<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1999
REGISTRATION NO. 33-66406
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 7
[X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X]
AMENDMENT NO. 9
---------------
THE AMERICAN SEPARATE ACCOUNT NO. 2
(EXACT NAME OF REGISTRANT)
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
(NAME OF DEPOSITOR)
---------------
320 PARK AVENUE
NEW YORK, NEW YORK 10022
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
(212) 224-1600
(DEPOSITOR'S TELEPHONE NUMBER INCLUDING AREA CODE)
---------------
PATRICK A. BURNS, ESQ.
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 PARK AVENUE, NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------
COPY TO:
J. SUMNER JONES, ESQ.
JONES & BLOUCH L.L.P.
SUITE 405 WEST
1025 THOMAS JEFFERSON STREET NW
WASHINGTON, DC 20007
---------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of the Registration Statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
[ ] immediately upon filing pursuant to paragraph (b) of
Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[X] 60 days after filing pursuant to paragraph (a) of
Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
(FILE NO. 33-66406, IRA/FPA CONTRACTS)
<TABLE>
<CAPTION>
PART A FORM N-4 ITEM PROSPECTUS CAPTION
<S> <C> <C>
1. Cover Page Cover Page
2. Definitions Definitions We Use in this Prospectus
3. Synopsis Table of Annual Expenses
4. Condensed Financial Information Appendix A: Unit Value Information for the
Separate Account Funds;Performance Information
for the Separate Account Fund
5. General Description of Registrant, Depositor, and About American Life and the Separate Acount;
Portfolio Companies Underlying Funds Invested in by Our Separate
Account; Your Vtoing Rights for Meetings of the
Underlying Funds; Administrative Matters
6. Deductions Table of Annual Expenses; Charges You Will Pay
7. General Description of Variable Annuity Contracts Who May Purchase a Contract and Make
Contributions; Your Account Balance in the
Separate Account Funds; Our General Account
8. Annuity Period You May Obtain an Annuity with Your Account
Balance
9. Death Benefit Our Payment of Account Balance to You or a
Beneficiary -- Death Benefit Prior to Annuity
Commencement Date
10. Purchases and Contract Value Who May Purchase a Contract and Make
Contributions; Your Account Balance in the
Separate Account Funds; Our General Account
11. Redemptions Your Account Balance in the Separate Account
Funds; Our Payment of Account Balance to You or
a Beneficiary; How to Contact Us and Give Us
Instructions
12 Taxes Federal Tax Information
13. Legal Proceedings Not Applicable (see Statement of Additional
Information)
14. Table of Contents of the Statement of Additional
Information Our Statement of Additional Information
PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History N/A
18. Services Not Applicable
19. Purchases of Securities Being Offered Distribution of the Contracts
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Data Yield and Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
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VARIABLE ACCUMULATION ANNUITY CONTRACTS
INDIVIDUAL RETIREMENT ANNUITY CONTRACTS AND
FLEXIBLE PREMIUM DEFERRED ANNUITY CONTRACTS
ISSUED BY
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 PARK AVENUE, NEW YORK, NEW YORK 10022
THROUGH ITS
SEPARATE ACCOUNT NO. 2
----------------------------------------------------------------------------
THE CONTRACTS - We offer these individual variable accumulation annuity
contracts, without a sales charge (CONTRACTS):
o an Individual Retirement Annuity Contract (IRA CONTRACT), including
Regular IRA, Roth IRA, SIMPLE IRA and SEP IRA Contract; and
o an individual Flexible Premium Deferred Annuity Contract (FPA CONTRACT).
The OWNER or YOU means a person to whom we have issued an IRA or FPA
Contract.
YOUR CONTRIBUTIONS - You may make Contributions in the amounts and at the
frequency you choose (subject to certain minimums), and some of the
Contracts permit your employer to make Contributions on your behalf. Under
IRA Contracts, the amount of your Contributions and those of your employer
are limited by Federal tax laws.
A Contract can help you accumulate funds for retirement and other long-term
financial needs. You may apply
the amount you have accumulated to provide fixed monthly Annuity Payments
that begin at a future date.
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE - You may allocate your
Account Balance to any of the Funds of The American Separate Account No. 2
(the SEPARATE ACCOUNT) or to our General Account. You may transfer all or any
part of your Account Balance among the available Investment Alternatives at
any time, without charge. The Separate Account Funds invest in these funds or
portfolios of mutual funds (the UNDERLYING FUNDS):
o MUTUAL OF AMERICA INVESTMENT CORPORATION: Equity Index Fund, All America
Fund, Mid-Cap Equity Index Fund, Aggressive Equity Fund, Composite Fund,
Bond Fund, Mid-Term Bond Fund, Short-Term Bond Fund and Money Market Fund;
o SCUDDER VARIABLE LIFE INVESTMENT FUND: Capital Growth Portfolio, Bond
Portfolio and International Portfolio;
o VARIABLE INSURANCE PRODUCTS FUNDS OF FIDELITY INVESTMENTS(R):
Equity-Income Portfolio of the Variable Insurance Products Fund, and
Contrafund Portfolio and Asset Manager Portfolio of the Variable Insurance
Products Fund II;
o CALVERT SOCIAL BALANCED PORTFOLIO of Calvert Variable Series, Inc.; and
o AMERICAN CENTURY VP CAPITAL APPRECIATION FUND of American Century
Variable Portfolios, Inc.
WE DO NOT GUARANTEE THE INVESTMENT PERFORMANCE OF ANY FUND OF THE SEPARATE
ACCOUNT. You have the entire
investment risk, including the risk of a decline in value, for amounts you
allocate to any Separate Account Fund.
We pay a fixed rate of interest on your Account Balance in our General
Account, and we change the rate from time to time. This Prospectus describes
the variable, or Separate Account, Investment Alternatives, but there is a
brief description of the General Account under the heading "Our General
Account".
STATEMENT OF ADDITIONAL INFORMATION - You may obtain at no charge a
Statement of Additional Information (an SAI), dated May 1, 1999, about the
Contracts and the Separate Account by writing to us at the address at the
top of this page or by calling 1-800-872-5963. We have filed the SAI with
the Securities and Exchange Commission and incorporate it into this
Prospectus by reference. The table of contents for the SAI is at the end of
this Prospectus for your review.
PROSPECTUSES - You should read this Prospectus before you purchase a
Contract, and you should keep it for future reference. This Prospectus is
not valid unless the prospectuses of the Underlying Funds, which you also
should read, are attached to it.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
DATED: MAY 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
TABLE OF ANNUAL EXPENSES .............................................. 1
SUMMARY OF INFORMATION IN THIS PROSPECTUS ............................. 3
ABOUT AMERICAN LIFE AND THE SEPARATE ACCOUNT .......................... 7
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT .................. 8
CHARGES YOU WILL PAY .................................................. 11
Administrative Charges ............................................... 11
Distribution Expense Charge .......................................... 11
Mortality and Expense Risk Charges ................................... 11
Expenses of the Underlying Funds ..................................... 12
WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS .................... 13
Purchase of a Contract; Participation ................................ 13
Payment of Contributions ............................................. 13
Allocation and Confirmation of Contributions ......................... 15
YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS .................... 16
OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY ................ 17
Your Right to Transfer Among Investment Alternatives ................. 17
Your Right to Make Withdrawals, including by Specified Payments ...... 17
How to Tell Us an Amount to Transfer or Withdraw ..................... 18
Death Benefit Prior to Annuity Commencement Date ..................... 18
Termination of a Contract ............................................ 19
When We May Postpone Payments ........................................ 19
YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT BALANCE ................... 20
Amount of Annuity Payments ........................................... 20
Annuity Commencement Date ............................................ 20
Available Forms of Annuity ........................................... 20
Death Benefit After Annuity Commencement Date ........................ 21
Lump Sum for Small Annuity Payments .................................. 21
OUR GENERAL ACCOUNT ................................................... 21
HOW TO CONTACT US AND GIVE US INSTRUCTIONS ............................ 23
ADMINISTRATIVE MATTERS ................................................ 24
Year 2000 Compliance ................................................. 24
Confirmation Statements to Owners .................................... 24
Designation of Beneficiary ........................................... 24
Miscellaneous Contract Provisions .................................... 25
FEDERAL TAX INFORMATION ............................................... 26
YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS ............... 31
FUNDING AND OTHER CHANGES WE MAY MAKE ................................. 31
PERFORMANCE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS ................ 32
DEFINITIONS WE USE IN THIS PROSPECTUS ................................. 33
OUR STATEMENT OF ADDITIONAL INFORMATION ............................... 35
APPENDIX A: UNIT VALUE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS ..... 37
</TABLE>
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE WE MAY NOT
LAWFULLY OFFER THE CONTRACTS FOR SALE. WE HAVE NOT AUTHORIZED ANY DEALER,
SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE CONTRACTS OTHER THAN THOSE IN THIS PROSPECTUS. A
PROSPECTIVE PURCHASER WHO RECEIVES UNAUTHORIZED INFORMATION OR REPRESENTATIONS
MUST NOT RELY ON THEM TO MAKE ANY PURCHASE DECISION.
<PAGE>
TABLE OF ANNUAL EXPENSES
The first part of the table below shows the expenses of the Separate Account
Funds during 1998 and the second part shows the expenses of the Underlying
Funds during 1998, except that we have estimated the expenses of the Mid-Cap
Equity Index Fund because it began operations on May 1, 1999.
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------
ALL AMERICA
COMPOSITE MID-CAP
BOND EQUITY
MID-TERM INDEX FIDELITY VIP
BOND AND --------------
MONEY SHORT-TERM EQUITY AGGRESSIVE EQUITY-
MARKET BOND INDEX EQUITY INCOME
---------- ------------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ............... None None None None None
ANNUAL CONTRACT FEE(1) ............ $ 24 $ 24 $ 24 $ 24 $ 24
======= ======= ======== ======= ========
SEPARATE ACCOUNT ANNUAL
EXPENSES
(as a percentage of average
Account Balance)
Mortality and Expense Risk
Fees ............................. .50% .50% .50% .50% .50%
------- ------- -------- ------- --------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) ......... .40% .40% .40% .40% .30%
Distribution Expense
Charge .......................... .35 .35 .35 .35 .35
------- ------- -------- ------- ---------
Total Account Fees and
Expenses ....................... .75 .75 .75 .75 .65
------- ------- -------- ------- ---------
TOTAL SEPARATE ACCOUNT
EXPENSES ......................... 1.25% 1.25% 1.25% 1.25% 1.15%
======= ======= ======== ======= =========
UNDERLYING FUND ANNUAL
EXPENSES
(as a percentage of average
net assets)(3)
Management Fees .................. .25% .50% .125% .85% .49%
Other Expenses (after
reimbursement)(3) ............... None None None None .09
------- ------- -------- ------- ---------
TOTAL UNDERLYING FUND
EXPENSES ........................ .25% .50% .125% .85% .58%(4)
======= ======= ======== ======= ===========
<CAPTION>
FIDELITY VIP II SCUDDER AMERICAN
------------------------------- ----------------------------------- CENTURY
ASSET CAPITAL VP CAPITAL
CONTRAFUND MANAGER GROWTH BOND INTERNATIONAL APPRECIATION
--------------- --------------- --------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ............... None None None None None None
ANNUAL CONTRACT FEE(1) ............ $ 24 $ 24 $ 24 $ 24 $ 24 $ 24
======== ======== ======= ======= ======= =======
SEPARATE ACCOUNT ANNUAL
EXPENSES
(as a percentage of average
Account Balance)
Mortality and Expense Risk
Fees ............................. .50% .50% .50% .50% .50% .50%
-------- -------- ------- ------- ------- -------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) ......... .30% .30% .40% .40% .40% .20%
Distribution Expense
Charge .......................... .35 .35 .35 .35 .35 .35
--------- --------- ------- ------- ------- -------
Total Account Fees and
Expenses ....................... .65 .65 .75 .75 .75 .55
--------- --------- ------- ------- ------- -------
TOTAL SEPARATE ACCOUNT
EXPENSES ......................... 1.15% 1.15% 1.25% 1.25% 1.25% 1.05%
========= ========= ======= ======= ======= =======
UNDERLYING FUND ANNUAL
EXPENSES
(as a percentage of average
net assets)(3)
Management Fees .................. .59% .54% .47% .48% .83% 1.00%
Other Expenses (after
reimbursement)(3) ............... .11 .10% .04 .14 .17 None
--------- --------- ------- ------- ------- -------
TOTAL UNDERLYING FUND
EXPENSES ........................ .70%(4) .64%(4) .51% .62% 1.00% 1.00%
=========== =========== ======= ======= ======= =======
<CAPTION>
CALVERT
SOCIAL
BALANCE
-------------
<S> <C>
CONTRACTOWNER TRANSACTION
EXPENSES
Sales Load Imposed on
Purchases, Deferred
Sales Load, Surrender
Fee, Exchange Fee ............... None
ANNUAL CONTRACT FEE(1) ............ $ 24
======
SEPARATE ACCOUNT ANNUAL
EXPENSES
(as a percentage of average
Account Balance)
Mortality and Expense Risk
Fees ............................. .50%
------
Account Fees and Expenses
Administrative Charges
(after reimbursement)(2) ......... .40%
Distribution Expense
Charge .......................... .35
-------
Total Account Fees and
Expenses ....................... .75
-------
TOTAL SEPARATE ACCOUNT
EXPENSES ......................... 1.25%
=======
UNDERLYING FUND ANNUAL
EXPENSES
(as a percentage of average
net assets)(3)
Management Fees .................. .69%
Other Expenses (after
reimbursement)(3) ............... .12
-------
TOTAL UNDERLYING FUND
EXPENSES ........................ 81%(5)
=========
</TABLE>
- ----------
(1) You pay a monthly amount of $2.00, or 1/12 of 1.00% of your Account
Balance for the month if that amount would be less than $2.00. The above
table reflects for each Separate Account Fund the full monthly charge, as
though you had allocated your entire Account Balance only to that Fund. An
employer under a SEP-IRA or SIMPLE IRA Contract may elect to pay your
monthly charges. SEE "Charges You Will Pay -- Administrative Charges".
(2) The investment adviser for the American Century VP Capital Appreciation
Fund reimburses us at an annual rate of up to 0.20% for administrative
expenses, and the transfer agent and distributor for the Fidelity
Portfolios reimburse us at an annual rate of 0.10% for certain services we
provide. The administrative expense for the corresponding Separate Account
Funds would be 0.40% if the reimbursement arrangements ended. SEE "Charges
You Will Pay -- Administrative Charges".
(3) The investment adviser for the Investment Company voluntarily limits the
expenses of each Investment Company Fund to its investment advisory fee.
The investment adviser for the American Century VP Capital Appreciation
Fund pays the expenses of that Fund other than the investment advisory
fee. The prospectuses of the Underlying Funds, which are attached to this
Prospectus, more fully describe the Funds' management fees and other
expenses.
(4) A portion of the brokerage commissions that these Portfolios pay was
used to reduce their expenses. In addition, the Portfolios have entered
into arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances reduced custodian and transfer agent
expenses. Including these reductions, total operating expenses for the VIP
Equity-Income Portfolio and the VIP II Contrafund and Asset Manager
Portfolios for 1998 would have been 0.57%, 0.66% and 0.63%, respectively.
(5) Total Expenses reflect expenses for fiscal year 1998 and have been
restated to reflect an increase in transfer agency expenses of 0. %
expected to be incurred in 1999. Management fees may be adjusted based on
performance by the Portfolio's advisers, which could cause the fee to be
as high as 0.85% or as low as 0.55%, depending on performance. The
Portfolio indirectly pays expenses of 0. %, and the Portfolio's total
operating expenses for 1998 would have been 0. % with reductions to
reflect fees paid indirectly.
-1-
<PAGE>
EXAMPLES
----------------------------------------------------------------------------
The examples below show the expenses that you would pay, assuming a $1,000
investment and a 5% annual rate of return on assets. We do not impose a
surrender charge when you make a withdrawal of Account Balance. As a result,
the expenses would be the same whether or not you surrender the Account
Balance at the end of the applicable time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
EXAMPLE FOR INVESTMENT COMPANY EQUITY INDEX AND
MID-CAP EQUITY INDEX FUNDS
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR INVESTMENT COMPANY ALL AMERICA, BOND, SHORT-TERM BOND,
MID-TERM BOND AND COMPOSITE FUNDS
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR INVESTMENT COMPANY AGGRESSIVE EQUITY FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR INVESTMENT COMPANY MONEY MARKET FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR SCUDDER CAPITAL GROWTH FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR SCUDDER BOND FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR SCUDDER INTERNATIONAL FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR FIDELITY VIP EQUITY-INCOME FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR FIDELITY VIP II CONTRAFUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR FIDELITY VIP II ASSET MANAGER FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR CALVERT SOCIAL BALANCED FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
EXAMPLE FOR AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
Expenses on a $1,000 investment, assuming a 5% annual return on assets:
</TABLE>
These examples are to assist you in understanding the various costs and
expenses that you will pay, directly or indirectly, under a Contract. The
examples reflect the expenses of the Separate Account, as well as those of
the Underlying Funds, as they were for the year ended December 31, 1998,
except that the expenses of the Mid-Cap Equity Index Fund are estimated
because the Fund began operations on May 1, 1999.
ACTUAL EXPENSES FOR PERIODS AFTER 1998 MAY BE GREATER OR LESS THAN THE
EXPENSES ON WHICH WE BASED THE EXAMPLES. We assumed a 5% annual rate of
return in the examples for illustration purposes. The 5% rate is not an
estimate or guarantee of the Separate Account Funds' future investment
performance. Each example also assumed an annual contract fee of $ per
$1,000 of value in the Separate Account Fund, based on an average Account
Balance of $ .
ACCUMULATION UNIT VALUES FOR THE SEPARATE ACCOUNT FUNDS
----------------------------------------------------------------------------
For information about the Accumulation Unit values of each of the Separate
Account Funds over a period of time (other than for the Mid-Cap Equity Index
Fund, which commenced operations on May 1, 1999), you should see Appendix A
to this Prospectus. The Unit values reflect the investment performance and
expenses of the Underlying Funds and the charges we assess on the assets of
the Separate Account Funds.
-2-
<PAGE>
SUMMARY OF INFORMATION IN THIS PROSPECTUS
The discussion below is a summary of information in the Prospectus. The
references in the Summary direct you to particular sections in the
Prospectus where you will find more detailed explanations. You will find
definitions at the end of this Prosectus under "Definitions We Use in This
Prospectus."
CONTRACTS WE OFFER
----------------------------------------------------------------------------
INDIVIDUAL RETIREMENT ANNUITY CONTRACTS (IRA CONTRACTS).
You may purchase an IRA Contract as a retirement arrangement that qualifies
for favorable Federal income tax treatment under the Code. If you are
married and are not a wage earner, you may purchase an IRA Contract (a
spousal IRA), and your spouse (if a wage earner) may make Contributions on
your behalf. If you have adjusted gross income for Federal income tax
purposes below a certain level, you are eligible to purchase a Roth IRA.
You may purchase an IRA Contract directly from us, and you must designate
whether the Contract is a Regular IRA or a Roth IRA. An employee may
purchase a SEP IRA Contract under a Simplified Employee Pension (SEP) or may
purchase a SIMPLE IRA Contract under a Savings Incentive Match Plan for
Employees (SIMPLE), if the individual's employer has established one of
those plans.
