TAX SHELTERED ANNUITY
SUPPLEMENT TO EQUITABLE ACCUMULATOR(SM)
(IRA, NQ AND QP)
PROSPECTUS DATED MAY 1, 1998
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
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This prospectus supplement describes the baseBUILDER(R) Combined Guaranteed
Minimum Income Benefit and Guaranteed Minimum Death Benefit offered to Annuitant
issue ages 76 or older under the Equitable Accumulator (IRA, NQ and QP)
prospectus. Capitalized terms in this supplement have the same meaning as in the
prospectus.
A different version of the Combined Guaranteed Minimum Income Benefit and
Guaranteed Minimum Death Benefit than the versions discussed on page 28 of the
prospectus under "baseBUILDER Benefits" is available for Annuitant issue ages 76
or older. The charge for this benefit is 0.30% of the Guaranteed Minimum Income
Benefit benefit base in effect on a Processing Date. The versions of the
baseBUILDER Benefits described in the prospectus are not available at these
Annuitant issue ages. The benefit for Annuitant issue ages 76 or older is as
discussed below:
The Guaranteed Minimum Income Benefit may be exercised only within 30
days following the 7th or later Contract Date anniversary, but in no
event later than the Annuitant's age 90.
The period certain will be 90 less the Annuitant's age at election.
The Guaranteed Minimum Death Benefit applicable to the combined benefit is as
follows:
4% Roll Up to Age 85 - On the Contract Date, the Guaranteed Minimum
Death Benefit is equal to the initial contribution. Thereafter, the
Guaranteed Minimum Death Benefit is credited with interest at 4% on
each Contract Date anniversary through the Annuitant's age 85 (or at
the Annuitant's death, if earlier), and 0% thereafter, and is adjusted
for any loan repayments, subsequent contributions and withdrawals.
The Guaranteed Minimum Income Benefit benefit base described on page 40 of the
prospectus is as follows:
The Guaranteed Minimum Income Benefit benefit base is equal to the
initial contribution on the Contract Date. Thereafter, the Guaranteed
Minimum Income Benefit benefit base is credited with interest at 4% on
each Contract Date anniversary through the Annuitant's age 85, and 0%
thereafter, and is adjusted for any loan repayments, subsequent
contributions and withdrawals. The Guaranteed Minimum Income Benefit
benefit base will also be reduced by any outstanding loan balance and
any withdrawal charge remaining on the Transaction Date that you
exercise your Guaranteed Minimum Income Benefit.
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Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved. Accumulator is a service mark and
baseBUILDER is a registered service mark of
The Equitable Life Assurance Society of the United States.
SUPPLEMENT DATED JUNE 18, 1998
PROS AGENT SUPP3 (6/98)
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TAX SHELTERED ANNUITY
SUPPLEMENT TO EQUITABLE ACCUMULATOR(SM)
(IRA, NQ AND QP) PROSPECTUS DATED MAY 1, 1998
COMBINATION VARIABLE AND FIXED DEFERRED ANNUITY CERTIFICATES
Issued By:
The Equitable Life Assurance Society of the United States
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This prospectus supplement describes terms applicable to Equitable Accumulator
Certificates purchased as a Code Section 403(b) tax-sheltered annuity (TSA).
Under Equitable Accumulator TSA Certificates, we will only accept contributions
that are rollover contributions or direct transfers as described below. The
information below adds to or changes the information in the prospectus. Unless
otherwise indicated, all other information included in the prospectus remains
unchanged. Capitalized terms in this supplement have the same meaning as in the
prospectus.
GENERAL TERMS
Under "General Terms" and throughout the prospectus, the definition of the
following terms is changed under TSA Certificates:
ANNUITY ACCOUNT VALUE -- The sum of the amounts in the Investment Options, plus
any amount in a loan reserve account (an amount we will establish as security
for the repayment of your loan).
CASH VALUE -- The Annuity Account Value minus any outstanding loan balance, and
less any withdrawal charges.
PARTICIPANT/EMPLOYEE -- A current or former participant under a TSA plan of an
eligible employer.
