatory withholding may apply for certain qualified certificates. In addition,
a federal penalty tax may apply to certain distributions or deemed
distributions.
Right to Cancel
You have the right to examine the certificate for a limited period. This is
known as a free lookperiod. You can cancel the certificate by delivering or
mailing a written notice or by sending a telegram to:
* the agent from whom you purchased the certificate; or
* our service center.
You must do this before midnight of the tenth day, or longer if required by New
York Department of Insurance, after you receive the certificate.
If you give us notice and return the certificate by mail, properly addressed and
postage prepaid, we will be deem it to have been made on the date postmarked. We
will refund the amounts allocated to the fixed account and the variable
accumulated value determined as of the date the notice is postmarked within
seven days after we receive such notice to cancel and the returned certificate.
See Premiums on page 22.
You may request more information by writing:
Transamerica Annuity Service Center
P.O. Box 31728
Charlotte, North Carolina
28231-1728
or
Call 1-800-258-4261
with any questions concerning your certificate.
You should provide the certificate number and the owner's and annuitant's names
when requesting information regarding a specific certificate.
NOTE: The foregoing summary is qualified in its entirety by the detailed
information in the remainder of this prospectus and in the prospectuses for the
funds. They should be referred to for more detailed information.
For qualified certificates, limits or restrictions may be imposed on premiums,
withdrawals, distributions, benefits or other certificate provisions due to:
* the requirements of a particular retirement plan;
* an endorsement to the certificate; or
* limitations or penalties imposed by the Code or the Employee Retirement Income
Security Act of 1974, as amended.
This prospectus does not describe such limitations or restrictions.
PERFORMANCE DATA
Advertising of Yields
From time to time, we may advertise yields and average annual total returns for
the sub-accounts of the variable account. In addition, we may advertise the
effective yield of the Money Market Sub-Account.
These figures will be based on historical information and are not intended to
indicate future performance.
Yield Calculations
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in that sub-account over a specified seven-day
period.
The yield is calculated by assuming:
* the income generated for that seven-day period is generated each seven-day
period over a 52-week period; and
* it is shown as a percentage of the investment.
The effective yield is calculated similarly but, when annualized, the income
earned by an investment in that sub-account is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
com-pounding effect of this assumed reinvestment.
The yield of a sub-account, other than that of the Money Market Sub-Account,
refers to the annualized income generated by an investment in the sub-account
over a specified thirty-day period. The yield is calculated by assuming that the
income generated by the investment during that thirty-day period is generated
each thirty-day period over a twelve-month period and is shown as a percentage
of the investment.
The yield calculations do not reflect the effect of any contingent deferred
sales load or premium taxes that may apply to a particular certificate. When the
contingent deferred sales load is applied to a particular certificate, the yield
of that certificate will be reduced. For additional information about how yields
and total returns are calculated, please refer to the Statement of Additional
Information.
Total Returns
Average annual total returns for each sub-account are based on performance data
compiled since the sub-account commenced operations. Performance results are
also measured over 1, 5 and 10 year time periods. When average annual total
returns for these periods are available, you will be provided with this
information. Each return will represent the average annual compounded rates of
return that would equate an initial investment of $1,000 to the redemption value
of that investment. This will include the deduction of any applicable contingent
deferred sales load, but exclude the deduction of any premium taxes. These
returns will represent the periods for which total return quotations are
provided up to the last day of the period.
Performance Information
Performance information for any sub-account reflects only the performance of a
hypothetical certificate under which certificate value is allocated to a
sub-account during a particular time period on which the calculations are based.
It should be considered in light of:
* the investment objectives;
* investment policies;
* characteristics of the portfolios in which the sub-account invests; and * the
market conditions during the given time period.
You should not consider it as a representation of what may be achieved in the
future. For a description of the methods used to determine yield and total
returns, see the Statement of Additional Information.
Reports and promotional literature may also contain other information including:
1. the ranking of any sub-account derived from rankings of variable annuity
separate accounts or their investment products tracked by:
* Lipper Analytical Services, Inc.,
* VARDS,
* IBC/Donoghue's Money Fund Report,
* Financial Planning Magazine,
* Money Magazine,
* Bank Rate Monitor,
* Standard and Poor's Indices, and
* The Dow Jones Industrial Average.
It may also include other rating services, companies, publications, or other
persons who rank separate accounts or other investment products on overall
performance or other criteria; and
2. the effect of tax deferred compounding on sub-account investment returns, or
returns in general, which may be illustrated by graphs, charts, or otherwise.
These may include a comparison, at various points in time, of the return from an
investment, or returns in general, on a tax-deferred basis, assuming one or more
tax rates, with the return on a currently taxable basis. We may also use other
ranking services and indices. In our advertisements and sales literature, we may
use charts and graphs to discuss and illustrate:
* the implications of longer life expectancy for retirement planning; * the tax
and other consequences of long-term investments; * the effects of the lifetime
payout option; * the operation of certain special investment features in the
certificate - such as the dollar cost averaging option; * the effects of certain
investment strategies; and * the Social Security system and its projected payout
levels and retirement plans generally.
We may, from time to time, disclose average annual total returns and cumulative
total returns for the sub-accounts in non-standard formats. We will assume that
no contingent deferred sales load is applicable to these returns. Whenever we
show non-standard performance, we will also show standardized performance. You
will find additional information about the calculation of performance data in
the Statement of Additional Information.
We may also advertise performance figures for the sub-accounts based on their
performance before the time the variable account started.
TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
AND THE VARIABLE ACCOUNT
Transamerica Life Insurance Company of New York
Transamerica Life Insurance Company of New York, hereafter referred to as
Transamerica, is a stock life insurance company incorporated under the laws of
the State of New York on February 5, 1986. It is mainly engaged in the sale of
life insurance and annuity policies. The address for Transamerica Life Insurance
Company of New York is 100 Manhattanville Road, Purchase, New York 10577.
On February 18, 1999, Transamerica Corporation announced that it had signed a
merger agreement with AEGON N.V., one of the world's leading international
insurance groups, providing for AEGON's acquisition of all of Transamerica's
outstanding common stock for a combination of cash and AEGON stock worth $9.7
billion. The closing of the transaction is expected to occur during the summer
of 1999.
Transamerica Corporation indirectly owns the issuing company, Transamerica Life
Insurance Company of New York.
Published Ratings
Transamerica may from time to time publish in advertisements, sales literature
and reports to owners, the ratings and other information assigned to it by one
or more independent rating organizations such as A.M. Best Company, Standard &
Poor's, and Duff & Phelps. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of Transamerica. These ratings
should not be considered as bearing on the investment performance of assets held
in the variable account. Each year the A.M. Best Company reviews the financial
status of thousands of insurers. Once it has completed its analysis of each
insurer's financial strength, A.M. Best assigns the insurer a Best Rating.
These ratings reflect their current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life/health insurance industry. In addition, other rating companies, such as
by Standard & Poor's Insurance Ratings Services or Duff & Phelps assess our
claims-paying ability. They also may be referred to in advertisements or sales
literature or in reports to owners. These ratings are opinions of an operating
insurance company's financial capacity to meet the obligations of its insurance
and annuity policies in accordance with their terms. Such ratings do not reflect
the investment performance of the variable account or the degree of risk
associated with an investment in the variable account.
Insurance Marketplace Standards
Association
In recent years, the insurance industry has recognized the need to develop
specific principles and practices to help maintain the highest standards of
marketplace behavior and enhance credibility with consumers. As a result, the
industry established the Insurance Marketplace Standards Association (IMSA).
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
The Variable Account
On June 23, 1992, Transamerica's Board of Directors passed resolutions to
establish the Separate Account VA-2LNY of Transamerica, also referred to as the
Variable Account, under the laws of the State of New York. The variable account
is registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 as a unit investment trust. It meets the definition of a
separate account under the federal securities laws. However, the Commission does
not supervise the management or the investment practices or policies of the
variable account.
The assets of the variable account are owned by Transamerica but they are held
separately from the other assets of Transamerica. Section 4240 of the New York
Insurance Law provides that the assets of a separate account are not chargeable
with liabilities incurred in any other business operation of the insurance
company. This protection remains in place so long as assets in the assets in the
separate account do not exceed the reserves and other requirements of the
separate account are maintained.
Income, gains and losses incurred on the assets in the variable account, whether
or not realized, are credited to or charged against the variable account without
regard to other income, gains or losses of Transamerica. Therefore, the
investment performance of the variable account is entirely independent of the
investment performance of Transamerica's general account assets or any other
separate account maintained by Transamerica.
The variable account has 20 sub-accounts, each of which invests solely in a
specific corresponding portfolio. Changes to the sub-accounts may be made at the
discretion of Transamerica.
The Funds
The variable account invests exclusively in the:
* Portfolios of Dreyfus Variable Investment Fund
* Dreyfus Stock Index Fund
* The Dreyfus Socially Responsible Growth Fund, Inc.
* Portfolios of Dreyfus Investment Portfolios
* The Growth Portfolio of Transamerica Variable Insurance Fund, Inc.
The Dreyfus Variable Investment Fund was organized as an unincorporated business
trust under Massachusetts law pursuant to an Agreement and Declaration of Trust
dated October 29, 1986. It commenced operations on August 31, 1990, and is
registered with the Commission as an open-end management investment company
under the 1940 Act. Currently, thirteen series, or portfolios, of the Variable
Fund are available for the certificates. Each portfolio has separate investment
objectives and policies. As a result, each portfolio operates as a separate
investment portfolio and the investment performance of one portfolio has no
effect on the investment performance of any other portfolio.
The Dreyfus Stock Index Fund was incorporated under Maryland law on January 24,
1989, and commenced operations on September 29, 1989. It is registered with the
Commission as an open-end, non-diversified, management investment company.
The Dreyfus Socially Responsible Growth Fund, Inc. was incorporated under
Maryland law on July 20, 1992, and commenced operations on August 31, 1993. It
is registered with the Commission as an open-end, diversified, management
investment company.
Dreyfus Investment Portfolios was organized as an unincorporated business trust
under Massachusetts law pursuant to an Agreement and Declaration of Trust dated
May 14, 1993. It is registered with the Commission as an open-end management
company under the 1940 Act and commenced operations May 1, 1998. Currently, four
Portfolios of Dreyfus Investment Portfolios are available for the certificate.
Transamerica Variable Insurance Fund, Inc. was incorporated under Maryland law
on June 23, 1995. It commenced operations on November 1, 1996, and is registered
with the SEC as a management investment company. One of its portfolios is the
Growth Portfolio.
The Commission does not supervise the management or the investment practices and
policies of any of the portfolios. The assets of the Variable Fund, the Socially
Responsible Fund, the Stock Index Fund are each separate from the assets of the
other portfolios.
Service Providers to The Funds
* The Dreyfus Corporation provides investment advisory and administrative
services to the Dreyfus Variable Investment Fund the Dreyfus Investment
Portfolios and the Socially Responsible Fund.
* Mellon Equity Associates provides index fund management services to the Stock
Index Fund, with The Dreyfus Corporation serving as the manager, in accordance
with applicable agreements with the fund.
* Fayez Sarofim & Co. provides sub-investment advisory services for the Capital
Appreciation Portfolio of the Variable Fund.
* NCM Capital Management Group, Inc. provides sub-investment advisory services
for the Socially Responsible Fund.
* Founders Asset Management LLC provides sub-investment advisory services for
the Founders Growth and Founders Passpost Portfolios.
* Transamerica provides investment advisory services to Transamerica VIF, with
Transamerica Investment Services, Inc. providing sub-investment advisory
services.
Transamerica receives fees from The Dreyfus Corporation and its affiliates for
providing certain administrative and or other services.
The portfolios are described below. Please see the Variable Fund, the Stock
Index Fund, the Socially Responsible Fund, Dreyfus Investment Portfolios and
Transamerica VIF prospectuses for more information.
Money Market Portfolio
The Money Market Portfolio's investment objective is to provide a high level of
current income while preserving invested capital and maintaining liquidity. It
seeks to achieve this objective by investing in short-term money market
instruments. The investment advisory fee is payable monthly at the annual rate
of 0.50 of 1% of the value of the portfolio's average daily net assets. An
investment in this portfolio is not insured or guaranteed by the FDIC or any
other government agency. Although this portfolio seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
this portfolio.
Special Value Portfolio
The Special Value Portfolio's investment objective is to maximize total return
on your investment capital. Total return consists of capital appreciation and
current income. It seeks to achieve its objective by following a "contrary
value" strategy, investing in a wide range of equity and debt securities and
money market instruments. An investment advisory fee is payable monthly at the
annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Zero Coupon 2000 Portfolio
The Zero Coupon 2000 Portfolio's investment objective is to provide as high an
investment return as is consistent with preserving capital. It seeks to achieve
its objective by investing primarily in:
* debt obligations of the U.S. Treasury that have been stripped of their
unmatured interest coupons;
* interest coupons that have been stripped from debt obligations issued by the
U.S. Treasury;
* receipts and certificates for stripped debt obligations and stripped coupons,
including U.S. Government trust certificates.
Collectively, we refer to these as Stripped Treasury Securities. The portfolio
also may purchase certain other types of stripped government or corporate
securities. The portfolio's assets will consist primarily of portfolio
securities which will mature on or about December 31, 2000. The investment
advisory fee is payable monthly at the annual rate of 0.45 of 1% of the value of
the portfolio's average daily net assets.
Quality Bond Portfolio
The Quality Bond Portfolio's investment objective is to provide the maximum
amount of current income while preserving capital and maintaining liquidity. It
seeks to achieve its objective by investing mainly in: debt obligations of
corporations, the U.S. Government, its agencies and instrumentalities, and major
U.S. banking institutions. The investment advisory fee is payable monthly at the
annual rate of 0.65 of 1% of the value of the portfolio's average daily net
assets.
Small Cap Portfolio
The Small Cap Portfolio's investment objective is to maximize capital
appreciation. It seeks to achieve its objective by investing mainly in common
stocks of domestic and foreign issuers. Under normal market conditions, the
portfolio will invest at least 65% of its total assets in companies with market
capitalizations of less than $1.5 billion at the time of purchase. The Dreyfus
Corporation will invest in companies it believes to be characterized by new or
innovative products, services or processes which should enhance prospects for
growth in future earnings. The investment advisory fee is payable monthly at the
annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Capital Appreciation Portfolio
The Capital Appreciation Portfolio's primary investment objective is to provide
long-term capital growth while preserving capital. Current income is a secondary
goal. It seeks to achieve its goals by investing in common stocks of domestic
and foreign issuers. An investment advisory fee is payable monthly to The
Dreyfus Corporation and a sub-investment advisory fee is payable monthly to
Fayez Sarofim & Co. at the total annual rate of 0.75 of 1% of the value of the
portfolio's average daily net assets.
Growth and Income Portfolio
The Growth and Income Portfolio's investment objective is to provide long-term
capital growth, current income and growth of income, consistent with reasonable
investment risk. This portfolio invests primarily in equity and debt securities
and money market instruments of domestic and foreign issuers. The proportion of
the portfolio's assets invested in each type of security will vary from time to
time in accordance with the Dreyfus Corporation's assessment of economic
conditions and investment opportunities. An investment advisory fee is payable
monthly at the annual rate of 0.75 of 1% of the value of the portfolio's average
daily net assets.
International Equity Portfolio
The International Equity Portfolio's investment objective is to maximize capital
growth. This portfolio's invests primarily in the equity securities of foreign
issuers located throughout the world. An investment advisory fee is payable
monthly at an annual rate of 0.75 of 1% of the value of the portfolio's average
daily net assets.
International Value Portfolio
The International Value Portfolio's investment objective is long-term capital
growth. This portfolio invests primarily in equity securities of foreign issuers
which are characterized as value companies according to criteria established by
the portfolio's investment adviser. An investment advisory fee is payable
monthly at the annual rate of 1.00% of the value of the portfolio's average
daily net assets.
Disciplined Stock Portfolio
The Disciplined Stock Portfolio's investment objective is to provide investment
results that are greater than the total return performance of publicly traded
common stocks as a group, as represented by the Standard & Poor's 500 Composite
Stock Price Index. This portfolio will use quantitative statistical modeling
techniques to build a portfolio similar to the S & P 500 in its sector
weightings and risk characteristics. An investment advisory fee is payable
monthly at the annual rate of 0.75 of 1% of the value of the Portfolio's average
daily net assets.
Small Company Stock Portfolio
The Small Company Stock Portfolio's investment objective is to provide
investment results that are greater than the total return performance of
publicly traded common stocks as a group, as represented by the Russell 2500
Index. This portfolio invests primarily in a portfolio of equity securities of
small to medium sized domestic companies. While investing in these companies,
the portfolio will attempt to maintain volatility and diversification similar to
that of the Russell 2500 Index. An investment advisory fee is payable monthly at
the annual rate of 0.75 of 1% of the value of the portfolio's average daily net
assets.
Balanced Portfolio
The Balanced Portfolio's investment objective is to provide investment results
that are greater than the total return performance of common stocks and bonds as
a group, as represented by a hybrid index. 60% of the index is composed of the
common stocks in the S & P 500 Composite Stock Price Index. 40% of the index is
composed of the bonds in the Lehman Brothers Intermediate Government/ Corporate
Bond Index. This portfolio invests primarily in common stocks and bonds in
proportions selected by The Dreyfus Corporation based on their expected returns
and risks. An investment advisory fee is payable monthly at the annual rate of
0.75 of 1% of the value of the portfolio's average daily net assets.
Limited Term High Income Portfolio
The Limited Term High Income Portfolio's investment objective is to maximize
total return, consisting of capital appreciation and current income. This
portfolio seeks to achieve its objective by investing up to all of its assets in
a portfolio of lower rated fixed-income securities, commonly known as junk
bonds. Investments of this type are subject to a greater risk of loss of
principal and non-payment of interest. Under normal market conditions, these
bonds will have an effective average duration of three and one-half years or
less. Investors should carefully assess the risks associated with an investment
in the portfolio. Those risks are described in the portfolio's prospectus. An
investment advisory fee is payable monthly at the annual rate of 0.65 of 1% of
the value of the portfolio's average daily net assets.
Stock Index Fund
The Stock Index Fund's investment objective is to provide investment results
that correspond to the price and yield performance of publicly traded common
stocks as a group, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is not sponsored by or affiliated with Standard & Poor's
Corporation in any way. A management fee is payable monthly to The Dreyfus
Corporation at the annual rate of 0.24 of 1% of the value of the Fund's average
daily net assets. Dreyfus pays Mellon Equity Associates to provide the
day-to-day management of the Fund's investments.
Socially Responsible Fund
The Socially Responsible Fund's primary goal is to provide capital growth.
Current income is a secondary goal. It seeks to achieve these objectives by
investing principally in common stocks, or securities convertible into common
stock. Stocks selected for this fund will be issued by companies which, in the
opinion of the fund's management, not only meet traditional investment
standards, but also show evidence that they conduct their business in a manner
that contributes to the enhancement of the quality of life in America. A
management fee is payable monthly to The Dreyfus Corporation at the annual rate
of 0.75 of 1% of the value of the Socially Responsible Fund's average daily net
assets. Dreyfus pays NCM Capital Management Group, Inc. as sub-adviser to
provide day-to-day management of the Fund's investments.
Core Value Portfolio
The Core Value Portfolio's primary investment objective is to provide long-term
growth of capital. Current income is a secondary investment objective. The
portfolio invests primarily in equity securities, such as common stocks,
preferred stock and securities convertible into common stocks. All of these
would be issued by "value" companies according to criteria established by The
Dreyfus Corporation. A management fee is payable monthly at the annual rate of
0.75 of 1% of the portfolio's average daily net assets.
MidCap Stock Portfolio
The MidCap Stock Portfolio's investment objective is to provide investment
results that are greater than the total return performance of publicly-traded
common stocks as a group, as represented by the Standard & Poor's MidCap 400
Index. The portfolio invests primarily in equity securities of medium-sized
domestic issurers, while attempting to maintain volatility and diversification
similar to that of the S & P Mid Cap 400 Index. The portfolio is not an index
fund and its investments are not limited to securities of issuers included in
the S&P Mid Cap 400 Index. A management fee is payable monthly at the annual
rate of 0.75 of 1% of the portfolio's average daily net assets.
Founders Growth
The Founders Growth Portfolio's investment objective is to provide long-term
growth of capital. It invests primarily in equity securities of
well-established, high quality "growth" companies, as determined by the
Portfolio's sub-investment adviser. These companies tend to have strong
performance records, solid market positions and reasonable financial strength,
and have continuous operating records of three years or more. An investment
advisory fee is payable monthly to The Dreyfus Corporation at an annual rate of
0.75% of the value of the portfolio's average daily net assets. Dreyfus pays
Founders Asset Management LLC to provide the day-to-day management of the
Portfolio's investments.
Founders Passport Portfolio
The Founders Passport Portfolio's investment objective is to provide capital
appreciation. It invests primarily in equity securities of foreign issuers with
market capitalizations or annual revenues of $1 billion or less and which are
characterized as "growth" companies, as determined by the Portfolio's
sub-investment adviser. It ordinarily invests in foreign issuers from at least
three foreign countries with established or emerging economies. The portfolio
may invest in securities of larger foreign issuers or in U.S. issuers if
management believes these securities offer attractive opportunities for capital
appreciation. An investment advisory fee is payable monthly to The Dreyfus
Corporation at an annual rate of 1.00% of the value of the portfolio's average
daily net assets. Dreyfus pays Founders Asset Management LLC to provide the
day-to-day management of the Portfolio's investments.
Growth Portfolio of the Transamerica Variable Insurance Fund, Inc. seeks
long-term capital growth. Common stock (listed and unlisted) is the basic form
of investment. The Growth Portfolio invests primarily in common stocks of growth
companies that are considered by the manager to be premier companies. In the
manager's view, characteristics of premier companies include one or more of the
following:
* dominant market share;
* leading brand recognition;
* proprietary products or technology;
* low-cost production capability; and/or
* excellent management with shareholder orientation.
The manager of the portfolio believes in long-term investing and places great
emphasis on each company's ability to sustain the above competitive advantages.
Unless market conditions indicate otherwise, the manager also tries to keep the
portfolio fully invested in equity-type securities. It also does not try to
invest or divest based on stock market movements. When, in the judgment of the
manager, and market conditions warrant, the portfolio may, for temporary
defensive purposes, hold part or all of its assets in cash, debt or money market
instruments. The portfolio may invest up to 10% of its assets in debt securities
having a call on common stocks that are rated below investment grade.
A management fee of 0.75 of 1% of the average daily net assets is payable
monthly to Transamerica Occidental Life Insurance Company, as adviser. The
adviser pays Transamerica Investment Services, Inc. as sub-adviser, a monthly
fee at the annual rate of 0.30 of 1% of the first $50 million, .25 of 1% of the
next $150 million and .20 of 1% of the assets in excess of $200 million.
Variable Account Objectives
Meeting objectives depends on various factors, including, but not limited to,
how well the portfolio managers anticipate changing economic and market
conditions. You should be aware of the following risks:
* There is no assurance that any of these portfolios will achieve their stated
objectives.
* An investment in the contract is not insured or guaranteed by the FDIC or any
other government agency.
* Investing in the contract involves certain investment risks, including
possible loss of principal.
Portfolios Not Publicly Available
The portfolios are open-end management investment companies, or portfolios or
series of, open-end management companies registered with the SEC under the 1940
Act, that are often referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios. Shares of the portfolios are not offered to the public but solely to
the insurance company separate accounts and other qualified purchasers as
limited by federal tax laws. These portfolios are not the same as mutual funds
that may have very similar names that are sold directly to the public, and the
performance of such publicly available funds, which have different portfolios
and expenses, should not be considered as an indication of the performance of
the portfolios. The assets of each portfolio are held separate from the assets
of the other portfolios. Each portfolio operates as a separate investment
vehicle. The income or losses of one portfolio have no effect on the investment
performance of another portfolio. The sub-accounts reinvest dividends and/or
capital gains distributions received from a portfolio in more shares of that
portfolio as retained assets.
Resolution of Possible Conflicts
Since variable insurance products from other companies as well as Transamerica
can invest in all of the portfolios, there is a possibility that a material
conflict may arise between the interests of the variable account and other
companies. If conflict occurs, the affected insurance companies will take the
needed steps to resolve the matter. This may include stopping their separate
account from investing in the portfolios.
Sources of Additional Information
You will find additional information in the current prospectuses for the
portfolios, which accompany this prospectus, including:
* the investment objectives;
* the investment policies;
* the investment advisory services;
* the administrative services; and
* charges
You should read the portfolios' prospectuses carefully before you make any
decision concerning the allocation of premiums to, or transfers among, the
sub-accounts.
Addition, Deletion or Substitution
Transamerica does not control the portfolios. We therefore cannot guarantee that
any of the sub-accounts of the variable account or any of the portfolios will
always be available to investors for allocation of premiums or transfers. We
retain the right to make changes in the variable account and in its investments.
We reserve the right to:
* eliminate the shares of any portfolio held by a sub-account; or
* substitute shares of another portfolio or of another investment company for
the shares of any portfolio.
If the shares of a portfolio are no longer available for investment or if, in
our judgement, a portfolio is not fulfilling its intended purpose within the
variable account, we reserve the right to remove it. To the extent required by
the 1940 Act, we will inform shareholders in advance of any substitutions. We
will also seek the Commission's advance approval before making substitutions.
These potentially necessary substitutions should not be construed in any way as
preventing or limiting the variable account from purchasing other securities for
other series or classes of variable annuity certificates, or from effecting an
exchange between series or classes of variable certificates on the basis of
requests made by owners.
The Establishment of New Sub-Accounts
At our discretion, based on marketing, tax, investment or other conditions, we
can elect to establish new sub-accounts. We will make these new sub-accounts
available to our existing certificate owners on a basis which we will determine
at that time. Each additional sub-account will purchase shares in a portfolio or
in another mutual fund or investment vehicle. We may also eliminate one or more
sub-accounts if, in our sole discretion, marketing, tax, investment or other
conditions so warrant. In the event any sub-account is eliminated, we will
notify owners and request a re-allocation of the amounts invested in the
eliminated sub-account.
In the event of any substitution or change, we may change the certificates in a
way that appropriately reflects substitutions or changes. Furthermore, if we
believe it to be in the best interests of persons having voting rights under the
certificates, the variable account may be operated as a management company under
the 1940 Act or any other form permitted by law. It may also be deregistered
under this act in the event such registration is no longer required, or may be
combined with one or more other separate accounts.
THE FIXED ACCOUNT
This prospectus is generally intended to serve owners as a disclosure document
only for the certificate and the variable account. For complete details
regarding the fixed account, see the certificate itself.
Premiums allocated to and amounts transferred to the fixed account become part
of the general account of Transamerica, which supports insurance and annuity
obligations. Because of exemptive and exclusionary provisions, interests in the
general account have not been registered under the Securities Act of 1933,
hereafter referred to simply as the 1933 Act. Nor is the general account
registered as an investment company under the 1940 Act. Accordingly, neither the
general account nor any interests therein are generally subject to the
provisions of the 1933 Act or the 1940 Act. Therefore the Securities and
Exchange Commission has not reviewed the disclosures in this prospectus which
relate to the fixed account.
The fixed account is part of the general account of Transamerica. The general
account consists of all the general assets of Transamerica, other than those in
the variable account, or assets in any other segregated asset account. We have
the right to determine how it will invest the assets of its general account
while adhering to applicable laws. The allocation or transfer of funds to the
fixed account does not entitle the owner to share in the overall investment
returns of our general account. The Interest Rate of the Fixed Account
We guarantee that we will credit interest at a rate of not less than 3% per
year, compounded annually, to amounts allocated to the fixed account under the
certificates. We may credit interest at a rate in excess of 3% per year. There
is no specific formula for the determination of excess interest credits.
Some of the factors that we may consider in determining whether to credit excess
interest to amounts allocated to the fixed account and the amount in that
account are:
* general economic trends;
* rates of return currently available;
* anticipated returns on our investments;
* regulatory and tax requirements; and
* competitive factors.
Interest credited to amounts allocated to the fixed account in excess of 3% per
year will be determined in our sole discretion. You, as the owner, assume the
risk that interest credited to the fixed account allocations may not exceed the
minimum guarantee of 3% for any given year.
Interest rates credited to the fixed account will be guaranteed for at least
twelve months and will vary by the timing and class of the allocation, transfer
or renewal. After the end of the twelve month period for a particular
allocation, we may change the annual rate of interest for that class. The new
annual rate of interest will remain in effect for at least twelve months. New
premiums paid to the certificate allocated to the fixed account may receive
different rates of interest. These rates of interest may differ from those
interest rates credited to amounts transferred from the variable sub-accounts
and from those credited to amounts remaining in the fixed account and receiving
renewal rates. These rates of interest may also differ from rates for
allocations applied under certain options and services we may be offering.