For Federal income tax purposes, you may be able to deduct Contributions
under a Regular IRA Contract or SEP IRA Contract, but there are limits on
the amount that you may deduct and restrictions on who may deduct IRA
contributions. REFER TO "FEDERAL TAX INFORMATION -- IRA AND SEP IRA
CONTRACTS -- DEDUCTION OF CONTRIBUTIONS FROM GROSS INCOME". You may not
deduct Contributions under a Roth IRA for Federal income tax purposes. You
may exclude Contributions to a SIMPLE IRA from gross income, within certain
limits.
You do not pay Federal income tax on the earnings from Contributions to an
IRA Contract, other than a Roth IRA, until you begin receiving Annuity
Payments or otherwise withdraw all or a portion of your Account Balance.
Under a Roth IRA, you may withdraw earnings tax-free if the Roth IRA
Contract is at least five years old and you are 59 1/2 years old or older,
or in certain other circumstances. REFER TO "FEDERAL TAX INFORMATION".
FLEXIBLE PREMIUM ANNUITY CONTRACTS (FPA CONTRACTS).
You may purchase an FPA Contract to accumulate assets for retirement. If you
are an individual (not a corporation, for example), you make Contributions
to an FPA Contract with "after-tax" dollars. In other words, you may not
deduct or exclude the amount of the Contributions from your income for
Federal income tax purposes. If you are an individual, you do not pay
Federal taxes on the earnings on Contributions to an FPA Contract until you
begin to receive Annuity Payments or otherwise withdraw all or a portion of
your Account Balance, in most circumstances. REFER TO "FEDERAL TAX
INFORMATION".
An employer may purchase FPA Contracts to serve as a depository for the
employer's deferred compensation obligations to employees, in States where
we have obtained state insurance department approval for use of our Contract
in this manner. There is no deferral of Federal income taxation of the
earnings on Contributions for employers who purchase FPA Contracts for
deferred compensation obligations or for other Contractholders who are not
individuals. REFER TO "FEDERAL TAX INFORMATION".
CONTRIBUTIONS DURING THE ACCUMULATION PERIOD
----------------------------------------------------------------------------
You may make Contributions at whatever times you select, but the timing will
be based on your payroll period if you make Contributions under a salary
reduction or payroll deduction agreement with your employer. The Code limits
the amount of Contributions to an IRA Contract, as described below.
MINIMUM REQUIRED. We from time to time will establish the minimum
Contribution that you may make under the Contracts. Currently, the minimum
Contribution is $10, except that there is no minimum for employer
contributions under SEP IRAs or for employer or Owner Contributions under
SIMPLE IRAs.
WHO MAY MAKE CONTRIBUTIONS. The persons who may make Contributions, and the
manner in which Contributions should be sent to us, are as follows.
o Under an FPA Contract or under an IRA Contract other than a SIMPLE IRA,
you may make Contributions directly to us.
o Under an FPA Contract or Regular IRA Contract, you may make
Contributions through a payroll deduction agreement with your employer.
-3-
<PAGE>
o Under a SIMPLE IRA Contract, you may make Contributions only by salary
reduction agreement with your employer.
o For both SEP IRAs and SIMPLE IRAs, the employer also may contribute
amounts on your behalf, within the limits established by the Code.
o Under a SIMPLE IRA, an employer must match certain Contributions by an
employee or make a Contribution for each employee who is eligible to
contribute under the SIMPLE.
We must receive each Contribution for you at our home office, along with
sufficient information to identify the person for whom the Contribution is
made, before we can credit the Contribution to your Account Balance. If an
employer sends us Contributions, we will apply the Contributions when we
receive the amounts at our home office or receive them by wire transfer of
Federal funds into our designated bank account. REFER TO "WHO MAY PURCHASE A
CONTRACT AND MAKE CONTRIBUTIONS -- PAYMENT OF CONTRIBUTIONS" AND "FEDERAL
TAX INFORMATION".
IRA CONTRACT -- LIMITS ON AMOUNTS. The aggregate amount that you may
contribute to a Regular IRA, SEP IRA and/or Roth IRA Contract is $2,000 per
tax year, or 100% of your compensation for the year if compensation is less
than $2,000. You may contribute up to an additional $2,000 to a spousal IRA,
minus any contribution your spouse makes to the spousal IRA. For Roth IRAs,
the $2,000 contribution amount is reduced or eliminated for Owners at
certain Federal adjusted gross income levels. Under a SIMPLE IRA, you may
contribute up to $6,000 per year through a salary reduction agreement with
the employer. You also may make Contributions by "rollover" to certain IRA
Contracts. REFER TO "WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS --
PAYMENT OF CONTRIBUTIONS" AND "FEDERAL TAX INFORMATION".
If you have reached the age of 70 1/2, you may no longer make Contributions
(except by rollover from another IRA contract or eligible employer
retirement plan) to a Regular IRA or SEP IRA Contract. There is no Owner age
limit for Contributions under a Roth IRA or a SIMPLE IRA, or for employer
contributions to a SEP IRA.
FPA CONTRACT -- LIMITS ON AMOUNTS. There is no limit on the amount of
Contributions that you may make to an FPA Contract if you are an individual.
INVESTMENT ALTERNATIVES FOR YOUR ACCOUNT BALANCE
----------------------------------------------------------------------------
You may allocate Contributions among the General Account and one or more of
the Separate Account Funds, change your allocation instructions at any time
for future Contributions, and transfer all or part of your Account Balance
among the available Investment Alternatives at any time.
THE GENERAL ACCOUNT. We pay interest on the portion of your Account Balance
you allocate to our General Account, at an effective annual rate of at least
3%. In our discretion, we change the current rate of interest from time to
time. We have the full investment risk for amounts you allocate to the
General Account. We sometimes refer to the General Account Investment
Alternative as the Interest Accumulation Account.
This Prospectus serves as a disclosure document for the Separate Account
Investment Alternatives under the Contracts. You may refer to "Our General
Account" for a brief description of the General Account.
THE SEPARATE ACCOUNT. The Separate Account has Funds, or sub-accounts. The
name of each Fund corresponds to the name of its Underlying Fund. When you
allocate Contributions or transfer Account Balance to a Separate Account
Fund, the Fund purchases shares in its Underlying Fund. A Separate Account
Fund is called a "variable option", because you have the investment risk
that your Account Balance in the Fund will increase or decrease based on the
investment performance of the Underlying Fund. The Mid-Cap Equity Index Fund
will be available to you upon its approval by your State's insurance
department.
UNDERLYING FUNDS INVESTED IN BY THE SEPARATE ACCOUNT
----------------------------------------------------------------------------
The Separate Account Funds currently invest in seventeen Underlying Funds,
which have different investment objectives, investment policies and risks.
You should refer to "Underlying Funds Invested in by Our Separate Account"
for more information about the Underlying Funds' investment objectives, and
to the prospectuses of the Underlying Funds that are attached to this
Prospectus.
-4-
<PAGE>
CHARGES UNDER THE CONTRACTS
----------------------------------------------------------------------------
We deduct several charges from the net assets of each Separate Account Fund.
REFER TO "CHARGES YOU WILL PAY". The charges include:
o an administrative expense charge at an annual rate of 0.40% (except
that currently the annual rate for the American Century VP Capital
Appreciation Fund is 0.20% and the annual rate for the Funds that
invest in the Fidelity Portfolios is approximately 0.30%);
o a distribution expense charge at an annual rate of 0.35% for expenses
related to the distribution of the Contracts; and
o a mortality risk charge at an annual rate of 0.35% for assuming certain
mortality risks under the Contracts and a charge at an annual rate of
0.15% for assuming certain expense risks under the Contracts.
We also deduct from your Account Balance a monthly administrative expense
charge. The charge is $2.00 if you have an Account Balance of $2,400 or more
during the month, or 1/12 of 1% of the Account Balance (which will be less
than $2.00) if your Account Balance is less than $2,400 in any month. REFER
TO "CHARGES YOU WILL PAY -- ADMINISTRATIVE CHARGES".
RESERVATION OF RIGHTS. We reserve the right to increase or decrease the
administrative expense charge, the monthly administrative charge and the
expense risk charge within the limits imposed under the Contracts, and the
right to deduct from Contributions any applicable State premium taxes. State
insurance provisions or federal securities laws may limit the amount of any
additional charges that we may impose.
EXPENSES OF THE UNDERLYING FUNDS. A Separate Account Fund's value is based
on the shares it owns of the Underlying Fund. As a result, the investment
management fees and other expenses the Underlying Funds pay will impact the
value of the Separate Account Funds. You should refer to the attached
prospectuses of the Underlying Funds for a complete description of their
expenses and deductions from net assets.
ACCESS TO YOUR ACCOUNT BALANCE BY TRANSFERS OR WITHDRAWALS
----------------------------------------------------------------------------
During the Accumulation Period, you may transfer all or a portion of your
Account Balance among the Investment Alternatives. REFER TO "OUR PAYMENT OF
ACCOUNT BALANCE TO YOU OR A BENEFICIARY -- YOUR RIGHT TO TRANSFER AMONG
INVESTMENT ALTERNATIVES".
During the Accumulation Period, you may withdraw all or a portion of your
Account Balance. We may take up to seven days following receipt of your
withdrawal request to process the request and mail a check to you. REFER TO
"OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY -- YOUR RIGHT TO
MAKE WITHDRAWALS, INCLUDING BY SPECIFIED PAYMENTS".
You may have taxable income upon any withdrawal of your Account Balance,
except in the case of certain withdrawals from Roth IRA Contracts. You will
be taxed at ordinary income tax rates on the amount withdrawn, except for
the portion of the withdrawal that is considered to be a return of your
after-tax Contributions (if any). The taxable portion of withdrawals, and in
certain cases the nontaxable portion of withdrawals from Roth IRAs, may be
subject to a 10% tax penalty, or 25% for SIMPLE IRAs in limited cases. The
tax penalty is not due if you have reached the age of 59 1/2, are disabled
or in certain other circumstances (including special rules for IRA
Contracts). REFER TO "FEDERAL TAX INFORMATION".
The Code imposes minimum distribution requirements for IRA Contracts, other
than Roth IRAs, when you reach a certain age or in some other circumstances.
You may be required to make partial withdrawals of your Account Balance, or
may choose to begin receiving Annuity Payments, to meet the minimum
distribution requirements.
We currently do not assess a charge for transfers or withdrawals under the
Contracts. We reserve the right, however, to impose a charge for transfers
or withdrawals in the future.
OUR SPECIFIED PAYMENTS OPTION. You may instruct us to withdraw a certain
amount (at least $100) each month from the Investment Alternatives you name.
You must be age 59 1/2 or older to elect this Option.
HOW TO MAKE ALLOCATION CHANGES, TRANSFERS AND WITHDRAWALS
----------------------------------------------------------------------------
IN WRITING. You may give instructions in writing on our forms to change your
allocations among Investment Alternatives for future Contributions, to
transfer your Account Balance among Investment Alternatives or to make any
withdrawals of Account Balance. REFER TO "HOW TO CONTACT US AND GIVE US
INSTRUCTIONS".
-5-
<PAGE>
BY TELEPHONE. Using a Personal Identification Number (PIN) we have assigned,
you may call us at 1-800-468-3785 for certain transactions and information.
You may not make a request for rollover of an IRA Contract by telephone.
REFER TO "HOW TO CONTACT US AND GIVE US INSTRUCTIONS".
OUR HOME OFFICE, PROCESSING CENTER AND REGIONAL OFFICES. Our home office
address is 320 Park Avenue, New York, New York 10022, attention Eldon
Wonacott, Senior Vice President. The address for our Financial Transactions
Processing Center is 1150 Broken Sound Parkway NW, Boca Raton, FL 33487. You
may check the address for the Regional Office that provides services for
your Contract by calling 1-800-468-3785 or by visiting our Website at
www.mutualofamerica.com.
CONFIRMATION STATEMENTS. We will send you confirmation statements (which may
be your quarterly statements) for your allocation changes and for your
Contributions, transfers of Account Balance and withdrawals of Account
Balance. You must promptly notify us of any error in a confirmation
statement, or you will give up your right to have us correct the error.
DEATH BENEFITS DURING THE ACCUMULATION PERIOD
----------------------------------------------------------------------------
If you were to die before the Annuity Commencement Date, we will pay a death
benefit to your Beneficiary. Under an FPA Contract when you are not the
Annuitant, we will pay the death benefit upon the first to occur of your
death and the Annuitant's death.
The death benefit amount will be your Account Balance as of the date we
receive proof of your death (or the death of the Annuitant) and the election
of the Beneficiary(ies) telling us how we should pay the death benefit. The
Beneficiary selects the form of death benefit, which may be a lump sum, a
form of annuity or fixed payments. If your Eligible Spouse is the
Beneficiary and the death benefit is due upon your death, your surviving
spouse may be able to continue the Contract instead of receiving a death
benefit. REFER TO "OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY --
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE".
ANNUITANTS AND BENEFICIARIES
----------------------------------------------------------------------------
Under an IRA Contract, you must be the Annuitant. Under an FPA Contract, you
may be the Annuitant or may name another person as the Annuitant, and you
may not change the Annuitant once you have named the Annuitant. When a
Beneficiary elects to receive a death benefit due in the form of an annuity,
the Beneficiary may be the Annuitant or may name another person as the
Annuitant. You or a Beneficiary also may name a joint Annuitant.
You may designate a Beneficiary or Beneficiaries to receive any death
benefit due during the Accumulation Period or to receive any remaining
payments (or their commuted value) due during the Annuity Period. You may
change the Beneficiary by giving us written notice on a form we provide.
REFER TO "ADMINISTRATIVE MATTERS UNDER THE CONTRACTS -- DESIGNATION OF
BENEFICIARY".
ANNUITY COMMENCEMENT DATE AND AMOUNT OF MONTHLY ANNUITY PAYMENT
----------------------------------------------------------------------------
You may select the Annuity Commencement Date, but under an IRA Contract, the
Annuity Commencement Date must be after you have reached the age of 55.
Annuity Payments will be the same amount every month and will be based on
your Account Balance at the Annuity Commencement Date and the form of
annuity you select. Each Contract contains tables of annuity purchase rates.
We guarantee that the amount of the Annuity Payments, for the form of
annuity you select, will never be less favorable than the guaranteed rate in
the Contract. REFER TO "YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT
BALANCE". You may choose to make withdrawals of your Account Balance instead
of electing to receive Annuity Payments.
FORMS OF ANNUITY AVAILABLE. We offer several forms of annuity, some of which
have guaranteed minimum time periods for payments. If an Annuitant (and
contingent Annuitant if a joint and survivor annuity) dies before the
minimum period has ended, the Beneficiary will receive the remaining Annuity
Payments due. A life annuity protects an Annuitant from outliving the time
period for receiving monthly payments, because the payments continue for the
life of the Annuitant. You may select the annuity form when you designate
the Annuity Commencement Date. REFER TO "YOU MAY OBTAIN AN ANNUITY WITH YOUR
ACCOUNT BALANCE -- AVAILABLE FORMS OF ANNUITY".
CANCELLATION RIGHT
----------------------------------------------------------------------------
You may surrender a Contract for cancellation within ten days after you have
received it (or a longer period if your State requires it). We will refund
all Contributions you allocated to the General Account, plus the value on
the surrender date of your Account Balance allocated to the Separate
Account, unless your state requires that all Contributions to the Separate
Account be refunded.
-6-
<PAGE>
ABOUT AMERICAN LIFE AND THE SEPARATE ACCOUNT
We are a life insurance company organized in 1955 under the laws of the
State of New York. We are authorized to transact business in 50 states, the
District of Columbia and the United States Virgin Islands. Mutual of America
Life Insurance Company (MUTUAL OF AMERICA), a mutual life insurance company
also organized under New York law, is our indirect parent company. Our home
office is located at 320 Park Avenue, New York, New York 10022.
We sell individual and group life insurance, annuities and pension plans,
including variable accumulation annuity contracts and variable universal
life insurance policies. As of December 31, 1998, we had total assets of
approximately $1. billion.
Our operations as a life insurance company are reviewed periodically by
various independent rating agencies. These agencies, such as A.M. Best &
Company, Standard and Poor's Insurance Rating Service and Duff & Phelps
Credit Rating Company, publish their ratings. From time to time we reprint
and distribute the rating reports in whole or in part, or summaries of them,
to the public. The ratings concern our operation as a life insurance company
and do not imply any guarantees of performance of the Separate Account.
OUR SEPARATE ACCOUNT
----------------------------------------------------------------------------
We established the Separate Account under a resolution of our Board of
Directors adopted on February 23, 1993. The Separate Account is registered
with the Securities and Exchange Commission (COMMISSION) as a unit
investment trust under the Investment Company Act of 1940 (1940 ACT). The
Commission does not supervise the management or investment practices or
policies of the Separate Account or American Life. The 1940 Act, however,
does regulate certain actions by the Separate Account.
We divide the Separate Account into distinct Funds. Each Fund invests its
assets in an Underlying Fund, and the name of each Separate Account Fund
reflects the name of the corresponding Underlying Fund.
The assets of the Separate Account are our property. The Separate Account
assets attributable to Owners' Account Balances and any other annuity
contracts funded through the Separate Account cannot be charged with
liabilities from other businesses that we conduct. The income, capital gains
and capital losses of each Fund of the Separate Account are credited to, or
charged against, the net assets held in that Fund. We separately determine
each Fund's net assets, without regard to the income, capital gains and
capital losses from any of the other Funds of the Separate Account or from
any other business that we conduct.
The Separate Account and American Life are subject to supervision and
regulation by the Superintendent of Insurance of the State of New York, and
by the insurance regulatory authorities of each State.
OTHER VARIABLE ANNUITY CONTRACTS WE ISSUE
----------------------------------------------------------------------------
In addition to the Contracts described in this Prospectus, we offer other
individual and group variable annuity contracts, some of which are not
described in this Prospectus but which also participate in the Separate
Account.
-7-
<PAGE>
UNDERLYING FUNDS INVESTED IN BY OUR SEPARATE ACCOUNT
Below are summaries of the Underlying Funds' investment objectives and
certain investment policies. The Underlying Funds sell their shares to the
separate accounts of insurance companies and do not offer them for sale to
the general public.
You will find more detailed information about the Underlying Funds in their
current prospectuses, which are attached to this Prospectus. You should read
each prospectus for a complete evaluation of the Underlying Funds, their
investment objectives, principal investment strategies and the risks related
to those strategies.
EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Equity Index Fund is to provide investment
results that correspond to the extent practical to the price and yield
performance of publicly traded common stocks in the aggregate, as
represented by the Standard & Poor's Composite Index of 500 Stocks (the S&P
500 INDEX*).
ALL AMERICA FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the All America Fund is to outperform the S&P
500 Index. The objective for approximately 60% of the assets of the All
America Fund (the INDEXED ASSETS) is to provide investment results that to
the extent practical correspond to the price and yield performance of
publicly traded common stocks in the aggregate, as represented by the S&P
500 Index.
The investment objective for the remaining approximately 40% of the assets
(the ACTIVE ASSETS) is to achieve a high level of total return, through both
appreciation of capital and, to a lesser extent, current income, by means of
a diversified portfolio of securities that may include common stocks,
securities convertible into common stocks, bonds and money market
instruments.