AVAILABILITY OF CERTIFICATES
Equitable Accumulator TSA Certificates are available for purchase by current or
former employees of public schools, higher education institutions, and nonprofit
tax exempt organizations under Code Section 501(c)(3). TSA Certificates are
available for Annuitant issue ages 20 through 78.
Equitable Accumulator TSA Certificates may not currently be available in your
state. Your agent can provide information about state availability or you may
contact our Processing Office.
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Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104.
All rights reserved. Accumulator is a service mark and
Income Manager is a registered service mark of
The Equitable Life Assurance Society of the United States.
SUPPLEMENT DATED JUNE 18, 1998
PROS AGENT SUPP2 (6/98)
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OWNER AND ANNUITANT
Each employee is the Certificate Owner and must also be the Annuitant. A
Successor Owner/Annuitant is not permitted. As in the prospectus, throughout
this supplement, "you" and "your" refers to the Certificate Owner.
CONTRIBUTIONS TO TSAS
An initial rollover or direct transfer contribution of at least $5,000 is
required to put a TSA Certificate into effect. Subsequent rollover or direct
transfer contributions in an amount of at least $1,000 may be made at any time
until you attain age 79.
Contributions to your TSA Certificate may be made in the form of (i) a rollover
from another TSA contract or arrangement that meets the requirements of Section
403(b) of the Code, or (ii) a direct transfer of assets ("direct transfer"), in
full or partially, from another contract or arrangement that meets the
requirements of Section 403(b) of the Code directly to an Equitable Accumulator
TSA Certificate, by means of IRS Revenue Ruling 90-24. A transfer form
acceptable to us will be required.
If you make a direct transfer as described in (ii) above, you must tell us the
portion, if any, of the transferred funds which, under Federal tax law, are (a)
exempt from withdrawal restrictions, and (b) eligible for delayed distribution.
See "Distributions from TSAs" and "Minimum Distributions" under "Federal Tax and
ERISA Matters" below. If you do not tell us, then we will treat all such amounts
as being subject to applicable tax restrictions. Before funds are transferred to
an Equitable Accumulator TSA Certificate, you may be required to obtain your
employer's authorization or demonstrate that employer authorization is not
needed.
GUARANTEED MINIMUM INCOME BENEFIT
Under Equitable Accumulator TSA Certificates, the Guaranteed Minimum Income
Benefit may be exercised, on Contract Date anniversaries as indicated under
"Guaranteed Minimum Income Benefit" in Part 4 of the prospectus, only after the
Certificate Owner converts such TSA Certificate in a direct rollover to a
Traditional IRA Certificate according to our rules at the time of change. The
rollover to a Traditional IRA Certificate may only occur when you are eligible
for a rollover distribution from a TSA. This may generally occur when you are
age 59 1/2, or you are separated from service from the employer who provided the
TSA funds. See "Rollover or Direct Transfer Contributions" under "Federal Tax
and ERISA Matters" below.
WITHDRAWAL OPTIONS
The only withdrawal options available under TSA Certificates are Lump Sum
Withdrawals and Minimum Distribution Withdrawals. Systematic Withdrawals and
Substantially Equal Payment Withdrawals are not available. See "Withdrawal
Options" in Part 5 of the prospectus.
Under certain TSAs, if you are married at the time you request a withdrawal (as
described under "Withdrawal Options" in Part 5 of the prospectus), spousal
consent is required before taking a withdrawal from your TSA Certificate. See
"Spousal Consent" below.
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ANNUITY BENEFITS AND PAYOUT ANNUITY OPTIONS
The only annuity benefits which are available under TSA Certificates are the
Life Annuity 10 Year Period Certain, or a Joint and Survivor Life Annuity 10
Year Period Certain. Income Manager(R) payout annuity options are available only
after the TSA Certificate is rolled over to a Traditional IRA Certificate. See
"Guaranteed Minimum Income Benefit" above and "Annuity Benefits and Payout
Annuity Options" in Part 5 of the prospectus.
LOANS
The loan provision is not currently available under Equitable Accumulator TSA
Certificates, but is expected to become available in early 1999. The following
is provided for your general information concerning the operation of the loan
provision and the effect of a loan on your Certificate's values once the loan
provision becomes available under your TSA Certificate.