Transfers from the Fixed Account
Transfers from the fixed account into a sub-account of the variable account are
limited to four per certificate year. The maximum amount you may transfer from
the fixed account will be the maximum transfer amount in effect on the date of
such transfer during a certificate year. The maximum transfer amount is a
percentage of the value of the fixed account as of the date of the last
certificate anniversary. The percentage rate, which we will declare from time to
time, will be a minimum of 25% and, currently, is 25%.
Transfers into the Fixed Account
You must wait 90 days before you are allowed to make a second or additional
transfers from a sub-account of the variable account into the fixed account.
THE CERTIFICATE
The certificate is a flexible premium multi-funded individual deferred annuity
certificate. The rights and benefits under the certificate are described below
and in the certificate. We reserve the right to modify the certificate so that
it conforms to any federal or state stature, or rule or regulation. Such
modifications will give certificate owners the benefits of these changes. We are
responsible for the obligations stated in the certificate.
The certificates may be used for contributory and rollover IRAs and for
contributory and rollover Roth IRAs that qualify for special federal income tax
treatment. With our prior approval, the certificates may be used as Section
403(b) annuities and for use in Section 401(a) qualified pension and profit
sharing plans established by corporate employers. Generally, qualified
certificates contain restrictive provisions limiting the timing and amount of
payments and distributions from the qualified certificate.
CERTIFICATE APPLICATION AND
PREMIUMS
Premiums
Please send all of your premium payments to our service center. We will send you
a confirmation letter to acknowledge the acceptance of each premium.
The initial premium for each certificate must generally be at least $5,000. We,
may, at our discretion, accept lower initial premiums for certain qualified
certificates. We will ordinarily issue the certificate and derive the net
premium from the initial premium within two days of receipt of a properly
completed application and the premium. At this time, the certificate is accepted
and funded with your premium. A net premium is defined as a premium minus any
applicable premium taxes. These taxes may include retaliatory premium taxes,
which may be levied in the future in New York, or in any other state in which
you live, where such taxes are levied in the future. Acceptance of the
application is subject to it being received in good order. We reserve the right
to reject any application. Certificates normally will not be issued with
annuitants more than 80 years old, although we in our discretion may waive this
restriction in certain cases.
If the initial premium allocated to the variable sub-account(s) cannot be
credited within two days of receipt because the information is incomplete, or
for any other reason, we will contact you. We will explain the reason for the
delay and will refund the initial premium within five business days. If you
consent to our retaining the initial premium, we will credit it to the variable
sub-account of your choice as soon as the requirements are fulfilled.
Ten Day Cancellation Option
You have the right to examine the certificate for a limited period known as a
free look period. You may cancel the certificate by delivering or mailing a
written notice or by sending a telegram to:
* the agent through whom the certificate was purchased; or
* our service center
This must be done before midnight of the tenth day after receipt of the
certificate. If you give notice by mail and return the certificate by mail,
properly addressed with postage paid, the request for cancellation will be
deemed to have been made on the date postmarked. We will refund your premiums to
the fixed account plus the variable accumulated value, determined by the date
postmarked. The return of these amounts will occur within seven days after we
receive your returned certificate and request to cancel.
Additional premiums may be paid into the certificate at any time before the
annuity date, as long as the annuitant or contingent annuitant is living.
Additional premiums must be at least $500, or at least $100 if paid to an
automatic payment plan. Using an automatic payment plan, the additional premiums
are automatically deducted from a bank account. In addition, minimum allocation
amounts apply. Additional net premiums are credited to the certificate as of the
date the payment is received. Currently, additional premiums after the initial
premium may not be made to Section 401(a) and Section 403(b) annuity
certificates.
Total premiums for any certificate may not exceed $1,000,000 without our prior
approval. In no event may the sum of all premiums for a certificate during any
taxable year exceed the limits imposed by any applicable federal or state laws,
rules, or regulations.
Choosing One or More Investment Options
You specify how premiums will be allocated under the certificate. You may select
one or more sub-accounts, and you may allocate your premium dollars in the
percentages of your choice. Any premium allocation you choose is allowed, as
long as it is 10% or more, and you use whole numbers. 25% is allowed, for
example, whereas an allocation of 25.50% is not allowed. In addition, the
initial premium allocated to any sub-account must be at least $500. You have the
choice of which sub-accounts to invest, or not invest in. For all non-IRA
certificates, the net premium derived from the initial premium will be allocated
directly to the sub-account or sub-accounts you choose. These net premiums will
be allocated as you have chosen, in the percentages you selected when we receive
the premium.
You may change your allocation percentages at any time. To do this, simply
submit a request for such a change to our service center in a form and manner
acceptable to us. Any changes to the allocation percentages are subject to this
limitation above. Please call our service center in advance to determine how
your request for allocation changes should be made. Your requested changes will
take effect:
* with the first we receive after you have submitted your request; or
* with any request deemed acceptable by us that is accompanied by a premium.
Your requested changes will remain in effect until you change them again or
surrender your certificate.
If you decide to allocate additional net premiums to an inactive sub-account of
the variable account, you must allocate at least $500.
Investment Option Limit
Currently, you may not allocate premium dollars to more than eighteen investment
options over the life of the certificate. Investment options include
sub-accounts of the variable account and the fixed account. Each sub-account and
the fixed account that ever received a transfer or purchase payment allocation
count as one towards this total of eighteen limit. We may waive this limit in
the future.
For example, if you make an allocation to the Money Market Sub-Account and later
transfer all amounts out of this Money Market Sub-Account, it would still count
as one for the purposes of the limitation even if it held no value. If you
transfer from a sub-account to another sub-account and later back to the first,
the count towards the limitation would be two, not three.
CERTIFICATE VALUE
Before the annuity date, the certificate value is the sum of:
* the fixed accumulated value; plus
* the variable accumulated value.
The variable accumulated value is determined with the use of valuation periods.
A valuation period is the period between successive valuation days. It begins at
the close of the New York Stock Exchange, generally 4:00 p.m. ET, on each
valuation day. It ends at the close of the New York Stock Exchange on the next
succeeding valuation day. A valuation day is each day that the New York Stock
Exchange is open for regular business. The value of the variable account assets
is determined at the end of each valuation day. To determine the value of an
asset on a day that is not a valuation day, the value of that asset as of the
end of the next valuation day will be used. Days that are not considered to be
valuation days are those during which the New York Stock Exchange is closed for
regular business.
The variable accumulated value is expected to change from valuation period to
valuation period. The changes reflect how the investment performed of all of the
selected portfolios, and also reflect the deductions for charges.
How Your Variable Accumulation Units Are Created
When you pay premiums into your certificate, those premiums are used to purchase
variable accumulation units in the sub-accounts in which you have chosen to
invest. At the end of each valuation period during which we received premiums
from you, will be credited with variable accumulation units. The number of units
you receive is determined by dividing:
* the portion of each net premium allocated to the sub-accounts; by
* the variable accumulation unit value, at the end of the valuation period.
When you pay your first premium, which is defined as the initial net premium,
variable accumulation units for that payment are credited to the certificate
value. That credit is then held in the Money Market Sub-Account for fifteen
calendar days after the certificate date.
The variable accumulation units credited to your certificate as the result of
your initial net premium are credited to your certificate's value within two
valuation days of the later of:
1. the date on which our service center receives an acceptable and properly
completed application; or
2. the date on which our service center receives the initial premium.
The variable accumulation units credited to your certificate as the result of
subsequent premiums will be credited to your certificate's value at the end of
the valuation period during which we received your payment.
How Variable Accumulation Unit Values Are Calculated
The value of a variable accumulation unit for each sub-account for a valuation
period is established at the end of each valuation period. It is calculated by
multiplying the value of that unit at the end of the prior valuation period by
the sub-account's net investment factor for the valuation period. The value of a
variable accumulation unit may go up or down.
The net investment factor is used to determine the value of accumulation and
annuity unit values for the end of a valuation period. The applicable formula
can be found in the Statement of Additional Information.
Transferring Among Sub-Accounts
When you transfer premium dollars among the sub-accounts, those transfers will
result in the purchase and/or cancellation of variable accumulation units. The
value of these units will equal the total dollar amount you are transferring to
or from a sub-account. These transactions are valued at the end of the valuation
day on which you performed your transaction.
TRANSFERS
Transfers Before the Annuity Date
Before the annuity date, you may transfer all or part of the certificate value
among the sub-accounts by giving a written request to our service center subject
to the following conditions:
1. the minimum amount that may be transferred is $500; and
2. the minimum transfer to an inactive sub-account is $500.
Transfers are restricted into or out of the fixed account. Transfers are also
subject to terms and conditions that may be imposed by the portfolios.
Your transfer request must specify the amounts you wish to transfer from each
sub-account or the fixed account and the amounts you wish to transfer into each
sub-account or the fixed account.
We impose a transfer fee equal to the lesser of $10 or 2% of the amount of
transfer for each transfer over 18 in a certificate year. We also reserve the
right to:
* waive the transfer fee;
* vary the number of transfers without charge, but not fewer than 12; or
* not count transfers under certain options or services.
If a transfer request would reduce the value in a sub-account or the fixed
account to less than $500, then we reserve the right to transfer the remaining
amount along with the amount you requested to be transferred. This will be done
according to your transfer instructions. Under current law, there will not be
any tax liability to you as the owner if you make a transfer.
Possible Restrictions
We reserve the right without prior notice, to modify, restrict, suspend or
eliminate the transfer privileges at any time and for any reason. For example,
restrictions may be necessary to protect owners from adverse impacts on
portfolio management of large and/or numerous transfers by market timers or
others. We have determined that the movement of significant sub-account values
from one sub-account to another may prevent the portfolio impacted by these
transfers from taking advantage of investment opportunities. This occurs because
the portfolio must maintain a significant cash position in order to handle
redemptions.
Such large and sudden movement of assets in any one portfolio may also cause a
substantial increase in portfolio transaction costs. These costs must be
indirectly borne by owners. Therefore, we reserve the right to require that all
transfer requests be made by you, the owner, and not by a third party holding a
power of attorney. We also require that each transfer request be made by a
separate communication to us. We also reserve the right to request that each
transfer request be submitted in writing and be manually signed by the owner or
owners; facsimile transfer requests may not be allowed.
Dollar Cost Averaging
You may elect to participate in dollar cost averaging. Dollar cost averaging
allows you to invest monthly the dollar amount you designate, from $250 upwards,
into the portfolio of your choice. The main benefit of this systematic
investment technique is that it enables you to average out the cost of your unit
prices over time, as you invest regularly to meet your personal investment
objectives.
Before the annuity date, you may request that a designated amount of money be
automatically transferred from one, and only one, of the sub-accounts which
invests in:
* the Money Market;
* the Quality Bond Portfolio;
* the Limited High Term Income Portfolio; or
* the Fixed Account.
This money may be transferred to any of the sub-accounts on a monthly basis by
submitting a request to our service center. The request must be in a form and
manner acceptable to us. Your transfers will begin the month following, but no
sooner than one week following, receipt of such request, provided that dollar
cost averaging transfers will not begin until the later of:
1. 30 days after the certificate date; or
2. the estimated end of the free look period, allowing 5 days for delivery of
the certificate by mail.
Transfers will continue for the duration you selected unless terminated:
1. by you;
2. automatically by us because there are insufficient funds in the applicable
sub-account or fixed account; or
3. for other reasons as set forth in the certificate.
You may request that monthly transfers be continued for an additional period of
time. You can accomplish this by giving notice to our service center in a form
and manner acceptable to us within 30 days before the last monthly transfer. If
no request to continue the monthly transfers is made by you, as the owner, this
option will terminate automatically with the last transfer.
Eligibility Requirements
In order to be eligible for dollar cost averaging, you must meet the following
conditions:
1. the value of the selected sub-account (from which your transfers are made)
must be at least $5,000;
2. the minimum amount that you may transfer out of the selected sub-account or
fixed account is $250 per month; and
3. the minimum amount transferred into any other sub-account is the greater of
$250 or 10% of the amount being transferred.
Please note that dollar cost averaging transfers can not be made from a
sub-account from which you are receiving systematic withdrawals or automatic
payouts.
You will not be charged for the dollar cost averaging service and transfers that
result from dollar cost averaging practices. Nor will these transfers count
toward the 18 transfers without charge per certificate year.
Automatic Asset Rebalancing
When you allocate premiums to certain portfolios in certain percentages, you
define how you want your investments to perform. Changing market conditions
affect each portfolio's performance, and can throw your allocations out of
balance. You may instruct us to automatically rebalance the amounts by
reallocating them among the variable sub-accounts, at the time and in the
percentages that you specify. You must specify automatic asset rebalancing in
your instructions to us. You may elect to have the rebalancing done on an
annual, semi-annual or quarterly basis. You may also elect to have amounts
allocated among the sub-accounts using whole percentages, with a minimum of 10%
allocated to each sub-account.
You may elect to establish, change or terminate the automatic asset rebalancing
by submitting a request to our service center in a form and manner acceptable to
us. Automatic asset rebalancing will not count towards the limit of 18 free
transfers in a certificate year. There is currently no charge for the automatic
asset rebalancing. However, we reserve the right to charge a nominal amount for
this feature. We also reserve the right to discontinue offering automatic asset
rebalancing any time for any reason.
After the Annuity Date
If you elect a variable annuity payout option, you may transfer variable account
amounts after the annuity date by submitting a request in a form acceptable to
us at our service center. Your request will be subject to the following
provisions:
1. transfers after the annuity date may be made no more than four times during
any annuity year; and
2. the minimum amount transferred from one sub-account to another is the amount
supporting a current $50 monthly payment.
Your transfers among sub-accounts during the annuity period will be processed
based on the formula outlined in the Statement of Additional Information.
CASH WITHDRAWALS
Withdrawals
You may withdraw all or part of the cash surrender value at any time during the
life of the annuitant and before the annuity date. You can do this by giving a
written request to our service center. Your request will be subject to the rules
below. Federal or state laws, rules or regulations may also apply.
The amount payable to you if the certificate is surrendered on or before the
annuity date is the cash surrender value. The cash surrender value is equal to
the certificate value, minus any certificate fee, minus any applicable
contingent deferred sales load and minus any applicable premium taxes.
A surrender of your certificate will result in a cash withdrawal payment equal
to the certificate's cash surrender value at the end of the valuation period
during which your request is received along with all of your completed forms. No
withdrawals may be made after the annuity date. Only one partial withdrawal will
be permitted while the systematic withdrawal option is in effect. Partial
withdrawals must be at least $500.
In the case of a partial withdrawal, you may instruct our service center as to
the amounts to be withdrawn from each sub-account or fixed account. If you do
not specify from where the withdrawal is to be made, the withdrawal will be
taken pro rata from all sub-accounts with current values. If the requested
withdrawal reduces the value of the sub-account from which the withdrawal was
made to less than $500, we reserve the right to transfer the remaining value of
that sub-account pro rata. If no such sub-accounts exist, such transfer will be
made to the Money Market Sub-Account. You will be notified in writing of any
such transfer.
A partial withdrawal will not be processed if it would reduce the certificate
value to less than $2,000. In that case, you will be notified that you will have
10 days from the date notice is mailed to:
a. withdraw a lesser amount, subject to the $500 minimum, leaving a certificate
value of at least $2,000; or
b. surrender the certificate for its cash surrender value.
Amounts payable will be determined as of the end of the valuation period during
which the subsequent instructions are received. If, after the expiration of the
10-day period, no written election is received from you, your withdrawal request
will be considered null and void, and no withdrawal will be processed.
Fees Relating to Withdrawals or Surrenders
The certificate fee will be deducted from a full surrender before the
application of any contingent deferred sales load. Your withdrawals may be
taxable transactions. The Code requires us to withhold federal income tax from
withdrawals. However, as an owner, you generally will be entitled to elect, in
writing, not to have tax withholding apply.
This is true except for distributions from certain qualified certificates that
may be subject to mandatory 20% withholding. Withholding applies to the portion
of the withdrawal which is includible in income and subject to federal income
tax. The federal income tax withholding rate for partial withdrawals and full
surrenders is 10%, or 20% in the case of certain qualified plans, of the taxable
amount of the withdrawal. Withholding applies only if the taxable amount of the
withdrawal is at least $200.
Moreover, the Code provides that a 10% penalty tax may be imposed on the taxable
portions of distributions for certain early withdrawals. In addition, under New
York law you may request us to withhold New York income tax from withdrawals.
Withdrawals, including surrender requests, generally will be processed as of the
end of the valuation period during which the request, including all completed
forms, is received. Payment of any cash withdrawal or lump sum death benefit due
from the variable account will occur within seven days from the date on which
your request is received, except that we may postpone such payment if:
1. the New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
2. an emergency exists as defined by the Commission, or the Commission requires
that trading be restricted; or
3. the Commission permits a delay for the protection of owners.
The withdrawal request will be effective when all appropriate forms are
received. Payments of any amounts derived from premiums paid by check may be
delayed until the check has cleared your bank. The payment of a withdrawal from
the fixed account may be delayed for up to six months. If delayed for more than
10 days, interest will be paid on the withdrawal amount up to the date of
payment.
You, as the owner, assume the investment risk for amounts allocated to the
variable account. Certain withdrawals are subject to a contingent deferred sales
load. The total amount paid upon surrender of the certificate, taking into
account any prior withdrawals, may be more or less than the total premiums paid.
Additional Withdrawal and Surrender Provisions
After a withdrawal of the total cash surrender value, or at any time that the
certificate value is zero, all of your rights as the owner will terminate.
Except for IRAs and Roth IRAs, qualified certificates offered by the prospectus
are only offered with our prior approval. They will be issued in connection with
retirement plans which meet the requirements of the Code. You should refer to
the terms of the particular retirement plans for any additional limitations or
restrictions on your cash withdrawals, as these limitations or restrictions may
supercede those of the certificate issued by us.
You may elect, under the systematic withdrawal option or automatic payout option
(but not both), to withdraw certain amounts on a periodic basis from the
sub-accounts before the annuity date.
Systematic Withdrawal Option
Before the annuity date, you may elect to have withdrawals automatically made
from one or more sub-account(s) on a monthly basis. You can accomplish this by
giving written notice to our service center. Other distribution modes may be
allowed. The withdrawals will begin the month following, but no sooner than one
week following, receipt of your written notice. Please note, however, payments
will not begin sooner than the later of:
a. 30 days after the certificate date; or
b. the end of the free look period, allowing 5 days for delivery of the
certificate by mail.
Upon written notice to you, we may change the day of the month on which
withdrawals are made under this option. Withdrawals will be from the
sub-account, or sub-accounts, and in the percentage allocations specified by you
the owner. If no specifications are made, withdrawals will be pro rata from all
sub-accounts and the fixed account with value. Systematic withdrawals can not be
made from a sub-account from which dollar cost averaging transfers are being
made.
Eligibility and Rules of the Systematic Withdrawal Option
To be eligible for the systematic withdrawal option:
* the certificate value must be at least $12,000 at the time you elect to use
this option;
* the minimum monthly amount that can be withdrawn is $100; and
* the maximum monthly amount that can be withdrawn on an annual basis is equal
to the sum, as of the date of the first withdrawal, of:
a) 10% of premiums that are less than seven certificate years old, and
b) 10% of remaining premiums that are at least seven certificate years old.
Systematic withdrawals are not subject to the contingent deferred sales load but
may be reduced by any applicable premium tax. Systematic withdrawals may be
taxable, subject to withholding, and subject to the 10% penalty tax.
Systematic withdrawals will continue unless you terminate them or they are
automatically terminated by us as described in the certificate. If this option
is terminated it may not be used again until the next certificate anniversary.
You may make only one partial withdrawal while the systematic withdrawal option
is in effect. If you make a second partial withdrawal while this option is in
effect, it will automatically terminate the systematic withdrawal option. Upon
any second partial withdrawal, any amount requested as a partial withdrawal,
including the first in a certificate year, will be subject to a contingent
deferred sales load to the extent it exceeds accumulated earnings.
We reserve the right to impose an annual fee of an amount not to exceed $25 per
certificate year for administrative expenses associated with processing the
systematic withdrawals. This fee, which is currently waived, will be deducted
from each systematic withdrawal in equal installments during a certificate year.
Consult your tax adviser and, if applicable, the particular retirement plan,
before requesting withdrawals from a qualified certificate. There may be severe
restrictions with on withdrawals from qualified certificates.
Automatic Payout Option, or APO
Before the annuity date you may elect the automatic payout option, referred to
as the APO, to satisfy minimum distribution requirements under the Code for
certain qualified certificates.
DEATH BENEFIT
If an owner or annuitant dies before the annuity date, a death benefit on the
certificate is payable. If the deceased owner or annuitant, as applicable, had
not reached age 85, the death benefit will be the greatest of :
a. the certificate value;
b. all premiums paid less all withdrawals and any premium taxes applicable to
those withdrawals; or
c. the greatest certificate anniversary value before the earliest of the
annuitant's or owner's 75th birthday plus all premiums paid since that
certificate anniversary, minus all withdrawals and any premium taxes applicable
to those withdrawals since that certificate anniversary.
If the deceased owner or annuitant, as applicable, had attained age 85, the
death benefit will be equal to the certificate value.
The death benefit will be determined as of the valuation period during which the
later of:
a. proof of death of the owner or annuitant is received by our service center;
or
b. written notice of the method of settlement elected by the beneficiary is
received at our service center.
If no settlement method is elected, the death benefit will be calculated and
paid as of a date no later than one year after the date of death. No contingent
deferred sales load will apply. Until the death benefit is paid, the certificate
value will remain in the sub-accounts as previously specified by the owner or as
reallocated according to instructions received by us from all beneficiaries.
Therefore, the certificate value will fluctuate with investment performance of
the applicable sub-accounts. As a result, the amount of the death benefit will
depend on the certificate value at the time the death benefit is paid.
Payment of Death Benefit
The death benefit is generally payable upon receipt of proof of death of the
annuitant or owner. Once our service center receives this proof and the
beneficiary's choice of a method of settlement, the death benefit generally will
be paid within seven days, or as soon thereafter as we have sufficient
information to make the payment. The death benefit may be paid in a lump sum
cash benefit. Or, subject to any limitations under any state or federal law,
rule, or regulation, it may be paid under one of the annuity forms, unless a
settlement agreement effective under the certificate prevents this choice. If no
settlement method is elected within one year of the date of death, the death
benefit will be paid in a lump sum. The payment of the death benefit may be
subject to certain distribution requirements under the federal income tax laws.
Designation of Beneficiaries
You, as the owner, may select one or more beneficiaries and name them in the
application. If you select more than one beneficiary, unless you indicate
otherwise they will each share equally in any death benefits payable in the
event of the annuitant's death before the annuity date if there is no contingent
annuitant, or your death if there is no joint owner. Different beneficiaries may
be named with respect to the annuitant's death and the owner's death.
Respectively, these individuals are referred to as the annuitant's beneficiary
and the owner's beneficiary. Before the annuitant's death, you may change the
beneficiary by notice to our service center in a form and manner acceptable to
us. The owner may also make the designation of beneficiary irrevocable by
sending notice to and obtaining approval from our service center. Irrevocable
beneficiaries may only be changed with the written consent of the designated
irrevocable beneficiaries, except to the extent required by law.
The interest of any beneficiary who dies before the owner or annuitant will
terminate at the death of the beneficiary. The interest of any beneficiary who
dies at the time of, or within 30 days after, the death of the owner or
annuitant will also terminate if no benefits have been paid, unless the
certificate has been endorsed to provide otherwise. The benefits will then be
paid as though the beneficiary had died before the owner or annuitant. If the
interests of all designated beneficiaries have terminated, any benefits payable
will be paid to the owner's estate.
We may rely on an affidavit by any responsible person in determining the
identity or non-existence of any beneficiary not identified by name.
Death of Annuitant Before the Annuity Date
If the annuitant dies before the annuity date and the annuitant is not the owner
and there is no contingent annuitant, a death benefit under the certificate
relating to that annuitant will be paid to the annuitant's beneficiary. If there
is a contingent annuitant, then upon the death of the annuitant the contingent
annuitant will become the annuitant and no death benefit will be paid at that
time.
Death of Owner Before the Annuity Date
If an owner dies before the annuity date, a death benefit will be paid to that
owner's beneficiary. If the certificate has joint owners, the surviving joint
owner will be the owner's beneficiary. If the owner's beneficiary is the
deceased owner's spouse, then the spouse may elect to treat the certificate as
his or her own or receive payment of the death benefit. The payment of the death
benefit may be subject to certain distribution requirements under the federal
income tax laws.
Death of Annuitant or Owner After the Annuity Date
If the annuitant or an owner dies after the annuity starts, the remaining
undistributed portion, if any, of the certificate will be distributed at least
as rapidly as under the method of distribution being used as of the date of such
death. Under some annuity forms, there will be no death benefit. If the owner is
not the annuitant, upon an owner's death, any remaining ownership rights will
pass to the owner's beneficiary.
CHARGES AND DEDUCTIONS
No deductions are made from premiums except for any applicable premium taxes.
Therefore, the full amount, less any premium taxes, of the premiums are invested
in one or more of the sub-accounts of the variable account or the fixed account.
As more fully described below, charges under the certificate are assessed in
three ways:
1. as deductions for the certificate or annuity fees, any transfer fees,
systematic withdrawal option or asset rebalancing fees, (if any), and, if
applicable, for premium taxes;
2. as charges against the assets of the variable account for the assumption of
mortality and expense risks and administrative expenses; and
3. as contingent deferred sales loads
In addition, certain deductions are made from the assets of the funds for
investment management fees and expenses. These fees and expenses are described
in the funds' prospectuses and their statements of additional information.
Contingent Deferred Sales Load/
Surrender Charge
No deduction for sales charges is made from your premiums, although premium tax
may be deducted. However, a contingent deferred sales load, or surrender charge,
of up to 6% of premiums paid may be imposed on certain withdrawals or
surrenders, and possibly on certain annuitizations, to partially cover certain
expenses incurred by us relating to the sale of the certificates, including
commissions paid to salespersons, the costs of preparation of sales literature
and other promotional costs and acquisition expenses.
The contingent deferred sales load/surrender charge percentage varies according
to the number of certificate years between the certificate year in which a net
premium was credited to the certificate and the certificate year in which the
withdrawal is made. This charge is determined by multiplying the amount
withdrawn subject to the contingent deferred sales load by the contingent
deferred sales load percentage according to the following table.
Contingent
Deferred Sales
Number of Certificate Load As a
Years Since Receipt Percentage of
of Each Premium Premium
Less than one year 6%
1 year but less than 2 years 6%
2 years but less than 3 years 5%
3 years but less than 4 years 5%
4 years but less than 5 years 4%
5 years but less than 6 years 4%
6 years but less than 7 years 2%
7 or more years 0%
In no event will the total contingent deferred sales load/surrender charge
assessed against the certificate exceed 6% of the aggregate premiums paid to a
certificate.
Certain amounts may be withdrawn free of any contingent deferred sales load. You
may make withdrawals up to the allowed amount without incurring a contingent
deferred sales load/surrender charge each certificate year before the annuity
date. During the first certificate year, the allowed amount is equal to
accumulated earnings not previously withdrawn.
For the first withdrawal, and only the first withdrawal in a certificate year
after the first certificate year, the available allowed amount you may withdraw
is equal to the sum of:
1. 100% of premiums not previously withdrawn and received at least seven
certificate years before the date of withdrawal; plus
2. the greater of:
a. accumulated earnings not previously withdrawn; or
b. 10% of premiums received at least one but less than seven complete
certificate years before the date of withdrawal not reduced to take into account
any withdrawals deemed to be made from such premiums.
After the first withdrawal in a certificate year after the first certificate
year, the available allowed amount is equal to the sum of: 1. 100% of premiums
not previously withdrawn and received at least seven certificate years before
the date of withdrawal; plus
2. accumulated earnings not previously withdrawn.
Withdrawals will always be made first from your accumulated earnings, and then
from your premiums on a first-in first-out basis. This is done so that
accumulated earnings may be depleted with the first withdrawal and the 10% of
premiums discussed above is not used in the calculation of the allowed amount.
If an allowed amount is not withdrawn during a certificate year, it does not
carry over to the next certificate year. However, accumulated earnings, if any,
in your certificate value are always available as the allowed amount. No
withdrawals are allowed from to premiums made by a check which has not cleared.