MID-CAP EQUITY INDEX FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Mid-Cap Equity Index Fund is to provide
investment results that correspond to the extent practical to the price and
yield performance of publicly traded common stocks in the aggregate, as
represented by the S&P MidCap 400 Index*.
AGGRESSIVE EQUITY FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Aggressive Equity Fund is capital growth, by
investing approximately 50% of its assets in companies believed to possess
above-average growth potential and approximately 50% of its assets in
companies believed to possess valuable assets or whose securities are
undervalued in the marketplace in relation to factors such as the company's
assets, earnings or growth potential. In utilizing the investment styles of
growth and value stock selection, the Adviser anticipates that the
percentage of the Fund's assets in either category will range between 40%
and 60%.
COMPOSITE FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Composite Fund is to achieve as high a total
rate of return, through both appreciation of capital and current income, as
is consistent with prudent investment risk by means of a diversified
portfolio of publicly-traded common stocks, publicly-traded debt securities
and money market instruments. The Fund seeks to achieve long-term growth of
its capital and increasing income by investments in common stock and other
equity-type securities, and a high level of current income through
investments in publicly-traded debt securities and money market instruments.
----------
* "S&P", "S&P 500" and "S&P MidCap 400" are trademarks of Standard & Poor's
Corporation. The Funds are not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation.
-8-
<PAGE>
BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Bond Fund is to provide as high a
level of current income over time as is believed to be consistent with
prudent investment risk. A secondary objective is preservation of capital.
The Bond Fund seeks to achieve its objective by investing primarily in
investment grade, publicly-traded debt securities, such as bonds, notes,
debentures and mortgage-backed securities. The Bond Fund may invest to a
limited extent in lower-rated or unrated securities.
MID-TERM BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Mid-Term Bond Fund is to provide as
high a level of current income over time as is believed to be consistent
with prudent investment risk. A secondary objective is preservation of
capital.
The Mid-Term Bond Fund seeks to achieve its objective by investing primarily
in investment grade, publicly-traded debt securities, such as bonds, notes,
debentures and mortgage-backed securities, that produce a portfolio with an
average maturity of three to seven years.
SHORT-TERM BOND FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The primary investment objective of the Short-Term Bond Fund is to provide
as high a level of current income over time as is believed to be consistent
with prudent investment risk. A secondary objective is preservation of
capital.
The Short-Term Bond Fund seeks to achieve its objective by investing
primarily in investment grade, publicly-traded debt securities, such as
bonds, notes, debentures and mortgage-backed securities, that will produce a
portfolio with an average maturity of one to three years.
MONEY MARKET FUND OF THE INVESTMENT COMPANY
----------------------------------------------------------------------------
The investment objective of the Money Market Fund is the realization of high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital.
The Money Market Fund invests only in money market instruments and other
short-term securities. Neither the Federal Deposit Insurance Corporation nor
any other U.S. Government agency insures or guarantees the Separate
Account's investments in shares of the Money Market Fund.
SCUDDER CAPITAL GROWTH PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Scudder Capital Growth Portfolio is to maximize
long-term capital growth through a broad and flexible investment program.
The Portfolio invests in marketable securities, principally common stocks
and, consistent with its objective of long-term capital growth, preferred
stocks. The Portfolio may invest up to 25% of its assets in short-term debt
instruments, depending on market and economic conditions.
SCUDDER BOND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder Bond Portfolio is to invest for a
high level of income consistent with a high quality portfolio of debt
securities.
To attempt to achieve its objective, the Portfolio invests principally in
investment grade bonds, including those issued by the U.S. Government and
its agencies and by corporations, and other notes and bonds paying high
current income. The Portfolio may invest up to 20% of its assets in
non-investment grade debt securities.
SCUDDER INTERNATIONAL PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Scudder International Portfolio is long-term
growth of capital primarily through diversified holdings of marketable
foreign equity investments.
-9-
<PAGE>
The Portfolio invests primarily in equity securities of established
companies that do business primarily outside the United States and that are
listed on foreign exchanges. In the event of exceptional conditions abroad,
the Portfolio may temporarily invest all or a portion of its assets in
Canadian or U.S. Government obligations or currencies, or securities of
companies incorporated in and having their principal activities in Canada or
the United States.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Equity-Income Portfolio is reasonable income
by investing primarily in income-producing equity securities. In choosing
these securities, the Portfolio also considers the potential for capital
appreciation. The Portfolio's goal is to achieve a yield that exceeds the
composite yield on the securities comprising the S&P 500 Index.
FIDELITY VIP II CONTRAFUND PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Contrafund Portfolio is capital growth. It
seeks to increase the value of an investment in the Portfolio over the long
term by investing mainly in securities of companies that are undervalued or
out-of-favor. These securities may be issued by domestic or foreign
companies and many may not be well known. The Portfolio usually invests
primarily in common stock and securities convertible into common stock, but
it has the flexibility to invest in any type of security that may produce
capital appreciation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
----------------------------------------------------------------------------
The investment objective of the Asset Manager Portfolio is high total return
with reduced risk over the long term by allocating its assets among domestic
and foreign stocks, bonds and short-term fixed-income instruments.
The Portfolio's adviser normally allocates the Portfolio's assets among the
three asset classes within the following investment parameters: 0-50% in
short-term/money market instruments; 20-60% in bonds; and 30-70% in stocks.
The expected "neutral mix", which the Portfolio's adviser would expect over
the long term, is 10% in short-term/money market instruments, 40% in bonds
and 50% in stocks.
CALVERT SOCIAL BALANCED PORTFOLIO
----------------------------------------------------------------------------
The investment objective of Calvert Social Balanced Portfolio is to achieve
a total return above the rate of inflation through an actively managed
non-diversified portfolio of common and preferred stocks, bonds and money
market instruments that offer income and capital growth opportunity and that
satisfy the social concern criteria established for the Portfolio.
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
----------------------------------------------------------------------------
The investment objective of the American Century VP Capital Appreciation
Fund is capital growth by investing primarily in common stocks (including
securities convertible into common stock) and other securities that meet
certain fundamental and technical standards of selection and have, in the
opinion of the Fund's manager, better-than-average prospects for
appreciation.
INVESTMENT ADVISERS FOR THE UNDERLYING FUNDS
----------------------------------------------------------------------------
MUTUAL OF AMERICA INVESTMENT CORPORATION: The Investment Company receives
investment advice from Mutual of America Capital Management Corporation (the
ADVISER), an indirect wholly-owned subsidiary of Mutual of America. For the
Active Assets of the All America Fund, the Adviser has entered into
subadvisory agreements with Palley-Needelman Asset Management, Inc., Oak
Associates, Ltd. and Fred Alger Management, Inc. Each of these subadvisers
provides investment advice for approximately 10% of the All America Fund's
assets.
SCUDDER VARIABLE LIFE INVESTMENT FUND: The Scudder Capital Growth, Bond and
International Portfolios receive investment advice from Scudder Kemper
Investments, Inc.
FIDELITY PORTFOLIOS: The Equity-Income Portfolio, Contrafund Portfolio and
Asset Manager Portfolio receive investment advice from Fidelity Management &
Research Company.
CALVERT SOCIAL BALANCED PORTFOLIO: The Portfolio receives investment advice
from Calvert Asset Management Company, Inc., which has entered into a
subadvisory agreement with NCM Capital Management Group, Inc. for the equity
portion of the Portfolio.
-10-
<PAGE>
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND: The Fund receives investment
advice from American Century Investment Management, Inc.
SHARED FUND ARRANGEMENTS. Shares of the Fidelity Portfolios, the Scudder
Portfolios, the American Century VP Capital Appreciation Fund and the
Calvert Social Balanced Portfolio (together, the SHARED FUNDS) currently are
available to the separate accounts of a number of insurance companies. The
Board of Directors (or Trustees) of each Shared Fund is responsible for
monitoring that Fund for the existence of any material irreconcilable
conflict between the interests of participants in all separate accounts that
invest in the Fund. The Board must determine what action, if any, the Shared
Fund should take in response to an irreconcilable conflict. If we believe
that a response does not sufficiently protect our Contractholders or Owners,
we will take appropriate action, and we may modify or reduce the Investment
Alternatives available to you.
CHARGES YOU WILL PAY
ADMINISTRATIVE CHARGES
----------------------------------------------------------------------------
We perform all administrative functions in connection with the Contracts,
including receiving and allocating Contributions, making Annuity Payments as
they become due, and preparing and filing all reports that the Separate
Account is required to file. The expenses we incur for administrative
functions include, but are not limited to, items such as state or other
taxes, salaries, rent, postage, telephone, travel, office equipment, costs
of outside legal, actuarial, accounting and other professional services, and
costs associated with determining the net asset value of the Separate
Account.
We may increase or decrease the daily and monthly administrative charges
described below, subject to any limitations in the Contract or a Plan. The
aggregate fees and charges we impose under the Contracts must be reasonable
in relation to the services we provide, the expenses we expect to incur, and
the risks we have assumed.
SEPARATE ACCOUNT CHARGE. We deduct, on each Valuation Day, from the value of
the net assets in each Fund of the Separate Account a charge for
administrative expenses at an annual rate of 0.40%, except that we reduce
the administrative charge to the extent we receive a reimbursement for
administrative expenses.
o For the Separate Account Fund that invests in the American Century VP
Capital Appreciation Fund, the annual rate currently is 0.20%, because
the adviser for the American Century VP Capital Appreciation Fund
reimburses us at an annual rate of up to 0.20% for administrative
expenses.
o For the Funds that invest in the Fidelity Portfolios, the annual rate
currently is 0.30%, because the transfer agent and distributor for the
Fidelity Portfolios reimburse us at an aggregate annual rate of 0.10%
for administrative expenses.
OWNER CHARGE. We make an additional deduction for administrative expenses
each month, on a Valuation Day that is administratively convenient, from
your Account Balance. The charge is $2.00 per month, except that we will
reduce the charge to 1/12 of 1.00% if your Account Balance for the month is
less than $2,400.
We deduct the monthly charge from your Account Balance allocated to the
General Account, if any. If you do not have any Account Balance in the
General Account, we will deduct the charge from your Account Balance
allocated to one or more of the Separate Account Funds, in a prescribed
order we have established. (Refer to the Statement of Additional Information
for the order of the Funds.)
DISTRIBUTION EXPENSE CHARGE
----------------------------------------------------------------------------
We deduct on each Valuation Day, from the net assets in each Fund of the
Separate Account, a charge at an annual rate of 0.35% to cover anticipated
distribution expenses. Mutual of America, under an administrative services
agreement with us, provides sales services for the Contracts and performs
all duties and functions needed for the distribution of the Contracts. To
compensate Mutual of America for its services, we pay it the distribution
charge under the Contracts.
MORTALITY AND EXPENSE RISK CHARGES
----------------------------------------------------------------------------
We bear certain mortality and expense risks under the Contracts. The
mortality risk we assume arises from our guarantee to make Annuity Payments
in accordance with the annuity tables provided in a Contract, regardless
-11-
<PAGE>
of how long an Annuitant lives and regardless of any improvement in life
expectancy generally. Our mortality risk is that Annuitants as a class will
live longer than we had estimated actuarially, and as a result we make
Annuity Payments for longer than we had anticipated. Our assumption of this
risk relieves Owners (Annuitants) of the risk that they will outlive the
funds that they have accumulated for their retirement.
We assume certain expense risks under the Contracts. The expense risks we
assume arise from our guarantees in the Contracts to make Annuity Payments
in accordance with annuity tables in the Contracts. We have estimated
expenses we expect to incur over the lengthy period that we may make Annuity
Payments. We assume the risk that expenses will be higher than we estimated.
On each Valuation Day, for assuming the mortality risks we make a deduction
at an annual rate of 0.35% of the net assets in each Fund and for assuming
the expense risks we make a deduction at an annual rate of 0.15% of the net
assets in each Fund. We guarantee that we will not increase the mortality
risk charge during the life of a Contract, and we have the right to increase
the expense risk charge, subject to any limitations in the Contract.
EXPENSES OF THE UNDERLYING FUNDS
----------------------------------------------------------------------------
Owners and the Separate Account Funds do not directly pay the advisory fees
and other expenses of the Underlying Funds. These fees and expenses are
deducted by the Underlying Funds and will impact the value of the shares the
Separate Account Funds own.
You should refer to "Table of Annual Expenses" in this Prospectus, which
shows the expenses of the Underlying Funds for the most recent calendar
year. The prospectuses of the Underlying Funds, which are attached to this
Prospectus, contain a complete description of the Underlying Funds' fees and
expenses.
-12-
<PAGE>
WHO MAY PURCHASE A CONTRACT AND MAKE CONTRIBUTIONS
PURCHASE OF A CONTRACT; PARTICIPATION
----------------------------------------------------------------------------
IRA CONTRACT. We issue IRA Contracts to individuals who are (or were)
employees of an organization that qualifies for tax-exempt status under the
Code and to these individuals' immediate family members. Each purchaser must
complete the prescribed application and make an initial Contribution of at
least the minimum required amount, except that we do not require an initial
Contribution for SEP IRA Contracts.
To purchase a Roth IRA, an individual must have Federal adjusted gross
income below a certain level and must designate the Contract as a Roth IRA.
To purchase a SEP IRA or SIMPLE IRA, the individual must be eligible to
participate in the SEP or SIMPLE adopted by the individual's employer.
FPA CONTRACT. We issue FPA Contracts to individuals who currently work for
or formerly worked for organizations that are tax-exempt under the Code and
to these individuals' spouses and certain family members. Each purchaser
must complete the prescribed application and make an initial Contribution of
at least the minimum required amount. We also may issue an FPA Contract to a
tax-exempt organization, which may use the Contract to accumulate funds to
meet its deferred compensation obligations.
A person to whom we issue an FPA Contract, even if the person names someone
else as the Annuitant, is the owner of the Contract and will possess all the
rights under the Contract. For example, the employer to whom we issue an FPA
Contract for deferred compensation purposes is the owner of the Contract and
may receive all payments under the Contract
ACCEPTANCE OF INITIAL CONTRIBUTIONS. When we receive your completed
application, together with an initial Contribution (when required) and any
other necessary information, we will accept the application and Contribution
and issue the Contract, or reject them, within two business days of receipt.
If you did not properly complete the application, we will retain the
Contribution for up to five business days while we attempt to obtain the
information necessary to complete the application. We will accept the
Contribution within two business days after we receive the completed
application.
If we do not receive a completed application for you within five business
days, we will return the Contribution at the end of that period unless we
obtain consent to hold the Contribution for a longer period from you, if the
application is for an FPA or IRA Contract where you send Contributions
directly to us, or we notify your employer on your behalf if the application
is for an IRA Contract where your employer sends Contributions to us. We
enter into agreements with employers that use our electronic processing
system and that make Contributions to a SEP IRA or SIMPLE IRA or that have
payroll deduction or salary reduction programs for the forwarding of
applications and Contributions to us.
CANCELLATION OF CONTRACT. You may surrender an IRA Contract or FPA Contract
for cancellation within ten days after receipt. We will refund all
Contributions you allocated to the General Account, plus the value on the
date of surrender of your Account Balance credited to the Separate Account.
Several states, however, require that the amount of Contributions be
refunded without deductions, and you should consult the Contract for
applicable provisions. We will return to your employer any Contributions
that were sent to us by your employer on your behalf.
PAYMENT OF CONTRIBUTIONS
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IRA CONTRACTS. The method of making Contributions depends on the type of
IRA Contract.
o For Regular IRA, Roth IRA and SEP IRA Contracts, you may make
Contributions directly to us.
o Under a Regular IRA Contract, you also may make Contributions under a
payroll deduction agreement between you and your employer, in which
case the employer forwards to us on your behalf the amounts deducted
from your salary.
o For a SIMPLE IRA Contract, you may make Contributions only by salary
reduction under the SIMPLE adopted by your employer.
The Code limits the amount of your total Contributions (excluding rollovers)
under a Regular IRA, SEP IRA or
Roth IRA Contract during a tax year to the LESSER of $2,000 and 100% of
your compensation for that year.
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The Code limits the amount of Contributions to a Roth IRA as follows:
o A single individual with adjusted gross income of $95,000 or less, and
a married individual who files a joint tax return with adjusted gross
income of $150,000 or less, may contribute up to $2,000 to a Roth IRA.
This $2,000 amount is reduced by contributions to other IRAs during the
tax year, other than rollovers and salary reduction contributions to a
SIMPLE.
o The $2,000 Roth IRA contribution limit declines in fixed amounts until
it becomes zero for a single individual with adjusted gross income
between $95,000 and $110,000 and for a married individual filing a
joint return with adjusted gross income between $150,000 and $160,000.
The Code limits Owner Contributions to a SIMPLE IRA, as follows:
o You may contribute up to $6,000 per year (or 100% of compensation if
less), and this amount will be increased in future years for
cost-of-living adjustments.
o If an individual has more than one employer, the maximum amount that an
employee may contribute under a SIMPLE IRA and other salary reduction
arrangements in any year is $10,000 for 1999, as adjusted in future
years for cost-of-living increases.
Code provisions also regulate an employer's Contributions to a SIMPLE IRA:
o An employer generally must match an employee's contribution in an
amount equal to 3% of the employee's compensation, but the employer may
lower the percentage to as low as 1% for two years out of a five year
period.
o Instead of matching a Contribution, the employer may make a
"nonelective" Contribution to each Owner's SIMPLE IRA. The amount of
the nonelective Contribution is equal to 2% of compensation for each
eligible employee, whether or not the employee has made Contributions
during the year. The maximum amount of compensation considered for each
employee in this calculation is $160,000 for 1999 (to be adjusted for
cost-of-living increases in the future). An employer must notify its
employees of an election to reduce the percentage of the employer's
matching Contributions or to make a nonelective Contribution instead of
matching Contributions for the coming year.
Under a SEP, an employer can contribute to the employee's SEP IRA an amount
up to 15% of the employee's compensation (with compensation limited to
$160,000), but not more than $30,000. These limits may be reduced, however,
by contributions that the employer makes to other tax-qualified plans for
the employee.
At any age you may make Contributions to a Roth IRA, as long as you are
eligible based on Federal adjusted gross income requirements. You may not
make any Contributions to a Regular IRA or SEP IRA Contract beginning in the
tax year you reach age 70 1/2, with the following exceptions:
o You may purchase an IRA Contract, or you may use an existing IRA
Contract, to receive rollover Contributions from certain other plans,
as described below, even after age 70 1/2.
o An employer may make contributions for its employee under a SEP IRA or
a SIMPLE IRA, and an employee may contribute to a SIMPLE IRA, after the
employee has attained age 70 1/2.
You may make Contributions to an IRA Contract (other than a SIMPLE IRA) by
ROLLOVER of eligible distributions from certain other pension or retirement
arrangements that qualify for favorable tax treatment under the Code, under
the following rules:
o Generally, amounts that you roll over will not be subject to the
limitations on the amount of Contributions during a tax year, except
for the portion that represents Contributions made for the same tax
year as the rollover.
o Qualified plans and arrangements include other IRA contracts, SEP IRAs
and SIMPLE IRAs, tax-sheltered annuities under Code Section 403(b), and
pension and profit-sharing plans, including 401(k) plans, under Code
Section 401(a). Not all distributions from these plans and arrangements
may be rolled over to an IRA Contract, and the tax implications of
rolling over distributions may vary depending on federal tax rules that
apply to the plan or arrangement. SEE "Federal Tax Information --
Obtaining Tax Advice".
o You may roll over amounts to a SIMPLE IRA only from another SIMPLE IRA.