Loans under TSA Certificates are restricted by the rules of the Code, and where
applicable, ERISA. Loans are not available under TSA Certificates when the
Minimum Distribution Withdrawals option is in effect. See "Minimum Distribution
Withdrawals" in Part 5 of the prospectus and "Minimum Distributions" below.
When available, you can request a loan by submitting a properly completed loan
request form that will be available from your agent or from our Processing
Office. You should read the terms and conditions of the loan request form
carefully and consult with your tax adviser before taking out a loan. Under TSA
Certificates subject to ERISA, the written consent of your spouse will be
required before a loan can be made. Further details of the loan provision are
provided in your Certificate. Also, see "Federal Tax and ERISA Matters" below
for general rules applicable to loans.
Under Equitable Accumulator TSA Certificates, only one outstanding loan at a
time will be permitted. The minimum loan amount will be $1,000 and the maximum
amount will be $50,000 or, if less, 50% of the Annuity Account Value, subject to
any limits under the Code. The term of a TSA loan is five years unless the loan
is used to acquire your primary residence. The limit for loans used to purchase
your primary residence is 10 years under Equitable Accumulator TSA Certificates.
The loan term under TSA Certificates may not extend beyond the earliest of; (1)
election and commencement of annuity benefits, (2) the date of termination of
the Certificate, and (3) the date a death benefit is paid.
During the period a loan balance is outstanding, interest will accrue daily at a
rate we set ("loan interest rate"). The loan interest rate will be equal to the
Moody's Corporate Bond Yield Averages for the calendar month ending two months
before the day of the calendar quarter in which the rate is determined.
A loan will not be treated as a taxable distribution when made to the extent
that it conforms to the limits under the Code. If the loan fails to qualify
under Code limits, or if interest and principal are not repaid when due, or, in
some instances, if service with the employer terminates, the amount borrowed and
not yet repaid may be treated as a taxable distribution.
EFFECTS OF LOANS ON YOUR CERTIFICATE BENEFITS
Guaranteed Minimum Death Benefit
If there is a loan outstanding as of the date of the Annuitant's death, the
death benefit payable will be reduced by the amount of the outstanding loan and
accrued interest.
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While a loan is outstanding, your Guaranteed Minimum Death Benefit will be
credited with interest at 6% (4% for amounts in the Alliance Money Market Fund
except as indicated in the prospectus, the Alliance Intermediate Government
Securities Fund, the GIROs, and the loan reserve account) on each Contract Date
anniversary through the Annuitant's age 80 (or age 70 if the 6% Roll Up to Age
70 benefit is elected), or at the Annuitant's death, if earlier, and 0%
thereafter and will be adjusted for any loan repayments, subsequent
contributions and withdrawals. See "Death Benefit" in Part 4 of the prospectus.
Guaranteed Minimum Income Benefit
While a loan is outstanding your Guaranteed Minimum Income Benefit benefit base
will be credited with interest at 6% (4% for amounts in the Alliance Money
Market Fund except as indicated in the prospectus, the Alliance Intermediate
Government Securities Fund, the GIROs, and the loan reserve account), on each
Contract Date anniversary through the Annuitant's age 80 (or age 70 if the 6% to
Age 70 benefit is elected), and 0% thereafter, and will be adjusted for any loan
repayments, subsequent contributions and withdrawals. The Guaranteed Minimum
Income Benefit benefit base will be reduced by any outstanding loan balance and
any withdrawal charge remaining on the Transaction Date that you exercise your
Guaranteed Minimum Income Benefit. See "Guaranteed Minimum Income Benefit
Benefit Base" in Part 5 of the prospectus.
Withdrawal Options
While a loan is outstanding, you may not elect Minimum Distribution Withdrawals.
Only Lump Sum Withdrawals will be permitted and the amount to be withdrawn will
be limited such that the Cash Value remaining after the withdrawal must equal at
least 10% of the outstanding loan balance. See "Withdrawal Options" in Part 5 of
the prospectus.
SPOUSAL CONSENT
In the case of certain TSAs, if you are married at the time that a loan,
withdrawal, or other distribution is requested under the Certificate, spousal
consent is required as provided below. In addition, the beneficiary must be your
spouse, unless your spouse consents in writing to the designation of another
beneficiary. See "Spousal Consent Rules" under "Federal Tax and ERISA Matters"
below.