Some certificate owners may hold certificates issued before 1995 which, when
originally issued, provided for an allowed amount which was equal to the sum of:
1. all premiums, not previously withdrawn and held more than seven certificate
years; plus
2. 10% of premiums held between one and seven certificate years not reduced by
any withdrawals made by the owner from such premiums.
Under these certificates, withdrawals were made first from premiums on a
first-in first-out basis, then from earnings. The allowed amount that applies to
these owners will be determined by whichever formula provides them with the
larger amount available, for full surrenders only, without a contingent deferred
sales load.
In addition, no contingent deferred sales load is charged:
1. upon annuitization to an option involving life contingencies on or after the
third certificate anniversary;
2. on distributions resulting from the death of the owner or annuitant before
the annuity date;
3. upon withdrawals of certificate value among the sub-accounts under the
systematic withdrawal option; or
4. in some circumstances, under the automatic payout option.
Any applicable contingent deferred sales load will be deducted from the amount
you requested for both partial withdrawals and full surrenders.
Administrative Charges
At the end of each certificate year before the annuity date, we deduct an annual
certificate fee as partial compensation for expenses relating to the issue and
maintenance of the certificate and the variable account. The annual certificate
fee is equal to the lesser of $30 or 2% of the certificate value. No certificate
fee will be deducted for a certificate year if your certificate value exceeds
$50,000 on the last business day of the certificate year or as of the date the
certificate is surrendered. The certificate fee may be changed upon 30 days
advance written notice to you, the owner, subject to the prior approval of the
New York State Insurance Department. In no event may this fee exceed the lesser
of $60 or 2% of the certificate value.
Such increases in the certificate fee will apply only to future deductions after
the effective date of the change. If you surrender your certificate on other
than the end of a certificate year, we will deduct the certificate fee in full
at the time of the surrender. The certificate fee will be deducted on a pro rata
basis from each sub-account in which the certificate is invested at the time of
such deduction or from the fixed account if there are insufficient funds in the
sub-accounts.
After the annuity date, an annual annuity fee of $30 will be deducted in equal
amounts from each variable annuity payment made during the year. If monthly
payments, the amount paid per month will be $2.50. This fee will not be changed.
No annuity fee will be deducted from fixed annuity payments.
We also deduct the administrative expense charge from the variable account at
the end of each valuation period both before and after the annuity date at an
effective current annual rate of 0.15% of assets held in each sub-account. This
deduction is for administrative expenses attributable to the certificates and
the variable account which exceed the revenues received from the certificate
fee, any transfer fee, and any fee imposed for systematic withdrawals.
We have the ability to increase or decrease this charge, but the charge is
guaranteed not to exceed 0.25%. We will provide 30 days written notice of any
change in fees. The administrative charges do not bear any relationship to the
actual administrative costs of a particular certificate. The administrative
expense charge is reflected in the variable accumulation or variable annuity
unit values for each sub-account.
Mortality and Expense Risk Charge
We impose a charge called the mortality and expense risk charge to compensate it
for bearing certain mortality and expense risks under the certificates. For
assuming these risks, we make a daily charge equal to 0.003403% corresponding to
an effective annual rate of 1.25% of the value of the net assets in the variable
account. This charge is imposed before the annuity date and if an annuity
purchase amount is applied to a variable payment option, also after the annuity
date. We guarantee that this charge of 1.25% will never increase.
The mortality and expense risk charge is reflected in the variable accumulation
or variable annuity unit values for each sub-account. Variable accumulated
values and variable annuity payments are not affected by changes in actual
mortality experience incurred by us. The mortality risks assumed by us arise
from our contractual obligations to make annuity payments and to pay death
benefits before the annuity date. These payments are determined according with
the annuity tables and other provisions contained in the certificate. Thus, as
owner, you are assured that neither the annuitant's own longevity nor an
unanticipated improvement in general life expectancy will adversely affect the
annuity payments under the certificate.
We also bear substantial risk in connection with the death benefit before the
annuity date, since it will pay a death benefit that may be greater than the
certificate value. In this way, we bear the risk of unfavorable experience in
the sub-accounts.
The expense risk assumed by us is the risk that our actual expenses in
administering the certificate and the variable account will exceed the amount
recovered through the administrative expense charge, certificate fees, transfer
fees and any fees imposed for systematic withdrawals.
If the mortality and expense risk charge is insufficient to cover actual costs
and risks assumed, the loss will fall on us. Conversely, if this charge is more
than sufficient, any excess will be profit to us. Currently, we expect a profit
from this charge.
We anticipates that the contingent deferred sales load will not generate
sufficient funds to pay the cost of distributing the certificates. To the extent
that the contingent deferred sales load is insufficient to cover the actual cost
of certificate distribution, the deficiency will be met from our general
corporate assets which may include amounts, if any, derived from the mortality
and expense risk charge.
Premium Taxes
Currently, New York has no premium tax or retaliatory premium tax. If New York
imposes these taxes in the future, or if you, as the owner are presently or
become a resident of a state where such taxes apply, we will deduct applicable
premium taxes, including any retaliatory taxes, paid with respect to a
particular certificate from the premiums, from amounts withdrawn, or from
amounts applied on the annuity date. These taxes may range up to 3.5%.
In certain limited circumstances, a broker-dealer or other entity distributing
the certificates may elect to pay us an amount equal to the premium taxes that
would otherwise be attributable to that entity's customers. In such cases, we
will not impose a premium tax charge on those certificates.
Transfer Fee
A fee equal to the lesser of $10 or 2% of the amount of the transfer is charged
for each transfer in excess of 18 in a certificate year. Currently, no fee is
charged for automatic asset rebalancing. However, we reserve the right to impose
a nominal fee.
Systematic Withdrawal Option
We reserve the right to impose an annual fee of an amount not to exceed $25 for
administrative expenses associated with processing systematic withdrawals. This
fee, which is currently waived, will be deducted in equal installments from each
systematic withdrawal you take during a certificate year.
Automatic Asset Rebalancing Option
We currently do not charge for automatic asset rebalancing, but we reserve the
right to impose a nominal fee for this feature in the future.
Taxes
Under present laws, we will incur state or local taxes, in addition to the
premium taxes described above, in several states. No charges are currently made
for taxes other than state premium taxes. However, we reserve the right to
deduct charges in the future for federal, state and local taxes or the economic
burden resulting from the application of any tax laws that we determine to be
attributable to the certificates.
Portfolio Expenses
The value of the assets in the variable account reflects the value of portfolio
shares and therefore the fees and expenses paid by each portfolio. You can find
a complete description of the fees, expenses, and deductions from the portfolios
in the funds' prospectuses.
Sales in Special Situations
We may sell the certificates in special situations that are expected to involve
reduced expenses for us. These instances may include:
1 sales in certain group arrangements, such as employee savings plans;
2 sales to current or former officers, directors, employees and their families,
of Transamerica and its affiliates;
3 sales to officers, directors, employees and their families, of the portfolios'
investment advisers and their affiliates; or
4 sales to officers, directors, employees and sales agents, including registered
representatives and their families, or broker-dealers and other financial
institutions that have sales agreements with us to sell the certificates. In
such situations:
1 the contingent deferred sales load may be reduced or waived;
2 the mortality and expense risk charge or administration charges may be reduced
or waived; or
3 certain amounts may be credited to the certificate account value, for example,
amounts related to commissions or sales compensation otherwise payable to a
broker-dealer may be credited to the certificate account value.
These reductions in fees or charges or credits to certificate value will not
unfairly discriminate against any certificate owner. These reductions in fees or
charges or credits to account value are generally taxable and treated as
premiums for purposes of income tax and any possible premium tax charge.
DISTRIBUTION OF THE CERTIFICATE
Transamerica Securities Sales Corporation, also referred to as TSSC, is the
principal underwriter of the certificates under a Distribution Agreement with
Transamerica. TSSC may also serve as an underwriter and distributor of other
certificates issued through the variable account and certain other separate
accounts of Transamerica and any affiliates of Transamerica. TSSC is an indirect
wholly-owned subsidiary of Transamerica Insurance Corporation of California,
which is a subsidiary of Transamerica Corporation. TSSC is registered with the
Commission as a broker/dealer and is a member of the National Association of
Securities Dealers, Inc., also known as the NASD. Its principal offices are
located at 1150 South Olive, Los Angeles, California 90015. Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to solicit
applications for the certificates through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the certificates may be solicited by registered
representatives of the broker/ dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker/dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for certificates will be sold by
broker/dealers which will generally receive compensation of up to 6.25% of any
initial and additional premiums paid, although higher amounts may be paid in
certain circumstances. Additional amounts, including asset based trail
commissions, may be paid in certain circumstances.
Transamerica Financial Resources, Inc., referred to as TFR, also is an
underwriter and distributor of the certificates. TFR is a wholly-owned
subsidiary of Transamerica Insurance Corporation of California and is registered
with the Commission and the NASD as a broker/dealer.
ANNUITY PAYMENTS
Annuity Date
The annuity date is the date that the annuity purchase amount is applied to
provide the annuity payments under the certificate. The annuity date will be
used together with the annuity form and payment option you selected. The annuity
date will remain effective unless the entire certificate value has been
withdrawn or the death benefit has been paid to the beneficiary before that
date.
Initially, as the owner, you select the annuity date at the time you pay the
initial premium. After that, you may change the annuity date from time to time
by giving notice to our service center, provided that our service center
receives notice of each change at least 30 days before the then-current annuity
date. The annuity date must not be earlier than the third certificate
anniversary.
The latest annuity date that you may elect is the first day of the calendar
month immediately preceding the month of the annuitant's 85th birthday. The
annuity date must be the first day of a calendar month. The first annuity
payment will be on the first day of the month immediately following the annuity
date.
Annuity Payment
The annuity purchase amount is the certificate value, minus any applicable
contingent deferred sales load and minus any applicable premium taxes. Any
contingent deferred sales load will be waived if the annuity form selected
involves life contingencies and begins on or after the third certificate
anniversary.
If the amount of the monthly annuity payment from the payment options which you
select results in a monthly annuity payment of less than $20, or if the annuity
purchase amount is less than $2,000, we reserve the right to offer a less
frequent mode of payment or pay the certificate value in a cash payment. Monthly
annuity payments from the variable annuity payment option will further be
subject to a minimum monthly annuity amount of $50 from each sub-account of the
variable account from which such payments are made.
You may choose from the annuity forms below and we may consent to other plans of
payment before the annuity date. For annuity forms involving life contingencies,
the actual age and/or sex of the annuitant, or a joint or contingent annuitant
will affect the amount of each payment. Sex-distinct rates generally are not
allowed under certain qualified certificates. We reserve the right to ask for
satisfactory proof of the annuitant's, or the joint or contingent annuitant's
age. We may delay annuity payments until satisfactory proof is received. Since
payments to older annuitants are expected to be fewer in number, the amount of
each annuity payment will be greater for older annuitants than for younger
annuitants.
You may choose from the fixed annuity payment option, the variable annuity
payment option or a combination of both. The annuity date and annuity forms
available for qualified certificates may also be controlled by endorsements, the
plan or applicable law.
A portion or the entire amount of the annuity payments may be taxable as
ordinary income. If, at the time the annuity payments begin, we have not
received a proper written election not to have federal income taxes withheld, we
must by law withhold such taxes from the taxable portion of such annuity
payments and remit that amount to the federal government. State income tax
withholding may also apply. Election of Annuity Forms and Payment Options
Before the annuity date and while the annuitant is living, you may, by written
request, change the annuity form or annuity payment option or may request
payment of the cash surrender value of the certificate. The request for change
of the annuity date or annuity payment option must be received by our service
center at least 30 days before the annuity date.
If you do not select an annuity form and payment option within at least 30 days
before the annuity date, we will make variable annuity payments under the 120
month period certain and life annuity form and the applicable provisions of the
certificate.
Annuity Payment Options
The annuity forms may be paid under fixed or variable annuity payment options.
Under the fixed annuity payment option, the amount of each payment will be
determined on the annuity date and will not subsequently be affected by the
investment performance of the sub-accounts.
Under the variable annuity payment option, the annuity payments, after the
first, will reflect the investment experience of the sub-account or sub-accounts
chosen by you.
You may elect a fixed annuity, a variable annuity, or a combination of both, in
25% increments of the annuity purchase amount. If you elect a combination, you
must specify what part of the annuity purchase amount is to be applied to the
fixed and variable payment options.
Unless you specify otherwise, the applied annuity purchase amount will be used
to provide a variable annuity. The initial allocation of variable annuity units
for the variable sub-accounts will be in proportion to the certificate's value
in the sub-accounts on the annuity date.
Fixed Annuity Payment Option
A fixed annuity provides for annuity payments that will remain constant
according to the terms of the annuity form elected. If a fixed annuity is
selected, the portion of the annuity purchase amount used to provide the fixed
annuity will be transferred to our general account assets. The amount of annuity
payments will be established by the fixed annuity provisions selected and the
age and sex, if sex-distinct rates are allowed by law, of the annuitant and will
not reflect investment performance after the annuity date.
The fixed annuity payment amounts are determined by applying the annuity
purchase rate specified in the certificate to the portion of the annuity
purchase amount applied to the fixed annuity option by you. Payments may vary
after the death of the annuitant under some annuity options; the amounts of
these variances are fixed on the annuity date.
Variable Annuity Payment Option
A variable annuity provides for payments that vary in dollar amount, based on
the investment performance of the selected sub-accounts of the variable account.
The variable annuity purchase rate tables in the certificate reflect an assumed,
but not guaranteed, annual interest rate of 4%, so if the actual net investment
performance of the sub-accounts is less than this rate, then the dollar amount
of the actual annuity payments will decrease. If the actual net investment
performance of the sub-accounts is higher than this rate, then the dollar amount
of the actual annuity payments will increase. If the net investment performance
exactly equals the 4% rate, then the dollar amount of the actual annuity
payments will remain constant.
Variable annuity payments will be based on the sub-accounts which you select,
and on the allocations you make among the sub-accounts. For further details as
to the determination of variable annuity payments, see the Statement of
Additional Information.
Annuity Forms
You may choose any of the annuity forms described below. Subject to our
approval, you may also select any other annuity form then being offered by us in
the future. You may select among any of the following contract choices:
1. Life Annuity. Payments start on the first day of the month immediately
following the annuity date, if the annuitant is living. Payments end with the
payment due just before the annuitant's death. There is no death benefit under
this form. It is possible that only one payment will be made under this form if
the annuitant dies before the second payment is due; only two payments will be
made if the annuitant dies before the third payment is due, and so forth.
2. Life and Contingent Annuity. Payments start on the first day of the month
immediately following the annuity date, if the annuitant is living. Payments
will continue for as long as the annuitant lives. After the annuitant dies,
payments will be made to the contingent annuitant, if living, for as long as the
contingent annuitant lives. The continued payments can be in the same amount as
the original payments, or in an amount equal to one-half or two-thirds thereof.
Payments will end with the payment due just before the death of the contingent
annuitant. There is no death benefit after both the annuitant and the contingent
annuitant die. If the contingent annuitant does not survive the annuitant,
payments will end with the payment due just before the death of the annuitant.
It is possible that only one payment or very few payments will be made under
this form, if the annuitant and contingent annuitant die shortly after payments
begin.
The written request for this form must:
a) name the contingent annuitant; and
b) state the percentage of payments for the contingent annuitant.
Once annuity payments start under this annuity form, the person named as
contingent annuitant for purposes of being the measuring life, may not be
changed. We will need proof of age for the annuitant and for the contingent
annuitant before payments start.
3. Life Annuity With Period Certain. Payments start on the first day of the
month immediately following the annuity date, if the annuitant is living.
Payments will be made for the longer of:
a) the annuitant's life; or,
b) the period certain.
The period certain may be 120 or 180 or 240 months, but in no event may it
exceed the life expectancy of the annuitant. If the annuitant dies after all
payments have been made for the period certain, payments will cease with the
payment due just before the annuitant's death. No benefit will then be payable
to the annuitant's beneficiary.
If the annuitant dies during the period certain, the rest of the period certain
payments will be made to the annuitant's beneficiary. You may elect to have the
commuted value of these payments paid in a single sum. The commuted value is the
remaining amount of the period certain payments discounted at the then current
rate of interest used for such values.
If you do not elect to have the commuted value paid in a single sum after the
annuitant's death, you may designate a payee to receive any remaining payments
payable if the annuitant's beneficiary dies before all of the payments under the
period certain have been made.
If the annuitant's beneficiary dies before receiving all of the remaining period
certain payments and a designated payee does not survive the annuitant's
beneficiary for at least 30 days, then the remaining payments will be paid to
you, if living, otherwise in a single sum to your estate.
The written request for this form must:
a) state the length of the period certain; and
b) name the annuitant's beneficiary.
4. Joint and Survivor Annuity. Payments will be made, starting on the first day
of the month immediately following the annuity date, if and for as long as the
annuitant and joint annuitant are living. After the annuitant or joint annuitant
dies, payments will continue as long as the survivor lives. The continued
payments can be in the same amount as the original payments, or in an amount
equal to one-half or two-thirds thereof. It is possible that only one payment or
very few payments will be made under this form if the annuitant and joint
annuitant both die shortly after payments begin. The written request for this
form must:
a) name the joint annuitant; and
b) state the percentage of continued payments for the survivor.
Once payments start under this annuity form, the person named as joint
annuitant, for the purpose of being the measuring life, may not be changed. We
will need proof of age for the joint annuitants before payments start.
5. Other Forms of Payment. Benefits can be provided under any other annuity
form not described in this section subject to our agreement and any applicable
state or federal law or regulation. Requests for any other annuity form must be
made in writing to our service center at least 30 days before the annuity date.
Once payments start under the annuity form and payment option selected by you:
a) no changes can be made in the annuity form and payment option;
b) no additional premium will be accepted under the certificate; and
c) no further withdrawals will be allowed.
You may, at any time after the annuity date by written notice to us at our
service center, change the payee of annuity benefits being provided under the
certificate.
The effective date of change in payee will be the later of:
a) the date we receive the written request for such change; or
b) the date specified by the owner.
If the certificate is issued as a qualified certificate, you may not change the
payee on or after the annuity date.
Alternate Fixed Annuity Rates
The amount of any fixed annuity payments will be determined on the annuity date
by using either the guaranteed fixed annuity rates or our current single premium
fixed annuity rates at the time, whichever would result in a higher amount of
monthly fixed annuity payments.
QUALIFIED CERTIFICATES
The qualified certificates may be used to fund contributory and rollover IRAs
and Roth IRAs. With our prior approval, the qualified certificates may also be
used for various types of qualified pension and profit sharing plans under Code
Section 401, which permits corporate employers to establish various types of
retirement plans for employees, and as Section 403(b) annuities. Currently,
additional premiums after the initial premium may not be made to certificates
used as Section 401(a) or Section 403(b) annuities. The tax rules applicable to
distribution from qualified retirement plans, including restrictions on
contributions and benefits, taxation of distributions, and any tax penalties,
vary according to the type of plan and the terms and the conditions of the plan
itself.
Various Tax Penalties May Apply to:
a) contributions in excess of specified limits;
b) distributions before age 591/2, subject to certain exceptions;
c) distributions that do not satisfy specified requirements; and
d) certain other transactions subject to qualified plans.
If you are purchasing a certificate for use in a qualified plan, you should seek
competent advice regarding the suitability of the proposed plan documents and
the certificates to their specific needs. We reserve the right to decline to
sell the certificate to certain qualified plans or terminate the certificate if,
in our judgment, the certificate is not appropriate for the plan.
If a certificate is purchased to fund an IRA or a Roth IRA, you must also be the
annuitant. In addition, under current tax law, minimum distributions are
required from certain qualified certificates. You should consult your tax
adviser concerning these matters.
The Automatic Payout Option, or APO
Before the annuity date, for qualified certificate other than Roth IRAs, you may
elect the automatic payout option, or APO, to satisfy minimum distribution
requirements under Code Sections 401(a)(9), 403(b), and 408(b)(3).
For IRAs and SEP/IRAs, APO may be elected no earlier than six months before the
calendar year in which the owner attains age 701/2, but payments may not begin
earlier than January of such calendar year.
For other qualified certificates, APO can be elected no earlier than six months
before the later of when you:
a) attain age 70 1/2; and
a) retire from employment.
Additionally, APO withdrawals may not begin before the later of:
a) 30 days after the certificate date; or
b) the end of the free look period.
APO may be elected in any calendar month, but no later than the month in which
the owner attains age 84. APO withdrawals will be from the sub-accounts and in
the percentage allocations which you specify. If no specifications are made,
withdrawals will be pro rata from all sub-accounts with value. Withdrawals can
not be made from a sub-account from which dollar cost averaging transfers are
being made.
Payments will be made annually, and will continue unless terminated by you or
automatically terminated by you as set forth in the certificate. Once
terminated, APO may not be elected again.
If only APO withdrawals are made, no contingent deferred sales load will apply,
regardless of the allowed amount. However, if a partial withdrawal is taken,
that partial withdrawal and any subsequent withdrawals in that certificate year
will be subject to a contingent deferred sales load to the extent they exceed
the allowed amount.
To be eligible for this option, the following conditions must be met:
1. the certificate value must be at least $12,000 at the time of election; and
2. the annual withdrawal amount is the larger of the required minimum
distribution under Code Sections 401(a)(9) or 408(b)(3), or $500.
APO allows the required minimum distribution to be paid from the sub-accounts of
the variable account. If there are insufficient funds in the variable account to
make a withdrawal, or for other reasons as set forth in the certificate, this
option will terminate.
If you have more than one qualified plan subject to the Code's minimum
distribution requirements, you must consider all such plans in the calculation
of your minimum distribution requirement, but we will make calculations and
distribution with regard to this certificate only.
Restrictions under Section 403(b)
Programs
Certain restrictions apply to annuity contracts used in connection with Code
Section 403(b) retirement plans. Code Section 403(b) provides for tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations.
According to the requirements of the Code, Section 403(b) annuities generally
may not permit distribution of:
a) elective contributions made in years beginning after December 31, 1988;
b) earnings on those contributions; or
c) earnings on amounts attributable to elective contributions held as of the end
of the last year beginning before January 1, 1989.
Distributions of such amounts will be allowed only upon death of the employee,
on or after attainment of age 591/2, separation from service, disability, or
financial hardship, except that income attributable to elective contributions
may not be distributed in the case of hardship.
FEDERAL TAX MATTERS
Introduction
The following discussion is a general description of federal tax considerations
relating to the certificate and is not intended as tax advice. This discussion
is not intended to address the tax consequences resulting from all of the
situations in which a person may be entitled to or may receive a distribution
under the certificate. If you are concerned about these tax implications, you
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon our understanding of the present federal income tax
laws as they are currently interpreted by the Internal Revenue Service, or
simply the IRS. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The certificate may be purchased:
a) on a non-tax qualified basis for use as a non-qualified certificate; or
b) purchased and used in connection with plans qualifying for special tax
treatment as a qualified certificate.
Qualified certificates are designed for use by individuals solely as plans
entitled to special income tax treatment under Code Sections 401, 403(b), 408
and 408A.
The ultimate effect of federal income taxes on the amounts held under a
certificate, on annuity payments, and on the economic benefit to the owner, the
annuitant, or the beneficiary may depend on:
a) the type of retirement plan or arrangement for which the certificate is
purchased;
b) the tax status of the individual concerned; or
c) our tax status.
In addition, certain requirements must be satisfied in purchasing a qualified
certificate with proceeds from a tax qualified retirement plan or other
arrangement. Certain requirements must also be met when receiving distributions
from a qualified certificate in order to continue receiving special tax
treatment. Therefore, if you are considering the purchase of a qualified
certificate, you should seek competent legal and tax advice regarding the
suitability of the certificate for your situation. You will also need to be
aware of the applicable requirements, and the tax treatment of the rights and
benefits of the certificate.
The following discussion assumes that a qualified certificate is purchased with
proceeds from and/or contributions under retirement plans that qualify for the
intended special federal income tax treatment. The following discussion is also
based on the assumption that the certificate qualifies as an annuity contract
for federal income tax purposes. The Statement of Additional Information
discusses the requirements for qualifying as an annuity.
Premiums
At the time the initial premium is paid, as a prospective purchaser, you must
specify whether you are purchasing a non-qualified certificate or a qualified
certificate. If the initial premium is derived from an exchange or surrender of
another annuity certificate, we may require that the prospective purchaser
provide information with regard to the federal income tax status of the previous
annuity certificate. We will require that you purchase separate certificates if
you desire to invest monies qualifying for different annuity tax treatment under
the Code.
Each such separate certificate would require the minimum initial premium stated
above. Additional premiums under a certificate must qualify for the same federal
income tax treatment as the initial premium under the certificate. We will not
accept an additional premium under a certificate if the federal income tax
treatment of such premium would be different from that of the initial premium.
Taxation of Annuities In General
Code Section 72 governs taxation of annuities in general. We believe that the
owner who is a natural person generally is not taxed on increases in the value
of a certificate until distribution occurs by withdrawing all or part of the
certificate value, for example, through withdrawals or annuity payments under
the annuity option elected. For this purpose, the assignment, pledge, or
agreement to assign or pledge any portion of the certificate value, and in the
case of a qualified certificate, any portion of an interest in the plan,
generally will be treated as a distribution. The taxable portion of a
distribution, in the form of a single sum payment or an annuity, is taxable as
ordinary income. The owner of any non-qualified certificate who is not a natural
person generally must include in income any increase in the excess of the
certificate value over the investment in the contract during the taxable year.
There are some exceptions to this rule and a prospective owner that is not a
natural person, for example, a trust, may wish to discuss these with a competent
tax adviser.
The following discussion generally applies to certificates owned by natural
persons.
Withdrawals
In the case of a withdrawal under a qualified certificate, including withdrawals
under the systematic withdrawal option or the automatic payout option, a ratable
portion of the amount received is taxable. This portion is generally based on
the ratio of the investment in the contract to the individual's total accrued
benefit under the retirement plan.
The investment in the certificate generally equals the amount of any
non-deductible premiums paid by or on behalf of any individual. For a qualified
certificate, the investment in the certificate can be zero. Special tax rules
may apply to certain distributions from a qualified certificate.
With respect to non-qualified certificates, partial withdrawals, including
withdrawals under the systematic withdrawal option, are generally treated as
taxable income to the extent that the certificate value immediately before the
withdrawal exceeds the investment in the contract at that time. Full surrenders
are treated as taxable income to the extent that the amount received exceeds the
investment in the contract.
Annuity Payments
Although the tax consequences may vary depending on the annuity payment elected
under the certificate, in general, only the portion of the annuity payment that
represents the amount by which the certificate value exceeds the investment in
the certificate will be taxed. After the investment in the certificate is
recovered, the full amount of any additional annuity payments is taxable. For
variable annuity payments, the taxable portion is generally determined by an
equation that establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the investment in the
certificate by the total number of expected periodic payments. However, the
entire distribution will be taxable once the recipient has recovered the dollar
amount of his or her investment in the certificate.
For fixed annuity payments, in general, there is no tax on the portion of each
payment which represents the same ratio that the investment in the certificate
bears to the total expected value of the annuity payments for the term of the
payments. However, the remainder of each annuity payment is taxable. Once the
investment in the certificate has been fully recovered, the full amount of any
additional annuity payments is taxable. If annuity payments cease as a result of
an annuitant's death before full recovery of the investment in the certificate,
consult a competent tax adviser regarding deductibility of the unrecovered
amount.
Withholding
The Code requires us to withhold federal income tax from distributions under the
certificates. However, except for distributions from certain qualified
certificates, an owner will be entitled to elect, in writing, not to have tax
withheld. Withholding applies to the portion of a distribution which is
includible in income and subject to federal income tax, where the taxable amount
is at least $200. Some states also require withholding for state income taxes.
The withholding varies according to the type of distribution and the owner's tax
status. "Eligible rollover distributions" from Section 401(a) plans and Section
403(b) tax sheltered annuities are subject to mandatory federal income tax
withholding at the rate of 20%. An eligible rollover distribution is the taxable
portion of any distribution from such a plan, except for certain distributions,
such as minimum required distributions or settlement option payments made in a
specified form. The 20% mandatory withholding does not apply, however, if the
owner chooses a "direct rollover" from the plan to another tax-qualified plan or
to an IRA, other than a Roth IRA. The federal income tax withholding rate for a
distribution that is not an eligible rollover distribution is 10% of the taxable
amount of the distribution.