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<PAGE>
Special rules apply for rollovers to a Roth IRA or for conversions from a
Regular IRA to a Roth IRA. If you have adjusted gross income of $100,000 or
less for a tax year, you can roll over or "convert" a Regular IRA to a Roth
IRA Contract, subject to the following:
o You may not directly transfer distributions from an employer-sponsored
plan to a Roth IRA, but you may roll over eligible distributions first
to a Regular IRA and subsequently to a Roth IRA.
o You must include in gross income amounts rolled over from a Regular IRA
to a Roth IRA (excluding "after-tax" Contributions), but no early
withdrawal penalty applies to the taxable amount. If you converted a
Regular IRA to a Roth IRA during 1998, you may include one-fourth of
the resulting taxable income in each of the 1998, 1999, 2000 and 2001
tax years for Federal income tax purposes.
o You will owe a penalty tax on withdrawals of amounts that were rolled
over to a Roth IRA from a Regular IRA if the withdrawal is made within
five tax years after the rollover, even if the amount withdrawn is
nontaxable. SEE "Federal Tax Information -- Roth IRA Contracts --
Special Penalty Tax on Withdrawals of Rollover or Conversion
Contributions".
o Individuals considering converting or rolling over a Regular IRA to a
Roth IRA should take into account various issues, including state and
local tax consequences. SEE "Federal Tax Information -- Obtaining Tax
Advice."
FPA CONTRACT. You may make Contributions directly to us, or your employer
may make Contributions to us on your behalf under a payroll deduction
agreement. You may make Contributions at whatever intervals and in whatever
amounts you select, except that each Contribution must be at least $10.
(From time to time we may change this minimum.)
If an employer purchases an FPA Contract as a depository for employee
deferred compensation obligations that do not constitute deferrals under an
eligible deferred compensation plan as defined in Section 457(b) of the
Code, there are no limits on the amount of compensation that employees may
defer. However, amounts deferred under the Contract are subject to a
substantial risk of forfeiture by the employees, including by the claims of
the employer's creditors.
ALLOCATION OF CONTRIBUTIONS
----------------------------------------------------------------------------
You may allocate Contributions among the Investment Alternatives. The
Mid-Cap Equity Index Fund may not be available to Owners in all States, due
to insurance department regulatory filings.
We will allocate a Contribution when we receive it according to instructions
sent with the Contribution, or if no instructions are sent, on the basis of
your allocation request currently on file at our home office. Your request
for allocation must specify the percentage, in any whole percentage from 0%
to 100%, of each Contribution to be allocated to each of the Investment
Alternatives. The percentages you give us must add up to 100%. We receive
your Contribution when we receive your check at our home office or your
employer transfers Federal Funds into the bank account we have designated
for the employer's use.
You may change the allocation instructions for future Contributions from
time to time. You should periodically review your allocations in light of
market conditions and your retirement plans and needs.
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YOUR ACCOUNT BALANCE IN THE SEPARATE ACCOUNT FUNDS
ACCUMULATION UNITS IN SEPARATE ACCOUNT FUNDS
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We use Accumulation Units to represent Account Balances in each Separate
Account Fund. We separately value the Accumulation Unit for each Fund of the
Separate Account.
We determine your Account Balance in the Separate Account as of any
Valuation Day by multiplying the number of Accumulation Units credited to
you in each Fund of the Separate Account by the Accumulation Unit value of
that Fund at the end of the Valuation Day.
Investment experience by the Separate Account Funds does not impact the
number of Accumulation Units credited to your Account Balance. The value of
an Accumulation Unit for a Fund, however, will change as a result of the
Fund's investment experience, in the manner described below.
CALCULATION OF ACCUMULATION UNIT VALUES
----------------------------------------------------------------------------
We determine Accumulation Unit values for the Funds as of the close of
business on each Valuation Day (generally at the close of the New York Stock
Exchange). A Valuation Period is from the close of a Valuation Day until the
close of the next Valuation Day.
The dollar value of an Accumulation Unit for each Fund of the Separate
Account will vary from Valuation Period to Valuation Period. The changes in
Accumulation Unit values for the Separate Account Funds will reflect:
o changes in the net asset values of the Underlying Funds, depending on
the investment experience and expenses of the Underlying Funds, and
o Separate Account charges under the Contracts, with the annual rates
calculated as a daily charge. (SEE "Charges You Will Pay".)
You may refer to "Appendix A: Unit Value Information for the Separate
Account Funds" in this Prospectus to review changes in Accumulation Unit
values for each Fund over a period of time (except for the Mid-Cap Equity
Index Fund, which began operations on May 1, 1999).
ACCUMULATION UNIT VALUES FOR TRANSACTIONS
----------------------------------------------------------------------------
When you allocate Contributions to a Separate Account Fund or transfer any
Account Balance to a Fund, we credit Accumulation Units to your Account
Balance. When you withdraw or transfer any Account Balance from a Separate
Account Fund, we cancel Accumulation Units from your Account Balance.
The Accumulation Unit value for a transaction is the Unit value for the
Valuation Period during which we receive the Contribution or request. As a
result, we will effect the transaction at the Accumulation Unit value we
determine at the NEXT CLOSE of a Valuation Day (generally the close of the
New York Stock Exchange on that business day).
We calculate the number of Accumulation Units for a particular Fund by
dividing the dollar amount you have allocated to, or withdrawn from, the
Fund during the Valuation Period by the applicable Accumulation Unit value
for that Valuation Period. We round the resulting number of Accumulation
Units to two decimal places.
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OUR PAYMENT OF ACCOUNT BALANCE TO YOU OR A BENEFICIARY
YOUR RIGHT TO TRANSFER AMONG INVESTMENT ALTERNATIVES
----------------------------------------------------------------------------
You may transfer all or a portion of your Account Balance among Funds of the
Separate Account, and between the Separate Account and the General Account.
There are no tax consequences to you for transfers among Investment
Alternatives. We currently do not impose a charge for transfers, but we
reserve the right to impose a transfer charge in the future.
YOUR RIGHT TO MAKE WITHDRAWALS, INCLUDING BY SPECIFIED PAYMENTS
----------------------------------------------------------------------------
You may withdraw your Account Balance in whole or in part, at any time
during the Accumulation Period. A full withdrawal results in the surrender
of your Contract. We may take up to seven days following receipt of your
withdrawal request to process the request and mail a check to you. SEE
"Income Tax Consequences of Withdrawals" below.
SPECIFIED PAYMENTS OPTION. If you have reached age 59 1/2, you may elect to
make withdrawals of Account Balance by telling us a set amount to be
withdrawn each month. You must specify an amount, which may not be less than
$100, and must tell us the Investment Alternatives from which the
withdrawals should be taken. We will send the Specified Payments to you,
except that we will send the Specified Payments to the Annuitant if you have
an FPA Contract and have named someone else as the Annuitant.
When you are receiving Specified Payments, you may not make payroll
deduction Contributions, but you (and your employer under an IRA) may make
single sum Contributions. You also may transfer Account Balance among
Investment Alternatives and make other withdrawals when receiving Specified
Payments.
Specified Payments will continue until the earliest of (a) your death; (b)
our receipt of your written request to change or end the Specified Payments;
(c) the decline in your Account Balance (or in any Investment Alternative
that you have designated for withdrawals) so that the remaining balance is
not large enough to cover the next Specified Payment due; or (d) your
Annuity Commencement Date.
If you are subject to the minimum distribution rules under the Code, the
Specified Payments for the year should at least total the minimum required
annual distribution. (SEE "Federal Tax Information -- Minimum Distribution
Requirements.")
OUR RIGHT TO IMPOSE A DEFERRED SALES CHARGE. Currently, we do not impose a
contingent deferred sales charge or any other withdrawal charge on
withdrawals you make, whether complete or partial. We reserve the right,
however, to impose a deferred sales charge or other charges on withdrawals
in the future.
INCOME TAX CONSEQUENCES OF WITHDRAWALS. You should consider the possible
Federal income tax consequences of any withdrawal, including withdrawals
under the Specified Payments Option. You will be taxed at ordinary income
tax rates on the portion of your withdrawal that is taxable. You will not be
taxed on the amount of any Contributions you made with "after-tax" dollars,
but there are special rules under the Code for determining whether a
withdrawal, or portion of a withdrawal, will be considered a return to you
of after-tax Contributions (SEE "Federal Tax Information").
Your withdrawals under a Roth IRA Contract that are made after the five year
period beginning with the tax year in which the Roth IRA Contract was first
issued are not taxable if:
o you have reached age 59 1/2, or
o the withdrawals are to pay for qualified first-time home buyer expenses
of up to $10,000 per lifetime, or
o you have died or become disabled.
A withdrawal that does not meet these requirements is nevertheless not
taxable if it is not more than the amount of your Contributions to the Roth
IRA and contributions to other Roth IRAs you own. Refer to the discussion on
Roth IRA Contracts under "Federal Tax Information".
PENALTY TAX ON TAXABLE PORTION OF WITHDRAWALS AND ON CERTAIN ROTH IRA
WITHDRAWALS. There is a 10% Federal penalty tax on the taxable amount of
withdrawals you make during the Accumulation Period, unless
o you have reached age 59 1/2,
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o you are disabled or have died,
o the distributions are Annuity Payments over your life (or life
expectancy) or over the joint lives (or joint life expectancies) of you
and the Beneficiary, or
o in certain other circumstances. Refer to "Federal Tax Information" for
a listing of circumstances when the penalty is not due.
The 10% penalty you pay increases to 25% if you make a withdrawal from a
SIMPLE IRA during the first two
years of your participation in the employer's SIMPLE.
You may owe a 10% penalty tax on withdrawals of amounts that you converted
or rolled over to a Roth IRA from a Regular IRA, even though the withdrawal
is tax-free to you. SEE "Federal Tax Information".
HOW TO TELL US AN AMOUNT TO TRANSFER OR WITHDRAW
----------------------------------------------------------------------------
To tell us the amount of your Account Balance to transfer or withdraw, you
may specify to us:
o the dollar amount to be taken from each Investment Alternative,
o for Separate Account Funds, the number of Accumulation Units to be
transferred or withdrawn, or
o the percentage of your Account Balance in a particular Investment
Alternative to be transferred or withdrawn.
For transfers, you also must specify the Investment Alternative(s) to which
you are moving the transferred amount. You should use the form we provide to
give us instructions. Your request for a transfer or withdrawal is not
binding on us until we receive all information necessary to process your
request.
DEATH BENEFIT PRIOR TO ANNUITY COMMENCEMENT DATE
----------------------------------------------------------------------------
During the Accumulation Period, we will pay a death benefit to your
Beneficiary upon your death or, under an FPA Contract when you are not the
Annuitant, upon the death of either you or the Annuitant, whichever comes
first.
We will pay the death benefit after we have received:
o due proof of your (or under an FPA Contract, if different, the
Annuitant's) death;
o notification of election by the Beneficiary(ies) of the form in which
we are to pay the death benefit; and
o all other information and documentation necessary for us to process the
death benefit request.
The amount of the death benefit will be the value of your Account Balance as
of the date on which we receive the items listed above. Until then, your
Account Balance will remain allocated as it was on the date of death. (If
you were the Annuitant and your Eligible Spouse is the Beneficiary, special
rules apply as described below).
FORM OF PAYMENT OF DEATH BENEFIT. The Beneficiary will elect the form of
death benefit. Payout options include a lump sum or annuity payments, but
the Code imposes special requirements on the payment of a death benefit, as
described below.
Under an IRA Contract (other than a Roth IRA), you are required to begin
taking minimum distributions after you reach a certain age (called the
REQUIRED BEGINNING DATE), and certain requirements depend on whether you had
reached that age at the time of your death. When minimum distribution
requirements are applicable, they can be satisfied by withdrawals from other
eligible IRA contracts. Beneficiaries should consult their tax advisers for
any additional rules that may apply in their particular circumstances. SEE
"Federal Tax Information -- Minimum Distributions under IRA Contracts".
In general, any method of distribution that your Beneficiary selects must
comply with ONE of the following.
(A) FIVE YEAR RULE. The general rule is that we must pay the entire death
benefit to the Beneficiary by December 31 of the year that is five years
after your death (or the Annuitant's death, if applicable), unless we pay
the death benefit in accordance with (b), (c) or (d) below.
(B) LIFE ANNUITY RULE. If a Beneficiary selects a life annuity, the entire
death benefit must generally be distributed to the Beneficiary in the
form of Annuity Payments that begin within one year of your (or the
Annuitant's)
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<PAGE>
death and are payable over a period of time that is not more than the
Beneficiary's life or life expectancy, whichever is longer.
(C) COMMENCEMENT OF MINIMUM DISTRIBUTIONS. Under an IRA (other than a Roth
IRA) Contract, if you die AFTER reaching the Required Beginning Date,
the method of distribution the Beneficiary selects may not be slower
than the method of distribution that was in effect before your death.
(D) BENEFICIARY IS YOUR ELIGIBLE SPOUSE. Your spouse may be able to
continue an FPA or IRA Contract.
o Under an FPA Contract when you are the Annuitant, a Beneficiary who is
your Eligible Spouse may choose to be considered as the Owner for
purposes of determining when distributions must begin. In effect, your
spouse can be substituted as the Owner under the FPA Contract, and the
death benefit distribution requirements will not apply until the
spouse's death.
o Under an IRA Contract, the spouse may use your Required Beginning Date
for determining when minimum distributions must begin. Alternatively,
the spouse may take over the IRA Contract and make Contributions to the
Contract, in which case the minimum distribution rules will be based on
the spouse's Required Beginning Date, and the death benefit
distribution requirements will not apply until the spouse's death.
TERMINATION OF A CONTRACT
----------------------------------------------------------------------------
We may, in our sole discretion, return your Account Balance and terminate a
Contract prior to the Annuity Commencement Date if:
o you have not made Contributions for three consecutive years,
o your Account Balance is less than the specified minimum for FPA
Contracts of $500 and for IRA Contracts of either $2,000 or the amount
needed to provide monthly Annuity Payments of at least $20 under the
form of annuity you selected, AND
o you have reached the age 59 1/2.
Before we elect to terminate a Contract, we will notify you of our intention
to do so and provide a period of 90 days during which you may make
additional Contributions to reach the specified minimum. We will pay your
Account Balance to you in a single sum if we terminate your Contract.
WHEN WE MAY POSTPONE PAYMENTS
----------------------------------------------------------------------------
We will pay any amounts due from the Separate Account for a withdrawal
(including a Specified Payments Option withdrawal), death benefit or
termination, and will transfer any amount from the Separate Account to the
General Account, within seven days, unless:
o The New York Stock Exchange is closed for other than usual weekends or
holidays, or trading on that Exchange is restricted as determined by
the Commission; or
o The Commission by order permits postponement for the protection of
Owners; or
o An emergency exists, as determined by the Commission, as a result of
which disposal of securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's
net assets.
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YOU MAY OBTAIN AN ANNUITY WITH YOUR ACCOUNT BALANCE
AMOUNT OF ANNUITY PAYMENTS
----------------------------------------------------------------------------
At your Annuity Commencement Date, we will apply your Account Balance to
purchase a stream of monthly Annuity Payments (an annuity). Once Annuity
Payments have begun, you may no longer make Contributions, transfers or
withdrawals under the Contract and your employer may no longer make
Contributions on your behalf. You may elect to receive your Account Balance
by making partial or full withdrawals, including under the Specified
Payments option, instead of receiving Annuity Payments.
We will fix the amount of each Annuity Payment and guarantee payment,
according to the form of annuity you select. The amount of the Annuity
Payments depends only on the annuity form you choose, the applicable annuity
purchase rates and your Account Balance. The life expectancy of the
Annuitant(s) is a factor we use in determining the amount of the monthly
Annuity Payments, if the form of annuity requires us to make payments for
the life of the Annuitant (or joint lives of the Annuitant and joint
Annuitant).
We guarantee that the purchase rates we use to determine the amount of
Annuity Payments will never be less favorable for you than the guaranteed
rates in the Contract. In providing guaranteed rates, we assume "mortality
risk", because the rates are applicable without regard to the death rate (or
in other words, the life expectancy) of the general population after the
date of Contract issuance. We also guarantee that we will not increase
expense charges under the Contracts for the Annuity Payments, regardless of
our actual expenses.
We will send Annuity Payments directly to the Annuitant(s) at the last
address known to us, as filed with us by you.
ANNUITY COMMENCEMENT DATE
----------------------------------------------------------------------------
You must notify us of the Annuity Commencement Date in advance, according
to our procedures.
IRA CONTRACTS. You may elect an Annuity Commencement Date that is the first
day of any calendar month on or after the date you attain age 55. For SEP
IRAs and SIMPLE IRAs, the Annuity Commencement Date must be no EARLIER than
the last to occur of the following: the first day of the calendar month in
which you attain age 55, the 30th day following the day you stop working for
the employer that sponsors the SEP or SIMPLE, or the 30th day following the
day that we receive at our home office the last employer contribution due
under the SEP or SIMPLE.
FPA CONTRACT. You may elect an Annuity Commencement Date that is the first
day of any calendar month.
AVAILABLE FORMS OF ANNUITY
----------------------------------------------------------------------------
You select the form of annuity at the time you designate an Annuity
Commencement Date.
You may select a form of annuity from the following list. You will be the
Annuitant, unless under an FPA Contract you named someone else as the
Annuitant.
TEN YEARS CERTAIN AND CONTINUOUS FORM. This annuity form provides for
monthly Annuity Payments to the Annuitant, continuing until the LATER OF the
month of the Annuitant's death and the end of 10 years (the certain period).
If the Annuitant dies before the end of the 10 year certain period, the
Annuitant's Beneficiary will receive the monthly Annuity Payments until the
end of the 10 year period. If the Beneficiary dies before the end of the 10
year period, we will pay the commuted value of the remaining Annuity
Payments to the payee named by you.
JOINT AND 66 2/3% SURVIVOR LIFE WITH 10 YEAR PERIOD CERTAIN FORM. This
annuity form provides a monthly Annuity Payment during the lifetime of the
Annuitant and 66 2/3% of that monthly Annuity Payment to the joint Annuitant
after the Annuitant's death if the joint Annuitant survives the Annuitant.
If both the Annuitant and the joint Annuitant die before the end of the ten
year period, payments continue in the amount last paid until the end of ten
years (the certain period) to the Beneficiary. If a person named as an
Annuitant's joint annuitant dies prior to the Annuity Commencement Date,
your election of this annuity form is cancelled automatically.
FULL CASH REFUND FORM. This annuity form provides for monthly Annuity
Payments to the Annuitant, continuing until the month of the Owner's death.
If the aggregate amount of the monthly Annuity Payments that we made to you
is less than your Account Balance at the Annuity Commencement Date, we will
pay the difference to the
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Beneficiary. The Beneficiary may elect to receive the amount in a lump sum
or as an annuity in the Ten Years Certain and Continuous Form.
We will calculate any commuted value on the basis of compound interest at a
rate we determine that is consistent with the interest assumption for the
annuity rates we used to determine the Annuity Payments.
In addition to the forms of annuity listed above, we may in our discretion
offer additional forms of annuity as of your Annuity Commencement Date. As
of the date of this Prospectus, we are offering the following additional
forms of annuity and have the right to discontinue offering these forms at
any time.