Your spouse's written consent must be witnessed by a representative of the TSA
plan or a notary and must be given on a form acceptable to your employer and to
us, in accordance with the plan and ERISA, prior to any withdrawal, loan or
other distribution, unless you can prove to the satisfaction of your employer
and us, that you have no spouse or that you cannot locate your spouse.
ASSIGNMENTS
TSA Certificates are not assignable or transferable except through surrender to
us.
FEDERAL TAX AND ERISA MATTERS
General
An employer eligible to maintain a TSA plan (also referred to as a "403(b)"
plan, program, or arrangement) for its employees ("participants") may make
contributions to an annuity contract or a custodial account investing in mutual
funds under Section 403(b)(7) of the Code purchased for the benefit of the
participant. Two different types of employers are eligible to maintain 403(b)
plans: (1) public
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schools and (2) specified tax-exempt organizations under Section 501(c)(3) of
the Code. These 403(b) contributions, if properly made, are not treated as
currently taxable compensation to participants. Moreover, participants are not
taxed on earnings in the 403(b) contract or account until distributions are
taken.
CONTRIBUTIONS TO TSAS
Three different types of contributions may be made to purchase a TSA: (1)
"employer-remitted contributions" which may be pure participant salary reduction
contributions or pure employer defined contributions or a combination of salary
reduction and employer contributions, (2) "rollover" contributions from other
existing TSAs or under certain circumstances, IRAs, or (3) direct transfers from
other existing TSAs. Because only rollover or direct transfer contributions are
permitted to the Equitable Accumulator TSA Certificates, the discussion below of
employer-remitted contributions to TSAs is limited. The discussion is provided
only for purposes of describing restrictions on distribution of funds rolled
over or transferred, which may include employer-remitted contributions made
under prior contracts. See "Distributions from TSAs" below.
Employer-Remitted Contributions
Employer-remitted contributions to TSAs made through the employer's payroll are
subject to annual limits. (Tax-free transfer or tax-deferred rollover
contributions from another 403(b) arrangement are not subject to these annual
contribution limits.) Commonly, some or all of the contributions made to a TSA
are made under a salary reduction agreement between the employee and the
employer. These contributions are called "salary reduction" or "elective
deferral" contributions. However, a TSA can also be wholly or partially funded
through nonelective employer contributions or after-tax employee contributions.
Amounts attributable to salary reduction contributions to TSAs are generally
subject to withdrawal restrictions. Also, all amounts attributable to
investments in a 403(b)(7) custodial account are subject to withdrawal
restrictions discussed below.
Rollover or Direct Transfer Contributions
Rollover contributions may be made to your Equitable Accumulator TSA Certificate
from TSAs under Section 403(b) of the Code. Generally, a rollover contribution
may be made to a TSA when a participant has a distributable event from an
existing TSA as a result of (1) termination of employment with the employer who
provided the TSA funds, (2) the attainment of age 59 1/2 even if still employed,
or (3) disability as defined in the Code. In some cases, an in-service
withdrawal made from an annuity may also be rolled over. With appropriate
written documentation satisfactory to us, we will accept rollover contributions
from "conduit IRAs" for TSA funds. See "Rollovers and Transfers" under
"Traditional Individual Retirement Annuities (Traditional IRAs)" in Part 8 of
the prospectus.
We will also accept direct transfers of TSA funds pursuant to Revenue Ruling
90-24 provided you furnish us with acceptable written documentation as to the
source of the funds. A transfer occurs when changing the funding vehicle, even
if there is no distributable event. A Revenue Ruling 90-24 transfer will not be
treated as such if the recipient contract does not have provisions at least as
restrictive as the source contract. Under a direct transfer, the individual
participant is not involved in the receipt of the distribution. For all
contributions to the Equitable Accumulator TSA we may require documentation of
your employment status with the employer who provided the funds. You may also
need to get your employer's consent to transfer funds to us.
See "Tax-Deferred Rollovers and Direct Transfers" under "Distributions from
TSAs" below for a further discussion of rollovers and direct transfers.
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DISTRIBUTIONS FROM TSAS
Depending on the terms of the employer plan and your employment status, you may
be required to get your employer's consent to take a loan or withdrawal.