Penalty Tax
A federal income tax penalty equal to 10% of the amount treated as taxable
income may be imposed on distributions. In general, however, there is no penalty
tax on distributions:
1. made on or after the date on which the owner attains age 591/2;
2. made as a result of death or disability of the owner; or
3. received in substantially equal periodic payments as a life annuity or a
joint and survivor annuity for the lives or life expectancies of the owner and a
designated beneficiary.
Other tax penalties may apply to certain distributions under a qualified
certificate.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the certificate because of the death of an owner
or the annuitant. Generally such amounts are includible in income as follows:
1. if distributed in a lump sum, they are taxed in the same manner as a full
surrender, as described above; or
2. if distributed under an annuity option, they are taxed in the same manner as
annuity payments, as described above.
For these purposes, the investment in the certificate is not affected by the
owner's or annuitant's death. That is, the investment in the certificate remains
the amount of any premiums paid which were not excluded from gross income. Other
rules relating to distributions at death apply to qualified certificates. You
should consult your legal counsel and tax adviser regarding these rules and
their impact on qualified certificates.
Required Distributions upon Owner's Death
Notwithstanding any provision of the certificate or this prospectus to the
contrary, no payment of benefits provided under the certificate will be allowed
that does not satisfy the requirements of Code Section 72(s). If the owner dies
before the annuity date, the death benefit payable to the owner's beneficiary
will be distributed as follows:
a) the death benefit must be completely distributed within five years of the
owner's date of death; or
b) the owner's beneficiary may elect, within the one year period after the
owner's date of death, to receive the death benefit in the form of an annuity
from us.
Please note that item b) is based on the following provisions:
1. the annuity must be distributed in substantially equal installments over the
life of the owner's beneficiary or over a period not extending beyond the life
expectancy of the owner's beneficiary; and
2. the distributions must not begin not later than one year after the owner's
date of death.
Notwithstanding items a) and b) above, if the sole owner's beneficiary is the
deceased owner's surviving spouse, then the surviving spouse may elect, within
the one year period after the owner's date of death, to continue the certificate
under the same terms as before the owner's death.
Upon receipt of such election from the spouse, in a form and manner acceptable
to us, at our service office:
1. all rights of the spouse as owner's beneficiary under the certificate in
effect before such election will cease;
2. the spouse will become the owner of the certificate and will also be treated
as the contingent annuitant, if none has been named and only if the deceased
owner was the annuitant; and
3. all rights and privileges granted by the certificate or allowed by us will
belong to the spouse as owner of the certificate.
This election will be deemed to have been made by the spouse if such spouse
makes a premium payment to the certificate or fails to make a timely election as
described in this paragraph. If the owner's beneficiary is a nonspouse, the
distribution provisions described in subparagraphs a) and b) above, will apply
even if the annuitant and/or contingent annuitant are alive at the time of the
owner's death. If the nonspouse owner's beneficiary is not an individual, then
only a cash payment will be paid.
If no election is received by us from a nonspouse owner's beneficiary within the
one year period after the owner's date of death, then we will pay the death
benefit to the owner's beneficiary in a cash payment. The death benefit will be
determined as of the date we make the cash payment. Such cash payment will be in
full settlement of all our liability under the certificate.
If Annuitant Dies After Annuity Starts - If the annuitant dies after the annuity
starts, any benefit payable will be distributed at least as rapidly as under the
annuity form then in effect.
If Owner Dies After Annuity Starts - If the owner dies after the annuity starts,
any benefit payable will continue to be distributed at least as rapidly as under
the annuity form then in effect. All of the owner's rights granted under the
certificate or allowed by us will pass to the owner's beneficiary.
Joint Ownership - For purposes of this section, if the certificate has joint
owners we will consider the date of death of the first joint owner as the death
of the owner and the surviving joint owner will become the owner of the
certificate, subject to the provisions described above.
Transfers, Assignments, or Exchanges of the Certificate
For a transfer of ownership of a non-qualified certificate, the designation of
an annuitant, payee, or beneficiary who is not also the owner, or the exchange
of a certificate may result in certain tax consequences to the owner that are
not discussed herein.
As an owner, if you are contemplating any such designation, transfer,
assignment, or exchange, you should contact a competent tax adviser with respect
to the potential tax effects of such a transaction. Certain qualified
certificates cannot be transferred or assigned, except as permitted by the Code
or the Employee Retirement Income Security Act of 1974, also referred to simply
as ERISA. Multiple Certificates
All deferred non-qualified annuity certificates that are issued by us, or our
affiliates, to the same owner during any calendar year are treated as one
annuity certificate for purposes of determining the amount includible in gross
income under Code Section 72(e). In addition, the Treasury Department has
specific authority to issue regulations that prevent the avoidance of Section
72(e) through the serial purchase of annuity certificates or otherwise.
Congress has also indicated that the Treasury Department may have authority to
treat the combination purchase of an immediate annuity certificate and separate
deferred annuity certificates as a single annuity certificate under its general
authority to prescribe rules as may be necessary to enforce the income tax laws.
QUALIFIED CERTIFICATES
In General
The qualified certificate is designed for use as an IRA or Roth IRA. With our
prior approval, the certificate may also be used for qualified pension and
profit sharing plans established by corporate employers.
The tax rules applicable to participants and beneficiaries in retirement plans
vary according to the type of plan and the terms and conditions of the plan.
Special favorable tax treatment may be available for certain types of
contributions and distributions.
Adverse tax consequences may result from:
* contributions in excess of specified limits;
* distributions before age 591/2, subject to certain exceptions;
* distributions that do not conform to specified commencement and minimum
distribution rules; and
* other specified circumstances.
We make no attempt to provide more than general information about use of the
certificates with the various types of retirement plans. Owners and participants
under retirement plans as well as annuitants and beneficiaries are cautioned
that the rights of any person to any benefits under qualified certificates may
be subject to the terms and conditions of the plans themselves, regardless of
the terms and conditions of the certificate issued in connection with such a
plan.
Some retirement plans are subject to distribution and other requirements that
are not incorporated in the administration of the certificates. Owners are
responsible for determining that contributions, distributions and other
transactions with respect to the certificates satisfy applicable law. Purchasers
of certificates for use with any retirement plan should consult their legal
counsel and tax adviser regarding the suitability of the certificate.
For qualified plans under Sections 401(a), 403(a) and 403(b), the Code requires
that distributions generally must commence no later than the later of April 1 of
the calendar year following the calendar year in which the owner or plan
participant:
1. reaches age 701/2; or
2. retires and distribution is made in a specified manner.
If the plan participant is a "5 percent owner" as defined in the Code,
distributions generally must begin no later than April 1 of the calendar year
following the calendar year in which the owner, or plan participant reaches, age
701/2.
For IRAs described in Section 408, distributions generally must commence no
later than the later of April 1 of the calendar year following the calendar year
in which the owner, or plan participant, reaches age 701/2. Roth IRAs under
Section 408A do not require distributions at any time before the owner's death.
Qualified Pension and Profit Sharing Plans
Code Section 401(a) permits employers to establish various types of retirement
plans for employees. Such retirement plans may permit the purchase of the
certificate in order to provide retirement savings under the plans. The
Self-Employed Individuals' Tax Retirement Act of 1962, as amended, commonly
referred to as H.R. 10, also permits self-employed individuals to establish
qualified plans for themselves and their employees.
Adverse tax consequences to the plan, to the participant, or to both, may result
if this certificate is assigned or transferred to any individual as a means to
provide benefits payments. If you are purchasing a certificate for use with such
plans, you should seek competent advice regarding the suitability of the
proposed plan documents and the certificate to their specific needs. The
certificate is designed to invest retirement savings and not to distribute
retirement benefits.
Individual Retirement Annuities,
Simplified Employee Plans and Roth
IRAs
The certificate is designed for use with contributory and rollover IRAs and Roth
IRAs.
A contributory IRA is a certificate in which initial and subsequent purchase
payments are subject to limitations imposed by the Code. Code Section 408
permits eligible individuals to contribute to an individual retirement program
known as an individual retirement annuity or individual retirement account, each
hereinafter referred to as an IRA. Also, distributions from certain other
qualified plans may be rolled over, or transferred on a tax-deferred basis into
an IRA described in Code Section 408.
A Section 408 IRA is an IRA described in Sections 408(a) or 408(b), other than a
Roth IRA.
Earnings in an IRA are not taxed until distributed. IRA contributions are
limited each year to the lesser of $2,000 or 100% of the owner's compensation.
This includes earned income as defined in Code Section 401(c)(2) and may be
deductible in whole or in part depending on the individual's adjusted gross
income and whether or not the individual is considered an active participant in
a qualified plan. The limit on the amount contributed to an IRA does not apply
to distributions from certain other types of qualified plans that are rolled
over or transferred on a tax-deferred basis into an IRA.
Other than nondeductible contributions, amounts in the IRA are taxed when
distributed from the IRA. Distributions before age 59 1/2 are subject to a 10%
penalty tax, unless certain exceptions apply. Purchasers should seek competent
advice as to the suitability of the certificate for use with IRAs.
Eligible employers that meet specified criteria under Code Section 408(k) could
establish simplified employee pension plans, also referred to as SEP-IRAs, for
their employees using IRAs. Employer contributions that may be made to such
plans are larger than the amounts that may be contributed to regular IRAs, and
may be deductible to the employer. SEP-IRAs are subject to certain Code
requirements regarding participation and amounts of contributions.
A contributory Roth IRA is a certificate to which initial and subsequent
purchase payments are subject to limitations imposed by the Code. Code Section
408A permits eligible individuals to contribute to an individual retirement
program known as a Roth IRA on a non-deductible basis. In addition,
distributions from a Section 408 IRA may be converted to a Roth IRA.
Distributions from a Roth IRA generally are not taxed, except that, once total
distributions exceed contributions to the Roth IRA, income tax and a 10% penalty
tax may apply to distributions made:
1. before age 591/2, subject to certain exceptions; or
2. during the five taxable years starting with the year in which the first
contribution is made to the Roth IRA.
Purchasers should seek competent advice as to the suitability of the certificate
for use with Roth IRAs. The sale of a certificate for use with an IRA, SEP-IRA
or Roth IRA may be subject to special disclosure requirements of the IRS.
Purchasers of these certificates will be provided with supplemental information
required by the IRS or other appropriate agency. Such purchasers will have the
right to revoke their purchase within 7 days of the earlier of the establishment
of the IRA, SEP-IRA or Roth IRA or their purchase.
Tax Sheltered Annuities
Under Code Section 403(b), payments made by public school systems and certain
tax exempt organizations to purchase annuity contracts for their employees are
excludable from the gross income of the employee, subject to certain
limitations. However, these payments may be subject to Social Security and
Medicare (FICA) taxes.
Code Section 403(b)(11) restricts the distribution under Code Section 403(b)
annuity contracts of:
* elective contributions made in years beginning after December 31, 1988;
* earnings on those contributions; or
* earnings in such years on amounts held as of the last year beginning before
January 1, 1989.
Distribution of those amounts may only occur upon death of the employee,
attainment of age 591/2, separation from service, disability, or financial
hardship. In addition, income attributable to elective contributions may not be
distributed in the case of hardship.
Pre-1989 contributions and earnings through December 31, 1989 are not subject to
the restrictions described above. However, funds transferred to a qualified
certificate from a Section 403(b)(7) custodial account will be subject to the
restrictions.
Restrictions under Qualified Certificates
Other restrictions may apply to the election, commencement, or distribution of
benefits under qualified certificates or under the terms of the plans in respect
of which qualified certificates are issued. A qualified certificate will be
amended as necessary to conform to the requirements of the Code.
Possible Changes in Taxation
Legislation has been proposed in the past that, if enacted, would adversely
modify the federal taxation of certain insurance and annuity certificates. For
example, one proposal would tax transfers among investment options and tax
exchanges involving variable certificates. A second proposal would reduce the
investment in the certificate under cash value life insurance and certain
annuity certificates by certain amounts, thereby increasing the amount of income
for purposes of computing gain. Although the likelihood of there being any
changes is uncertain, there is always the possibility that the tax treatment of
the certificates could be changed by legislation or other means. Moreover, it is
also possible that any change could be retroactive, that is, effective before
the date of the change. You should consult a tax adviser with respect to
legislative developments and their effect on the certificate.
Other Tax Consequences
As noted above, the foregoing discussion of the federal income tax consequences
is not exhaustive and special rules are provided with respect to other tax
situations not discussed in this prospectus. Further, the federal income tax
consequences discussed herein reflect our understanding of current law and the
law may change. Federal gift and estate tax consequences and state and local
estate, inheritance, and other tax consequences of ownership or receipt of
distributions under the certificate depend on the individual circumstances of
each owner or recipient of the distribution. A competent tax adviser should be
consulted for further information.
YEAR 2000 ISSUE
Many computer software systems in use today cannot distinguish the year 2000
from the year 1900 because dates are encoded using the standard six-place format
that allows entry of only the last two digits of the year. This is commonly
known as the "Year 2000 Problem".
Regarding our systems and software that administer the certificates, we believe
that our own internal systems will be Year 2000 ready. Additionally, we require
any third party vendor that supplies software or administrative services to us
in connection with the certificate administration, to certify that such software
and/or services will be Year 2000 ready.
The "Year 2000 Problem" could adversely impact the portfolios if the computer
systems used by the portfolios' investment adviser, sub-adviser, custodian and
transfer agent (including service providers' systems) do not accurately process
date information on or after January 1, 2000. The investment advisers are
addressing this issue by testing the computer systems they use to ensure that
those systems will operate properly on or after January 1, 2000, and seeking
assurances from other service providers they use that their computer systems
will be adapted to address the "Year 2000 Problem" in time to prevent adverse
consequences on or after January 1, 2000. However, especially when taking into
account interaction with other systems, it is difficult to predict with
precision that there will be no disruption of services in connection with the
year 2000.
We continue to believe that we will achieve Year 2000 readiness. However, the
size and complexity of our systems and the need for them to interface with other
systems internally and with those of our customers, vendors, partners,
governmental agencies and other outside parties, creates the possibility that
some systems may experience Year 2000 problems. Although we believe we will be
properly prepared for the date change, we are also developing contingency plans
to minimize any potential disruptions to operations, especially from externally
interfaced systems over which we have limited or no control.
This issue could also adversely impact the value of the securities that the
portfolios invest in if the issuing companies' systems do not operate properly
on or after January 1, 2000, and this risk could be heightened for portfolios
that invest internationally. Refer to the prospectuses for the portfolios for
more information.
The above information is subject to the Year 2000 Readiness Disclosure Act. This
act may limit your legal rights in the event of a dispute.
LEGAL PROCEEDINGS
There is no pending material legal proceeding affecting the variable account.
Transamerica is involved in various kinds of routine litigation which, in
management's judgment, are not of material importance to Transamerica's assets
or to the variable account.
LEGAL MATTERS
The organization of Transamerica, its authority to issue the certificates and
the validity of the form of the certificates have been passed upon by James W.
Dederer, general counsel of Transamerica.
ACCOUNTANTS AND FINANCIAL
STATEMENTS
The consolidated financial statements of Transamerica at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998, and
and the financial statements of Separate Account VA-2LNY at December 31, 1998
and for each of the three years in the period then ended appearing in the
Statement of Additional Information have been audited by Ernst & Young LLP,
Independent Auditors, as set forth in their reports appearing in the Statement
of Additional Information. The financial statements audited by Ernst & Young LLP
have been included in reliance upon such reports given upon the authority of
such firm experts in accounting and auditing.
VOTING RIGHTS
To the extent required by applicable law, all portfolio shares held in the
variable account will be voted by Transamerica at regular and special
shareholder meetings of the respective funds in accordance with instructions
received from persons having voting interests in the corresponding sub-account.
If, however, the 1940 Act or any regulation thereunder should be amended, or if
the present interpretation thereof should change, or if Transamerica determines
that it is allowed to vote all portfolio shares in its own right, Transamerica
may elect to do so.
The person with the voting interest is the owner. The number of votes which are
available to an owner will be calculated separately for each sub-account of the
variable account. Before the annuity date, that number will be determined by
applying his or her percentage interest, if any, in a particular sub-account to
the total number of votes attributable to that sub-account. The owner holds a
voting interest in each sub-account to which the certificate value is allocated.
After the annuity date, the number of votes decreases as annuity payments are
made and as the reserves for the certificate decrease.
The number of votes of a portfolio will be determined as of the date coincident
with the date established by that portfolio for determining shareholders
eligible to vote at the meeting of the funds. Voting instructions will be
solicited by written communication before such meeting in accordance with
procedures established by the respective funds.
Shares as to which no timely instructions are received and shares held by
Transamerica as to which owners have no beneficial interest will be voted in
proportion to the voting instructions which are received with respect to all
certificates participating in the sub-account. Voting instructions to abstain on
any item to be voted upon will be applied on a pro rata basis to reduce the
votes eligible to be cast.
Each person or entity having a voting interest in a sub-account will receive
proxy material, reports and other material relating to the appropriate
portfolio. It should be noted that the funds are not required to, and do not
intend to, hold annual or other regular meetings of shareholders.
AVAILABLE INFORMATION
Transamerica has filed a registration statement with the Securities and Exchange
Commission under the Securities Act of 1933 relating to the certificate offered
by this prospectus. This prospectus has been filed as a part of the registration
statement and does not contain all of the information set forth in the
registration statement and exhibits thereto. Reference is hereby made to such
Registration Statement and exhibits for further information relating to
Transamerica and the certificate.
Statements contained in this prospectus, as to the content of the certificate
and other legal instruments, are summaries. For a complete statement of the
terms thereof, reference is made to the instruments filed as exhibits to the
registration statement. The registration statement and the exhibits thereto may
be inspected and copied at the office of the Commission, located at 450 Fifth
Street, N.W., Washington, D.C.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
A Statement of Additional Information is available which contains more details
concerning the subjects discussed in this prospectus. The following is the table
of contents for that statement:
TABLE OF CONTENTS
Page
The Certificate (page 22) 3 Dollar Cost Averaging (page 25) 3 Net Investment
Factor 3 Annuity Period (page 34) 4 Variable Annuity Units and Payments 4
Variable Annuity Unit Value 4 Transfers After the Annuity Date 4 General
Provisions 4 IRS Required Distributions 4 Non-Participating 4 Misstatement of
Age or Sex 5 Proof of Existence and Age 5 Assignment 5 Annuity Data 5 Annual
Report 5 Incontestability 5 Ownership 5 Entire Certificate 5 Changes In the
Certificate 5 Protection of Benefits 6 Delay of Payments 6 Notices and
Directions 6 Calculations of Yields and Total Returns 6 Money Market Sub-Account
Yield Calculation 6 Other Sub-Account Yield Calculations 7 Average Total Return
Calculations 8 Adjusted Historical Performance Data 8 Other Performance Data 8
Historical Performance Data 9 General Limitations 9 Money Market Sub-Account
Yields 9 Sub-Account Performance Figures Including Adjusted Historical
Performance
9
Since Commencement of the Sub-Accounts
9
Since Commencement of the Portfolios
11
Federal Tax Matters (page 39)
13
Taxation of Transamerica
14
Tax Status of the Certificates
14
Distribution of the Certificate (page 34)
15
Safekeeping of Account Assets
15 Transamerica (page 14) 15 General Information and History 15 State Regulation
16 Records and Reports 16 Financial Statements 16 Appendix 17
Accumulation Transfer Formula
17
Appendix A
Example of Variable Accumulation Unit Value Calculations
Suppose the net asset value per share of a portfolio at the end of the current
valuation period is $20.15; at the end of the immediately preceding valuation
period it was $20.10; the valuation period is one day; and no dividends or
distributions caused the portfolio to go ex-dividend during the current
valuation period. $20.15 divided by $20.10 is 1.002488. Subtracting the one day
risk factor for mortality and expense risk charge and the administrative expense
charge of .003814% (the daily equivalent of the current charge of 1.40% on an
annual basis) gives a net investment factor of 1.002449. If the value of the
variable accumulation unit for the immediately preceding valuation period had
been 15.500000, the value for the current valuation period would be 15.537966
(15.5 x 1.002449).
Example of Variable Annuity Unit Value Calculations
Suppose the circumstances of the first example exist, and the value of a
variable annuity unit for the immediately preceding valuation period had been
13.500000. If the first variable annuity payment is determined by using an
annuity payment based on an assumed interest rate of 4% per year, the value of
the variable annuity unit for the current valuation period would be 13.531613
(13.5 x 1.002449, which is the Net Investment Factor x 0.999893). 0.999893 is
the factor, for a one day valuation period, that neutralizes the assumed rate of
four percent (4%) per year used to establish the variable annuity rates found in
the certificate.
Example of Variable Annuity Payment Calculations
Suppose that the account is currently credited with 3,200.000000 variable
accumulation units of a particular sub-account. Also suppose that the variable
accumulation unit value and the variable annuity unit value for the particular
sub-account for the valuation period which ends immediately preceding the first
day of the month is 15.500000 and 13.500000 respectively, and that the variable
annuity rate for the age and option elected is $5.73 per $1,000.
Then the first variable annuity payment would be:
3.200 x 15.5 x 5.73 divided by 1,000 = $284.21,
and the number of variable annuity units credited for future payments would be:
284.21 divided by 13.5 = 21.052444.
For the second monthly payment, suppose that the variable annuity unit value on
the 10th day of the second month is 13.565712. Then the second variable annuity
payment would be $285.59 (21.052444 x 13.565712).
Appendix B
CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial
statements of the variable account. The data should be read in conjunction with
the financial statements, related notes, and other financial information
included in the Statement of Additional Information.
The following table sets forth certain information regarding the sub-accounts
for the period from commencement of business operations of the sub-account
through December 31, 1998. The variable accumulation unit values and the number
of variable accumulation units outstanding for each sub-account for the periods
shown are as follows:
<PAGE>
<TABLE>
<CAPTION>
Year Ending December 31, 1993
_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)(Inception 1/4/93)
Accumulation Unit Value
<S> <C> <C> <C> <C> <C>
at Beginning of Period $1.021 $12.797 $13.225 $12.310 $39.620
Accumulation Unit Value
at End of Period $1.018 $12.861 $13.373 $12.445 $37.702
Number of Accumulation
Units Outstanding
at End of Period 2,678,280.492 167,686.797 137,252.898 86,752.856 138,557.449
Capital Appreciation Stock IndexSocially Responsible
Sub-Account Sub-Account Sub-Account
(Inception- (Inception (Inception-
4/5/93 1/4/93 10/7/93
Accumulation Unit Value at
Beginning of Period $6.590 $16.590 $12.490
Accumulation Unit Value at
End of Period $13.160 $16.521 $13.364
Number of Accumulation Units
Outstanding at End of Period 44,612.892 32,543.274 3,555.254
Year Ending December 31, 1994
_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.018 $12.861 $13.373 $12.445 $37.702
Accumulation Unit Value
at End of Period $1.048 $12.496 $12.672 $11.710 $40.064
Number of Accumulation
Units Outstanding
at End of Period 8,547,165.659 820,985.237 203,164.533 164,657.770 612,327.237
Capital Appreciation Stock Index Socially Responsible
Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $13.160 $16.521 $13.364
Accumulation Unit Value
at End of Period $13.373 $16.437 $13.377
Number of Accumulation
Units Outstanding
at End of Period 285,265.910 190,496.642 24,171.591
Year Ending December 31, 1995
- ------------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.048 $12.496 $12.672 $11.710 $40.064
Accumulation Unit Value
at End of Period $1.093 $12.292 $14.740 $13.908 $51.121
Number of Accumulation
Units Outstanding
at End of Period 9,084,943.487 666,488.480 351,788.006 454,139.991 817,445.023
Growth and Income International Equity
Sub-Account Sub-Account
Capital Appreciation Stock Index Socially Responsible (Inception (Inception
Sub-Account Sub-Account Sub-Account 1/5/95) 1/5/95)
Accumulation Unit Value
at Beginning of Period $13.373 $16.437 $13.377 $12.235 $12.024
Accumulation Unit Value
at End of Period $17.610 $22.172 $17.752 $19.426 $12.964
Number of Accumulation
Units Outstanding
at End of Period 587,928.246 365,482.688 49,020.846 734,393.096 61,152.467
Year Ending December 31, 1996
- ---------------------------------------------------------------------------------------------------------
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.093 $12.292 $14.740 $13.908 $51.121
Accumulation Unit Value
at End of Period $1.132 $11.682 $14.911 $14.142 $58.773
Number of Accumulation
Units Outstanding
at End of Period 10,392,468.634 489,733.637 396,886.829 664,469.782 1,000,594.786
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $17.610 $22.172 $17.752 $19.426 $12.964
Accumulation Unit Value
at End of Period $21.802 $26.791 $21.221 $23.131 $14.267
Number of Accumulation
Units Outstanding
at End of Period 1,074,614.761 585,454.420 103,732.717 1,906,011.179 226,976.242
International Value Disciplined Stock Small Company Stock
Sub-Account Sub-Account Sub-Account
(Inception 5/1/96) (Inception 5/1/96) (Inception 5/1/96)
Accumulation Unit Value
at Beginning of Period $10.00 $10.00 $10.00
Accumulation Unit Value
at End of Period $10.244 $11.776 $10.772
Number of Accumulation
Units Outstanding
at End of Period 47,815.855 381,884.114 212,878.654
Year Ending December 31, 1997
_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $1.132 $11.682 $14.911 $14.142 $58.773
Accumulation Unit Value
at End of Period $1.175 $14.185 $15.736 $15.260 $67.668
Number of Accumulation
Units Outstanding
at End of Period 12,049,327.817 1,017,390.458 424,325.816 987,773.886 1,031,483.594
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $21.802 $26.791 $21.221 $23.131 $14.267
Accumulation Unit Value
at End of Period $27.532 $35.128 $26.879 $26.509 $15.422
Number of Accumulation
Units Outstanding
at End of Period 1,798,913.636 808,857.987 230,281.724 2,179,109.968 378,355.293
Limited Term
High Income Balanced
International Value Disciplined Stock Small Company Stock Sub-Account Sub-Account
Sub-Account Sub-Account Sub-Account (Inception 5/1/97)(Inception 5/1/97)
Accumulation Unit Value
at Beginning of Period $10.244 $11.776 $10.772 $10.000 $10.000
Accumulation Unit Value
at End of Period $10.982 $15.272 $12.935 $10.852 $11.738
Number of Accumulation
Units Outstanding
at End of Period 172,941.244 1,196,912.676 513,524.112 473,373.863 333,714.857
Year Ending December 31, 1998
_________________________________________________________________________________________________________
Money Special Zero Coupon Quality
Market Value 2000 Bond Small Cap
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period 4 $1.175 $14.185 $15.736 $15.260 $67.668
Accumulation Unit Value
at End of Period $1.22 $16.19 $16.65 $15.88 $64.44
Number of Accumulation
Units Outstanding
at End of Period 17,914,765.700 1,081,841.670 501,871.997 1,282,534.621 949,334.076
International
Capital Appreciation Stock Index Socially Responsible Growth and Income Equity
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $27.532 $35.128 $26.879 $26.509 $15.422
Accumulation Unit Value
at End of Period $35.36 $44.42 $34.30 $29.23 $15.89
Number of Accumulation
Units Outstanding
at End of Period 2,358,609.519 1,117,569.153 346,500.316 2,071,117.603 431,892.273
Limited Term
International Value Disciplined Stock Small Company Stock High Income Balanced
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
Accumulation Unit Value
at Beginning of Period $10.982 $15.272 $12.935 $10.852 $11.738
Accumulation Unit Value
at End of Period $11.78 $19.09 $11.99 $10.73 $14.16
Number of Accumulation
Units Outstanding
at End of Period 240,526.824 2,262,990.153 582,290.495 1,308,425.217 857,333.328
Transamerica Growth Cash Value MidCap Stock
Sub-Account Sub-Account Sub-Account
(Inception 5/1/98) (Inception 5/1/98) (Inception 5/1/98)
Accumulation Unit Value
at Beginning of Period N/A N/A N/A
Accumulation Unit Value
at End of Period $11.35 $9.29 $9.63
Number of Accumulation
Units Outstanding
at End of Period 337,225.242 32,398.128 221,581.308
</TABLE>
Financial Statements for the Variable Account and Transamerica
The financial statements and reports of independent auditors for the
variable account and Transamerica are contained in the Statement of Additional
Information.
<PAGE>
Appendix C
DEFINITIONS
Active Sub-Account: A sub-account of the variable account in which the
certificate has current value.
Annuitant: The person: (a) whose life is used to determine the amount of monthly
annuity payments on the annuity date; and (b) who is the payee designated to
receive monthly annuity payments, unless such payee is changed by the owner. The
annuitant cannot be changed after the certificate has been issued, except upon
the annuitant's death before the annuity date if a contingent annuitant has
previously been named. In the case of a qualified certificate used to fund an
IRA or a 403(b) annuity, the owner must be the annuitant.