PERIOD CERTAIN AND CONTINUOUS ANNUITY. Same as the Ten Years Certain and
Continuous annuity above, except that the period may be for three or five
years or for some other period we approve.
JOINT AND SURVIVOR LIFE WITH PERIOD CERTAIN ANNUITY. Same as the Joint and
Survivor Life with Period Certain annuity above, except that the percentage
to the contingent Annuitant may be 50%, 75% or 100%, rather than 66 2/3%,
and the Period Certain may be different, as elected by the Annuitant.
JOINT AND SURVIVOR LIFE ANNUITY. Same as the Joint and Survivor Life With
Period Certain annuity above, except that payments will end upon the death
of the survivor as between the Annuitant and the contingent Annuitant. There
is no guaranteed minimum payment period.
NON-REFUND LIFE ANNUITY. We make a monthly Annuity Payment until the death
of the Annuitant. No amount is payable to any contingent Annuitant or
Beneficiary.
DEATH BENEFIT AFTER ANNUITY COMMENCEMENT DATE
----------------------------------------------------------------------------
If an Annuitant (and the joint Annuitant if the form is a joint annuity)
dies on or after the Annuity Commencement Date, your Beneficiary will
receive the death benefit (if any) provided by the form of annuity under
which Annuity Payments were made. SEE "Available Forms of Annuity" above.
LUMP SUM FOR SMALL ANNUITY PAYMENTS
----------------------------------------------------------------------------
If the annuity benefit payable would be less than $20 each month, we may
elect to pay the Account Balance in a single payment to the Annuitant.
OUR GENERAL ACCOUNT
SCOPE OF PROSPECTUS
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This Prospectus serves as a disclosure document for the variable, or
Separate Account, interests under the Contracts. We have not registered the
Contracts under the Securities Act of 1933 for allocations to the General
Account, nor is the General Account registered as an investment company
under the 1940 Act. The staff of the Commission has not reviewed the
disclosures in this Prospectus that relate to the General Account.
Disclosures regarding the fixed portion of the Contracts and the General
Account, however, generally are subject to certain provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.
GENERAL DESCRIPTION
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Amounts that you allocate to the General Account become part of our general
assets. Our General Account supports our insurance and annuity obligations.
The General Account consists of all of our general assets, other than those
in the Separate Account and other segregated asset accounts.
We bear the full investment risk for all amounts that Owners allocate to the
General Account. We have sole discretion to invest the assets of the General
Account, subject to applicable law. Your allocation of Account Balance to
the General Account does not entitle you to share in the investment
experience of the General Account.
We guarantee that we will credit interest to Owners' Account Balances in the
General Account at an effective annual rate of at least 3%. In our sole
discretion, we may credit a higher rate of interest to Account Balances in
the General Account, although WE ARE NOT OBLIGATED TO CREDIT INTEREST IN
EXCESS OF 3% PER YEAR. We will send you notice when we change the current
rate. We credit interest daily and compound it annually.
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For SEP and SIMPLE IRAs and payroll deduction IRA Contracts, we reserve the
right to credit a higher interest rate than the rate otherwise set for
amounts allocated to the General Account when the employer uses electronic
media, in compliance with our established rules and requirements, for the
transmission and receipt of certain information regarding Owners,
Contributions and other Contract information.
TRANSFERS AND WITHDRAWALS
----------------------------------------------------------------------------
You may transfer any portion of your Account Balance to or from the General
Account and may withdraw any portion of your Account Balance from the
General Account prior to the Annuity Commencement Date. SEE "Your Right to
Transfer Among Investment Alternatives" and "Your Right to Make Withdrawals,
including by Specified Payments"under "Our Payment of Account Balance to You
or a Beneficiary". We have the right to delay transfers and withdrawals from
the General Account for up to six months following the date that we receive
the transaction request.
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HOW TO CONTACT US AND GIVE US INSTRUCTIONS
CONTACTING AMERICAN LIFE
----------------------------------------------------------------------------
You should send in writing all notices, requests and elections required or
permitted under the Contracts, except that you may give certain instructions
by telephone, as described below. Our home office address is:
The American Life Insurance Company of New York
Eldon Wonacott, Senior Vice President
320 Park Avenue
New York, New York 10022
You can check the address for your Regional Office by calling 1-800-872-5963
or by visiting our Website at www.mutualofamerica.com.
TRANSFERS, ALLOCATION CHANGES AND WITHDRAWALS BY TELEPHONE
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You may make requests by telephone for transfers among Investment
Alternatives or withdrawals of Account Balance (except for IRA rollovers) or
to change the Investment Alternatives to which we will allocate your future
Contributions.
You must use a Personal Identification Number (PIN) to make telephone
requests. We will automatically send you a PIN, and your use of the PIN
constitutes your agreement to use the PIN in accordance with our rules and
requirements. You may call us to change or cancel the PIN that we have
assigned. Our toll-free telephone number for requests is 1-800-872-5963.
On any Valuation Day, we treat requests by telephone that we receive by 4
p.m. Eastern Time (or the close of the New York Stock Exchange, if earlier)
as received that day. We treat requests that we receive after 4 p.m. (or the
Exchange close) as received the next Valuation Day. We reserve the right to
suspend or terminate at any time the right of Owners to request transfers or
reallocations by telephone.
Although our failure to follow reasonable procedures may result in our
liability for any losses due to unauthorized or fraudulent telephone
transfers, we will not be liable for following instructions communicated by
telephone that we reasonably believe to be genuine. We will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. Those procedures are to confirm your Social Security number,
check the Personal Identification Number, tape record all telephone
transactions and provide written confirmation of telephone transactions.
WHERE YOU SHOULD DIRECT REQUESTS
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You should request an allocation change or a transfer by calling
1-800-872-5963 or sending a written request to our Processing Center. The
address is:
The American Life Insurance Company of New York
Financial Transaction Processing Center
1150 Broken Sound Parkway NW
Boca Raton, FL 33487
For withdrawals, you must make your request according to our procedures,
which we may change from time to time. Under our current procedures, you may
make a withdrawal request:
o under an IRA Contract by writing to your Regional Office or by calling
our 800 number, except that a request for rollover to another IRA must
be in writing, and
o under an FPA Contract by calling our 800 number or writing to our Home
Office.
You should use our forms to submit written requests to us.
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ADMINISTRATIVE MATTERS
YEAR 2000 COMPLIANCE
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Many of the services that we provide to you depend on the proper functioning
of our computer and computer-based systems, as well as those of our outside
service providers. Many computers cannot distinguish the year 2000 from the
year 1900, and this inability could potentially have an adverse impact on
the handling of your purchase, exchange and redemption transactions, the
crediting of Accumulation Units, accounting and other recordkeeping
services.
We have performed a comprehensive review of our computer systems, made the
necessary modifications or replacements and successfully completed system
testing of our in-house software, the largest and most critical project under
our Year 2000 program. For the balance of 1999, we will continue to monitor
and verify Year 2000 compliance. We also have contacted our vendors and
service providers as to the status of their Year 2000 compliance. Vendors and
service providers whose systems are material to our operations have indicated
they are, or expect to be, Year 2000 compliant. Although we anticipate that
our computer systems and those of our providers will be adapted in time for
the year 2000, it is possible Year 2000 problems still may occur. We are
developing written contingency plans to ensure our business continuity through
the year 2000.
CONFIRMATION STATEMENTS TO OWNERS
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We will send you a confirmation statement each time you change your
allocation instructions, we receive a new Contribution from or for you, or
you transfer any portion of your Account Balance among the Investment
Alternatives. The confirmation for a new Contribution or transfer of Account
Balance may be an individual statement for FPA and certain IRA Contracts or
may be part of your next quarterly account statement for certain IRA
Contracts. You must notify us of any error in a statement within 30 days
after the date we processed the change or transaction, or within 30 days
after the end of the period covered by the quarterly statement that serves
as the confirmation statement, or you will give up your right to have us
correct the error.
DESIGNATION OF BENEFICIARY
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You may designate one or more persons as your Beneficiary(ies). You may
change a Beneficiary while you are living, either before or after the
Annuity Commencement Date, by providing us (or your employer when the
employer has agreed to hold such information) with written notice of the
change. The designation or change in designation will take effect when we
(or your employer, if applicable) receive the notice, whether or not you are
living at the time we receive the notice. We will not be liable for any
payment or settlement we make before we receive the notice of Beneficiary or
change of Beneficiary.
If no Beneficiary designated by you is living at the time of your death
during the Accumulation Period (or under an FPA Contract, the Annuitant, if
different), or when the Annuitant dies (and the joint Annuitant, if any
dies) during the Annuity Period, we will pay a single sum payment or the
commuted value of any remaining periodic payments to a Beneficiary or
Beneficiaries determined under the Contract. The Contract lists classes of
Beneficiaries in an order of preference. We will pay the surviving family
member(s) in the first class of Beneficiaries we find, in this order:
o your spouse;
o your children;
o your parents; and
o your brothers and sisters.
If we do not find family members in these classes, we will pay the
executors or administrators of your estate.
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MISCELLANEOUS CONTRACT PROVISIONS
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ASSIGNMENT OF CONTRACTS. You may not assign or transfer an IRA Contract or
any rights under an IRA Contract, except as otherwise required by law.
You may assign an FPA Contract. Your assignment of an FPA Contract will not
be binding on us until we have recorded it, and an assignment will not apply
to payments we make before we record the assignment.
MODIFICATION OR AMENDMENT OF CONTRACTS. Our rights and obligations under a
Contract cannot be changed or waived, unless one of our duly authorized
officers signs a written agreement to the change or waiver. No amendment or
endorsement will affect the amount or terms of any Annuity Payments we
provide under a Contract that commenced before the amendment or endorsement.
By accepting an IRA Contract, you delegate to us the power to amend or
replace that Contract to conform it to the provisions of any law,
regulations, or material administrative rulings pertaining to individual
retirement annuities, and to make such other changes in the Contract that we
determine from time to time are necessary or appropriate. If the effect
would be to substantially change the costs or benefits under the Contract,
we may not make changes without your consent.
EVIDENCE OF SURVIVAL. When payment of a benefit is contingent upon the
survival of any person, we may require that evidence of that person's
survival be furnished to us, either by personal endorsement of the check
drawn for payment, or by other means satisfactory to us.
MISSTATEMENT OF INFORMATION. If we pay a benefit under a Contract based on
information that you or Beneficiary misstated to us, we will recalculate the
benefit when we learn of the misstatement. We will adjust the amount of the
benefit payments, or the amount applied to provide the benefit, or both, to
the proper amount we determine based on the corrected information.
If we underpaid benefits due to any misstatement, we will pay the amount of
the underpayment in full with the next payment due under the Contract. If we
overpaid any benefits due to a misstatement, we will deduct the overpayment
to the extent possible from payments as they become due under the Contract.
We will include interest on the amount of any underpayments or charge
interest on overpayments, at the effective rate then required under State
insurance law provisions.
INFORMATION AND DETERMINATION. You must furnish us with the facts and
information that we may require for the operation of the Contract including,
upon request, the original or photocopy of any pertinent records held by
you. We may rely on reports and other information furnished by or on your
behalf and are not obligated to inquire as to the accuracy or completeness
of such reports and information.
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FEDERAL TAX INFORMATION
For Federal income tax purposes, the Separate Account is not separate from
us, and its operations are considered part of our operations. Under existing
Federal income tax law, we do not pay taxes on the net investment income and
realized capital gains earned by the Separate Account. We reserve the right,
however, to make a deduction for taxes if in the future we must pay tax on
the Separate Account's operations.
OBTAINING TAX ADVICE
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THE DESCRIPTION BELOW OF THE CURRENT FEDERAL TAX STATUS AND CONSEQUENCES FOR
OWNERS UNDER THE CONTRACTS DOES NOT COVER EVERY POSSIBLE SITUATION AND IS
FOR INFORMATION PURPOSES ONLY. TAX PROVISIONS AND REGULATIONS MAY CHANGE AT
ANY TIME. Tax results may vary depending upon your individual situation, and
special rules may apply to you in certain cases. You also may be subject to
State and local taxes, which may not correspond to the Federal tax
provisions, especially for Roth IRAs.
For these reasons, you or a Beneficiary should consult a qualified tax
adviser for complete tax information, including advice concerning the form
of IRA Contract to purchase and methods for determining the minimum required
distributions under IRA Contracts (other than Roth IRAs).
This Prospectus does not discuss the requirements and limitations under the
Code applicable to employers in establishing and maintaining SEPs and
SIMPLEs or for the deductibility of employer contributions. Employers should
consult their own qualified tax advisers for this information.
PAYMENTS UNDER ANNUITY CONTRACTS GENERALLY
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Section 72 of the Code describes the income taxation of Annuity Payments. We
intend that the provisions of Section 72 will apply to payments we make
under your Contract, except that other provisions of the Code may apply to
payments we make under an FPA Contract issued to an employer for its
deferred compensation plan obligations.
SPECIAL TREATMENT FOR WITHDRAWALS UNDER ROTH IRAS. The discussion below on
the taxation of IRA Contract withdrawals is applicable to IRA Contracts,
other than distributions from Roth IRA Contracts. Owners receive special tax
treatment for withdrawals from Roth IRA Contracts, as discussed under "Roth
IRA Contracts Qualified Distributions" and "Roth IRA Contracts Nonqualified
Distributions; When Penalty Tax is Not Due".
GENERAL RULES FOR WITHDRAWALS UNDER CONTRACTS OTHER THAN ROTH IRAS. The
general rule is that you must receive a payment under a Contract or Plan in
order to be subject to income taxation. If you are individual, you do not
include in gross income the interest and investment earnings we credit to
your Account Balance until you withdraw or otherwise receive such amounts.
If the owner of an FPA Contract is not a natural person, or if requirements
of the Code relating to deferred compensation are not met, then the owner
may be required to include in gross income the interest and investment
earnings on amounts under the Contract.
When you receive a distribution or Annuity Payments, all or part of the
payments will be taxable to you as ordinary income. An important factor in
determining the taxable portion is whether you have an INVESTMENT IN THE
CONTRACT, which generally is the amount of after-tax Contributions (not
deducted or excluded from gross income) that you have made and not
previously withdrawn. You must report to the IRS the amount of your
after-tax Contributions to an IRA Contract, other than for a Roth IRA, and
you are responsible for determining the investment in the IRA Contract. SEE
"Regular IRA and SEP IRA Contracts -- Deduction of Contributions".
The following are general concepts, and you should refer to the
discussions below for your type of Contract.
o If you do not have an investment in the contract, you must include in
gross income the entire amount received during the tax year.
o If you do have an investment in the contract, you may be able to
exclude from gross income a portion of the Annuity Payments or other
distribution received.
o The amount you may exclude from gross income each year represents a
partial return of your Contributions that were not tax deductible or
excludable when made.
o The EXCLUSION RATIO is a method of determining the percentage of a
distribution that you may exclude from gross income for a tax year. The
percentage you may exclude is calculated by dividing your investment in
the contract by your expected return from the Contract.
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o The EXPECTED RETURN is the present (or discounted) value of the Annuity
Payments or other periodic payments we expect to make to you.
DISTRIBUTIONS UNDER AN FPA CONTRACT
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ANNUITY PAYMENTS. If you begin to receive Annuity Payments, or another form
of periodic payments such as an installment method for a fixed period or a
fixed amount, you may apply the exclusion ratio method to determine the
amount to exclude from gross income for the tax year of the distribution.
After we make Annuity Payments or other periodic distributions for a
sufficient period of time, you will receive back all of your investment in
the contract. Thereafter, you must include in gross income the entire amount
of the Annuity Payments or other periodic distributions, except that an
Owner whose Annuity Commencement Date was before January 1, 1987 may
continue to use the exclusion ratio method.
WITHDRAWALS. If you make cash withdrawals, you may not use the exclusion
ratio and may owe tax on up to the entire amount of the withdrawal. You must
include in gross income the amount withdrawn to the extent that the value of
the FPA Contract immediately before the withdrawal is greater than your
investment in the contract. In effect, you must treat withdrawals as first
being withdrawals of the increase in value under the Contract, and you are
taxed on the entire amount of interest and earnings under the FPA Contract
before you may recover the investment in the contract. A different method
may be applicable for withdrawals under FPA Contracts issued on or before
August 14, 1982 (SEE "Obtaining Tax Advice").
LUMP SUM PAYMENTS. If you receive a single lump sum payment, you must
include in gross income, for the tax year in which you receive the lump sum,
the difference between the amount of the lump sum payment and the amount of
your investment in the contract.
DISTRIBUTIONS UNDER AN IRA CONTRACT (OTHER THAN A ROTH IRA)
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If you make "after-tax" Contributions under an IRA Contract (other than a
Roth IRA), you will have an investment in the contract.
ANNUITY PAYMENTS. If you have an investment in the contract and begin to
receive Annuity Payments, or another form of periodic payments such as an
installment method for a fixed period or a fixed amount, you may apply the
exclusion ratio method to determine the amount to exclude from gross income
for the tax year of the distribution. The exclusion ratio method continues
to apply until you recover the investment in the contract. After that time,
you will have to include the full amount of each Annuity Payment in gross
income for each taxable year.
WITHDRAWALS. If you receive amounts (that are not Annuity Payments) and you
have an investment in the contract, you generally may exclude a portion of
the payments from gross income.
LUMP SUM PAYMENTS. If you receive a single lump sum payment of the Account
Balance, you must include in gross income, for the tax year in which you
receive the payment, the difference between the amount of the payment and
your investment in the contract, if any.
REGULAR IRA AND SEP IRA CONTRACTS -- DEDUCTION OF CONTRIBUTIONS FROM GROSS
INCOME
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You may deduct from gross income your Contributions to a Regular or SEP IRA
Contract up to a maximum of $2,000 or 100% of annual compensation, whichever
is less. The deductible amount depends on whether or not you participate
(and if you are married, whether or not your spouse participates) in a
pension or profit-sharing plan, a tax-sheltered annuity arrangement, a SEP,
a SIMPLE or an eligible 457 plan (a PENSION ARRANGEMENT) and, if so, on your
Federal adjusted gross income (AGI).
o If you are not-married and do not participate in a pension arrangement,
or if you are married and neither you nor your spouse participates in a
pension arrangement, you may deduct the maximum deductible amount.
o When (1) you (whether or not married) participate in a pension
arrangement, or if you are married and do not participate in a pension
arrangement but your spouse participates in a pension arrangement, and
(2) you have AGI over a specified amount, then you either will not be
able to deduct Contributions, or the amount that you may deduct will be
reduced.
The maximum deductible amount is reduced in 1999 by $1 for every $5 of
your AGI over $31,000 if not married, or over $51,000 if married and
filing jointly (with these amounts increasing each year until 2007), or
$0 if married and filing separately. As a result, you may not deduct
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Contributions under an IRA Contract once your AGI for 1999 reaches
$41,000 if you are not married, or $61,000 if you are married and
filing jointly (such amounts to increase each year until 2007) or
$10,000 if married and filing separately.
o If you are married, participate in a pension arrangement, and make
Contributions to a spousal IRA of up to $2,000 (minus any amount the
spouse contributes to an IRA for the same tax year) for a spouse who
does not participate in a pension arrangement, you may deduct the
Contribution to the spousal IRA from gross income if you and your
spouse file a joint federal income tax return and your combined AGI is
not more than $150,000. The deduction is reduced by $1 for every $5 of
AGI over $150,000, and the deduction is zero at $160,000.
