Variable Annuity Account I
Aetna Insurance Company of America
Supplement dated January 1, 1997, to Prospectus dated May 1, 1996
This information supplements your current Prospectus and should be read and
retained with that Prospectus.
The Small Business Job Protection Act of 1996 (the "Act"), signed into law on
August 20, 1996, has several effects on the Contracts offered in connection with
this Prospectus; these are summarized below.
[bullet] Repeal of Death Benefit Exclusion
While payments received by your beneficiaries after your death are
generally taxed in the same manner as if you had received those payments, a
limited death benefit exclusion may have applied for payments due to deaths
occurring on or before August 20, 1996. This exclusion no longer applies to
payments due to deaths occurring after August 20, 1996.
[bullet] Individual Retirement Annuity ("IRA") Availability
Currently, the IRAs offered in connection with this Prospectus are not
available as "SIMPLE IRAs" as defined in section 408(p) of the Internal
Revenue Code (the "Code").
[bullet] Minimum Distribution Requirements
Prior to August 20, 1996, the Code required distributions to be made from
certain plans by April 1 of the calendar year following the calendar year
in which you attained age 70 1/2. As of January 1, 1997, distributions from
Qualified Contracts other than for IRAs pursuant to section 408(b) of the
Code and other than for five percent owners, must begin by April 1 of the
calendar year following the year in which you attain age 70 1/2 or retire,
whichever occurs later. For all IRA depositors and for five percent owners
minimum distributions must begin by April 1 of the calendar year following
the calendar year in which you attain age 70 1/2.
[bullet] Spousal IRA Limits
As a result of the Act, beginning in 1997, the maximum tax-deductible
contribution a married couple with one working spouse may make to an IRA is
increased to $4,000.
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[bullet] Section 457 Plan Trust Requirements
Under the Act, Section 457 Plans for state and local governments are
required to hold all assets and income in trust (or a custodial account or
an annuity contract) for the exclusive benefit of participants and their
beneficiaries. Section 457 Plans that were in existence on August 20, 1996
are allowed until January 1, 1999 to meet this requirement. Until such time
as a state or local government-sponsored Section 457 Plan meets the Act's
trust requirement, all amounts of compensation deferred under the plan, all
property and rights purchased with such amounts, and all income
attributable to such amounts, property or rights remain solely the property
and rights of the employer (without being restricted to the provision of
benefits under the plan) subject only to the claims of the employer's
general creditors.
[bullet] Revocability of Options
Formerly, Additional Withdrawal Options elected by Section 457 Plan
participants were irrevocable. Such elections are now subject to the usual
rules regarding their revocation contained in the "Additional Withdrawal
Options" section of the Prospectus.
[bullet] Limits on Purchase Payments Excludable from Income
Effective January 1, 1997, the maximum limit on annual Purchase Payments
which may be excluded from your gross income under a Section 457 Plan is
generally the lesser of $7,500, as adjusted to reflect the cost of living,
or 33 1/3% of your includible compensation (25% of gross compensation).
Also, the Health Insurance Portability and Accountability Act of 1996, provides
two new waivers of the 10% penalty tax on certain distributions from IRAs. As of
January 1, 1997, the penalty tax is waived on the amount of distributions from
IRAs for certain unreimbursed medical expenses, and for certain medical
insurance premiums if you have been unemployed and receiving unemployment
benefits as described in the Code.
X59749-2
X80750-2