Annuitant's Beneficiary: The person or persons named by the owner who may
receive the death benefit under the certificate, if: (a) the annuitant is not
the owner, there is no named contingent annuitant and the annuitant dies before
the annuity date and before the death of the owner or owners; or (b) the
annuitant dies after the annuity date under an annuity form containing a period
certain option.
Annuity Date: The date on which the annuity purchase amount will be applied to
provide monthly annuity payments under the annuity form and payment option
selected by the owner. Monthly annuity payments will start the first day of the
month immediately following the annuity date. Unless the annuity date is changed
as allowed by the certificate, the annuity date will be as shown in the
certificate. The annuity date may be changed by the owner upon 30 days advance
written notice to our service office. The revised annuity date may not be
earlier than the first day of the calendar month coinciding with or next
following the third certificate anniversary. The annuity date may not be later
than the first day of the calendar month immediately preceding the month of the
annuitant's 85th birthday.
Annuity Payment: An amount paid by Transamerica at regular intervals to the
annuitant and/or any other payee. It may be on a variable or fixed basis.
Annuity Purchase Amount: The amount applied as a single premium to provide an
annuity under the annuity form and payment options available under the
certificate. The annuity purchase amount is equal to the certificate value, less
any applicable contingent deferred sales load, and less any applicable premium
taxes. In determining the annuity purchase amount, we will waive the contingent
deferred sales load if the annuity form involves life contingencies and the
annuity date occurs on or after the third certificate anniversary.
Annuity Year: A one-year period starting on the annuity date and, after that,
each succeeding one-year period.
Cash Surrender Value: The amount payable to the owner if the certificate is
surrendered on or before the annuity date. The cash surrender value is equal to
the certificate value, less the certificate fee, less any applicable contingent
deferred sales load, and less applicable premium taxes.
Certificate Anniversary: The same month and day as the certificate date in each
calendar year after the calendar year in which the certificate date occurs.
Certificate Date: The effective date of the certificate as shown on the
certificate.
Certificate Value: The sum of the fixed accumulated value plus the variable
accumulated value.
Certificate Year: The 12-month period from the certificate date and ending with
the day before the first certificate anniversary and each twelve month period
thereafter. The first certificate year for any particular net premium is the
certificate year in which the premium is received by our service center.
Code: The U.S. Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
Contingent Annuitant: The person who: (a) becomes the annuitant if the annuitant
dies before the annuity date; or (b) may receive benefits under the certificate
if the annuitant dies after the annuity date under an annuity form containing a
contingent annuity option. A contingent annuitant may be designated only if the
owner is not also the annuitant. The contingent annuitant may be changed at any
time by the owner while the annuitant is living and before the annuity date.
Contingent Deferred Sales Load: A charge equal to a percentage of premiums
withdrawn from the certificate that are less than seven years old. See
Contingent Deferred Sales Load/Surrender Charge on page 35 for the specific
percentages.
Fixed Account: All or portions of net premiums and transfers may be allocated to
the fixed account. The fixed account assets are general assets of the company
and are distinguishable from those allocated to a separate account of the
company.
Fixed Accumulated Value: The total dollar amount of all amounts held under the
fixed account for the certificate before the annuity date. The fixed accumulated
value before the annuity date is equal to: (a) net premiums allocated to the
fixed account plus interest credited; less (b) reductions for the annual
certificate fee deducted on the last business day of each certificate year; plus
or minus (c) amounts transferred to or from the variable sub-accounts; less (d)
any applicable transfer fees; and less (e) withdrawals from fixed account.
Fixed Annuity: An annuity with predetermined payment amounts.
Free Look Period: The period of time, currently 10 days, beginning when the
owner has received the certificate, during which the owner has the right to
cancel the certificate.
Funds: Dreyfus Variable Investment Fund, Dreyfus Stock Index Fund, The Dreyfus
Socially Responsible Growth Fund, Inc., Dreyfus Investment Portfolios and
Transamerica Variable Insurance Fund, Inc., in which the variable account
currently invests.
Inactive Sub-Account: A sub-account of the variable account in which the
certificate has a zero balance.
Net Investment Factor: An index that measures the investment performance of a
sub-account from one valuation period to the next.
Net Premium: A premium reduced by any applicable premium tax, including
retaliatory premium taxes.
Non-Qualified Certificate: A certificate that does not receive favorable tax
treatment under the Code.
Owner or Joint Owners: The person or persons who, while living, control all
rights and benefits under the certificate. Joint owners own the certificate
equally with the right of survivorship. The right of survivorship means that if
a joint owner dies, his or her interest in the certificate will pass to the
surviving joint owner in accordance with the death benefit provision. Qualified
certificates may not have joint owners.
Owner's Beneficiary: The person who becomes the owner of the certificate if the
owner dies. If the certificate has joint owners, the surviving joint owner will
be the owner's beneficiary.
Payee: The person who receives the annuity payments after the annuity date. The
payee will be the annuitant, unless otherwise changed by the owner.
Portfolio: Dreyfus Stock Index Fund, The Dreyfus Socially Responsible Growth
Fund, Inc., or any one of the series of Dreyfus Variable Investment Fund or any
one of the portfolios of Dreyfus Investment Portfolios or the Growth Portfolio
of Transamerica Variable Insurance Fund, Inc., underlying a sub-account of the
variable account.
Proof of Death: May be: (a) a copy of a certified death certificate; (b) a copy
of a certified decree of a court of competent jurisdiction as to the finding of
death; (c) a written statement by a medical doctor who attended the deceased; or
(d) any other proof satisfactory to us.
Qualified Certificate: A certificate issued in connection with a retirement plan
or program.
Receipt: Receipt and acceptance by us at our service center.
Series: Any of the portfolios of Dreyfus Variable Investment Fund available for
investment by a sub-account under the certificate.
Service Center: Transamerica's Annuity Service Center, at P.O. Box 31728,
Charlotte, North Carolina 28231-1728 and at telephone (800) 258-4261.
Source Account: A sub-account of the variable account or the fixed account, as
permitted, from which dollar cost averaging transfers are being made.
Sub-Account: A subdivision of the variable account investing solely in shares of
one of the portfolios.
Surrender Charge: See Contingent Deferred Sales Load.
Valuation Day: Any day the New York Stock Exchange is open for trading.
Valuation Period: The time interval between the closing of the New York Stock
Exchange on consecutive valuation days.
Variable Account: Separate Account VA-2LNY, a separate account established and
maintained by Transamerica for the investment of a portion of its assets
pursuant to Section 4240 of the New York Insurance Law and Regulation 47, part
50. The variable account contains several sub-accounts to which all or portions
of net premiums and transfers may be allocated.
Variable Accumulated Value: The total dollar amount of all variable accumulation
units under each sub-account of the variable account held for the certificate
before the annuity date. The variable accumulated value before the annuity date
is equal to: (a) net premiums allocated to the sub-accounts; plus or minus (b)
any increase or decrease in the value of assets of the sub-accounts due to
investment results; less (c) the daily mortality and expense risk charge; less
(d) the daily administrative expense charge; less (e) reductions for the annual
certificate fee deducted on the last business day of each certificate year; plus
or minus (f) amounts transferred to or from the fixed account; less (g) any
applicable transfer fees; and less (h) withdrawals from the sub-accounts.
Variable Accumulation Unit: A unit of measure used to determine the certificate
value before the annuity date. The value of a variable accumulation unit varies
with each sub-account.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified sub-accounts of the variable
account.
Variable Annuity Unit: A unit of measure used to determine the amount of the
second and each subsequent payment under a variable annuity payment option. The
value of a variable annuity unit varies with each sub-account.
Withdrawals: Refers to partial withdrawals, full surrenders, and systematic
withdrawals that are paid in cash to the owner, person or persons specified by
the owner.
Written Notice or Written Request: A notice or request in writing by the owner
to Transamerica's service center. Such a request must contain original
signatures; no carbons or photocopies will be accepted. Transamerica reserves
the right to accept a facsimile copy.
Appendix D
Transamerica Life Insurance Company of New York
DISCLOSURE STATEMENT
for Individual Retirement Annuities
The following information is being provided to you, the owner, in accordance
with the requirements of the Internal Revenue Service (IRS). This Disclosure
Statement contains information about opening and maintaining an Individual
Retirement Account or Annuity (IRA), and summarizes some of the financial and
tax consequences of establishing an IRA.
Part I of this Disclosure Statement discusses Traditional IRAs, while Part II
addresses Roth IRAs. Because the tax consequences of the two categories of IRAs
differ significantly, it is important that you review the correct part of this
Disclosure Statement to learn about your particular IRA. This Disclosure
Statement does not discuss Education IRAs or SIMPLE-IRAs, except as necessary in
the context of discussing other types of IRAs.
Your Transamerica Life Insurance Company of New York's Individual Retirement
Annuity, also referred to as a Transamerica Life IRA Contract has been approved
as to form by the IRS. In addition, we are using an IRA and a Roth IRA
Endorsement based the IRS-approved text. Please note that IRS approval applies
only to the form of the contract and does not represent a determination of the
merits of such IRA contract.
It may be necessary for us to amend your Transamerica Life IRA or Roth IRA
Contract in order for us to obtain or maintain IRS approval of its tax
qualification. In addition, laws and regulations adopted in the future may
require changes to your contract in order to preserve its status as an IRA. We
will send you a copy of any such amendment.
No contribution to a Transamerica Life IRA will be accepted under a SIMPLE plan
established by any employer pursuant to Internal Revenue Code Section 408(p). No
transfer or rollover of funds attributable to contributions made by an employer
to your SIMPLE IRA under the employer's SIMPLE plan may be transferred or rolled
over to your Transamerica Life IRA before the expiration of the two year period
beginning on the date you first participated in the employer's SIMPLE plan. In
addition, depending on the annuity contract you purchased, contributory IRAs may
or may not be available.
This Disclosure Statement includes the non-technical explanation of some of the
changes made by the Tax Reform Act of 1986 applicable to IRAs and more recent
changes made by the Small Business Job Protection Act of 1996, the Health
Insurance Portability and Accountability Act of 1996, the Tax Relief Act of 1997
and the IRS Restructuring and Reform Act of 1998.
The information provided applies to contributions made and distributions
received after December 31, 1986, and reflects the relevant provisions of the
Code as in effect on January 1, 1999. This Disclosure Statement is not intended
to constitute tax advice, and you should consult a tax professional if you have
questions about your own circumstances.
Revocation of Your IRA or Roth IRA
You have the right to revoke your Traditional IRA or Roth IRA issued by us
during the seven calendar day period following its establishment. The
establishment of your Traditional IRA or Roth IRA contract will be the contract
effective date. This seven day calendar period may or may not coincide with the
free look period of your contract.
In order to revoke your Traditional IRA or Roth IRA, you must notify us in
writing and you must mail or deliver your revocation to us postage prepaid, at:
401 North Tryon Street, Charlotte, NC 28202. The date of the postmark, or the
date of certification or registration if sent by certified or registered mail,
will be considered your revocation date. If you revoke your Traditional IRA or
Roth IRA during the seven day period, an amount equal to your premium will be
returned to you without any adjustment.
Definitions
Code - Internal Revenue Code of 1986, as amended, and regulations issued
thereunder.
Contributions - Purchase payments paid to your contract.
Contract - The annuity policy, certificate or contract which you purchased.
Compensation - For purposes of determining allowable contributions, the term
compensation includes all earned income, including net earnings from
self-employment and alimony or separate maintenance payments received under a
decree of divorce or separate maintenance and includable in your gross income,
but does not include deferred compensation or any amount received as a pension
or annuity.
Regular Contributions - In General
As is more fully discussed below, for 1998 and later years, the maximum total
amount that you may contribute for any tax year to your regular IRAs and your
regular Roth IRAs combined is $2,000, or if less, your compensation for that
year. Once you attain age 701/2, this limit is reduced to zero only for your
regular IRAs, not for your Roth IRAs, but the separate limit on Roth IRA
contributions can be reduced to zero for taxpayers with adjusted gross income,
also referred to as AGI, above certain levels, as described below in Part II,
Section 1. While your Roth IRA contributions are never deductible, your regular
IRA contributions are fully deductible, unless you, or your spouse, is an active
participant in some form of tax-qualified retirement plan for the tax year. In
the latter case, any deductible portion of your regular IRA contributions for
each year is subject to the limits that are described below in Part I, Section
2, and any remaining regular IRA contributions for that year must be reported to
the IRS as nondeductible IRA contributions, along with your Roth IRA
contributions.
IRA PART I: TRADITIONAL IRAs
The rules that apply to a Traditional Individual Retirement Account or Annuity,
which is referred to in this Disclosure Statement simply as an "IRA" or as a
"Traditional IRA" and which includes a regular or Spousal IRA and a rollover
IRA, generally also apply to IRAs under Simplified Employee Pension plans or
SEP-IRAs, unless specific rules for SEP-IRAs are stated.
1. Contributions
(a) Regular IRA. Regular IRA contributions must be in cash and are subject to
the limits described above. Such contributions are also subject to the minimum
amount under the Transamerica IRA contract. In addition, any of your regular
contributions to an IRA for a tax year must be made by the due date, not
including extensions, for your federal tax return for that tax year. See also
Part II, Section 4 below about recharacterizing IRA and Roth IRA contributions
by such date.
(b) Spousal IRA. If you and your spouse file a joint federal income tax return
for the taxable year and if your spouse's compensation, if any, includable in
gross income for the year is less than the compensation includable in your gross
income for the year, you and your spouse may each establish your own separate
regular IRA, and Roth IRA, and may make contributions to such IRAs for your
spouse that are not limited by your spouse's lower amount of compensation.
Instead, the limit for the total contribution to spousal IRAs that can be made
by you or your spouse for the tax year is:
1. $2,000; or
2. if less, the total combined compensation for both you and your spouse reduced
by any deductible IRA contributions and any Roth IRA contributions for such
year.
As with any regular IRA contributions, those for your spouse cannot be made for
any tax year in which your spouse has attained age 701/2, must be in cash, and
must be made by the due date, not including extensions, for your federal income
tax return for that tax year.
(c) Rollover IRA. Rollover contributions to a Traditional IRA are unlimited in
dollar amount. These can include rollover contributions of eligible
distributions received by you from another Traditional IRA or tax-qualified
retirement plan. Generally, any distribution from a tax-qualified retirement
plans, such as a pension or profit sharing plan, Code Section 401(k) plan, H.R.
10 or Keogh plan, or a Traditional IRA can be rolled over to a Traditional IRA
unless it is a required minimum distribution as discussed below in Part I,
Section 4(a) or it is part of a series of payments to be paid to you over your
life, life expectancy or a period of at least 10 years. In addition,
distributions of "after-tax" plan contributions, i.e., amounts which are not
subject to federal income tax when distributed from a tax-qualified retirement
plan, are not eligible to be rolled over to an IRA. If a distribution from a
tax-qualified plan or a Traditional IRA is paid to you and you want to roll over
all or part of the eligible distributed amount to a Transamerica Life
Traditional IRA, the rollover must be accomplished within 60 days of the date
you receive the amount to be rolled over. However, you may roll over any amount
from one Traditional IRA into another Traditional IRA only once in any 365-day
period.
A timely rollover of an eligible distributed amount that has been paid to you
directly will prevent its being taxable to you at the time of distribution; that
is, none of it will be includable in your gross income until you withdraw some
amount from your rollover IRA. However, any such distribution directly to you
from a tax-qualified retirement plan is generally subject to a mandatory 20%
withholding tax.
By contrast, a direct transfer from a tax-qualified retirement plan to a
Traditional IRA is considered a "direct" rollover and is not subject to any
mandatory withholding tax, or other federal income tax, upon the direct
transfer. If you elect to make such a "direct" rollover from a tax-qualified
plan to a Transamerica Life Traditional IRA, the transferred amount will be
deposited directly into your rollover IRA.
Strict limitations apply to rollovers, and you should seek competent tax advice
in order to comply with all the rules governing rollovers.
(d) Direct Transfers from another Traditional IRA. You may make an initial or
subsequent contribution to your Transamerica Life Traditional IRA by directing
the fiduciary or issuer of any of your existing IRAs to make a direct transfer
of all or part of such IRAs in cash to your Transamerica Life Traditional IRA.
Such a direct transfer between Traditional IRAs is not considered a rollover ,
e.g., for purposes of the 1-year waiting period or withholding.
(e) Simplified Employee Pension Plan, or SEP-IRA. If an IRA is established that
meets the requirements of a SEP-IRA, generally your employer may contribute an
amount not to exceed the lesser of 15% of your includable compensation ($160,000
for 1999, adjusted for inflation thereafter) or $30,000, even after you attain
age 701/2. The amount of such contribution is not includable in your income for
federal income tax purposes. In the case of a SEP-IRA that has a grandfathered
qualifying form of salary reduction, referred to as a SARSEP, that was
established by an employer before 1997, generally any employee, including a
self-employed individual, who:
1. has worked for the employer for 3 of the last 5 preceding tax years;
2. is at least age 21; and
3. has received from the employer compensation of at least $400 for the current
tax year, adjusted for inflation after 1999.
is eligible to make a before tax salary reduction contribution to the SARSEP for
the current tax year of up to $10,000, adjusted for inflation after 1998,
subject to the overall limits for SEP-IRA contributions.
Your employer is not required to make a SEP-IRA contribution in any year nor
make the same percentage contribution each year. But if contributions are made,
they must be made to the SEP-IRA for all eligible employees and must not
discriminate in favor of highly compensated employees. If these rules are not
met, any SEP-IRA contributions by the employer could be treated as taxable to
the employees and could result in adverse tax consequences to the participating
employee. For further details about SARSEPs and SEP-IRAs, e.g., for computing
contribution limits for self-employed individuals, see IRS Publication 590, as
indicated below.
(f) Responsibility of the Owner. Contributions, rollovers, or transfers to any
IRA must be made in accordance with the appropriate sections of the Code. It is
your full and sole responsibility to determine the tax deductibility of any
contribution to your Traditional IRA, and to make such contributions in
accordance with the Code. Transamerica does not provide tax advice, and assumes
no liability for the tax consequences of any contribution to your Transamerica
Life Traditional IRA.
2. Deductibility of Contributions for a Regular IRA
(a) General Rules. The deductible portion of the contributions made to the
regular IRAs for you, or your spouse, for a tax year depends on whether you, or
your spouse, is an "active participant" in some type of a tax-qualified
retirement plan for such year, as described in Section 2(b) immediately below.
If you and your spouse file a joint return for a tax year and neither of you is
an active participant for such year, then the permissible contributions to the
regular IRAs for each of you are fully deductible up to $2,000 each, i.e., your
combined deductible IRA contribution limit for the tax year could be $4,000.
Similarly, if you are not married, or treated as such, for the tax year and you
are not an active participant for such year, the permissible contributions to
your regular IRAs for the tax year are fully deductible up to $2,000. For
instance, if you and your spouse file separate returns for the tax year and you
did not live together at any time during such tax year, then you are treated as
unmarried for such year, and if you were not an active participant for the tax
year, then your deductible limit for your regular IRA contribution is $2,000,
even if your spouse was an active participant for such year.
If you are an active participant for the tax year, then your $2,000 limit is
subject to a phase-out rule if your AGI for such year exceeds a Threshold Level,
depending on your tax filing status and the calendar year. If, however, you are
not an active participant for the tax year but your spouse is, then your $2,000
limit is subject to the phase-out rule only if your AGI exceeds a higher
Threshold Level. See Part I, Section 2(c), below.
(b) Active Participant. You are an "active participant" for a year if you
participate in some type of tax-qualified retirement plan. For example, if you
participate in a qualified pension or profit sharing plan, a Code Section 401(k)
plan, certain government plans, a tax-sheltered arrangement under Code Section
403, a SIMPLE plan or a SEP-IRA plan, you are considered to be an active
participant. Your Form W-2 for the year should indicate your participation
status.
(c) Adjusted Gross Income, also referred to as AGI. If you are an active
participant, you must look at your AGI for the year, or if you and your spouse
file a joint tax return, you use your combined AGI, to determine whether you can
make a deductible IRA contribution for that taxable year. The instructions for
your tax return will show you how to calculate your AGI for this purpose. If you
are at or below a certain AGI level, called the Threshold Level, you are treated
as if you were not an active participant and you can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are an active participant for the tax year, then your Threshold Level
depends upon whether you are a married taxpayer filing a joint tax return, an
unmarried taxpayer, or a married taxpayer filing a separate tax return. If you
are a married taxpayer but file a separate tax return, the Threshold Level is
$0. If you are a married taxpayer filing a joint tax return, or an unmarried
taxpayer, your Threshold Level depends upon the taxable year, and can be
determined using the appropriate table below:
Married Filing Jointly Unmarried
Taxable Threshold Taxable Threshold
Year Level Year Level
1998 $50,000 1998 $30,000
1999 $51,000 1999 $31,000
2000 $52,000 2000 $32,000
2001 $53,000 2001 $33,000
2002 $54,000 2002 $34,000
2003 $60,000 2003 $40,000
2004 $65,000 2004 $45,000
2005 $70,000 2005 and
2006 $75,000 thereafter $50,000
2007 and
thereafter $80,000
Beginning in 1998, if you are not an active participant for the tax year but
your spouse is, and you are not treated as unmarried for filing purposes, then
your Threshold Level is $150,000.
If your AGI is less than $10,000 above your Threshold Level, or $20,000 for
married taxpayers filing jointly for the taxable year beginning on or after
January 1, 2007, you will still be able to make a deductible contribution, but
it will be limited in amount. The amount by which your AGI exceeds your
Threshold Level is called your Excess AGI. The Maximum Allowable Deduction is
$2,000, even for Spousal IRAs. You can calculate your Deduction Limit as
follows:
10,000 - Excess AGI x Maximum Allowable Deduction = Deduction Limit 10,000
For taxable years beginning on or after January 1, 2007, married taxpayers
filing jointly should substitute 20,000 for 10,000 in the numerator and
denominator of the above equation.
You must round up any computation of the Deduction Limit to the next highest $10
level, that is, to the next highest number which ends in zero. For example, if
the result is $1,525, you must round it up to $1,530. If the final result is
below $200 but above zero, your Deduction Limit is $200. Your Deduction Limit
cannot in any event exceed 100% of your compensation.
3. Nondeductible Contributions to Regular IRAs
The amounts of your regular IRA contributions which are not deductible will be
nondeductible contributions to such IRAs. You may also choose to make a
nondeductible contribution to your regular IRA, even if you could have deducted
part or all of the contribution. Interest or other earnings on your regular IRA
contributions, whether from deductible or nondeductible contributions, will not
be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA, you must report the amount
of the nondeductible contribution to the IRS as a part of your tax return for
the year, e.g., on Form 8606.
4. Distributions
(a) Required Minimum Distributions, or simply, RMD. Distributions from your
Traditional IRAs must be made or begin no later than April 1 of the calendar
year following the calendar year in which you attain age 701/2, the required
beginning date. You may take RMDs from any Traditional IRA you maintain, but not
from any Roth IRA, as long as:
a) distributions begin when required;
b) distributions are made at least once a year; and
c) the amount to be distributed is not less than the minimum required under
current federal tax law.
If you own more than one Traditional IRA, you can choose whether to take your
RMD from one Traditional IRA or a combination of your Traditional IRAs. A
distribution may be made at once in a lump sum, as qualifying partial
withdrawals or as qualifying settlement option payments. Qualifying partial
withdrawals and settlement option payments must be made in equal or
substantially equal amounts over:
a) your life or the joint lives of you and your beneficiary; or
b) a period not exceeding your life expectancy, as redetermined annually under
IRS tables in the income tax regulations, or the joint life expectancy of you
and your beneficiary, as redetermined annually, if that beneficiary is your
spouse.
Also, special rules may apply if your designated beneficiary, other than your
spouse, is more than ten years younger than you.
If qualifying settlement option payments start before the April 1 following the
year you turn age 701/2, then the annuity date of such settlement option
payments will be treated as the required beginning date for purposes of the RMD
provisions, above, and the death benefit provisions, below.
If you die before the entire interest in your Traditional IRAs is distributed to
you, but after your required beginning date, the entire interest in your
Traditional IRAs must be distributed to your beneficiaries at least as rapidly
as under the method in effect at your death. If you die before your required
beginning date and if you have a designated beneficiary, distributions to your
designated beneficiary can be made in substantially equal installments over the
life or life expectancy of the designated beneficiary, beginning by December 31
of the calendar year that is one year after the year of your death. Otherwise,
if you die before your required beginning date and your surviving spouse is not
your designated beneficiary, distributions must be completed by December 31 of
the calendar year that is five years after the year of your death.
If your designated beneficiary is your surviving spouse, and you die before your
required beginning date, your surviving spouse can become the new
owner/annuitant and can continue the Transamerica Life Traditional IRA on the
same basis as before your death. If your surviving spouse does not wish to
continue the contract as his or her IRA, he or she may elect to receive the
death benefit in the form of qualifying settlement option payments in order to
avoid the 5-year rule. Such payments must be made in substantially equal amounts
over your spouse's life or a period not extending beyond his or her life
expectancy. Your surviving spouse must elect this option and begin receiving
payments no later than the later of the following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached the required
beginning date if you had not died.
Either you or, if applicable, your beneficiary, is responsible for assuring that
the RMD is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of IRA Distributions. Because nondeductible Traditional IRA
contributions are made using income which has already been taxed, that is, they
are not deductible contributions, the portion of the Traditional IRA
distributions consisting of nondeductible contributions will not be taxed again
when received by you. If you make any nondeductible contributions to your
Traditional IRAs, each distribution from any of your Traditional IRAs will
consist of a nontaxable portion, return of nondeductible contributions, and a
taxable portion, return of deductible contributions, if any, and earnings.
Thus, if you receive a distribution from any of your Traditional IRAs and you
previously made deductible and nondeductible contributions to such IRAs, you may
not take a Traditional IRA distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year.
Remaining nondeductible contributions
Divided by
Year-end total adjusted Traditional IRA balances
Multiplied by
Total distributions
for the year
Equals:
Nontaxable distributions
for the year
To figure the year-end total adjusted Traditional IRA balance, you must treat
all of your Traditional IRAs as a single Traditional IRA. This includes all
regular IRAs, as well as SEP-IRAs, SIMPLE IRAs and Rollover IRAs, but not Roth
IRAs. You also add back to your year-end total Traditional IRA balances,
specifically the distributions taken during the year from your Traditional IRAs.
Please refer to IRS Publication 590, Individual Retirement Arrangements for
instructions, including worksheets, that can assist you in these calculations.
Transamerica Life Insurance and Annuity Company will report all distributions
from your Transamerica Traditional IRA to the IRS as fully taxable income to
you.
Even if you withdraw all of the assets in your Traditional IRAs in a lump sum,
you will not be entitled to use any form of lump sum treatment or income
averaging to reduce the federal income tax on your distribution. Also, no
portion of your distribution qualifies as a capital gain. Moreover, any
distribution made before you reach age 591/2, may be subject to a 10% penalty
tax on early distributions, as indicated below. (c) Withholding. Unless you
elect not to have withholding apply, federal income tax will be withheld from
your Traditional IRA distributions. If you receive distributions under a
settlement option, tax will be withheld in the same manner as taxes withheld on
wages, calculated as if you were married and claim three withholding allowances.
If you are receiving any other type of distribution, tax will be withheld in the
amount of 10% of the distribution. If payments are delivered to foreign
countries, federal income, tax will generally be withheld at a 10% rate unless
you certify to Transamerica that you are not a U. S. citizen residing abroad or
a tax avoidance expatriate as defined in Code Section 877. Such certification
may result in mandatory withholding of federal income taxes at a different rate.
5. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year the total regular
IRA contributions you made to your Traditional IRAs and your Roth IRAs, other
than rollovers or transfers, exceed the maximum allowable deductible and
nondeductible contributions for that year, the excess contribution amount will
be subject to a nondeductible 6% excise penalty tax. Such penalty tax cannot
exceed 6% of the value of your IRAs at the end of such year.
However, if you withdraw the excess contribution, plus any earnings on it,
before the due date for filing your federal income tax return, including
extensions, for the taxable year in which you made the excess contribution, the
excess contribution will not be subject to the 6% penalty tax. The amount of the
excess contribution withdrawn will not be considered an early distribution, nor
otherwise be includible in your gross income if you have not taken a deduction
for the excess amount.