NON-DEDUCTIBLE CONTRIBUTIONS. If you may not deduct all or part of your
Contributions to an IRA under the above rules, you may still make
non-deductible Contributions. The maximum non-deductible Contribution is
$2,000 or 100% of annual compensation, whichever is less, reduced by the
amount of your deductible contribution for the year and by any contribution
you make to a Roth IRA, other than rollovers to a Roth IRA. You also may
make non-deductible Contributions up to $2,000 to a spousal IRA for your
spouse for any tax year, reduced by any contributions to an IRA (including a
Roth IRA) made by your spouse for the same tax year and any deductible
Contribution for the year. Excess Contributions may result in adverse income
tax consequences to you.
If you make a non-deductible contribution to an IRA, you must report the
amount of that contribution to the IRS when filing an income tax return for
the year. You are responsible for maintaining your own records regarding
non-deductible contributions. We will presume that all Contributions to our
Regular IRA and SEP IRA Contracts are deductible, including for tax
reporting purposes. When we make distributions to you, it is your
responsibility to make any appropriate adjustments when you report the
distributions to the IRS on your income tax return for the year of
distribution.
These limits on Contributions, however, do not apply to tax-free rollovers
from other qualified retirement plans (SEE "Who May Purchase a Contract and
Make Contributions -- Payment of Contributions").
SIMPLE IRAS -- EXCLUSION OF CONTRIBUTIONS FROM GROSS INCOME; ROLLOVER
LIMITATION
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You may exclude Contributions to a SIMPLE IRA from gross income for
Federal income tax purposes.
During the first two years of participation in a SIMPLE, you may rollover
amounts from a SIMPLE IRA only to another SIMPLE IRA. After the two year
period, you may rollover amounts from a SIMPLE IRA to any IRA (other than a
Roth IRA).
PENALTY TAXES FOR WITHDRAWALS
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In addition to ordinary income taxation, Section 72 of the Code imposes a
penalty tax on premature withdrawals, which are withdrawals before you have
reached age 59 1/2. This penalty tax is equal to 10% of the amount of the
premature withdrawal that you include in gross income. However, if you make
any withdrawals from a SIMPLE IRA within the first two years of your
participation in the employer's SIMPLE, the early withdrawal penalty
increases to 25% from 10%. Other Federal income tax penalties may apply to
amounts or withdrawals under IRA Contracts. SEE "Obtaining Tax Advice".
FPA CONTRACTS -- WHEN NO PENALTY TAX IS DUE
The taxable amount of a withdrawal you make before you reach age 59 1/2 is
not subject to a penalty tax if:
1. You have died or become disabled;
2. The withdrawal is part of a series of substantially equal periodic
payments made over your life (or life expectancy) or over the joint
lives (or joint life expectancies) of you and the Beneficiary;
3. The withdrawn amount is attributable to Contributions made prior to
August 14, 1982;
4. The Contract was purchased in conjunction with a plan that meets the
requirements of Section 401(a) or was issued under an IRA (but such
payment may be subject to a similar tax applicable to premature
distributions from such retirement plans);
5. The withdrawal is under an immediate annuity contract; or
6. The Contract was purchased for an employee by a plan upon its
termination, provided the plan met the requirements of Section 401(a) or
Section 403(a) of the Code.
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For premature payments received under FPA Contracts issued before January
19, 1985, the penalty tax may be
only 5% and additional exceptions may apply to certain amounts (SEE
"Obtaining Tax Advice").
IRA CONTRACTS -- WHEN NO PENALTY TAX IS DUE
The taxable amount of a withdrawal you make before you reach age 59 1/2 is
not subject to a penalty tax if:
1. You have died or become disabled.
2. The withdrawals are Annuity Payments made over your life (or life
expectancy) or the joint lives (or joint life expectancies) of you and
the Beneficiary.
3. The withdrawals are to pay your medical expenses, or of your spouse or
dependents, if the medical expenses would be deductible by you for
Federal income tax purposes. (Generally, a taxpayer may deduct medical
expenses if they are not covered by health insurance or otherwise
reimbursed and they exceed 7.5% of the taxpayer's adjusted gross
income.)
4. The withdrawal is to pay your health insurance premiums, or the
premiums for your spouse or dependents, if you have received
unemployment compensation for at least 12 weeks and you meet certain
other eligibility requirements.
5. The withdrawal is for the payment of qualifying post-secondary
(college) education expenses, OR
6. The withdrawal is for qualified first-time home buyer expenses (up to
$10,000 per lifetime).
ROTH IRA CONTRACTS -- QUALIFIED DISTRIBUTIONS. You receive tax-free any
distribution that is a QUALIFIED DISTRIBUTION from a Roth IRA Contract. The
distribution also is penalty tax free, except for certain withdrawals from
rollover or conversion Contributions as described below.
A qualified distribution is a distribution made:
1. After the end of the five-year period beginning with the year in which
you first contributed to the Roth IRA Contract; AND
2. In one of the following circumstances:
a) You are age 59 1/2 or older; or
b) You have died or become disabled; or
c) For qualified first-time home buyer expenses (up to $10,000 per
lifetime).
ROTH IRA CONTRACTS -- NON-QUALIFIED DISTRIBUTIONS; WHEN PENALTY TAX IS NOT
DUE. Any withdrawal by you that is not a "qualified distribution" is first
considered to be a return of your after-tax Contributions. Withdrawals of
after-tax Contributions are not subject to taxation or, except as noted
below for rollover or conversion Contributions, subject to the 10% penalty
tax. After you have recovered all Contributions under the Roth IRA Contract,
you will be taxed at ordinary income rates on the amount of investment
earnings withdrawn and may be subject to the penalty tax on the taxable
amount. (For purposes of this rule, you must aggregate all of your Roth IRA
contracts.)
There is no penalty tax for withdrawals that are not Qualified Distributions
if one of the Regular IRA exceptions to the penalty tax applies. SEE "IRA
Contracts -- When No Penalty Tax is Due" above.
ROTH IRA CONTRACTS -- SPECIAL PENALTY TAX ON WITHDRAWALS OF ROLLOVER OR
CONVERSION CONTRIBUTIONS. Your withdrawal from a Roth IRA Contract is
subject to the 10% penalty for premature withdrawals, even though the amount
withdrawn is not taxable, if:
o the amount withdrawn was rolled over or converted from a Regular IRA
Contract, and
o the withdrawal is within the 5 tax year period beginning with the tax
year in which you made the rollover or conversion.
Each rollover or conversion contribution has its own separate 5 tax year
period for purposes of this special penalty tax. If you make Contributions
from rollovers or conversions to the same Roth IRA Contract to which you
make other Contributions, then:
o your withdrawals will be considered to come first from Contributions
other than the rollover or conversion Contributions, and
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o withdrawals of rollover or conversion Contributions will be considered
to come first from the oldest of these Contributions, for purposes of
calculating the 5 tax year period.
MINIMUM DISTRIBUTIONS UNDER IRA CONTRACTS
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The Code contains a series of rules that require you (or your Beneficiary)
to take minimum distributions under an IRA Contract beginning at a certain
time (called the REQUIRED BEGINNING DATE). For Roth IRAs, however,
distributions are not required until your death. Generally, you may take the
required amount from the IRA Contract we have issued, or from other IRA
contracts that you have.
Distributions under IRA Contracts (other than Roth IRAs) must begin by April
1 of the year following the year in which you reach age 70 1/2, even if you
do not retire.
You may elect to calculate the required minimum distribution amount by one
of several methods, and you should consult a tax adviser in making the
election. We will provide explanatory information to Owners before their
Required Beginning Dates. If you do not satisfy the minimum distribution
requirements, you may owe a penalty tax equal to 50% of the difference
between the required minimum and the actual amount you withdrew.
Federal tax law provisions concerning distributions upon the death of an
Owner may reduce the period over which a Beneficiary may take or defer
receipt of the death benefit. SEE "Our Payment of Account Balance to You or
a Beneficiary -- Death Benefit Prior to Annuity Commencement Date".
ESTATE TAXES; TAX LIABILITY OF BENEFICIARY FOR DEATH BENEFIT
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The death benefit payable to your Beneficiary is included in your estate for
Federal estate tax purposes in most circumstances. An exception to this rule
may apply for an FPA Contract if you did not own or control the Contract at
the time of (and for a period before) death. SEE "Obtaining Tax Advice."
A Beneficiary will not receive a "stepped-up basis" for the increase in
value under your Contract over the amount of your Contributions. The gain
under a Contract is called "income in respect of a decedent" (IRD), and the
Beneficiary may owe income tax at ordinary income rates on the IRD when the
Beneficiary receives the death benefit. SEE "Obtaining Tax Advice." If your
estate pays any estate tax on the death benefit, the Beneficiary may be able
to credit the estate tax paid against the income tax the Beneficiary owes. A
Beneficiary should consult a tax adviser for a complete explanation of the
rules that will apply to the Beneficiary's particular situation.
WITHHOLDING ON ANNUITY PAYMENTS AND OTHER DISTRIBUTIONS
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We are required to withhold Federal income tax on Annuity Payments and other
distributions, such as lump sum distributions or withdrawals. In addition,
certain states require us to withhold if Federal withholding is applicable.
In some instances, you may elect to have us not withhold Federal income tax.
When you (or a Beneficiary) request withdrawals or Annuity Payments, we will
give detailed information and advise you (or your Beneficiary) of possible
elections to be made. Owners and Beneficiaries should carefully review
information they receive from us.
We are required to withhold Federal income tax on Annuity Payments and other
distributions, such as partial or lump sum withdrawals, unless the recipient
has provided us with a valid election not to have Federal income tax
withheld. You at any time may revoke an election not to withhold. If you
revoke an election, we will begin withholding.
We will withhold only against the taxable portion of the Annuity Payments or
of the other distributions. The rate we use will be determined based upon
the nature of the distribution(s).
o For Annuity Payments, we will withhold Federal tax in accordance with
the Annuitant's withholding certificate. If an Annuitant does not file
a withholding certificate with us, we will withhold Federal tax from
Annuity Payments on the basis that the Annuitant is married with three
withholding exemptions.
o For most withdrawals, we will withhold Federal tax at a flat 10% rate
of the amount withdrawn.
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YOUR VOTING RIGHTS FOR MEETINGS OF THE UNDERLYING FUNDS
We will vote the shares of the Underlying Funds owned by the Separate
Account at regular and special meetings of the shareholders of the
Underlying Funds. We will cast our votes according to instructions we
receive from Owners. The number of Underlying Fund shares that we may vote
at a meeting of shareholders will be determined as of a record date set by
the Board of Directors or Trustees of the Underlying Fund.
We will vote 100% of the shares that a Separate Account Fund owns. If you do
not send us voting instructions, we will vote the shares attributable to
your Account Balance in the same proportion as we vote shares for which we
have received voting instructions from Owners. We will determine the number
of Accumulation Units attributable to each Owner for purposes of giving
voting instructions as of the same record date used by the Underlying Fund.
Each Owner who has the right to give us voting instructions for a
shareholders' meeting of an Underlying Fund will receive information about
the matters to be voted on, including the Underlying Fund's proxy statement
and a voting instructions form to return to us.
We may elect to vote the shares of the Underlying Funds held by our Separate
Account in our own discretion if the Investment Company Act of 1940 is
amended, or if the present interpretation of the Act changes with respect to
our voting of these shares.
FUNDING AND OTHER CHANGES WE MAY MAKE
We reserve the right to make certain changes to the Separate Account Funds
and to the Separate Account's operations. In making changes, we will comply
with applicable law and will obtain the approval of Owners, if required. We
may:
o create new investment funds of the Separate Account at any time;
o to the extent permitted by state and federal law, modify, combine or
remove investment funds in the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Contracts belong from one Fund of the Separate
Account to another Fund of the Separate Account;
o create additional separate accounts or combine any two or more accounts
including the Separate Account;
o transfer assets we have determined to be associated with the class of
contracts to which the Contracts belong from the Separate Account to
another separate account of ours by withdrawing the same percentage of
each investment in the Separate Account, with appropriate adjustments
to avoid odd lots and fractions;
o operate the Separate Account as a diversified, open-end management
investment company under the 1940 Act, or in any other form permitted
by law, and designate an investment advisor for its management, which
may be us, an affiliate of ours or another person;
o deregister the Separate Account under the 1940 Act; and
o operate the Separate Account under the general supervision of a
committee, any or all the members of which may be interested persons
(as defined in the 1940 Act) of ours or our affiliates, or discharge
the committee for the Separate Account.
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PERFORMANCE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS
MONEY MARKET FUND
----------------------------------------------------------------------------
From time to time, we may include quotations of the YIELD and EFFECTIVE
YIELD of the Separate Account's Money Market Fund in advertisements, sales
literature or reports to Owners. These yield figures show historical
performance of the Fund assuming a hypothetical investment for the period
indicated in the yield quotation. Yield figures do not indicate future
performance.
o The yield of the Money Market Fund refers to the net investment income
generated by the Fund over a specified seven-day period (with the
ending date stated). We then annualize this income. That is, we assume
that the amount of income the Fund generates during that week is
generated during each week in a 52-week period and we show the income
as a percentage.
o The effective yield is calculated similarly to yield, except that when
we annualize income, we assume that the income earned by an investment
in the Fund is reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed
reinvestment.
Yield and effective yield for the Money Market Fund will vary based on its
expenses and the performance of the Investment Company Money Market Fund,
which reflects (among other things) changes in market conditions and the
level of its expenses.
TOTAL RETURN OF FUNDS
----------------------------------------------------------------------------
From time to time, we include quotations of a Separate Account Fund's TOTAL
RETURN in advertisements, sales literature or reports to Owners. Total
return figures for a Fund show historical performance of a Fund assuming a
hypothetical investment and that amounts under a Contract were allocated to
the Underlying Fund when it commenced operations. Total return figures do
not indicate future performance.
o Total return quotations are expressed in terms of average annual
compounded rates of return for all periods quoted and assume that all
dividends and capital gains distributions were reinvested.
o Total return for a Separate Account Fund will vary based on its
expenses and the performance of its Underlying Fund, which reflects
(among other things) changes in market conditions and the level of the
Underlying Fund's expenses.
-32-
<PAGE>
DEFINITIONS WE USE IN THIS PROSPECTUS
ACCOUNT BALANCE -- The value of an Owner's Accumulation Units in the
Separate Account Funds plus the value of amounts held in the General Account
for the Owner, during the Accumulation Period. As used in this Prospectus,
the term "Account Balance" may mean all or any part of your total Account
Balance.
ACCUMULATION PERIOD -- For an Owner, the period under a Contract when
Contributions are made or held for the Owner. The Accumulation Period ends
at the Annuity Commencement Date, or the date the Owner withdraws the
Account Balance in full before the Annuity Commencement Date.
ACCUMULATION UNIT -- A measure we use to calculate the value of an Owner's
interest in each of the Funds of the Separate Account. Each Fund has its own
Accumulation Unit value.
ANNUITANT -- A person who is receiving Annuity Payments or who will receive
Annuity Payments after the Annuity Commencement Date. We use the life
expectancy of the Annuitant(s) as a factor in determining the amount of
monthly Annuity Payments for annuities with a life contingency.
ANNUITY COMMENCEMENT DATE -- The date Annuity Payments become payable under
a Contract or become payable as the death benefit for a Beneficiary. An
Owner, or a Beneficiary entitled to a death benefit, selects the Annuity
Commencement Date. The Owner's Account Balance is used to provide Annuity
Payments.
ANNUITY PAYMENTS -- A series of equal monthly payments from us to an
Annuitant. The amount of the Annuity Payments will depend on your Account
Balance on the Annuity Commencement Date and the form of annuity selected.
The Annuity Payments may be for the Annuitant's life, for a minimum period
of time, for the joint lifetime of the Annuitant and the Annuitant's joint
Annuitant, or for such other specified period as we may permit.
BENEFICIARY(IES) -- The person(s) named by an Owner to receive (1) the death
benefit under the Contract if during the Accumulation Period the Owner dies
(or if the Owner is not the Annuitant, if the Annuitant dies first), or (2)
after the Annuity Commencement Date, any remaining Annuity Payments (or
their commuted value) if the Annuitant dies and the joint Annuitant, if any,
dies.
CODE -- The Internal Revenue Code of 1986, as amended. Depending on the
context, the term Code includes the regulations adopted by the Internal
Revenue Service for the Code section being discussed.
CONTRACT(S) -- An IRA or FPA variable accumulation annuity contract (or
contracts) described in this Prospectus.
CONTRIBUTIONS -- Amounts contributed from time to time under a Contract
during the Accumulation Period.
ELIGIBLE SPOUSE -- The person to whom an Owner or Annuitant is legally
married.
FIDELITY PORTFOLIOS -- The Equity-Income Portfolio of the Variable Insurance
Products Fund (the FIDELITY VIP FUND) and the Contrafund and Asset Manager
Portfolios of the Variable Insurance Products Fund II (the FIDELITY VIP II
FUND).
FUND OF THE SEPARATE ACCOUNT (OR FUND) -- One of the subaccounts of the
Separate Account. Each Fund's name corresponds to the name of the Underlying
Fund in which it invests.
GENERAL ACCOUNT -- Assets we own that are not in a separate account, but
rather are held as part of our general assets. We sometimes refer to the
General Account as the INTEREST ACCUMULATION ACCOUNT, because amounts you
allocate to the General Account earn interest at a fixed rate that we change
from time to time.
INVESTMENT ALTERNATIVES -- Our General Account and the Funds of the Separate
Account. You may allocate your Contributions and transfer your Account
Balance among the Investment Alternatives, subject to any limitations under
a Plan.
INVESTMENT COMPANY -- Mutual of America Investment Corporation.
OWNER -- Under an IRA Contract, the individual, and under an FPA Contract,
the individual or employer, to whom we issued a Contract.
-33-
<PAGE>
PLAN -- For SEP IRA and SIMPLE IRA Contracts, a retirement plan adopted by
an employer for which a Contract has been purchased to provide benefits.
REGULAR IRA -- An IRA Contract other than a Roth IRA, SEP IRA or SIMPLE
IRA Contract.
ROTH IRA -- An IRA Contract designated as a Roth IRA, in accordance with
Code Section 408A.
SCUDDER PORTFOLIOS -- The following three portfolios of the Scudder Variable
Life Investment Fund: the Capital Growth Portfolio, the Bond Portfolio and
the International Portfolio.
SEPARATE ACCOUNT -- The American Separate Account No. 2, a separate account
established by us to receive and invest deposits made under variable
accumulation annuity contracts. The assets of the Separate Account are set
aside and kept separate from our other assets.
SEP IRA -- An IRA Contract purchased by an employee in connection with a
Simplified Employee Pension (SEP) adopted by the employer.
SIMPLE IRA -- An IRA Contract purchased by an employee under a Savings
Incentive Match Plan for Employees (SIMPLE) adopted by the employer.
UNDERLYING FUNDS -- The funds or portfolios that are invested in by the
Separate Account Funds.
VALUATION DAY -- Each day that the New York Stock Exchange is open for
business until the close of the New York Stock Exchange that day.
VALUATION PERIOD -- A period beginning on the close of business of a
Valuation Day and ending on the close of the next Valuation Day.