Withdrawal Restrictions
If you have established your TSA through a direct transfer pursuant to Revenue
Ruling 90-24 (as opposed to a rollover from another TSA) restrictions may apply
to all or a portion of your TSA Certificate. Distributions of these restricted
amounts generally may be made only (1) if you attain age 59 1/2, (2) if you die
or become disabled as defined in the Code, (3) if you separate from service with
the employer that provided the funds for the TSA or (4) on account of financial
hardship. Hardship withdrawals may be limited. If any portion of the funds
directly transferred to your TSA Certificate is attributable to amounts that
were invested in a 403(b)(7) custodial account, all such amounts, including
earnings, are subject to withdrawal restrictions. With respect to the portion of
the funds that were never invested in a 403(b)(7) custodial account, these
restrictions apply to the salary reduction (elective deferral) contributions to
a TSA annuity contract you made and any earnings thereon. These restrictions do
not apply to the amount directly transferred to your TSA Certificate which
represents your December 31, 1988 account balance attributable to salary
reduction contributions to a TSA annuity contract and earnings. To take
advantage of this grandfathering you must properly notify us in writing at our
Processing Office of your December 31, 1988 account balance if you have
qualifying amounts transferred to your TSA Certificate.
This paragraph applies only to participants in a Texas Optional Retirement
Program. Texas Law permits withdrawals only after one of the following
distributable events occur: (1) the requirements for minimum distribution
(discussed under "Minimum Distributions" below) are met, (2) death, (3)
retirement, or (4) termination of employment in all Texas public institutions of
higher education. To make a withdrawal, a properly completed written
acknowledgement must be received from the employer. If a distributable event
occurs prior to your being vested, any amounts provided by an employer's
first-year matching contribution will be refunded to the employer. We reserve
the right to change these provisions without your consent, but only to the
extent necessary to maintain compliance with applicable law. Loans are not
permitted under Texas Optional Retirement Programs.
Tax Treatment of Distributions
Amounts held under TSAs are generally not subject to Federal income tax until
benefits are distributed. Distributions include withdrawals from the TSA
Certificate and annuity payments from the TSA Certificate. Death benefits paid
to a beneficiary are also taxable distributions. Unless an exception applies,
amounts distributed from TSAs are includable in gross income as ordinary income.
Distributions from TSAs may be subject to 20% Federal income tax withholding.
See "Federal and State Income Tax Withholding and Information Reporting" below.
In addition, TSA distributions may be subject to additional tax penalties. For
information regarding tax penalties which may apply, see "Penalty Tax on
Premature Distributions" and "Tax Penalties for Insufficient Distributions"
later in this section.
If you have made after-tax contributions, for example, you will have a tax basis
in the TSA Certificate which may be recovered. On a total surrender, the amount
received in excess of the basis is taxable. We will report the total amount of
the distribution. It is your responsibility to determine how much of the
distribution is taxable. The amount of any partial distribution from a TSA prior
to the annuity starting date is generally taxable, except to the extent that the
distribution is treated as a withdrawal of after-tax contributions.
Distributions are normally treated as pro rata withdrawals of after-tax
contributions and earnings on those contributions.
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If an annuity benefit option is elected, any basis will be recovered as each
payment is received by dividing the investment in the contract by an expected
return determined under an IRS table prescribed for qualified annuities. The
amount of each payment not excluded from income under this exclusion ratio is
fully taxable. The full amount of the payments received after the cost basis of
the annuity is recovered is fully taxable. If you (and your beneficiary under a
joint and survivor annuity) die prior to recovering the full cost basis of the
annuity, a deduction is allowed on your (or your beneficiary's) final tax
return.
Death Benefit
Distributions from a TSA are generally given the same tax treatment whether made
on account of your death or while you are living. In some instances,
distributions from a TSA made to your surviving spouse may be rolled over to a
traditional individual retirement arrangement on a tax-deferred basis. See
"Tax-Deferred Rollovers and Direct Transfers," below and "Contributions to
Traditional IRAs" under "Traditional Individual Retirement Annuities
(Traditional IRAs)" in Part 8 of the prospectus.