However, the earnings withdrawn will be taxable income to you and may be subject
to the 10% penalty tax on early distributions. Alternatively, excess
contributions for one year may be withdrawn in a later year or may be carried
forward as regular IRA contributions in the following year to the extent that
the excess, when aggregated with your regular IRA contributions, if any, for the
subsequent year, does not exceed the maximum allowable deductible and
nondeductible amount for that year. The 6% excise tax will be imposed on excess
contributions in each subsequent year they are neither returned to you nor
applied as permissible regular IRA contributions for such year.
(b) Early Distributions. Since the purpose of an IRA is to accumulate funds for
retirement, your receipt or use of any portion of your IRA before you attain age
591/2 constitutes an early distribution subject to a 10% penalty tax unless the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary, as determined from IRS
tables in the income tax regulations.
Also, the 10% penalty tax will not apply if distributions are used to pay for
medical expenses in excess of 7.5% of your AGI or if distributions are used to
pay for health insurance premiums for you, your spouse and/or your dependents if
you are an unemployed individual who is receiving unemployment compensation
under federal or state programs for at least 12 consecutive weeks. Effective for
distributions made in 1998 or later, the 10% penalty tax also will not apply to
an early distribution made to pay for certain qualifying first-time homebuyer
expenses of you or certain family members, or for certain qualifying higher
education expenses for you or certain family members.
First-time homebuyer expenses must be paid within 120 days of the distribution
from the IRA and include up to $10,000 of the costs of acquiring, constructing,
or reconstructing a principal residence, including any usual or reasonable
settlement, financing or other closing costs. Higher education expenses include
tuition, fees, books, supplies, and equipment required for enrollment,
attendance, and room and board at a post-secondary educational institution. The
amount of an early distribution, excluding any nondeductible contribution
included therein, is includable in your gross income and may be subject to the
10% penalty tax unless you transfer it to another IRA as a qualifying rollover
contribution.
(c) Failure To Satisfy RMD. If the RMD rules described above in Part I, Section
4(a) apply to you and if the amount distributed during a calendar year is less
than the minimum amount required to be distributed, you will be subject to a
penalty tax equal to 50% of the excess of the amount required to be distributed
over the amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Traditional IRA, or any interference with the
independent status of such IRA, the Traditional IRA will lose its tax exemption
and be treated as having been distributed to you. The value of the entire
Traditional IRA, excluding any nondeductible contributions included therein,
will be includable in your gross income; and, if at the time of the prohibited
transaction you are under age 591/2, you may also be subject to the 10% penalty
tax on early distributions, as described above in Part I, Section 5(b).
If you borrow from or pledge your Traditional IRA, or your benefits under the
contract, as security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you will have to include the value of the portion
borrowed or pledged as security in your income that year for federal tax
purposes. You may also be subject to the 10% penalty tax on early distributions.
(e) Overstatement or Understatement of Nondeductible Contributions. If you
overstate your nondeductible Traditional IRA contributions on your federal
income tax return, without reasonable cause, you may be subject to a reporting
penalty. Such a penalty also applies for failure to file any form required by
the IRS to report nondeductible contributions. These penalties are in addition
to any ordinary income or penalty taxes, interest, and penalties for which you
may be liable if you underreport income upon receiving a distribution from your
Traditional IRA. See Part I, Section 4(b) above for the tax treatment of such
distributions.
IRA PART II: ROTH IRAs
1. Contributions
(a) Regular Roth IRA. You may make contributions to a regular Roth IRA in any
amount up to the contribution limits described in Part II, Section 3, below.
Such contributions are also subject to the minimum amount under the Transamerica
Life Roth IRA contract. Such contribution must be in cash. Your contribution for
a tax year must be made by the due date, not including extensions, for your
federal income tax return for that tax year. Unlike Traditional IRAs, you may
continue making Roth IRA contributions after reaching age 701/2 to the extent
that your AGI does not exceed the levels described below.
(b) Spousal Roth IRA. If you and your spouse file a joint federal income tax
return for the taxable year and if your spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in your gross income for the year, you and your spouse may each establish your
own individual Roth IRA and may make contributions to those Roth IRAs in
accordance with the rules and limits for contributions contained in the Code,
which are described in Part II, Section 3, below. Such contributions must be in
cash. Your contribution to a Spousal Roth IRA for a tax year must be made by the
due date, not including extensions, for your federal income tax return for that
tax year.
(c) Rollover Roth IRA. You may make contributions to a Rollover Roth IRA within
60 days after receiving a distribution from an existing Roth IRA, subject to
certain limitations discussed in Part II, Section 3, below.
(d) Transfer Roth IRA. You may make an initial or subsequent contribution to
your Transamerica Life Roth IRA by directing a fiduciary or issuer of any of
your existing Roth IRAs to make a direct transfer of all or a portion of the
assets from such Roth IRAs to your Transamerica Life Roth IRA.
(e) Conversion Roth IRA. You may make contributions to a Conversion Roth IRA
within 60 days of receiving a distribution from an existing Traditional IRA or
by instructing the fiduciary or issuer of any of your existing Traditional IRAs
to make a direct transfer of all or a portion of the assets from such a
Traditional IRA to your Transamerica Life Roth IRA, subject to certain
restrictions and subject to income tax on some or all of the converted amounts.
If your AGI, not including the conversion amount, is greater than $100,000 for
the tax year, or if you are married and you and your spouse file separate tax
returns, you may not convert or transfer any amount from a Traditional IRA to a
Roth IRA.
(f) Responsibility of the Owner. Contributions, rollovers, transfers or
conversions to a Roth IRA must be made in accordance with the appropriate
sections of the Code. It is your full and sole responsibility to make
contributions to your Roth IRA in accordance with the Code. Transamerica Life
Insurance and Annuity Company does not provide tax advice, and assumes no
liability for the tax consequences of any contribution to your Roth IRA.
2. Deductibility of Contributions
Your Roth IRA permits only nondeductible after-tax contributions. However,
distributions from your Roth IRA are generally not subject to federal income
tax. See Part II, 4(b) below. This is unlike a Traditional IRA, which permits
deductible and nondeductible contributions, but which provides that most
distributions are subject to federal income tax.
3. Contribution Limits
Contributions for each taxable year to all Traditional and Roth IRAs may not
exceed the lesser of 100% of your compensation or $2,000 for any calendar year,
subject to AGI phase-out rules described below in Section 3(a). Rollover,
transfer and conversion contributions, if properly made, do not count towards
your maximum annual contribution limit, nor do employer contributions to a
SEP-IRA or SIMPLE IRA.
(a) Regular Roth IRAs. The maximum amount you may contribute to a regular Roth
IRA will depend on the amount of your AGI for the calendar year. Your maximum
$2,000 contribution limit begins to phase out when your AGI reaches $95,000 as
unmarried or $150,000 when married filing jointly. Under this phase out, your
maximum regular Roth IRA contributions generally will not be less than $200;
however, no contribution is allowed if your AGI exceeds $110,000 as unmarried or
$160,000 when married filing jointly. If you are married and you and your spouse
file separate tax returns, your maximum regular Roth IRA contribution phases out
between $0 and $10,000. If you are married but you and your spouse lived apart
for the entire taxable year and file separate federal income tax returns, your
maximum contribution is calculated as if you were not married. You should
consult your tax adviser to determine your maximum contribution.
You may make contributions to a regular Roth IRA after age 701/2, subject to the
phase-out rules. Regular Roth IRA contributions for a tax year should be
reported on your tax return for that year, specifically, on Form 8606.
(b) Spousal Roth IRAs. Contributions to your lower-earning spouse's Spousal Roth
IRA may not exceed the lesser of:
1. 100% of both spouses' combined compensation minus any Roth IRA or deductible
Traditional IRA contribution for the spouse with the higher compensation for the
year; or
2. $2,000, as reduced by the phase-out rules described above for regular Roth
IRAs.
A maximum of $4,000 may be contributed to both spouses' Roth IRAs. Contributions
can be divided between the spouses' Roth IRAs as you and your spouse wish, but
no more than $2,000 in regular Roth IRA contributions can be contributed to
either individual's Roth IRA each year.
(c) Rollover Roth IRAs. There is no limit on the amounts that you may rollover
from one Roth IRA into another Roth IRA, including your Transamerica Life Roth
IRA. You may roll over a distribution from any single Roth IRA to another Roth
IRA only once in any 365-day period.
(d) Transfer Roth IRAs. There is no limit on amounts that you may transfer
directly from one Roth IRA into another Roth IRA, including your Transamerica
Life Roth IRA. Such a direct transfer does not constitute a rollover for
purposes of the 1-year waiting period.
(e) Conversion Roth IRAs. There is no limit on amounts that you may convert from
your Traditional IRA into your Transamerica Life Roth IRA if you are eligible to
open a Conversion Roth IRA as described in Part II, Section 1(e), above. In the
case of a conversion from a SIMPLE-IRA, the conversion may only be done after
the expiration of your 2-year participation period described in Code Section
72(t)(6). However, the distribution proceeds from your Traditional IRA are
includable in your taxable income to the extent that they represent a return of
deductible contributions and earnings on any contributions. The distribution
proceeds from your Traditional IRA are not subject to the 10% early distribution
penalty tax, described below, if the distribution proceeds are deposited to your
Roth IRA within 60 days.
You can also make contributions to a Roth IRA by instructing the fiduciary or
issuer, custodian or trustee of your existing Traditional IRAs to transfer the
assets in your Traditional IRAs to the Roth IRA, which can be a successor to
your existing Traditional IRAs. The transfer will be treated as a distribution
from your Traditional IRAs, and that amount will be includable in your taxable
income to the extent that it represents a return of deductible contributions and
earnings on any contributions, but will not be subject to the 10% early
distribution penalty tax.
If you converted from a Traditional IRA to a Roth IRA during 1998, the income
reportable upon distribution from the Traditional IRA may be reportable entirely
for 1998 or reportable ratably over four years beginning in 1998.
4. Recharacterization of IRA
Contributions
(a) Eligibility. By making a timely transfer and election, you generally can
treat a contribution made to one type of IRA as made to a different type of IRA
for a taxable year. For example, if you make contributions to a Roth IRA and
later discover that you are not eligible to make Roth IRA contributions, you may
recharacterize all or a portion of the contribution as a Traditional IRA
contribution by the filing due date, including extensions, for the applicable
tax year.
You may not recharacterize amounts paid into a Traditional IRA that represented
tax-free rollovers or transfers, or employer contributions.
(b) Election. You may elect to recharacterize a contribution amount made to one
type of IRA by simply making a trustee-to-trustee transfer of such amount, plus
net income attributable to it, to a second type of IRA on or before the federal
income tax due date, including extensions, for the tax year for which the
contribution was initially made. After the recharacterization has been made, you
may not revoke or modify the election.
(c) Taxation of a Recharacterization. For federal income tax purposes, a
recharacterized contribution will be treated as having been contributed to the
transferee IRA, rather than to the transferor IRA, on the same date and for the
same tax year that the contribution was initially made to the transferor IRA. A
recharacterized transfer is not considered a rollover for purposes of the 1-year
waiting period.
The transfer of the contribution amount being recharacterized must include the
net income attributable to such amount. If such amount has experienced net
losses as of the time of the recharacterization transfer, the amount
transferred, the original contribution amount less any losses, will generally
constitute a transfer of the entire contribution amount. You must treat the
contribution amount as made to the transferee IRA on your federal income tax
return for the year to which the original contribution amount related.
For reconversions following a recharacterization, see Publication 590 and
Treasury Regulation Section 1.408A-5.
5. Distributions
(a) Required Minimum Distribution, or simply, RMD. Unlike a Traditional IRA,
there are no rules that require that any distribution be made to you from your
Roth IRA during your lifetime.
If you die before the entire value of your Roth IRA is distributed to you, the
balance of your Roth IRA must be distributed by December 31 of the calendar year
that is five years after your death. However, if you die and you have a
designated beneficiary, your beneficiary may elect to take distributions in the
form of qualifying settlement option payments in substantially equal
installments over the life or life expectancy of the designated beneficiary,
beginning by December 31 of the calendar year that is one year after your death.
If your beneficiary is your surviving spouse, he or she can become the new
owner/annuitant and can continue the Transamerica Life Roth IRA on the same
basis as before your death. If your surviving spouse does not wish to continue
the Transamerica Life Roth IRA as his or her Roth IRA, he or she may elect to
receive the death benefit in the form of qualifying settlement option payments
in order to avoid the 5-year distribution requirement. Such payments must be
made in substantially equal amounts over your spouse's life or a period not
extending beyond his or her life expectancy. Your surviving spouse must elect
this option and begin receiving payments no later than the later of the
following dates:
a) December 31 of the year following the year you died; or
b) December 31 of the year in which you would have reached age 701/2.
Your beneficiary is responsible for assuring that the RMD following your death
is taken in a timely manner and that the correct amount is distributed.
(b) Taxation of Roth IRA Distributions. The amounts that you withdraw from your
Roth IRA are generally tax-free. For federal income tax purposes, all of your
Roth IRAs are aggregated and Roth IRA distributions are treated as made first
from Roth IRA contributions and second from earnings. Distributions that are
treated as made from Roth IRA contributions are treated as made first from
regular Roth IRA contributions, which are always tax-free, and second from
conversion or rollover Roth IRA contributions on a first-in, first-out basis. A
distribution allocable to a particular conversion or rollover Roth IRA
contribution is treated as consisting first of the portion, if any, of the
conversion contribution that was previously includible in gross income by reason
of the conversion.
In any event, since the purpose of a Roth IRA is to accumulate funds for
retirement, your receipt or use of Roth IRA earnings before you attain age 591/2
, or within 5 years of your first contribution to the Roth IRA, including a
contribution rolled over, transferred or converted from a Traditional IRA, will
generally be treated as an early distribution subject to regular income tax and
to the 10% penalty tax described below in Section 6(b).
No income tax will apply to earnings that are withdrawn before you attain age
591/2, but which are withdrawn five or more years after the first contribution
to the Roth IRA, including a rollover or transfer contribution or conversion
from a Traditional IRA, where the withdrawal is made:
a) upon your death or disability; or
b) to pay qualified first-time homebuyer expenses of you or certain family
members.
No portion of your Roth IRA distribution qualifies as a capital gain. There is
also a separate 5-year rule for the recapture of the 10% penalty tax that is
described below in Section 6(b) and that applies to any Roth IRA distribution
made before age 591/2 if any conversion or rollover contribution has been made
to any Roth IRA owned by the individual within the 5 most recent taxable years,
even if this current distribution from the Roth IRA is otherwise tax-free under
the rules described in this Subsection 5(b).
(c) Withholding. If the distribution from your Roth IRA is subject to federal
income tax, unless you elect not to have withholding apply, federal income tax
will be withheld from your Roth IRA distributions. If you receive distributions
under a settlement option, tax will be withheld in the same manner as taxes
withheld on wages, calculated as if you were married and claim three withholding
allowances. If you are receiving any other type of distribution, tax will be
withheld in the amount of 10% of the amount of the distribution. If payments are
delivered to foreign countries, federal income tax will generally be withheld at
a 10% rate unless you certify to Transamerica Life Insurance Company of New York
that you are not a U. S. citizen residing abroad or a "tax avoidance expatriate"
as defined in Code Section 877. Such certification may result in mandatory
withholding of federal income taxes at a different rate.
6. Penalty Taxes
(a) Excess Contributions. If at the end of any taxable year your total regular
Roth IRA contributions, other than rollovers, transfers or conversions, exceed
the maximum allowable contributions for that year, taking into account
Traditional IRA contributions, the excess contribution amount will be subject to
a nondeductible 6% excise penalty tax. Such penalty tax cannot exceed 6% of the
value of your Roth IRAs at the end of such year. However, if you withdraw the
excess contribution, plus any earnings on it, before the due date for filing
your federal income tax return, including extensions, for the taxable year in
which you made the excess contribution, the excess contribution will not be
subject to the 6% penalty tax. The amount of the excess contribution withdrawn
will not be considered an early distribution, but the earnings withdrawn will be
taxable income to you and may be subject to the 10% penalty tax on early
distributions. Alternatively, excess contributions for one year may be withdrawn
in a later year or may be carried forward as Roth IRA contributions in a later
year to the extent that the excess, when aggregated with your regular Roth IRA
contributions, if any, for the subsequent year, does not exceed the maximum
allowable contribution for that year. The 6% excise tax will be imposed on
excess contributions in each subsequent year they are neither returned to you
nor applied as permissible regular Roth IRA contributions for such year.
(a) Early Distributions. Since the purpose of a Roth IRA is to accumulate funds
for retirement, your receipt or use of any portion of your Roth IRA before you
attain age 591/2 constitutes an early distribution subject to the 10% penalty
tax on the earnings in your Roth IRA. This penalty tax will not apply if the
distribution occurs as a result of your death or disability or is part of a
series of substantially equal payments made over your life expectancy or the
joint life expectancies of you and your beneficiary, as determined from IRS
tables in the income tax regulations. Also, the 10% penalty tax will not apply
if distributions are used to pay for medical expenses in excess of 7.5% of your
AGI; or if distributions are used to pay for health insurance premiums for you,
your spouse and/or your dependents if you are an unemployed individual who is
receiving unemployment compensation under federal or state programs for at least
12 consecutive weeks.
The 10% penalty tax also will not apply to an early distribution made to pay for
certain qualifying first-time homebuyer expenses for you or certain family
members, or for certain qualifying higher education expenses for you or certain
family members. First-time homebuyer expenses must be paid within 120 days of
the distribution from the Roth IRA and include up to $10,000 of the costs of
acquiring, constructing, or reconstructing a principle residence, including any
usual or reasonable settlement, financing or other closing costs. Higher
education expenses include tuition, fees, books, supplies, and equipment
required for enrollment, attendance, and room and board at a post-secondary
educational institution. There is also a separate 5-year recapture rule for the
10% penalty tax in the case of a Roth IRA distribution made before age 591/2
that is made within 5 years after a conversion or rollover contribution from a
Traditional IRA. This recapture rule exists because such a prior Roth IRA
contribution avoided the 10% penalty tax when it was rolled over or converted
from the Traditional IRA. Under this 5-year recapture rule, any Roth IRA
distribution made before age 591/2 that is attributable to any conversion or
rollover contribution from a Traditional IRA made within the previous 5 years to
any of the individual's Roth IRAs is generally subject to the 10% penalty tax,
and its exceptions, to the extent that such prior Roth IRA contribution was
subject to ordinary tax upon the conversion or rollover, even if the Roth IRA
distribution is otherwise tax-free.
Under the distribution ordering rules for a Roth IRA, all of an individual's
Roth IRAs and distributions therefrom are treated as made: first from regular
Roth IRA contributions; then from conversion or rollover Roth IRA contributions
on a first-in, first-out basis; and last from earnings. However, whenever any
Roth IRA distribution amount is attributable to any conversion or rollover
contribution made within the 5 most recent tax years, this distributed amount is
attributed first to the taxable portion of such prior contribution, for purposes
of determining the amount of this Roth IRA distribution that is subject to the
recapture of the 10% penalty tax, unless some exception to the penalty tax
applies to the current Roth IRA distribution, such as age 591/2, disability or
certain health, education or homebuyer expenses, as described above in this
Subsection 6(b).
(c) Failure to Satisfy RMDs Upon Death. If the RMD rules described above in Part
II, Section 4(a) apply to the beneficiary of your Roth IRA after your death and
if the amount distributed during a calendar year is less than the minimum amount
required to be distributed, your beneficiary will be subject to a penalty tax
equal to 50% of the excess of the amount required to be distributed over the
amount actually distributed.
(d) Policy Loans and Prohibited Transactions. If you or any beneficiary engage
in any prohibited transaction, such as any sale, exchange or leasing of any
property between you and the Roth IRA, or any interference with the independent
status of the Roth IRA, the Roth IRA will lose its tax exemption and be treated
as having been distributed to you. The value of any earnings on your Roth IRA
contributions will be includable in your gross income; and if at the time of the
prohibited transaction, you are under age 591/2 you may also be subject to the
10% penalty tax on early distributions, as described above in Part II, Section
5(b). If you borrow from or pledge your Roth IRA, or your benefits under the
contract, as a security for a loan, the portion borrowed or pledged as security
will cease to be tax-qualified, the value of that portion will be treated as
distributed to you, and you may be subject to the 10% penalty tax on early
distributions from a Roth IRA.
IRA PART III: OTHER INFORMATION
(1) Federal Estate and Gift Taxes
Any amount in or distributed from your Traditional and/or Roth IRAs upon your
death may be subject to federal estate tax, although certain credits and
deductions may be available. The exercise or non-exercise of an option that
would pay a survivor an annuity at or after your death should not be considered
a transfer for federal gift tax purposes.
(2) Tax Reporting
You must report contributions to, and distributions from, your Traditional IRA
and Roth IRA, including the year-end aggregate account balance of all
Traditional IRAs and Roth IRAs, on your federal income tax return for the year
specifically on IRS Form 8606. For Traditional IRAs, you must designate on the
return how much of your annual contribution is deductible and how much is
nondeductible. You need not file IRS Form 5329 with your income tax return for a
particular year unless for that year you are subject to a penalty tax because
there has been an excess contribution to, an early distribution from, or
insufficient RMDs from your Traditional IRA or Roth IRA, as applicable.
(3) Vesting
Your interest in your Traditional IRA or Roth IRA is nonforfeitable at all
times.
(4) Exclusive Benefit
Your interest in your Traditional IRA or Roth IRA is for the exclusive benefit
of you and your beneficiaries.
(5) IRS Publication 590
Additional information about your Traditional IRA or Roth IRA or about SEP-IRAs
and SIMPLE-IRAs can be obtained from any district office of the IRS or by
calling 1-800-TAX-FORM for a free copy of IRS Publication 590, Individual
Retirement Arrangements.
4
1
54
18
STATEMENT OF ADDITIONAL INFORMATION FOR
DREYFUS/TRANSAMERICA TRIPLE ADVANTAGE
VARIABLE ANNUITY CERTIFICATE
Separate Account VA-2LNY
Issued By
Transamerica Life Insurance Company of New York
The Statement of Additional Information expands upon subjects discussed
in the May 1, 1999, prospectus for the Dreyfus/Transamerica Triple Advantage
Variable Annuity Certificate ("certificate") issued by Transamerica Life
Insurance Company of New York (formerly called First Transamerica Life Insurance
Company). The owner may obtain a copy of the prospectus dated May 1, 1999, as
supplemented from time to time, by writing to Transamerica Life Insurance
Company of New York, Annuity Service Center, P.O. Box 31728, Charlotte, North
Carolina 28231-1728 or by calling 800-258-4261. Terms used in the current
prospectus for the certificate are incorporated in this statement.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the certificate.
Dated May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C> <C>
THE CERTIFICATE (page 22).................................................................................3
DOLLAR COST AVERAGING (page 25)...........................................................................3
NET INVESTMENT FACTOR.....................................................................................3
ANNUITY PERIOD (page 34)..................................................................................4
Variable Annuity Units and Payments................................................................4
Variable Annuity Unit Value........................................................................4
Transfers After the Annuity Date...................................................................4
GENERAL PROVISIONS........................................................................................4
IRS Required Distributions.........................................................................4
Non-Participating..................................................................................4
Misstatement of Age or Sex.........................................................................5
Proof of Existence and Age.........................................................................5
Assignment.........................................................................................5
Annuity Data.......................................................................................5
Annual Report......................................................................................5
Incontestability...................................................................................5
Ownership..........................................................................................5
Entire Contract....................................................................................5
Changes in the Certificate.........................................................................5
Protection of Benefits.............................................................................6
Delay of Payments..................................................................................6
Notices and Directions.............................................................................6
CALCULATION OF YIELDS AND TOTAL RETURNS...................................................................6
Money Market Sub-Account Yield Calculation.........................................................6
Other Sub-Account Yield Calculations...............................................................7
Average Total Return Calculations..................................................................8
Adjusted Historical Performance Data...............................................................8
Other Performance Data.............................................................................8
HISTORICAL PERFORMANCE DATA...............................................................................9
General Limitations................................................................................9
Money Market Sub-Account Yield.....................................................................9
Sub-Account Performance Figures....................................................................9
Since Commencment of the Sub-Accounts............................................................9
Since Commencement of the Portfolios.............................................................11
FEDERAL TAX MATTERS (page 39).............................................................................13
Taxation of Transamerica...........................................................................14
Tax Status of the Certificates.....................................................................14
DISTRIBUTION OF THE CERTIFICATE (page 33).................................................................15
SAFEKEEPING OF ACCOUNT ASSETS.............................................................................15
TRANSAMERICA (page 14)....................................................................................15
General Information and History....................................................................15
STATE REGULATION..........................................................................................16
RECORDS AND REPORTS.......................................................................................16
FINANCIAL STATEMENTS......................................................................................16
APPENDIX..................................................................................................17
Accumulation Transfer Formula......................................................................17
</TABLE>
(Additional page references refer to the current prospectus.)
<PAGE>
THE CERTIFICATE
As a supplement to the description in the prospectus, the following
provides additional information about the certificate which may be of interest
to some owners.
DOLLAR COST AVERAGING
We reserve the right to send written notification to you as to the
options available if termination of dollar cost averaging, either by you or by
us, results in the value in the receiving sub-account(s) to which monthly
transfers were made to be less than $500. You will have 10 days from the date
our notice is mailed to:
(a) transfer the value of the sub-account(s) to another sub-account with a
value equal to or greater than $500; or
(b) transfer funds from another sub-account into the receiving
sub-account(s) to bring the value of that sub-account to at least $500;
or
(c) submit an additional premium to make the value of the sub-account equal
to or greater than $500; or
(d) transfer the entire value of the receiving sub-account(s) back into the
source account from which the automatic transfers were made.
If no election, in a form and manner acceptable to us, is made by you
before to the end of the 10 day period, we reserve the right to transfer the
value of the receiving sub-account(s) back into the source account from which
the automatic transfers were made. Transfers made as a result of (a), (b), or
(d) above will not be counted for purposes of the eighteen free transfers per
certificate year limitation.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor
for a valuation period before the annuity date is (a) divided by (b), minus (c)
minus (d).
Where (a) is
The net asset value per share held in the sub-account, as of the end
of the valuation period, plus or minus the per-share amount of any
dividend or capital gain distributions if the "ex-dividend" date
occurs in the valuation period, plus or minus a per-share charge or
credit as we may determine, as of the end of the valuation period,
for taxes.
Where (b) is
The net asset value per share held in the sub-account as of the end
of the last prior valuation period.
Where (c) is
The daily charge of 0.003403% (1.25% annually) for the mortality and
expense risk charge under the certificate times the number of
calendar days in the current valuation period.
Where (d) is
The daily administrative charge, currently 0.000411% (0.15% annually)
times the number of calendar days in the current valuation period.
This charge may be increased, but will not exceed 0.000684% (0.25%
annually).
A valuation day is defined as any day on which the New York Stock Exchange is
open.
ANNUITY PERIOD
The variable annuity options provide for payments that fluctuate or vary in
dollar amount, based on the investment performance of the selected variable
account sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units
credited in each sub-account will be determined by dividing: (a) the product of
the portion of the value to be applied to the sub-account and the variable
annuity purchase rate specified in the certificate by (b) the value of one
variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable annuity payment equals the product
of the number of variable annuity units in each sub-account and the
sub-account's variable annuity unit value as of the tenth day of the month
before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a sub-account on any valuation
day is determined as described below.
The net investment factor for the valuation period (for the appropriate
annuity payment frequency) just ended is multiplied by the value of the variable
annuity unit for the sub-account on the preceding valuation day. The net
investment factor after the annuity date is calculated in the same manner as
before the annuity date and then multiplied by an interest factor. The interest
factor equals (.999893) where n is the number of days since the preceding
valuation day. This compensates for the 4% interest assumption built into the
variable annuity purchase rates.
Transfers After the Annuity Date
After the annuity date, you may transfer variable annuity units from one
sub-account to another, subject to certain limitations. (See "Transfers" page 24
of the prospectus.) The dollar amount of each subsequent monthly variable
annuity payment after the transfer must be determined using the new number of
variable annuity units multiplied by the sub-account's variable annuity unit
value on the tenth day of the month preceding payment.
The formula used to determine a transfer after the annuity date can be found
in the Appendix to this Statement of Additional Information.
GENERAL PROVISIONS
IRS Required Distributions
The certificate is intended to qualify as an annuity contract for federal
income tax purposes. All provisions in the certificate will be interpreted to
maintain such tax qualification. We may make changes in order to maintain this
qualification or to conform the certificate to any applicable changes in the tax
qualification requirements. We will provide you with a copy of any changes made
to the certificate. If any owner under a non-qualified certificate dies before
the entire interest in the certificate is distributed, the value generally must
be distributed to the designated beneficiary so that the certificate qualifies
as an annuity under the Code. (See "Federal Tax Matters" page 39.)