WE, US, OUR -- Refer to The American Life Insurance Company of New York.
YOU, YOUR -- Refer to an Owner.
-34-
<PAGE>
OUR STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more information about the
Contracts and our operations.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------------------------------------
<TABLE>
<S> <C>
Distribution of the Contracts Legal Proceedings
Calculation of Accumulation Unit VaLegal Matters
Yield and Performance Information Experts
Safekeeping of Separate Account AssAdditional Information
State Regulation Financial Statements
Periodic Reports
</TABLE>
HOW TO OBTAIN A STATEMENT OF ADDITIONAL INFORMATION
----------------------------------------------------------------------------
You may receive a copy of the Statement of Additional Information at no
charge by calling (212) 224-1600 or by completing the Form below and mailing
it to Mutual of America Life Insurance Company, 320 Park Avenue, New York,
New York 10022.
(PLEASE CUT HERE)
To: The American Life Insurance Company of New York
Please send me a copy of the Statement of Additional Information dated May
1, 1999 for the Individual Retirement Annuity and Flexible Premium Annuity
Contracts offered by The American Life Insurance Company of New York. My
name and address are as follows:
----------------------------------------
Name
----------------------------------------
Street Address
----------------------------------------
City State Zip
-35-
<PAGE>
(This page left blank intentionally)
<PAGE>
APPENDIX A
UNIT VALUE INFORMATION FOR THE SEPARATE ACCOUNT FUNDS
The tables below show changes in Accumulation Unit values and in the number
of units outstanding for each Separate Account Fund for the period from the
commencement of operations of that Fund to December 31, 1998. (The Mid-Cap
Equity Index Fund is not included because it began operations on May 1,
1999.) Arthur Andersen LLP, the Funds' independent auditor, has audited the
information below for each of the years in the seven year period ended
December 31, 1998. The Funds' previous auditor audited information for each
of the years in the period ended December 31, 1991.
Accumulation Unit values are calculated from the net asset values of the
Underlying Funds. The All America Fund (previously called the Stock Fund) of
the Investment Company changed its name and its investment objectives and
policies and added subadvisers on May 1, 1994. Prior to January 1, 1998, the
Calvert Social Balanced Portfolio was known as the Calvert Responsibly
Invested Balanced Portfolio, and prior to May 1, 1995, that Portfolio was
known as the Calvert Socially Responsible Series and had a different
subadviser. Before May 1, 1997, the American Century VP Capital Appreciation
Fund was called the TCI Growth Fund.
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND
-------------------------------------------------- ---------------------
1998 1997 1996 1995 1994 1997 1996
------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year/period ......... $ 1.87 $ 1.80 $ 1.72 $ 1.68 $ 5.39 $ 4.52
====== ======= ======= ======= ======= ====== ======
Unit value, end of
year/period ......... $ 1.95 $ 1.87 $ 1.80 $ 1.72 $ 6.76 $ 5.39
======= ======= ======= ======= ====== ======
Units outstanding,
end of
year/period
(000's) ............. 90.5 66.1 62.8 29.6 919 621
======= ======= ======= ======= ====== ======
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------------------------------------
ALL AMERICA FUND BOND FUND
-------------------------------- --------------------------------------------------
1995 1994 1993 1998 1997 1996 1995 1994
---------- ---------- ---------- ------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year/period ......... $ 3.35 $ 3.36 $ 3.31 $ 2.75 $ 2.69 $ 2.28 $ 2.39
====== ======= ======= ====== ====== ====== ======= =======
Unit value, end of
year/period ......... $ 4.52 $ 3.35 $ 3.36 $ 3.00 $ 2.75 $ 2.69 $ 2.28
====== ======= ======= ====== ====== ======= =======
Units outstanding,
end of
year/period
(000's) ............. 240 91.2 .027 301 328 65.5 23.4
====== ======= ======== ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
----------------------------------------------------------------------------------------------
SHORT-TERM BOND FUND MID-TERM BOND FUND
-------------------------------------------------- -------------------------------------------
1998 1997 1996 1995 1994 1997 1996 1995 1994
------ ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year/period ......... $ 1.14 $ 1.10 $ 1.03 $ 1.03 $ 1.19 $ 1.16 $ 1.01 $ 1.06
====== ======= ======= ======= ======= ====== ====== ======= =======
Unit value, end of
year/period ......... $ 1.19 $ 1.14 $ 1.10 $ 1.03 $ 1.26 $ 1.19 $ 1.16 $ 1.01
======= ======= ======= ======= ====== ====== ======= =======
Units outstanding,
end of year/period
(000's) ............. 24.3 17.8 5.3 3.6 49 261 18.6 3.7
======= ======= ======= ======= ====== ====== ======= =======
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------------------
COMPOSITE FUND
-------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value,
beginning of
year/period ......... $ 3.75 $ 3.39 $ 2.82 $ 2.95 $ 2.93
====== ====== ====== ====== ====== =======
Unit value, end of
year/period ......... $ 4.36 $ 3.75 $ 3.39 $ 2.82 $ 2.95
====== ====== ====== ====== =======
Units outstanding,
end of year/period
(000's) ............. 643 456 282 132 .322
====== ====== ====== ====== ========
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------------------
EQUITY INDEX FUND
-------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of year/period .......... $ 1.72 $ 1.42 $ 1.05 $ 1.05 $ 1.04
====== ======= ====== ====== ======= =======
Unit value, end of year/period ................ $ 2.26 $ 1.72 $ 1.42 $ 1.05 $ 1.05
======= ====== ====== ======= =======
Units outstanding, end of year/period (000's) 2,496 858 333 35.7 .185
======= ====== ====== ======= ========
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------
AGGRESSIVE EQUITY FUND
--------------------------------------------------
1998 1997 1996 1995 1994
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of year/period .......... $ 1.80 $ 1.43 $ 1.05 $ 1.00
====== ======= ======= ====== ======
Unit value, end of year/period ................ $ 2.15 $ 1.80 $ 1.43 $ 1.05
======= ======= ====== ======
Units outstanding, end of year/period (000's) 2,289 1,386 599 107
======= ======= ====== ======
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION>
SCUDDER
-----------------------------------------------------------------
BOND FUND
-----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 11.48 $ 11.30 $ 9.69 $ 10.32 $ 10.24
====== ======== ======== ======= ======== =======
Unit value, end of
year/period ................. $ 12.37 $ 11.48 $ 11.30 $ 9.69 $ 10.32
======== ======== ======= ======== =======
Units outstanding, end of
year/period (000's) ......... 7.9 3.9 2.4 .799 --
======== ======== ======= ========= =======
<CAPTION>
SCUDDER
------------------------------------------------------------------
CAPITAL GROWTH FUND
------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 22.11 $ 18.64 $ 14.67 $ 16.46 $ 16.10
====== ======= ======== ======== ======== ========
Unit value, end of
year/period ................. $ 29.64 $ 22.11 $ 18.64 $ 14.67 $ 16.46
======= ======== ======== ======== ========
Units outstanding, end of
year/period (000's) ......... 160 73.6 42.4 22.1 .059
======= ======== ======== ======== =========
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
------------------------------------------------------------------
INTERNATIONAL FUND
------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of year/period .......... $ 13.43 $ 11.85 $ 10.80 $ 11.06 $ 10.36
====== ======== ======== ======== ======== ========
Unit value, end of year/period ................ $ 14.46 $ 13.43 $ 11.85 $ 10.80 $ 11.06
======== ======== ======== ======== ========
Units outstanding, end of year/period (000's) . 78.2 70.1 29.5 52.3 .038
======== ======== ======== ======== =========
<CAPTION>
FIDELITY VIP
------------------------------------------
EQUITY-INCOME FUND
------------------------------------------
1998 1997 1996 1995
------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Unit value, beginning of year/period .......... $ 21.93 $ 19.43 $ 16.30
====== ======== ======= =======
Unit value, end of year/period ................ $ 27.77 $ 21.93 $ 19.43
======== ======= =======
Units outstanding, end of year/period (000's) . 94.2 61 18
======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP II
-------------------------------------------------------------------------------------
CONTRA FUND ASSET MANAGER FUND
------------------------------------------ ------------------------------------------
1998 1997 1996 1995 1998 1997 1996 1995
------ ----------- ----------- ----------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 16.59 $ 13.85 $ 11.43 $ 17.72 $ 15.66 $ 14.04
====== ======= ======= ======== ====== ======== ======== ========
Unit value, end of
year/period ................. $ 20.36 $ 16.59 $ 13.85 $ 21.14 $ 17.72 $ 15.66
======= ======= ======== ======== ======== ========
Units outstanding, end of
year/period (000's) ......... 213 153 29.1 65.1 36.9 5.6
======= ======= ======== ======== ======== ========
<CAPTION>
CALVERT
--------------------------------------------------
SOCIAL BALANCED FUND
--------------------------------------------------
1998 1997 1996 1995 1994
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period ................. $ 2.23 $ 2.01 $ 1.57 $ 1.64
====== ====== ====== ======= =======
Unit value, end of
year/period ................. $ 2.65 $ 2.23 $ 2.01 $ 1.57
====== ====== ======= =======
Units outstanding, end of
year/period (000's) ......... 194 100 45.4 18.3
====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
AMERICAN CENTURY
---------------------------------------------------------------
VP CAPITAL APPRECIATION FUND
---------------------------------------------------------------
1998 1997 1996 1995 1994 1993
------ ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of year/period .................. $ 11.53 $ 12.18 $ 9.39 $ 9.61 $ 9.38
====== ======== ======== ======= ======= =======
Unit value, end of year/period ........................ $ 11.04 $ 11.53 $ 12.18 $ 9.39 $ 9.61
======== ======== ======= ======= =======
Units outstanding, end of year/period (000's) ......... 44.3 67.7 56.7 13.1 .020
======== ======== ======= ======= ========
</TABLE>
----------
* The dates the Funds of the Separate Account commenced operation are as
follows:
o Investment Company All America, Equity Index and Composite Funds --
November 19, 1993
o Scudder Bond, Capital Growth and International Funds -- November 19,
1993
o American CenturyVP Capital Appreciation Fund -- November 19, 1993
o Investment Company Money Market, Bond, Short-Term Bond and Mid-Term Bond
Funds -- March 10, 1994 o Calvert Social Balanced Fund -- March 10, 1994
o Investment Company Aggressive Equity Fund -- May 2, 1994
o Fidelity VIP Equity-Income and Fidelity VIP II Contra and Asset Manager
Funds -- May 1, 1995; and
o Investment Company Mid-Cap Equity Index Fund -- May 1, 1999.
-38-
<PAGE>
PART B
THE AMERICAN SEPARATE ACCOUNT NO. 2
STATEMENT OF ADDITIONAL INFORMATION
FOR
VARIABLE ACCUMULATION ANNUITY CONTRACTS
ISSUED BY
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 PARK AVENUE
NEW YORK, NEW YORK 10022
------------
This Statement of Additional Information expands upon subjects we discuss in
the current Prospectus for the Individual Retirement Annuity Contracts and
Flexible Premium Annuity Contracts that we offer (together, the CONTRACTS).
You may obtain a copy of the Prospectus, dated May 1, 1999, by calling
1-800-872-5963, or writing to The American Life Insurance Company of New
York, 320 Park Avenue, New York, New York 10022. The Prospectus contains
definitions of various terms, and we incorporate those terms by reference
into this Statement of Additional Information.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND YOU SHOULD
READ IT IN CONJUNCTION WITH THE PROSPECTUS FOR THE CONTRACTS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Distribution of the Contracts .................... 2
Calculation of Accumulation Unit Values .......... 2
Yield and Performance Information ................ 2
Safekeeping of Separate Account Assets ........... 5
State Regulation ................................. 5
Periodic Reports ................................. 6
Legal Proceedings ................................ 6
Legal Matters .................................... 6
Experts .......................................... 6
Additional Information ........................... 6
Financial Statements ............................. 7
</TABLE>
- --------------------------------------------------------------------------------
DATED: MAY 1, 1999
<PAGE>
DISTRIBUTION OF THE CONTRACTS
Mutual of America Life Insurance Company, a registered broker-dealer and a
member of the National Association of Securities Dealers, Inc.
("Distributor") acts as the principal underwriter of the Contracts. We offer
the Contracts for sale on a continuous basis through our employees and
certain employees of the Distributor. The only compensation we pay for sales
of the Contracts is in the form of salary. All persons engaged in selling
the Contracts are our licensed agents and are duly qualified registered
representatives of the Distributor.
CALCULATION OF ACCUMULATION UNIT VALUES
The Accumulation Unit Change Factor for each Fund of the Separate Account
for any Valuation Period is:
(a) the ratio of (i) the asset value of that Fund at the end of the current
Valuation Period, before any amounts are allocated to or withdrawn from
the Fund with respect to that Valuation Period, to (ii) the asset value
of the Fund at the end of the preceding Valuation Period, after all
allocations and withdrawals were made for that period,
divided by
(b) 1.000000 plus the component of the annual rate of mortality and expense
risk, distribution expense and Separate Account administrative charges
against the Fund's assets for the number of days from the end of the
preceding Valuation Period to the end of the current Valuation Period.
YIELD AND PERFORMANCE INFORMATION
MONEY MARKET FUND
----------------------------------------------------------------------------
Regulations adopted by the Commission require us to disclose the current
annualized yield of the Money Market Fund of the Separate Account for a
seven-day period in a manner that does not take into consideration any
realized or unrealized gains or losses on shares of the Money Market Fund of
the Investment Company or on its portfolio securities. This is called YIELD.
The Commission also permits us to disclose the effective yield of the Money
Market Fund of the Separate Account for the same seven-day period,
determined on a compounded basis. This is called the EFFECTIVE YIELD.
Yield and effective yield reflect our deductions from the Separate Account
Fund for administrative and distribution expenses or services and the
mortality and expense risk charge accrued during the period. Because of
these deductions, the yield for the Money Market Fund of the Separate
Account will be lower than the yield for the Money Market Fund of the
Investment Company.
From time to time, we will include quotations of the yield or performance of
the Separate Account's Money Market Fund in advertisements, sales literature
or shareholder reports. These performance figures are calculated in the
following manner:
A. YIELD is the net annualized yield based on a specified seven
calendar-days calculated at simple interest rates. Yield is calculated by
determining the net change, exclusive of capital changes, in the value of
a hypothetical preexisting account having a balance of one accumulation
unit at the beginning of the period and dividing the difference by the
value of the account at the beginning of the base period to obtain the
base period return. The yield is annualized by multiplying the base period
return by 365/7. The yield figure is stated to the nearest hundredth of
one percent.
B. EFFECTIVE YIELD is the net annualized yield for a specified seven
calendar days, assuming a reinvestment of the income (compounding).
Effective yield is calculated by the same method as yield, except the
yield figure is compounded by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting one from the result, according to the
following formula:
Effective Yield = [(Base Period Return + 1)365/7] - 1.
The current yield of the Money Market Fund of the Separate Account for the
seven-day period ended December 31, 1998 was %.
Yield and effective yield are based on historical earnings and show the
performance of a hypothetical investment. The yield on amounts held in the
Money Market Fund of the Separate Account normally will fluctuate on a daily
basis, and therefore the yield for any past period is not an indication or
representation of future yield. The Money Market Fund's actual yield and
effective yield are affected by changes in interest rates on money market
securities,
-2-
<PAGE>
average portfolio maturity of the Money Market Fund of the Investment
Company, the types and quality of portfolio securities held by the Money
Market Fund of the Investment Company, and its operating expenses.
When communicating total return to current or prospective Participants, we
also may compare the Money Market Fund's figures to the performance of other
variable annuity accounts tracked by mutual fund rating services or to
unmanaged indices that may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
BOND FUNDS
----------------------------------------------------------------------------
From time to time, we may include quotations of the yield of the Separate
Account's Investment Company Bond Funds and Scudder Bond Fund in
advertisements, sales literature or shareholder reports. YIELD is computed
by annualizing net investment income, as determined by the Commission's
formula, calculated on a per Accumulation Unit basis, for a recent one month
or 30-day period and dividing that amount by the unit value of the Fund at
the end of the period.
FUNDS OTHER THAN MONEY MARKET
----------------------------------------------------------------------------
From time to time, we may include quotations of a Fund's TOTAL RETURN in
advertisements, sales literature or shareholder reports. These performance
figures are calculated in the following manner:
A. AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of
return for the periods of one year, five years and ten years, if
applicable, all ended on the date of a recent calendar quarter. In
addition, the total return for the life of the Fund is given. Total return
quotations reflect changes in the price of a Fund's shares and assume that
all dividends and capital gains distributions during the respective
periods were reinvested in Fund shares. Total return is calculated by
finding the average annual compounded rates of return of a hypothetical
investment over such periods, according to the following formula (total
return is then expressed as a percentage):
T = (ERV/P)1/n - 1
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
B. CUMULATIVE TOTAL RETURN is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period.
Cumulative total return quotations reflect changes in the value of a
Fund's unit values and assume that all dividends and capital gains
distributions during the period were reinvested in Fund shares.
Cumulative total return is calculated by finding the compound rates of
return of a hypothetical investment over such periods, according to the
following formula (cumulative total return is then expressed as a
percentage):
C = (ERV/P) - 1.
Where:
C = Cumulative Total Return
P = hypothetical initial payment of $1,000
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
-3-
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE INCEPTION
FUND ONE YEAR FIVE YEARS TEN YEARS OF FUND DATE
- ------------------------------------------------ ---------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Investment Company Equity Index .............. N/A 02/05/93
Investment Company All America ............... % 01/01/85
Investment Company Aggressive Equity ......... N/A N/A 05/02/94
Investment Company Composite ................. % 01/01/85
Investment Company Bond ...................... % 01/01/85
Investment Company Mid-Term Bond ............. % N/A 02/05/93
Investment Company Short-Term Bond ........... % N/A 02/05/93
Scudder Capital Growth ....................... % 07/16/85
Scudder Bond ................................. % 07/16/85
Scudder International ........................ % 05/01/87
Fidelity VIP Equity-Income ................... % 10/09/86
Fidelity VIP II Contra ....................... N/A N/A 01/03/95
Fidelity VIP II Asset Manager ................ % 09/06/89
Calvert Social Balanced ...................... % 09/02/86
American Century VP Capital Appreciation ..... 11/20/87
</TABLE>
CUMULATIVE TOTAL RETURNS
FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
LIFE INCEPTION
FUND ONE YEAR FIVE YEARS TEN YEARS OF FUND DATE
- ------------------------------------------------ ---------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
Investment Company Equity Index .............. N/A 02/05/93
Investment Company All America ............... % 01/01/85
Investment Company Aggressive Equity ......... N/A N/A 05/02/94
Investment Company Composite ................. % 01/01/85
Investment Company Bond ...................... % 01/01/85
Investment Company Mid-Term Bond ............. % N/A 02/05/93
Investment Company Short-Term Bond ........... % N/A 02/05/93
Scudder Capital Growth ....................... % 07/16/85
Scudder Bond ................................. % 07/16/85
Scudder International ........................ % 05/01/87
Fidelity VIP Equity-Income ................... % 10/09/86
Fidelity VIP II Contra ....................... N/A N/A 01/03/95
Fidelity VIP II Asset Manager ................ % 09/06/89
Calvert Social Balanced ...................... % 09/02/86
American Century VP Capital Appreciation ..... 11/20/87
</TABLE>
The returns for the All America Fund (previously called the "Stock Fund")
prior to May 1, 1994 reflect the results of the Underlying Fund prior to a
change in its investment objectives and policies and the addition of
subadvisers on that date. The commencement dates for the Funds reflect the
commencement dates for the Underlying Funds. In the tables, we have deducted
Separate Account charges for Underlying Funds that commenced operations
prior to the commencement of operations of the corresponding Fund of the
Separate Account. The Mid-Cap Equity Index Fund is not included in the
tables because it commenced operations on May 1, 1999.