Loans from TSAs
Loans may be taken from a TSA unless restricted by the employer under a plan
subject to ERISA. Loans are generally not treated as a taxable distribution,
except under the following circumstances. If the amount of the loan exceeds
permissible limits under the Code when made, the amount of the excess is treated
(solely for tax purposes) as a taxable distribution. Additionally, if the loan
is not repaid at least quarterly, amortizing interest and principal, the amount
not repaid when due will be treated as a taxable distribution. Under Proposed
Treasury Regulations the entire unpaid balance of the loan is includable in
income in the year of the default. See "Loans" above and "Certain Rules
Applicable to Plan Loans" below.
Tax-Deferred Rollovers and Direct Transfers
Any distribution from a TSA which is an "eligible rollover distribution" may be
rolled over into another eligible retirement plan, either as a direct rollover
or a rollover within 60 days of receiving the distribution. To the extent a
distribution is rolled over, it remains tax deferred.
A distribution from a TSA may be rolled over to another TSA or traditional
individual retirement arrangement. Death benefits received by a spousal
beneficiary may only be rolled over to a Traditional IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under the Code. Distributions which cannot be rolled
over generally include periodic payments for life or for a period of 10 years or
more, and minimum distributions required under Section 401(a)(9) of the Code
(discussed below). Eligible rollover distributions are discussed in greater
detail under "Federal and State Income Tax Withholding and Information
Reporting" below.
Direct transfers of TSA funds from one TSA to another pursuant to Revenue Ruling
90-24 are not distributions.
Minimum Distributions
The minimum distribution rules mandate that TSA participants start taking annual
distributions from their retirement plans by a required date. When minimum
distributions must begin depends on, among other things, your age and retirement
status. The distribution requirements are designed to provide for distribution
of your interest in the TSA plan over your life expectancy. Whether the correct
amount has
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been distributed is calculated on a year-by-year basis; there are no
provisions to allow amounts taken in excess of the required amount to be carried
over or carried back and credited to other years.
Generally, you must take the first required minimum distribution with respect to
the calendar year in which you turn age 70 1/2. Exceptions which may permit you
to delay commencement of required minimum distributions are noted in the next
paragraphs. You have the choice to take the first required minimum distribution
during the calendar year you turn age 70 1/2, or to delay taking it until the
three-month (January 1 - April 1) period in the next calendar year.
(Distributions must commence no later than the "Required Beginning Date," which
is the April 1st of the calendar year following the calendar year in which you
turn age 70 1/2 unless an exception applies.) If you choose to delay taking the
first annual minimum distribution, then you will have to take two minimum
distributions in that year - the delayed one for the first year and the one
actually for that year. Once minimum distributions begin, they must be made at
some time every year.
You may be entitled to delay commencement of required minimum distributions for
all or part of your account balance until after age 70 1/2. Consult your tax
adviser to determine whether you may qualify for these exceptions. These
exceptions apply to the following individuals:
o For TSA participants who have not retired from service with the employer
who provided the funds in the TSA arrangement in question by the calendar
year the participant turns age 70 1/2, the Required Beginning Date for
minimum distributions is extended to April 1 following the calendar year of
such retirement. TSA plan participants may also delay commencement to age
75 of the portion of their Annuity Account Value attributable to their
December 31, 1986 TSA account balance, even if retired at age 70 1/2. (If
you have already transferred amounts from another insurer's TSA to your
Equitable Accumulator TSA, you must tell us at the time of the transfer the
amount of your December 31, 1986 account balance to take advantage of this
exception.)
There are two general ways to take minimum distributions -- "account based" or
"annuity based" -- and there are a number of distribution options in both of
these categories. These choices are intended to give you a great deal of
flexibility to provide for yourself and your family.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Generally, the minimum distribution must be calculated annually for, and taken
from, each tax qualified retirement plan and TSA. Distributions in excess of the
amount required in any year from a qualified plan, for example, will not satisfy
the required amount for a TSA in which you also participate. In Notice 88-38,
the IRS indicated that an individual maintaining more than one Code Section
403(b) arrangement may choose to take the annual required minimum distribution
for all TSAs from any one or more TSAs the individual maintains, as long as the
required distribution is calculated separately for each TSA and all other
minimum distribution amounts are added together.