Non-Participating
The certificates are non-participating. No dividends are payable and the
certificates will not share in the profits or surplus earnings of Transamerica.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated in the application, the annuity payments under the certificate will be
whatever the annuity purchase amount applied on the annuity date would purchase
on the basis of the correct age or sex of the annuitant and/or other measuring
life. Any overpayments or underpayments by us as a result of any such
misstatement may be respectively charged against or credited to the annuity
payment or annuity payments to be made after the correction so as to adjust for
such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the certificate, we may require proof of
the existence and/or proof of the age of the annuitant or any other measuring
life, or any other information deemed necessary in order to provide benefits
under the certificate.
Assignment
No assignment of a certificate will be binding us unless made in writing
and given to us at our service center. We are not responsible for the adequacy
of any assignment. Your rights and the interest of any annuitant or
non-irrevocable beneficiary will be subject to the rights of any assignee of
record.
Annuity Data
We will not be liable for obligations which depend on receiving
information from a payee or measuring life until such information is received in
a satisfactory form.
Annual Report
At least once each certificate year prior to the annuity date, you will
be given a report of the current certificate value. This report will also
include any other information required by law or regulation. After the annuity
date, a confirmation will be provided with every variable annuity payment.
Incontestability
The certificates are incontestable from the certificate date.
Ownership
Only you, as the owner, will be entitled to the rights granted by the
certificate, or allowed by us under the certificate. If an owner dies, the
rights of the owner belong to the estate of the owner unless the owner has
previously named an owner's beneficiary. A surviving joint owner automatically
becomes the owner's beneficiary.
Entire Contract
We have issued the certificate in consideration and acceptance of the
application and payment of the initial premium. A copy of the application is
attached to and is part of the certificate and along with the certificate
constitutes the entire contract. All statements made by you are considered
representations and not warranties. We will not use any statement in defense of
a claim unless it is made in the application and a copy of the application is
attached to the certificate when issued.
Changes in the Certificate
Only two of our authorized officers, acting together, have the authority
to bind Transamerica or to make any change in the certificate and then only in
writing. We will not be bound by any promise or representation made by any other
persons.
We may not change or amend the certificate, except as expressly provided
in the certificate, without your consent. However, we may change or amend the
certificate if such change or amendment is necessary for the certificate to
comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits)
under the certificate will be subject to any claim or process of law by any
creditor.
Delay of Payments
Payment of any cash withdrawal or lump sum death benefit due from the
variable account will occur within seven days from the date the election becomes
effective, except that we may be permitted to postpone such payment if: (1) the
New York Stock Exchange is closed for other than usual weekends or holidays, or
trading on the Exchange is otherwise restricted; or (2) an emergency exists as
defined by the Securities and Exchange Commission (Commission), or the
Commission requires that trading be restricted; or (3) the Commission permits a
delay for the protection of owners.
In addition, while it is our intention to process all transfers from the
sub-accounts immediately upon receipt of a transfer request, the certificate
gives us the right to delay effecting a transfer from a sub-account for up to
seven days, but only in certain limited circumstances. However, the staff of the
Commission currently interprets the Investment Company Act of 1940 to require
the immediate processing of all transfers, and in compliance with that
interpretation we will process all transfers immediately unless and until the
Commission or its staff changes its interpretation or otherwise permits us to
exercise this right. Subject to such approval, we may delay effecting such a
transfer only if there is a delay of payment from an affected portfolio. If this
happens, and if the prior approval of the Commission or its staff is obtained,
then we will calculate the dollar value or number of units involved in the
transfer from a sub-account on or as of the date we receive a written transfer
request, but will not process the transfer to the transferee sub-account until a
later date during the seven-day delay period when the portfolio underlying the
transferring sub-account obtains liquidity to fund the transfer request through
sales of portfolio securities, new premiums, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
sub-account.
We may delay payment of any withdrawal from th fixed account for a period
of not more than six months after we receive the request for such withdrawal. we
delay payment for more than 30 days, we will pay interest on the withdrawal
amount up to the date of payment. (See "Cash Withdrawals" page 26 of the
prospectus.)
Notices and Directions
We will not be bound by any authorization, direction, election or notice
which is not in writing, or in a form and manner acceptable to us, and received
at our service center.
Any written notice requirement by us to you will be satisfied by our
mailing of any such required written notice, by first-class mail, to your last
known address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, we are required
to compute the Money Market Sub-Account's current annualized yield for a
seven-day period in a manner which does not take into consideration any realized
or unrealized gains or losses on shares of the Money Market Series or on its
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of securities
and unrealized appreciation and depreciation) in the value of a hypothetical
account having a balance of one unit of the Money Market Sub-Account and income
other than investment income at the beginning of such seven-day period, dividing
such net change in certificate value by the value of the account at the
beginning of the period to determine the base period return and annualizing this
quotient on a 365-day basis. The net change in certificate value reflects the
deductions for the annual certificate fee, the mortality and expense risk
charges and administrative expense charges and income and expenses accrued
during the period. Because of these deductions, the yield for the Money Market
Sub-Account of the variable account will be lower than the yield for the Money
Market Portfolio or any comparable substitute funding vehicle.
The Commission also permits us to disclose the effective yield of the
Money Market Sub-Account for the same seven-day period, determined on a
compounded basis. The effective yield is calculated by compounding the
unannualized base period return by adding one to the base period return, raising
the sum to a power equal to 365 divided by 7, and subtracting one from the
result.
The yield on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio or substitute funding vehicle, the types and quality of
portfolio securities held by the Money Market Portfolio or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 6% of premiums) that
may be applicable to a certificate.
Other Sub-Account Yield Calculations
We may from time to time disclose the current annualized yield of one or
more of the sub-accounts (except the Money Market Sub-Account) for 30-day
periods. The annualized yield of a sub-account refers to the income generated by
the sub-account over a specified 30-day period. Because this yield is
annualized, the yield generated by a sub-account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per variable accumulation unit earned during the
period by the price per unit on the last day of the period, according to the
following formula:
YIELD= 2[{a - b+1}6-1]
cd
Where:
a = net investment income earned during the period by the
portfolio attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements).
c = the average daily number of variable accumulation units
outstanding during the period.
d = the maximum offering price per variable accumulation unit on the
last day of the period.
Net investment income will be determined in accordance with rules
established by the Commission. Accrued expenses will include all recurring fees
that are charged to all certificates. The yield calculations do not reflect the
effect of any contingent deferred sales load that may be applicable to a
particular certificate. Contingent deferred sales load range from 6% to 0% of
the amount of certificate value withdrawn depending on the elapsed time since
the receipt of each premium attributable to the portion of the certificate value
withdrawn.
Because of the charges and deductions imposed by the variable account,
the yield for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the sub-accounts normally will fluctuate
over time. Therefore, the disclosed yield for any given period is not an
indication or representation of future yields or rates of return. The
sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
<PAGE>
Average Total Return Calculations
We may from time to time also disclose average annual total returns for
one or more of the sub-accounts for various periods of time. Average annual
total return quotations are computed by finding the average annual compounded
rates of return over one, five and ten year periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P{1+T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten-year period at
the end of the one, five or ten-year period (or fractional
portion thereof).
All recurring fees are recognized in the ending redeemable value. The
standard average annual total return calculations will reflect the effect of any
contingent deferred sales loads that may be applicable to a particular period.
Adjusted Historical Performance Data
We may also disclose adjusted historical performance data for a
sub-account, for periods before the sub-account commenced operations. Such
performance information for the sub-account will be calculated based on the
performance of the corresponding portfolio and the assumption that the
sub-account was in existence for the same periods as those indicated for the
portfolio, with a level of certificate charges currently in effect. The
portfolio used for these calculations will be the actual portfolio that the
sub-account will invest in.
This type of adjusted historical performance data may be disclosed on
both an average annual total return and a cumulative total return basis.
Moreover, it may be disclosed assuming that the certificate is not surrendered
(i.e., with no deduction for the contingent deferred sales load) and assuming
that the certificate is surrendered at the end of the applicable period (i.e.,
reflecting a deduction for any applicable contingent deferred sales load).
Other Performance Data
We may from time to time also disclose average annual total returns in a
non-standard format in conjunction with the standard described above. The
non-standard format will be identical to the standard format except that the
contingent deferred sales load percentage will be assumed to be 0%.
We may from time to time also disclose cumulative total returns in
conjunction with the standard format described above. The cumulative returns
will be calculated using the following formula assuming that the contingent
deferred sales load percentage will be 0%.
CTR = {ERV/P} - 1
Where:
CTR = the cumulative total return net of sub-account recurring charges
for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment at
the beginning of the one, five, or ten-year period at the end
of the one, five, or ten-year period (or fractional portion
thereof).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the standard
performance data is also disclosed.
HISTORICAL PERFORMANCE DATA
General Limitations
The figures below represent the past performance of the sub-accounts and
are not indicative of future performance. The figures may reflect the waiver of
advisory fees and reimbursement of other expenses.
Except for Transamerica Growth, the funds have provided the performance
data for the sub-accounts. Except for Transamerica Growth none of the funds or
their investment advisers are affiliated with Transamerica. In preparing the
tables below, we have relied on the data provided by the funds. While we have no
reason to doubt the accuracy of the figures provided by the funds, we have not
verified those figures.
Money Market Sub-Account Yields
The annualized yield for the Money Market Sub-Account for the seven-day
period ending December 31, 1998 was 3.21%. The effective yield for the Money
Market Sub-Account for the seven-day period ending December 31, 1998 was 3.25%.
Sub-Account Performance Figures Including Adjusted Historical Performance
The charts below show historical performance data for the sub-accounts.
Charts 1 through 3 show performance since the commencement of the sub-accounts.
Charts 4 through 6 include, for certain sub-accounts, adjusted historical
performance for the periods prior to the inception of the sub-accounts, based on
the performance of the corresponding portfolios since their inception date, with
a level of charges equal to those currently assessed under the certificates.
These figures are not an indication of the future performance of the
sub-accounts. Some of the figures reflect the waiver of advisory fees and
reimbursement of other expenses for part or all of the periods indicated.
Since Commencement of the Sub-Accounts
The dates to the right of the sub-account names indicate the date of
commencement of operation of the sub-accounts.
<TABLE>
<CAPTION>
1. Average annual total returns for periods since inception of the
sub-account are as follows. These figures include mortality and expenses charges
deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the
administration charge of $30 per annum adjusted for average account size and the
maximum contingent deferred sales load of 6%.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of For the 1-year For the 3-year For the 5-year sub-account
commencement of operation of period ending period ending period ending operations to
sub-account) 12/31/98 12/31/98 12/31/98 12/31/98
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Money Market (1/4/93) -2.02% 2.02% N/A 2.99%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (1/4/93) 8.02% 7.88% N/A 7.81%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (1/4/93) -0.03% 2.51% N/A 5.63%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (1/4/93) -1.86% 2.88% N/A 6.09%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (1/4/93) -10.26% 6.58% N/A 18.78%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 22.34% 24.68% 21.43% 19.54%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (1/4/93) 20.37% 24.60% N/A 19.21%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 21.52% 23.32% 20.37% 20.86%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth and Income (12/15/94) 4.19% 13.12% N/A 23.68%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) -2.61% 5.42% N/A 6.02%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 1.33% N/A N/A 4.52%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 18.90% N/A N/A 26.06%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) -12.75% N/A N/A 5.28%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) 14.57% N/A N/A 19.92%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) -6.57% N/A N/A 0.81%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth (5/1/98)* N/A N/A N/A 18.14%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Growth (5/1/99) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Passport (5/1/99) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
2. Average annual total returns for period since inception of the
sub-account are as follows. These figures include mortality and expenses charges
deducted at 1.25%, the administrative expenses charge of 0.15% per annum, the
administration charge of $30 per annum adjusted for average account size but do
not reflect the maximum contingent deferred sales load of 6% which if reflected
would reduce the figures. Performance data with no contingent deferred sales
load deduction will only be disclosed if the performance data for the required
periods with the contingent deferred sales load deduction is also disclosed.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of For the 1-year For the 3-year For the 5-year sub-account
commencement of operation of period ending period ending period ending operations to
sub-account) 12/31/98 12/31/98 12/31/98 12/31/98
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Money Market (1/4/93) 3.59% 3.59% N/A 3.27%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (1/4/93) 14.02% 9.29% N/A 8.04%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (1/4/93) -5.71% 4.07% N/A 5.88%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (1/4/93) 3.96% 4.44% N/A 6.34%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (1/4/93) 4.86% 8.01% N/A 19.92%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 28.34% 25.75% 21.80% 19.84%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (1/4/93) 26.37% 25.66% N/A 19.35%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 27.52% 24.32% 20.75% 21.20%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth and Income (12/15/94) 10.19% 14.41% N/A 24.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) 2.97% 6.90% N/A 6.83%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 7.16% N/A N/A 6.27%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 24.90% N/A N/A 27.34%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) -7.35% N/A N/A 7.00%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) 20.57% N/A N/A 28.12%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) -1.17% N/A N/A 4.29%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth (5/1/98)* N/A N/A N/A 23.45%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Growth (5/1/99) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Passport (5/1/99) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
<PAGE>
3. Cumulative total returns for periods since inception of the sub-accounts
are as follows. These figures include mortality and expenses charges deducted at
1.25%, the administrative expenses charge of 0.15% per annum, the administration
charge of $30 per annum adjusted for average account size but do not reflect the
maximum contingent deferred sales load of 6%, which if reflected would reduce
the figures. Performance data with no contingent deferred sales load deduction
will only be disclosed if performance data for the required periods with the
contingent deferred sales load deduction is also disclosed.
- ---------------------------------------- ------------------- ------------------
For the period
from
commencement of
SUB-ACCOUNT (date of For the 1-year sub-account
commencement of operation of period ending operations to
sub-account) 12/31/98 12/31/98
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Money Market (1/4/93) 3.59% 21.31%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Special Value (1/4/93) 14.02% 59.04%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Zero Coupon 2000 (1/4/93) -5.71% 40.89%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Quality Bond (1/4/93) -3.96% 44.57%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Cap (1/4/93) -4.86% 182.86%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Capital Appreciation (4/5/93) 28.34% 183.09%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Stock Index (1/4/93) 26.87% 189.03%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Socially Responsible (10/7/93) 27.52% 173.93%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Growth and Income (12/15/94) 10.19% 110.47%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Equity (12/15/94) 2.97% 30.70%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
International Value (5/1/96) 7.16% 17.62%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Disciplined Stock (5/1/96) 24.90% 90.67%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Small Company Stock (5/1/96) -7.95% 19.60%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Balanced (5/1/97) 20.57% 41.53%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Limited Term High Income(5/1/97) -1.17% 7.26%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Transamerica Growth (5/1/98)* N/A 23.54%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Core Value (5/1/98) N/A -7.12%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
MidCap Stock (5/1/98) N/A -3.66%
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Founder's Growth (5/1/99) N/A N/A
- ---------------------------------------- ------------------- ------------------
- ---------------------------------------- ------------------- ------------------
Founder's Passport (5/1/99) N/A N/A
- ---------------------------------------- ------------------- ------------------
Since Commencement of the Portfolios
The dates to the right of the sub-account names indicate the date of
commencement of operation of the Portfolios.
4. Average annual total returns for periods since inception of the
portfolio, including adjusted historical performance are as follows. These
figures include mortality and expenses charges deducted at 1.25%, the
administrative expenses charge of 0.15% per annum, the administration charge of
$30 per annum adjusted for average account size and the maximum contingent
deferred sales load of 6%.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
PORTFOLIO (date of For the 1-year For the 3-year For the 5-year commencement of
commencement of operation of period ending period ending period ending portfolio to
portfolio) 12/31/98 12/31/98 12/31/98 12/31/98
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Money Market (8/31/90) -2.02% 2.02% 2.87% 3.44%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 8.02% 7.88% 3.95% 6.94%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) -0.03% 2.51% 3.72% 7.88%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) -1.88% 2.88% 4.25% 7.52%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) -10.26% 6.58% 10.73% 35.32%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 22.34% 24.68% 21.43% 19.54%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 20.37% 24.60% 21.45% 15.45%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 21.52% 23.23% 20.37% 20.86%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth and Income (12/15/94) 4.19% 13.12% N/A 23.68%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (12/15/94) -2.61% 5.42% N/A 6.02%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (5/1/96) 1.33% N/A N/A 4.52%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (5/1/96) 18.90% N/A N/A 26.06%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (5/1/96) -12.75% N/A N/A 5.28%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) 14.57% N/A N/A 19.92%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income(5/1/97) -6.57% N/A N/A 0.81%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth(2/26/69)* 35.81% 36.13% 32.50% 24.63%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Growth (11/30/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Passport (11/30/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
5. Average annual total returns for period since inception of the
portfolio including adjusted historical performance are as follows. These
figures include mortality and expenses charges deducted at 1.25%, the
administrative expenses charge of 0.15% per annum, the administration charge of
$30 per annum adjusted for average account size but do not reflect the maximum
contingent deferred sales load of 6% which if reflected would reduce the
figures. Performance data with no contingent deferred sales load deduction will
only be disclosed if the performance data for the required periods with no
contingent deferred sales load deduction is also disclosed.
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
For the period
from
PORTFOLIO (date of For the 1-year For the 3-year For the 5-year commencement of
commencement of operation of period ending period ending period ending portfolio to
portfolio) 12/31/98 12/31/98 12/31/98 12/31/98
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Money Market (8/31/90) 3.59% 3.59% 3.57% 3.45%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Special Value (8/31/90) 14.02% 9.29% 4.63% 6.94%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Zero Coupon 2000 (8/31/90) 5.71% 4.07% 4.41% 7.89%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Quality Bond (8/31/90) -3.96% 4.44% 4.92% 7.53%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Cap (8/31/90) -4.86% 8.01% 11.28% 35.32%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Capital Appreciation (4/5/93) 28.34% 25.75% 21.83% 19.84%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Stock Index (9/29/89) 26.37% 25.86% 21.81% 15.45%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Socially Responsible (10/7/93) 21.52% 24.32% 20.75% 20.86%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Growth and Income (5/2/94) 10.19% 14.41% N/A 24.19%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Equity (5/2/94) 2.97% 6.90% N/A 6.83%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
International Value (4/30/96) 7.16% N/A% N/A 6.27%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Disciplined Stock (4/30/96) 24.90% N/A N/A 27.34%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Small Company Stock (4/30/96) -7.35% N/A N/A 7.00%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Balanced (5/1/97) 20.57% N/A N/A 28.12%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Limited Term High Income (4/30/97) -1.17% N/A N/A 4.21%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Transamerica Growth (2/26/69)* 41.21% 36.13% 32.50% 24.63%
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Core Value (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
MidCap Stock (5/1/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Growth (9/30/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
Founder's Passport (9/30/98) N/A N/A N/A N/A
- ---------------------------------------- ------------------- ------------------ ------------------ ------------------
<PAGE>
6. Cumulative total returns for periods since inception of the portfolio,
including hypothetical performance are as follows. These figures include
mortality and expenses charges deducted at 1.25%, the administrative expenses
charge of 0.15% per annum, the administration charge of $30 per annum adjusted
for average account size but do not reflect the maximum contingent deferred
sales load of 6%, which if reflected would reduce the figures. Performance data
with no contingent deferred sales load deduction will only be disclosed if
performance data for the required periods with no contingent deferred sales load
deduction is also disclosed.
- -------------------------------------------- ------------------------- --------------------------
PORTFOLIO (date of For the period from
commencement of operation of For the 1-year period commencement of
portfolio) ending 12/31/98 portfolio to 12/31/98
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Money Market (8/31/90) 3.59% 32.70%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Special Value (8/31/90) 14.02% 75.06%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Zero Coupon 2000 (8/31/90) 5.71% 88.37%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Quality Bond (8/31/90) 3.96% 83.19%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Small Cap (8/31/90) -4.86% 1145.95%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Capital Appreciation (4/5/93) 28.34% 183.09%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Stock Index (9/29/89) 26.37% 278.20%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Socially Responsible (10/7/93) 27.52% 173.93%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Growth and Income (5/2/94) 10.19% 140.47%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
International Equity (5/2/94) 2.97% 30.70%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
International Value (4/30/96) 7.16% 17.62%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Disciplined Stock (4/30/96) 24.90% 90.67%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Small Company Stock (4/30/96) -7.35% 19.80%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Balanced (5/1/97) 20.57% 41.53%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Limited Term High Income (4/30/97) -1.17% 7.26%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Transamerica Growth (2/26/69)* 41.21% 809.17%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Core Value (5/1/98) N/A -7.12%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
MidCap Stock (5/1/98) N/A -3.66%
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Founder's Growth (9/30/98) N/A N/A
- -------------------------------------------- ------------------------- --------------------------
- -------------------------------------------- ------------------------- --------------------------
Founder's Passport (9/30/98) N/A N/A
- -------------------------------------------- ------------------------- --------------------------
</TABLE>
*The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc.,
is the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable annuities,
through a reorganization on November 1, 1996. Accordingly, the performance data
for the Transamerica VIF Growth Portfolio include performance of its
predecessor. The performance shown in the "since inception" box for the
Transamerica Growth Sub-Account is 10-year performance, not performance since
1969.
FEDERAL TAX MATTERS
The Dreyfus/Transamerica Triple Advantage Variable Annuity may be
purchased on a non-tax-qualified basis ("non-qualified certificates") or
purchased and used in connection with plans qualifying for special tax treatment
("qualified certificates"). Qualified certificates are designed for use by
individual retirement plans qualified for special tax treatment under Section
401, 403(b), 408 or 408A of the Internal Revenue Code of 1986, as amended (the
"Code").The ultimate effect of federal income taxes on the certificate value, on
annuity payments, and on the economic benefit to the owner, the annuitant or the
beneficiary may depend on the type of retirement plan for which the certificate
is purchased, on the tax and employment status of the individual concerned and
on our tax status. THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS
TAX ADVICE. Any person concerned about these tax implications should consult a
competent tax adviser. This discussion is based upon our understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the likelihood
of continuation of these present federal income tax laws or of the current
interpretations by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
<PAGE>
Taxation of Transamerica
We are taxed as a life insurance company under Part I of Subchapter L of
the Code. Since the variable account is not an entity separate from
Transamerica, and its operations form a part of Transamerica, it will not be
taxed separately as a "regulated investment company" under Subchapter M of the
Code. Investment income and realized capital gains are automatically applied to
increase reserves under the certificate. Under existing federal income tax law,
we believe that the variable account investment income and realized net capital
gains will not be taxed to the extent that such income and gains are applied to
increase the reserves under the certificate.
Accordingly, we do not anticipate that we will incur any federal income
tax liability attributable to the variable account and, therefore, we do not
intend to make provisions for any such taxes. However, if changes in the federal
tax laws or interpretations thereof result in our being taxed on income or gains
attributable to the variable account, then we may impose a charge against the
variable account (with respect to some or all certificates) in order to set
aside provisions to pay such taxes.
Tax Status of the Certificates
Code Section 817(h) requires that with respect to non-qualified
certificates, the investments of the funds be "adequately diversified" in
accordance with Treasury regulations in order for the certificates to qualify as
annuity contracts under federal tax law. The variable account, through the
funds, intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the funds' assets may be
invested.
In certain circumstances, owners of variable annuity certificates may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their certificates. In those circumstances,
income and gains from the separate account assets would be includible in the
variable certificate owner's gross income. The IRS has stated in published
rulings that a variable certificate owner will be considered the owner of
separate account assets if the certificate owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury Department has also announced, in connection with
the issuance of regulations concerning diversification, that those regulations
"do not provide guidance concerning the circumstances in which investor control
for the investments of a segregated asset account may cause the investor (i.e.,
the owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which
certificateholders may direct their investments to particular sub-accounts
without being treated as owners of the underlying assets."
The ownership rights under the certificate are similar to, but different
in certain respects from, those described by the IRS in rulings in which it was
determined that owners were not owners of separate account assets. For example,
the owner has additional flexibility in allocating premium payments and
certificate values. These differences could result in an owner being treated as
the owner of a pro rata portion of the assets of the variable account. In
addition, we do not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. we therefore reserve the right to modify the certificate as necessary to
attempt to prevent an owner from being considered the owner of a pro rata share
of the assets of the variable account.
In order to be treated as an annuity contract for federal income tax
purposes, Code Section 72(s) requires any non-qualified certificate to provide
that: (a) if any owner dies on or after the annuity date but prior to the time
the entire interest in the certificate has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that owner's death; and (b)
if any owner dies prior to the annuity date, the entire interest in the
certificate will be distributed within five years after the date of the owner's
death. These requirements will be considered satisfied as to any portion of the
owner's interest which is payable to or for the benefit of a "designated
beneficiary" and which is distributed over the life of such "designated
beneficiary" or over a period not extending beyond the life expectancy of that
beneficiary, provided that such distributions begin within one year of that
owner's death. The owner's "designated beneficiary" refers to a natural person
designated by such owner as a beneficiary and to whom ownership of the
certificate passes by reason of death. However, if the owner's "designated
beneficiary" is the surviving spouse of the deceased owner, the certificate may
be continued with the surviving spouse as the new owner.
The non-qualified certificates contain provisions which are intended to
comply with the requirements of Code Section 72(s), although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
Other rules may apply to qualified certificates.
DISTRIBUTION OF THE CERTIFICATE
Transamerica Securities Sales Corporation ("TSSC") is principal
underwriter of the certificates. TSSC may also serve as principal underwriter
and distributor of other contracts issued through the variable account and
certain other separate accounts of Transamerica and any affiliates of
Transamerica. TSSC is a wholly-owned subsidiary of Transamerica Insurance
Corporation of California, which is a subsidiary of Transamerica Corporation.
TSSC is registered with the Commission as a broker/dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Transamerica pays
TSSC for acting as the principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker/dealers to
solicit applications for the certificates through registered representatives who
are licensed to sell securities and variable insurance products. These
agreements provide that applications for the certificates may be solicited by
registered representatives of the broker/dealers appointed by Transamerica to
sell its variable life insurance and variable annuities. These broker/dealers
are registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Transamerica Financial Resources, Inc. ("TFR") is an underwriter and distributor
of the certificates. TFR is a wholly-owned subsidiary of Transamerica Insurance
Corporation of California and is registered with the Commission and the NASD as
a broker/dealer.
Under the agreements, applications for the certificates will be sold by
broker/dealers which will receive compensation as described in the prospectus.
The offering of the certificates is expected to be continuous and neither
TSSC nor TFR anticipate discontinuing the offering of the certificates. However,
TSSC and TFR reserve the right to discontinue the offering of the certificates.
During fiscal year 1998, $7,396,960 in commissions were paid to TSSC as
underwriter of the certificates; no amounts were retained by TSSC. During fiscal
year 1998, no commissions were paid to TFR as underwriter of the certificates;
no amounts were retained by TFR.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The
assets of the variable account are kept separate and apart from Transamerica's
general account assets. Records are maintained of all purchases and redemptions
of portfolio shares held by each of the sub-accounts.
TRANSAMERICA
General Information and History
Transamerica is wholly-owned by Transamerica Occidental Life Insurance Company,
which is, in turn, an indirect subsidiary of Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in two primary businesses: finance and insurance.
Finance consists of consumer lending, commercial lending, leasing and real
estate services. Insurance comprises life insurance, asset management and
insurance brokerage. STATE REGULATION
We are subject to the insurance laws and regulations of all the states
where we are licensed to operate. The availability of certain certificate rights
and provisions depends on state approval and/or filing and review processes.
Where required by state law or regulation, the certificates will be modified
accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be
maintained by us or by our service center. As presently required by the 1940 Act
and regulations promulgated thereunder which pertain to the variable account,
reports containing such information as may be required under the 1940 Act or by
other applicable law or regulation will be sent to owners semi-annually at their
last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the financial
statements of the variable account as of and for the period ended December 31,
1998.
The financial statements of Transamerica included in this Statement of
Additional Information should be considered only as bearing on the ability of
Transamerica to meet its obligations under the certificates. They should not be
considered as bearing on the investment performance of the assets held in the
variable account.
<PAGE>
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows:
= AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer):
= UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer):
= UNIT2 + AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next variable sccumulation payment's due date.
Where:
(AUV1) is the variable accumulation unit value of the variable
sub-account that the transfer is being made from as of the end of the
valuation period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Parts A or B of this
Registration Statement.