The above figures for the Money Market and other Funds, both for average
annual total return and cumulative total return, reflect charges made to the
Separate Account, including a monthly service charge. In the above table, we
deducted the $2.00 monthly contract fee from each Separate Account Fund,
calculated as a cost per $1,000 based on the average Account Balance for all
of our individually allocated contracts. For any Participant, the actual
treatment of the monthly contract fee and its effect on total return will
depend on the Participant's actual allocation of Account Balance.
If you have Account Balance in the General Account, the monthly contract fee
would be deducted from the General Account, not any Separate Account Fund.
Accordingly, the illustration of your Account Balance held in
-4-
<PAGE>
any of the Funds of the Separate Account would show a slightly higher total
return than in the table above. If you do not have Account Balance allocated
to the General Account, but you do have Account Balance allocated to more
than one Fund of the Separate Account, the fee would be deducted only from
one of the Funds, so that an illustration of total return figures of the
other Funds would be slightly higher than shown above.
If you do not have any Account Balance in the General Account, we will
deduct the $2.00 monthly charge from your Account Balance allocated to one
or more of the Separate Account Funds, in the following order: (a)
Investment Company Money Market Fund, (b) Investment Company Short-Term Bond
Fund, (c) Investment Company Mid-Term Bond Fund, (d) Investment Company Bond
Fund, (e) Scudder Bond Fund, (f) Investment Company Composite Fund, (g)
Fidelity VIP II Asset Manager Fund, (h) Calvert Social Balanced Fund, (i)
Fidelity VIP Equity-Income Fund, (j) Investment Company All America Fund,
(k) Investment Company Equity Index Fund, (l) Investment Company Mid-Cap
Equity Index Fund, (m) Fidelity VIP II Contra Fund, (n) Investment Company
Aggressive Equity Fund, (o) Scudder Capital Growth Fund, (p) Scudder
International Fund, and (q) American Century VP Capital Appreciation Fund.
Performance figures are based on historical earnings and are not guaranteed
to reoccur. They are not necessarily indicative of the future investment
performance of a particular Fund. Total return and yield for a Fund will
vary based on changes in market conditions and the performance of the
Underlying Fund. Unit values will fluctuate so that, when redeemed, they may
be worth more or less than their original cost.
When communicating total return to current or prospective Participants, we
also may compare a Fund's figures to the performance of other variable
annuity accounts tracked by mutual fund rating services or to unmanaged
indices that may assume reinvestment of dividends but generally do not
reflect deductions for administrative and management costs.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
We hold title to the Separate Account's assets, including shares of the
Underlying Funds. We maintain records
of all purchases and redemptions of Underlying Fund shares by each of the
Separate Account Funds.
STATE REGULATION
We are subject to regulation by the New York State Superintendent of
Insurance ("Superintendent") as well as
by the insurance departments of all the other states and jurisdictions in
which we do business.
We must file with the Superintendent an annual statement on a form specified
by the National Association of Insurance Commissioners. We also must file
with New York and other states a separate statement covering the separate
accounts that we maintain, including the Separate Account. Our books and
assets are subject to review and examination by the Superintendent and the
Superintendent's agents at all times. The Superintendent makes a full
examination into our affairs at least every five years. Other states also
may periodically conduct a full examination of our operations.
The laws of New York and of other states in which we are licensed to
transact business specifically provide for regulation and supervision of the
variable annuity activities of life insurance companies. Regulations require
certain contract provisions and require us to obtain approval of contract
forms. State regulation does not involve any supervision or control over the
investment policies of the Separate Account, or the selection of investments
therefor, except for verification that any such investments are permissible
under applicable law. Generally, the states in which we do business apply
the laws of New York in determining permissible investments for us.
-5-
<PAGE>
PERIODIC REPORTS
Prior to your Annuity Commencement Date, we will provide you, at least
quarterly, with a statement as of a
specified date covering the period since the last statement. The statement
will set forth, for the covered period:
(1) The amount of Contributions paid under the Contract, including
o the allocation of contributed amounts to the Separate and General
Accounts;
o the date the Contribution was made; and
o the date the amount was credited to your account.
(2) Interest accrued on amounts you have allocated to the General Account.
(3) The number and dollar value of Accumulation Units credited to you in
each Fund of the Separate Account; and
(4) The total amounts of all withdrawals and transfers from the General
Account and each Fund.
We have advised employers making payroll deductions that they should remit
your Contributions to us within
seven days of the date the Contribution was withheld from your pay.
The statement we send you also will specify your Account Balance available
to provide a periodic benefit, cash return or death benefit. We will
transmit to Participants, at least semi-annually, reports showing the
financial condition of the Separate Account and showing the schedules of
investments held in each Underlying Fund.
LEGAL PROCEEDINGS
We are engaged in litigation of various kinds, which in our judgment is not
of material importance in relation
to our total assets. The Separate Account is not a party to any pending
legal proceedings.
LEGAL MATTERS
All matters of applicable state law pertaining to the Contracts, including
our right to issue the Contracts, have been passed upon by Patrick A. Burns,
Senior Executive Vice President and General Counsel of Mutual of America.
Certain legal matters relating to Federal securities laws applicable to the
Contracts have been passed upon by the law firm of Jones & Blouch L.L.P.,
Washington, D.C.
EXPERTS
Arthur Andersen LLP, our independent public accountants, have audited the
financial statements included in this Statement of Additional Information,
as indicated in their reports relating to the statements. We have included
the reports of Arthur Andersen LLP in reliance upon the authority of the
firm as experts in giving such reports.
ADDITIONAL INFORMATION
We have filed with the Commission a registration statement under the
Securities Act of 1933, as amended, concerning the Contracts. Not all of the
information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information or in
the current Prospectus for the Contracts. Statements contained herein
concerning the content of the Contracts and other legal instruments are
intended to be summaries. For a complete statement of the terms of those
documents, reference should be made to the materials filed with the
Commission.
-6-
<PAGE>
FINANCIAL STATEMENTS
When you allocate Account Balance to the Separate Account Funds, the value
of the Account Balance in those Funds is impacted primarily by the
investment results of the Underlying Fund(s). Financial Statements of the
Separate Account for 1998 are included as follows:
Financial Statements of the Separate Account No. 2 for 1998 are included
as follows:
<TABLE>
<S> <C>
Statement of Assets and Liabilities ..........
Statement of Operations ......................
Statements of Changes in Net Assets ..........
Notes to Financial Statements ................
Report of Independent Public Accountants .....
</TABLE>
You should consider our financial statements included in this Statement of
Additional Information as bearing on
our ability to meet our obligations under the Contracts and to support our
General Account.
Financial Statements of American Life for 1998 are included as follows:
<TABLE>
<S> <C>
Report of Independent Public Accountants ........... SAI-8
Consolidated Statements of Financial Condition ..... SAI-9
Consolidated Statements of Operations and Surplus .. SAI-10
Consolidated Statements of Cash Flows .............. SAI-11
Notes to Financial Statements ...................... SAI-12
</TABLE>
-7-
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
The financial statements of The American Separate Account No. 2 and The
American Life Insurance Company of New York for 1998 will be included with a
Post-Effective Amendment to be filed in April 1999.
(b) EXHIBITS
<TABLE>
<S> <C>
9 Consent of Jones & Blouch L.L.P.
12 Powers of Attorney of Diane M. Aramony, Amir Lear and Robert W. Ruane.
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The name and position of each executive officer and director of the
Insurance Company are set forth below. The business address of each executive
officer and director is 320 Park Avenue, New York, NY 10022.
<TABLE>
<CAPTION>
POSITIONS AND
NAME OFFICES WITH DEPOSITOR
- ------------------------- ----------------------------------------------------------------------
<S> <C>
Manfred Altstadt Senior Executive Vice President and Chief Financial Officer; Director
Diane M. Aramony Senior Vice President and Corporate Secretary; Director
William Breneisen Executive Vice President
Jeremy J. Brown Executive Vice President and Chief Actuary; Director
Patrick A. Burns Senior Executive Vice President and General Counsel; Director
Richard J. Ciecka Director
William S. Conway Executive Vice President; Director
Salvatore R. Curiale Senior Executive Vice President; Director
William A. DeMilt Executive Vice President; Director
Thomas E. Gilliam Executive Vice President; Director
John R. Greed Executive Vice President, Treasurer; Director
Theodore L. Herman Vice Chairman of the Board; Director
Gregory A. Kleva Executive Vice President and Deputy General Counsel
Amir Lear Senior Vice President; Director
Howard Lichtenstein President and Chief Operating Officer; Director
George L. Medlin Executive Vice President, Internal Audit
Thomas J. Moran Chairman of the Board and Chief Executive Officer; Director
Robert W. Ruane Senior Vice President; Director
</TABLE>
ITEM 27. NUMBER OF HOLDERS OF SECURITIES
As of March 31, 1999, there were Participants in The American Separate
Account No. 2.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Mutual of America, the principal underwriter of the Separate Account,
acts as sponsor of Mutual of America Investment Corporation, as depositor and
principal underwriter of Mutual of America Separate Account No. 2, and as
principal underwriter of The American Separate Account No. 3 of the Insurance
Company.
C-1
<PAGE>
(b) The name, business address and position of each senior officer and
director of Mutual of America are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- ------------------------------- ------------------------------------------------------------
<S> <C>
DIRECTORS
Clifford L. Alexander, Jr. Director
Washington, D.C.
Patricia A. Cahill Director
Denver, Colorado
Roselyn P. Epps, M.D. Director
Bethesda, Maryland
Dudley H. Hafner Director
Dallas, Texas
Earle H. Harbison, Jr. Director
St. Louis, Missouri
Frances R. Hesselbein Director
New York, New York
William Kahn Director
St. Louis, Missouri
Lasalle D. Leffall, Jr., M.D. Director
Washington, D.C.
Michael A. Pelavin Director
Flint, Michigan
Fioravante G. Perrotta Director
New York, New York
Francis H. Schott Director
New York, New York
O. Stanley Smith, Jr. Director
Columbia, South Carolina
Sheila M. Smythe Director
Valhalla, New York
Elie Wiesel Director
New York, New York
OFFICERS-DIRECTORS
William J. Flynn Chairman of the Board
Thomas J. Moran President and Chief Executive Officer
Manfred Altstadt Senior Executive Vice President and Chief Financial Officer
Patrick A. Burns Senior Executive Vice President and General Counsel
Salvatore R. Curiale Senior Executive Vice President, Technical Operations
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- ------------------------- ----------------------------------------------------------------------
<S> <C>
OTHER OFFICERS
Diane Aramony Senior Vice President, Corporate Secretary
and Assistant to the Chairman
Meyer Baruch Senior Vice President, State Compliance and Government Regulations
since July 1996; prior thereto, Assistant Chief of the Life Insurance
and Companies Bureau of The New York State Insurance
Department
Deborah Swinford Becker Senior Vice President and Associate General Counsel
Nicholas Branchina Senior Vice President and Associate Treasurer
William Breneisen Executive Vice President, Office of Technology
Jeremy J. Brown Executive Vice President and Chief Actuary
Allen J. Bruckheimer Senior Vice President and Associate Treasurer
Patrick Burke Senior Vice President, Special Markets
Sean Carroll Senior Vice President, Facilities Management
William Conway Executive Vice President, Marketing and Corporate Communications
William A. DeMilt Executive Vice President Real Estate Management
Warren A. Essner Senior Vice President, Corporate Services
James Flynn Senior Vice President, Marketing
Michael Gallagher Senior Vice President, Direct Response and Technical
Boca Raton, FL Communications
Harold D. Gannon Senior Vice President, Corporate Tax
Gordon Gaspard Senior Vice President, Technical Services
Robert Giaquinto Senior Vice President, MIS Operations
Thomas E. Gilliam Executive Vice President and Assistant to the President and Chief
Executive Officer
John R. Greed Executive Vice President and Treasurer
Thomas A. Harwood Senior Vice President, Competition and Asset Retention
Sandra Hersko Senior Vice President, Technical Administration
Edward J.T. Kenney Senior Vice President and Assistant to the President and Chief
Executive Officer
Gregory A. Kleva, Jr. Executive Vice President and Deputy General Counsel
Robert Kordecki Senior Vice President, National Accounts
Stanley M. Lenkowicz Senior Vice President and Deputy General Counsel
Daniel LaSaffre Senior Vice President, Human Resources and Training, since January
1999; prior thereto, FBI
Robert W. Maull Senior Vice President and Corporate Actuary
George L. Medlin Executive Vice President and Internal Auditor since March 1998;
prior thereto, Senior Vice President, Internal Audit
Lynn M. Nadler Senior Vice President, Training -- Boca
Boca Raton, FL
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND
BUSINESS ADDRESS OFFICES WITH DEPOSITOR
- --------------------- -----------------------------------------------------------
<S> <C>
Roger F. Napoleon Senior Vice President and Associate General Counsel
James Peterson Senior Vice President, Training -- New York and Leadership
Development
William Rose Senior Vice President, Field Operations
Dennis J. Routledge Senior Vice President, LAN/Telecommunications
Robert W. Ruane Senior Vice President, Corporate Communications and Direct
Response
William G. Shannon Senior Vice President, Individual Financial Planning
Walter W. Siegel Senior Vice President and Actuary
Joan M. Squires Senior Vice President, Business Applications
Eldon Wonacott Senior Vice President, Field Administration
Raymond Yeager Senior Vice President, MIS Operations
Boca Raton, FL
</TABLE>
The business address of all officers and directors is 320 Park Avenue, New
York, New York 10022, unless otherwise noted.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant has duly caused this amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of New York, the State of New York, the 1st day of
March, 1999.
THE AMERICAN LIFE SEPARATE ACCOUNT NO. 2
(Registrant)
THE AMERICAN LIFE INSURANCE COMPANY OF
NEW YORK
(Depositor)
By: /s/ MANFRED ALTSTADT
-------------------------------------
MANFRED ALTSTADT
SENIOR EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this amendment
to Registration Statement has been signed below by the following persons in the
capacities indicated on March 1, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ -----------------------------------------
<S> <C> <C>
*
---------------------------------- Chairman and Chief Executive Officer;
THOMAS J. MORAN Director
/s/ MANFRED ALTSTADT
---------------------------------- Senior Executive Vice President &
MANFRED ALTSTADT Chief Financial Officer; Director
*
---------------------------------- Senior Vice President & Corporate
DIANE M. ARAMONY Secretary; Director
*
---------------------------------- Executive Vice President, Chief Actuary;
JEREMY J. BROWN Director
*
---------------------------------- Senior Executive Vice President &
PATRICK A. BURNS General Counsel; Director
*
---------------------------------- Director
RICHARD J. CIECKA
* Director
----------------------------------
WILLIAM S. CONWAY
* Director
----------------------------------
SALVATORE R. CURIALE
*
---------------------------------- Executive Vice President; Director
WILLIAM A. DEMILT
*
---------------------------------- Executive Vice President; Director
THOMAS E. GILLIAM
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ --------------------------------------
<S> <C> <C>
*
---------------------------------- Executive Vice President & Treasurer;
JOHN R. GREED Director
*
---------------------------------- Vice Chairman; Director
THEODORE L. HERMAN
*
---------------------------------- Senior Vice President; Director
AMIR LEAR
*
---------------------------------- President & Chief Operating Officer;
HOWARD LICHTENSTEIN Director
*
---------------------------------- Senior Vice President; Director
ROBERT W. RUANE
</TABLE>
*By: /s/ MANFRED ALTSTADT
------------------------------
MANFRED ALTSTADT
ATTORNEY-IN-FACT
C-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
- -------- -----
<S> <C> <C>
9 Consent of Jones & Blouch L.L.P ......................................
12 Powers of Attorney of Diane M. Aramony, Amir Lear and Robert W. Ruane
</TABLE>
C-7
Exhibit 99.9
[JONES & BLOUCH LETTERHEAD]
March 1, 1999
Board of Directors
The American Life Insurance Company
of New York
320 Park Avenue
New York, New York 10022
Gentlemen:
We hereby consent to the reference to this firm under the caption "Legal
Matters" in the Statement of Additional Information contained in Post-Effective
Amendment No. 7 to the Registration Statement on Form N-4 of The American
Separate Account No. 2 and The American Life Insurance Company of New York, File
No. 33-66406, to be filed with the Securities and Exchange Commission.
Very truly yours,
JONES & BLOUCH L.L.P.
POWER OF ATTORNEY
The undersigned Director of The American Life Insurance Company of New York, a
New York corporation, hereby constitutes and appoints Thomas J. Moran, Theodore
Herman, Manfred Altstadt and Patrick A. Burns, and each of them (with full power
to each of them to act alone), her true and lawful attorney-in-fact and agent,
with full power of substitution to each, for her and on her behalf and in her
name, place and stead, to execute and file any of the documents referred to
below relating to registrations under the Securities Act of 1933 or the
Investment Company Act of 1940 (the ACTS): registration statements on any form
or forms under the Acts, and any and all amendments and supplements thereto
(including post-effective amendments), with all exhibits and all agreements,
consents, exemptive applications and other documents and instruments necessary
or appropriate in connection therewith, including any documents required under
the Securities Exchange Act of 1934, each of said attorneys-in-fact and agents
being empowered to act with or without the others or other, and to have full
power and authority to do or cause to be done in the name and on behalf of the
undersigned each and every act and thing requisite and necessary or appropriate
with respect thereto to be done in and about the premises in order to effectuate
the same, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney on the
25th day of February, 1999.
/s/ Diane M. Aramony
--------------------------
Diane M. Aramony
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The American Life Insurance Company of New York, a
New York corporation, hereby constitutes and appoints Thomas J. Moran, Theodore
Herman, Manfred Altstadt, Patrick A. Burns and Diane M. Aramony, and each of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the ACTS): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, including any
documents required under the Securities Exchange Act of 1934, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney on the
25th day of February, 1999.
/s/ Amir Lear
-------------------
Amir Lear
<PAGE>
POWER OF ATTORNEY
The undersigned Director of The American Life Insurance Company of New York, a
New York corporation, hereby constitutes and appoints Thomas J. Moran, Theodore
Herman, Manfred Altstadt, Patrick A. Burns and Diane M. Aramony, and each of
them (with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to each, for him and
on his behalf and in his name, place and stead, to execute and file any of the
documents referred to below relating to registrations under the Securities Act
of 1933 or the Investment Company Act of 1940 (the ACTS): registration
statements on any form or forms under the Acts, and any and all amendments and
supplements thereto (including post-effective amendments), with all exhibits and
all agreements, consents, exemptive applications and other documents and
instruments necessary or appropriate in connection therewith, including any
documents required under the Securities Exchange Act of 1934, each of said
attorneys-in-fact and agents being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has signed this Power of Attorney on the
25th day of February, 1999.
/s/ Robert W. Ruane
-----------------------
Robert Ruane