(b) Exhibits
(1) Resolution of the Board of Directors of First Transamerica Life
Insurance Company ("Transamerica") authorizing establishment of the
Variable Account.(1)
(2) Not Applicable.
(3) (a) Master Agreement among Transamerica Occidental Life Insurance Company,
First Transamerica Life Insurance Company, Transamerica Financial
Resources, Inc., Dreyfus Service Corporation, and Dreyfus Service
Organization, Inc.(4)
(b) Principal Agency Agreement between First Transameric a Life Insurance
Company and Dreyfus Service Organization, Inc.(3)
(c) Distribution Agreement between First Transamerica life Insurance Company
and Dreyfus Service Corporation.(3)
(d) Form of Sales Agreement among Dreyfus Service Corporation, Dreyfus Service
Organization, Inc. and Broker-Dealers.(4) (e) Amendment Dated as of August
31, 1993, to Master Agreement among Transamerica Occidental Life Insurance
Company, First Transamerica Life Insurance Company, Transamerica Financial
Resources, Inc., Dreyfus Service Corporation and Dreyfus Service
Organization, Inc.
(5) (f) Amendment Dated as of August 31, 1993 to Principal Agency Agreement
between First Transamerica Life Insurance Company and Dreyfus Service
Organization, Inc. (5) (g) Amendment Dated as of August 31, 1993 to
Distribution Agreement between First Transamerica Life Insurance Company
and Dreyfus Service Corporation. (5) (h) Form of Sales Agreement among
Transamerica Insurance Securities Sales Corporation, Transamerica
Occidental Life Insurance Company, First Transamerica Life Insurance
Company and Broker/Dealers, dated August 24, 1994.(8)
(i) Form of Sales Agreement between Transamerica Occidental Life Insurance
Company, Transamerica Life Insurance and Annuity Company, First
Transamerica Life Insurance Company and Transamerica Securities Sales
Corporation.(8)
(4) Policy Form and Endorsements. (5)
(a) Form of Flexible Premium Multi-Funded Individual
Deferred Annuity Policy.
(b) Form of IRA Endorsement.
(c) Form of Automatic Payout Option Endorsement.
(d) Form of Dollar Cost Averaging Option Endorsement.
(e) Form of Systematic Withdrawal Option Endorsement.
(f) Form of Unisex Annuity Rates Endorsement.
(g) Form of Fixed Account Rider(9)
(5) Form of Application. (5)
(6) (a) Declaration of Intention and Charter of Transamerica.(1)
(b) By-Laws of Transamerica.(1)
(7) Not applicable.
(8) (a) Participation Agreement between First Transamerica Life Insurance
Company and Dreyfus Variable Investment Fund.(3)
(b) Participation Agreement between First Transamerica Life Insurance Company
and Dreyfus Life and Annuity Index Fund, Inc.(3)
(c) Participation Agreement between First Transamerica Life Insurance Company
and The Dreyfus Socially Responsible Growth Fund, Inc. (5)
(d) Administrative Services Agreement (Draft) between First Transamerica Life
Insurance Company and Vantage Computer Systems, Inc.(3)
(e) Form of Participation Agreement between Transamerica Life Insurance Company
of New York and Dreyfus Investment Services(9) (f) Form of Participation
Agreement between Transamerica Variable Insurance Fund, Transamerica
Securities Sales Corporation and Transamerica Life Insurance Company of New
York.(9)
(9) (a) Opinion and Consent of Counsel.(7)
(10) (a) Consent of Counsel.(9)
(b) Consent of Independent Auditors .(9) (11)
(11) No financial statements are omitted from item 23.
(12) Not applicable.
(13) Performance Data Calculations.(5)
(14) Not applicable.
(15) Powers of Attorney.
Alan T. Cunningham (8)(9) Marc C. Abrahms (5)(9)
Daniel E. Jund (7)(9)
James T. Byrne, Jr. (5)(9)
John A. Fibiger (2)(9) Thomas O'Neill
James B. Roszak (2) (9) Robert Rubinstein
Nooruddin S. Veerjee
(1) Filed with initial filing of the Form N-4 Registration Statement, File No.
33-55152 (December 1, 1992).
(2) Filed with Pre-Effective Amendment No.1 to the Form N-4 Registration
Statement, File No. 33-55152 (February 10, 1993).
(3) Incorporated by reference to the like-numbered exhibit to
Post-Effective Amendment No.1 to the Form N-4 Registration Statement of
Transamerica Occidental Life Insurance Company's Separate Account
VA-2L, File No. 33-49998 (April 30, 1993).
(4) Filed with Post-Effective Amendment No. 1 to the Form N-4 Registration
Statement, File No. 33-55152 (June 8, 1993).
(5) Filed with Post-Effective Amendment No. 2 to the Form N-4 Registration
Statement, File No. 33-55152 (April 29, 1994).
(6) Filed with Post-Effective Amendment No. 3 to the Form N-4 Registration
Statement File No. 33-55152 (April 29, 1995).
(7) Filed with Post-Effective Amendment No. 5 to the Form N-4 Registration
Statement File No. 33-55152 (April 26, 1996).
(8) Filed with Post-Effective Amendment No. 6 to the Form N-4 Registration
Statement File No. 33-55152 (April 28, 1997)
(9) Filed with Post-Effective Amendment No. 7 to the Form N-4 Registration
Statement File No. 33-55152 (April 28, 1998).
(10) Filed with Post-Effective Amendment No. 8 to the Form N-4 Registration
Statement File No. 33-55152 (February 26, 1999).
(11) Filed herewith.
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address Position and Offices with Depositor
<S> <C> <C> <C>
Nooruddin S. Veerjee Director and Chairman
James W. Dederer General Counsel
Alan T. Cunningham Director and President
Robert Rubinstein Director, Senior Vice President, Chief Actuary and Chief Operating
Officer and Secretary
Gary Rolle' Investment Officer
Susan Silbert Investment Officer
Nicki Bair FSA, MAAA Vice President
Roy Chong-Kit FSA, MAAA Vice President
Paul Hankowitz MD Vice President and Chief Medical Director
Ken Kilbane Vice President
William J. Lyons Vice President and Chief Underwriter
Alexander Smith, Jr. Vice President, Administration and Controller
Kamran Haghighi Tax Officer
William M. Hurst Assistant Secretary
Timothy Weis Vice President
Sally S. Yamada Treasurer
Marc C. Abrahms Director
James T. Byrne, Jr. Director
John A. Fibiger Director
Daniel E. Jund Director
Thomas O'Neill Director
James B. Roszak Director
</TABLE>
The Depositor, Transamerica Life Insurance Company of New York
(Transamerica), is wholly owned by Transamerica Occidental Life Insurance
Company. The Registrant is a segregated asset account of Transamerica.
The following chart indicates the persons controlled by or under common
control with Transamerica.
<PAGE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
ARC Reinsurance Corporation
Transamerica Management, Inc. -- DE
BWAC Seventeen, Inc.
Transamerica Commercial Finance Canada, Limited -- ON Transamerica Commercial
Finance Corporation, Canada -- Can.
BWAC Twelve, Inc.
TIFCO Lending Corporation -- IL
Transamerica Insurance Finance Corporation -- MD
BWAC Twenty-One, Inc.
Transamerica Commercial Holdings Limited -- U.K.
First Florida Appraisal Services, Inc.
First Georgia Appraisal Services, Inc. -- GA
Greybox L.L.C.
Transamerica Trailer Leasing S.N.C. -- Fra.
Intermodal Equipment, Inc.
Transamerica Leasing N.V. -- Belg.
Transamerica Leasing SRL -- Itl.
Inventory Funding Trust
Inventory Funding Company, LLC -- DE
Metropolitan Mortgage Company
Easy Yes Mortgage, Inc. -- FL
Easy Yes Mortgage, Inc. -- GA
First Florida Appraisal Services, Inc. -- FL
Freedom Tax Services, Inc. -- FL
J.J. & W. Advertising, Inc. -- FL
J.J. & W. Realty Services, Inc. -- FL
Liberty Mortgage Company of Ft. Myers, Inc. -- FL
Metropolis Mortgage Company -- FL
Perfect Mortgage Company -- FL
Pyramid Insurance Company, Ltd.
Pacific Cable Ltd. -- Bmda.
TA Leasing Holding Co., Inc.
Trans Ocean Ltd. -- DE
Transamerica Leasing Inc. -- DE
Trans Ocean Container Corp.
SpaceWise Inc. -- DE
Trans Ocean Container Finance Corp. -- DE
Trans Ocean Leasing Deutschland GmbH -- Ger.
Trans Ocean Leasing PTY Limited -- Aust.
Trans Ocean Management S.A. -- SWTZ
Trans Ocean Regional Corporate Holdings -- CA
Trans Ocean Tank Services Corporation -- DE
Trans Ocean Ltd.
Trans Ocean Container Corp. -- DE
Transamerica Accounts Holding Corporation
ARS Funding Corporation -- DE
Transamerica Acquisition Corporation
Camtrex Group, Inc. --
Transamerica Business Credit Corporation
Bay Capital Corporation -- DE
Coast Funding Corporation -- DE
Direct Capital Equity Investment, Inc. -- DE
Gulf Capital Corporation -- DE
TA Air East, Corp. --
TA Air III, Corp. -- DE
TA Air IV, Corp. -- DE
TA Air IX, Corp. -- DE
TA Air I, Corp. -- DE
TA Air VIII, Corp. --
TA Air VII, Corp. --
TA Air VI, Corp. --
TA Air V, Corp. --
TA Air X Corp. -- DE
TA Marine I Corp. -- DE
TA Marine II Corp. -- DE
TBC III, Inc. -- DE
TBC II, Inc. -- DE
TBC IV, Inc. -- DE
TBC I, Inc. -- DE
TBC Tax III, Inc. -- DE
TBC Tax II, Inc. -- DE
TBC Tax IV, Inc. -- DE
TBC TAX IX, Inc. -- DE
TBC Tax I, Inc. -- DE
TBC Tax VIII, Inc. -- DE
TBC Tax VII, Inc. -- DE
TBC Tax VI, Inc. -- DE
TBC Tax V, Inc. -- DE
TBC V, Inc. -- DE
TBCC Funding Trust I --
TBCC Funding Trust II --
The Plain Company -- DE
Transamerica Mezzanine Financing, Inc. --
Transamerica Small Business Services, Inc. --
Transamerica Business Credit Corporation - DE
TA Air II, Corp. -- DE
Transamerica Commercial Finance Canada, Limited
Transamerica Acquisition Corporation -- Can.
Transamerica Commercial Finance Corporation
Inventory Funding Trust -- DE
TCF Asset Management Corporation -- CO
Transamerica Distribution Finance Corporation de Mexico --
Transamerica Joint Ventures, Inc. -- DE
Transamerica Commercial Finance Corporation, I
BWAC Credit Corporation -- DE
BWAC International Corporation -- DE
BWAC Twelve, Inc. -- DE
Transamerica Business Credit Corporation -- DE
Transamerica Distribution Finance Corporation -- DE
Transamerica Equipment Financial Services Corporation --
Transamerica Commercial Finance Limited
WFC Polska Sp. Zo.o --
Transamerica Commercial Holdings Limited
Transamerica Commercial Finance Limited -- U.K.
Transamerica Trailer Leasing Limited -- NY
Transamerica Trailer Leasing Limited -- U.K.
Transamerica Consumer Finance Holding Company
Metropolitan Mortgage Company -- FL
Pacific Agency, Inc. -- IN
Transamerica Consumer Mortgage Receivables Corporation -- DE
Transamerica Mortgage Company -- DE
Transamerica Corporation
ARC Reinsurance Corporation -- HI
Inter-America Corporation -- CA
Pyramid Insurance Company, Ltd. -- HI
RTI Holdings, Inc. -- DE
Transamerica Airlines, Inc. -- DE
Transamerica Business Technologies Corporation -- DE
Transamerica CBO I, Inc. -- DE
Transamerica Corporation (Oregon) -- OR
Transamerica Delaware, L.P. -- DE
Transamerica Finance Corporation -- DE
Transamerica Financial Products, Inc. -- CA
Transamerica Foundation -- CA
Transamerica Insurance Corporation of California -- CA
Transamerica Intellitech, Inc. -- DE
Transamerica International Holdings, Inc. -- DE
Transamerica Investment Services, Inc. -- DE
Transamerica LP Holdings Corp. -- DE
Transamerica Pacific Insurance Company, Ltd. -- HI
Transamerica Real Estate Tax Service (A Division of Transamerica Corporation)
-- N/A
Transamerica Realty Services, Inc. -- DE
Transamerica Senior Properties, Inc. -- DE
TREIC Enterprises, Inc. -- DE
Transamerica Distribution Finance Corporation Transamerica Accounts Holding
Corporation -- DE Transamerica Commercial Finance Corporation -- DE
Transamerica Inventory Finance Corporation -- DE Transamerica Retail Financial
Services Corporation -- DE Transamerica Vendor Financial Services Corporation
-- DE
Transamerica Distribution Finance Corporation de Mexico
TDF de Mexico --
Transamerica Distribution Finance Corporation de Mexico and TDF de Mexico
Transamerica Corporate Services de Mexico --
Transamerica Finance Corporation
TA Leasing Holding Co., Inc. -- DE
Transamerica Commercial Finance Corporation, I -- DE
Transamerica Home Loan -- CA
Transamerica HomeFirst, Inc. -- CA
Transamerica Lending Company -- DE
Transamerica Financial Resources, Inc.
Financial Resources Insurance Agency of Texas -- TX
TBK Insurance Agency of Ohio, Inc. -- OH
Transamerica Financial Resources Insurance Agency of Alabama Inc. -- AL
Transamerica Financial Resources Insurance Agency of Massachusetts Inc. -- MA
Transamerica GmbH Inc.
Transamerica Financieringsmaatschappij B.V. -- Neth.
Transamerica GmbH - Germany -- Ger.
Transamerica Insurance Corporation of California
Arbor Life Insurance Company -- AZ
Bulkrich Trading --
Gemini Investments, Inc. --
Plaza Insurance Sales, Inc. -- CA
Transamerica Advisors, Inc. -- CA
Transamerica Annuity Service Corporation -- NM
Transamerica Financial Resources, Inc. -- DE
Transamerica International Insurance Services, Inc. -- DE
Transamerica Occidental Life Insurance Company -- CA
Transamerica Products, Inc. -- CA
Transamerica Securities Sales Corporation -- MD
Transamerica Service Company -- DE
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Company (Europe) -- MD
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Corporation, California -- CA
Transamerica Insurance Finance Corporation - MD
Transamerica Insurance Finance Corporation, Canada -- ON
Transamerica Intellitech, Inc.
Information Service Corp. --
Transamerica International Insurance Services, Inc.
Home Loans and Finance Ltd. -- U.K.
Transamerica Inventory Finance Corporation
BWAC Seventeen, Inc. -- DE
BWAC Twenty-One, Inc. -- DE
Transamerica Commercial Finance France S.A. -- Fra.
Transamerica GmbH Inc. -- DE
Transamerica Investment Services, Inc.
Transamerica Income Shares, Inc. (managed by TA Investment Services) -- MD
Transamerica Leasing Holdings Inc.
Greybox Logistics Services Inc. -- DE
Greybox L.L.C. -- DE
Greybox Services Limited -- U.K.
Intermodal Equipment, Inc. -- DE
Transamerica Distribution Services Inc. -- DE
Transamerica Leasing Coordination Center -- Belg.
Transamerica Leasing do Brasil Ltda. -- Braz.
Transamerica Leasing GmbH -- Ger.
Transamerica Leasing Limited -- U.K.
Transamerica Leasing Pty. Ltd. -- Aust.
Transamerica Leasing (Canada) Inc. -- Can.
Transamerica Leasing (HK) Ltd. -- H.K.
Transamerica Leasing (Proprietary) Limited -- S.Afr.
Transamerica Tank Container Leasing Pty. Limited -- Aust.
Transamerica Trailer Holdings I Inc. -- DE
Transamerica Trailer Holdings II Inc. -- DE
Transamerica Trailer Holdings III Inc. -- DE
Transamerica Trailer Leasing AB -- Swed.
Transamerica Trailer Leasing AG -- SWTZ
Transamerica Trailer Leasing A/S -- Denmk.
Transamerica Trailer Leasing GmbH -- Ger.
Transamerica Trailer Leasing (Belgium) N.V. -- Belg.
Transamerica Trailer Leasing (Netherlands) B.V. -- Neth.
Transamerica Trailer Spain S.A. -- Spn.
Transamerica Transport Inc. -- NJ
Transamerica Leasing Inc.
Better Asset Management Company LLC -- DE
Transamerica Leasing Holdings Inc. -- DE
Transamerica Leasing Limited
ICS Terminals (UK) Limited -- U.K.
Transamerica Life Insurance and Annuity Company
Transamerica Assurance Company -- MO
Transamerica Management, Inc.
Criterion Investment Management Company -- TX
Transamerica Occidental Life Insurance Company
NEF Investment Company -- CA
Transamerica China Investments Holdings Limited -- H.K.
Transamerica International RE (Bermuda) Ltd. -- Bmda.
Transamerica Life Insurance and Annuity Company -- NC
Transamerica Life Insurance Company of Canada -- Can.
Transamerica Life Insurance Company of New York -- NY
Transamerica South Park Resources, Inc. -- DE
Transamerica Variable Insurance Fund, Inc. -- MD
USA Administration Services, Inc. -- KS
Transamerica Products, Inc.
Transamerica Products II, Inc. -- CA
Transamerica Products IV, Inc. -- CA
Transamerica Products I, Inc. -- CA
Transamerica Real Estate Tax Service
Transamerica Flood Hazard Certification (A Division of TA Real Estate Tax
Service) -- N/A Transamerica Realty Services, Inc.
Bankers Mortgage Company of California -- CA
Pyramid Investment Corporation -- DE
The Gilwell Company -- CA
Transamerica Affordable Housing, Inc. -- CA
Transamerica Minerals Company -- CA
Transamerica Oakmont Corporation -- CA
Ventana Inn, Inc. -- CA
Transamerica Retail Financial Services Corporation
Transamerica Consumer Finance Holding Company -- DE
Whirlpool Financial National Bank -- DE
Transamerica Senior Properties, Inc.
Transamerica Senior Living, Inc. -- DE
Transamerica Small Business Services, Inc.
Emergent Business Capital Holdings, Inc. --
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
<PAGE>
Item 27. Number of Policy Owners
As of June 30 , 1999, there were 4402 Owners of Non-Qualified Individual
Policies and 2673 Owners of Qualified Individual Policies.
Item 28. Indemnification
Transamerica's Bylaws provide in Article VIII as follows:
Section 1. Indemnification: (a) The Corporation shall indemnify to the
fullest extent now or hereafter provided for or permitted by law each person
involved in, or made or threatened to be made a party to, any action, suit,
claim or proceeding, whether civil or criminal, including any investigative,
administrative, legislative, or other proceeding, and including any action by or
in the right of the Corporation or any other corporation, or any partnership,
joint venture, trust, employee benefit plan, or other enterprise (any such
entity, other than the Corporation, being hereinafter referred to as an
"Enterprise"), and including appeals therein (any such action or process being
hereinafter referred to as a "Proceeding"), by reason of the fact that such
person, such person's testator or intestate (i) is or was a director or officer
of the Corporation, or (ii) is or was serving, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, against any and all judgments, amounts paid in settlement, and
expenses, including attorneys' fees, actually and reasonably incurred as a
result of or in connection with any Proceeding, except as provided in Subsection
(b) below.
(b) No indemnification shall be made to or on behalf of any such person
if a judgment or other final adjudication adverse to such person establishes
that such person's acts were committed in bad faith or were the result of active
and deliberate dishonesty and were material to the cause of action so
adjudicated, or that such person personally gained in fact a financial profit or
other advantage to which such person was not legally entitled. In addition, no
indemnification shall be made with respect to any Proceeding initiated by any
such person against the Corporation, or a director or officer of the
Corporation, other than to enforce the terms of this Article VIII, unless such
Proceeding was authorized by the Board of Directors. Further, no indemnification
shall be made with respect to any settlement or compromise of any Proceeding
unless and until the Corporation has consented to such settlement or compromise.
(c) Written notice of any Proceeding for which indemnification may be
sought by any person shall be given to the Corporation as soon as practicable.
The Corporation shall then be permitted to participate in the defense of any
such proceeding or, unless conflicts of interest or position exist between such
person and the Corporation in the conduct of such defense, to assume such
defense. In the event that the Corporation assumes the defense of any such
Proceeding, legal counsel selected by the Corporation shall be reasonably
acceptable to such person. After such an assumption, the Corporation shall not
be liable to such person for any legal or other expenses subsequently incurred
unless such expenses have been expressly authorized by the Corporation. In the
event that the Corporation participates in the defense of any such Proceeding,
such person may select counsel to represent him in regard to such a Proceeding;
however, such person shall cooperate in good faith with any request that common
counsel be utilized by the parties to any Proceeding who are similarly situated,
unless to do so would be inappropriate due to actual or potential differing
interests between or among such parties.
(d) In making any determination regarding any person's entitlement to
indemnification hereunder, it shall be presumed that such person is entitled to
indemnification, and the Corporation shall have the burden of proving the
contrary.
Section 2. Advancement of Expenses. Except in the case of a Proceeding
against a director, officer, or other person specifically approved by the Board
of Directors, the Corporation shall, subject to Section 1 of this Article VIII
above, pay expenses actually and reasonably incurred by or on behalf of such a
person in defending any Proceeding in advance of the final disposition of such
Proceeding. Such payments shall be made promptly upon receipt by the
Corporation, from time to time, of a written demand by such person for such
advancement, together with an undertaking by or on behalf of such person to
repay any expenses so advanced to the extent that the person receiving the
advancement is ultimately found not to be entitled to indemnification for part
or all of such expenses.
Section 3. Rights Not Exclusive. The rights to indemnification and
advancement of expenses granted by or pursuant to this Article VIII (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, corporate charter, by-law, resolution of
stockholders or directors or agreement, (ii) shall be deemed to constitute
contractual obligations of the Corporation to any person who serves in a
capacity referred to in Section 1 of this Article VIII at any time while this
Article VIII is in effect, (iii) shall continue to exist after the repeal or
modification of this Article VIII with respect to events occurring prior thereto
and (iv) shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the estate, spouse, heirs, executors,
administrators or assigns of such person. It is the intent of this Article VIII
to require the Corporation to indemnify the persons referred to herein for the
aforementioned judgments, amounts paid in settlement, and expenses, including
attorneys' fees, in each and every circumstance in which such indemnification
could lawfully be permitted by express provisions of by-laws, and the
indemnification required by this Article VIII shall not be limited by the
absence of an express recital of such circumstances.
Section 4. Indemnification of Employees and Others. The Corporation
may, from time to time, with the approval of the Board of Directors, and to the
extent authorized, grant rights to indemnification, and to the advancement of
expenses, to any employee or agent of the Corporation or to any person serving
at the request of the Corporation as a director or officer, or in any other
capacity, of any other Enterprise, to the fullest extent of the provisions of
this Article VIII with respect to the indemnification and advancement of
expenses of directors and officers of the Corporation.
Section 5. Authorization of Contracts. The Corporation may, with the
approval of the Board of Directors, enter into an agreement with any person who
is, or is about to become, a director, officer, employee or agent of the
Corporation, or who is serving, or is about to serve, at the request of the
Corporation, as a director, officer, or in any other capacity, of any other
Enterprise, which agreement may provide for indemnification of such person and
advancement of expenses to such person upon terms, and to the extent, not
prohibited by law. The failure to enter into any such agreement shall not affect
or limit the rights of any such person under this Article VIII.
Section 6. Insurance. The Corporation may purchase and maintain insurance to
indemnify the Corporation and any person eligible to be indemnified under
this Article VIII within the limits permitted by law.
Section 7. Severability. If any provision of this Article VIII is determined at
any time to be unenforceable in any respect, the other provisions shall not
in any way be affected or impaired thereby.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by the director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Life Insurance Company of
New York are covered under a Directors and Officers liability program which
includes direct coverage to directors and officers (Coverage A) and for
corporate reimbursement (Coverage B) to reimburse the Company for
indemnification of its directors and officers. Such directors and officers are
indemnified for loss arising from any covered claim by reason of any Wrongful
Act in their capacities as directors or officers. The term "loss" means any
amount which the insureds are legally obligated to pay for a claim for Wrongful
Acts. The term "Wrongful Acts" means any breach of duty, neglect, error,
misstatement, misleading statement or omission actually or allegedly caused,
committed or attempted by a director or officer while acting individually or
collectively in their capacity as such, claimed against them solely by reason of
their being directors and officers. The limit of liability under the program is
$95,000,000 for Coverage A and $80,000,000 for Coverage B for the policy year
11/15/98 to 11/15/2000. Coverage B is subject to a self insured retention of
$15,000,000. The primary policy is with CNA Lloyds, Gulf, Chubb and Travelers.
Item 29. Principal Underwriter
Transamerica Securities Sales Corporation (TSSC) and Transamerica
Financial Resources (TFR) are the co-underwriters of the Certificates and the
Individual Contracts as defined in the Investment Company Act of 1940. TSSC
became Principal Underwriter effective 8-24-94.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA SECURITIES SALES CORPORATION
Nooruddin Veerjee Chairman and Director
Nicki Bair President and Director
Sandy Brown Senior Vice President, Treasurer and Director
Roy Chong-Kit Director
George Chuang Vice President and Chief Financial Officer
Chris Shaw Vice President and Chief Compliance Officer
Jay Gould Vice President
Milan Konkol Compliance Officer
Regina Fink Secretary
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
NAME AND PRINCIPAL POSITION AND OFFICES WITH
BUSINESS ADDRESS* TRANSAMERICA FINANCIAL RESOURCES
Nooruddin S. Veerjee Chairman of the Board and Director
Regina M. Fink Secretary and Counsel
Monica Suryapranata Treasurer
Gilbert F. Cronin Director
James W. Dederer Director
Dan Trivers Vice President, Director of
Administration and
Chief Compliance Officer
Ronald F. Wagley Director
Kerry Rider Vice President,
Director of Compliance and
Assistant Secretary
Susan Vivino Assistant Secretary
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
The following table lists the amounts of commissions paid to the
principal underwriter during the last fiscal year.
<PAGE>
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter*Discounts & Commission Redemption Commissions Compensation
TSSC -0- -0- $7,494,290.68 -0-
TFR -0- -0- $3,131.97 -0-
<PAGE>
Item 30. Location and Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the 1940 Act and the rules under it are maintained by Transamerica or the
Service Office at their administrative offices.
Item 31. Management Services
All management contracts are discussed in Parts A or B.
Items 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment to
this registration statement as frequently as necessary to ensure that
the audited financial statements in the registration statement are
never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
Application to purchase a Policy offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can remove
to send for a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request to Transamerica
at the address or phone number listed in the Prospectus.
(d) Transamerica hereby represents that the fees and the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred, and the
risks assumed by Transamerica.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Life Insurance Company of New York certifies that this Post-Effective Amendment
No. 10 to the Registration Statement meets all of the requirements for
effectiveness pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment No. 10 to the Registration Statement
to be signed on its behalf by the undersigned in the City of Los Angeles, State
of California on the 24th day of September , 1999.
SEPARATE ACCOUNT VA-2LNY TRANSAMERICA
OF TRANSAMERICA LIFE INSURANCE COMPANY OF NEW YORK
LIFE INSURANCE COMPANY (DEPOSITOR)
OF NEW YORK
(REGISTRANT)
BY:________________________
William M. Hurst
Vice President
As Required by the Securities Act of 1933, this Post-Effective Amendment
No. 10 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
<PAGE>
Signature Title Date
<S> <C> <C>
_________________________* Chairman and Director September 24, 1999
Nooruddin S. Veerjee
_________________________ * President and Director September 24, 1999
Alan T. Cunningham
__________________________* Senior Vice President, September 24, 1999
Robert Rubinstein Chief Actuary, Chief Operating
Officer, Secretary and Director
__________________________* Vice President - Administration September 24, 1999
Alexander Smith and Controller
__________________________* Director September 24, 1999
Marc C. Abrahms
_________________________* Director September 24, 1999
James T. Byrne, Jr.
__________________________* Director September 24, 1999
John Fibiger
___________________________* Director September 24, 1999
James B. Roszak
___________________________* Director September 24, 1999
Daniel E. Jund
_________________________* Director September 24, 1999
Thomas P. O'Neill
</TABLE>
On September 24, 1999 as Attorney -in-Fact pursuant to powers of
attorney previously filed and filed herewith, and in his own capacity as Vice
President. *By:William M. Hurst
<PAGE>