An account-based minimum distribution method may be a lump sum payment, or a
periodic withdrawal made over a period which does not extend beyond your life
expectancy or the joint life expectancies of you and a designated beneficiary.
In the alternative, you could meet the minimum distribution requirements by
applying the Annuity Account Value to an annuity over your life or the joint
lives of you and a designated beneficiary, or for a period certain not extending
beyond applicable life expectancies.
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If you die before the Required Beginning Date or before distributions in the
form of an annuity begin, distributions of the entire interest under the TSA
Certificate must be completed within five years after your death, unless
payments to a designated beneficiary begin within one year of your death and are
made over the beneficiary's life or over a period certain which does not extend
beyond the beneficiary's life expectancy. If your surviving spouse is the
designated beneficiary, your spouse may delay the commencement of such payments
up until you would have attained age 70 1/2. In the alternative, such spouse can
roll over the death benefit to a Traditional IRA. See "Tax-Deferred Rollovers
and Direct Transfers" above. If you die after the Required Beginning Date or
after distributions in the form of an annuity have begun, payments after your
death must continue to be made at least as rapidly as the payments made before
your death.
SPOUSAL CONSENT RULES
In the case of certain TSAs, if you are married at the time a loan, withdrawal,
or other distribution is requested under the TSA Certificate, spousal consent is
required. In addition, unless you elect otherwise with the written consent of
your spouse, the retirement benefits payable under the plan must be paid in the
form of a "qualified joint and survivor annuity" (QJSA). A QJSA is an annuity
payable for the life of the Annuitant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable to
the Annuitant during his or her lifetime. In addition, if you are married, the
beneficiary must be your spouse, unless your spouse consents in writing to the
designation of another beneficiary.
If you are married and you die before annuity payments have begun, payments will
be made to your surviving spouse in the form of a life annuity unless at the
time of your death there was a contrary election made. However, your surviving
spouse may elect before payments are to commence, to have payments made in any
form permitted under the terms of the TSA Certificate and the TSA plan.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The taxable portion of distributions from a TSA will be subject to a 10% penalty
tax unless the distribution is made (1) on or after your death, (2) because you
have become disabled, (3) on or after the date when you reach age 59 1/2, (4) if
you separate from service and elect a payout over your life or life expectancy
(or the joint lives or life expectancies of you and your spouse under a joint
and survivor annuity form), (5) on or after the date you attain age 55 if you
are separated from service, or (6) to pay certain extraordinary medical
expenses.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS
Failure to make minimum distributions discussed above may cause the
disqualification of the TSA. Disqualification may result in current taxation of
your entire benefit. In addition, a 50% penalty tax is imposed on the difference
between the required distribution amount and the amount actually distributed, if
any.
It is your responsibility as the Certificate Owner to see that the minimum
distributions are made with respect to your TSA Certificate. We do not
automatically make distributions from a TSA Certificate before the Annuity
Commencement Date unless a request has been made. We will notify you during the
year when our records show that you will attain age 70 1/2. If you do not select
a method of distribution, we will assume you are taking your minimum
distribution from another TSA that you maintain. You should consult your tax
adviser concerning these rules and their proper application to your situation.
See "Minimum Distributions" above.
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FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING
Equitable Life is required to withhold Federal income tax on the taxable portion
of TSA payments. The rate of withholding will depend on the type of distribution
and, in certain cases, the amount of the distribution. Unless the payment is an
"eligible rollover distribution" from a TSA, the recipient generally may elect
not to be subject to income tax withholding. Compare "Elective Withholding" and
"Mandatory Withholding from TSAs" below.
Certain states have indicated that pension and annuity withholding will apply to
payments made to residents. Generally, an election out of Federal withholding
will also be considered an election out of state withholding. In some states, a
recipient may elect out of state withholding, even if Federal withholding
applies. It is not clear whether such states may require mandatory withholding
with respect to eligible rollover distributions (described below). Contact your
tax adviser to see how state income tax withholding may apply to your payment.
Special withholding rules apply to foreign recipients and United States citizens
residing outside the United States. See your tax adviser if you may be affected
by such rules. Withholding may also apply to taxable amounts paid under a 10-day
free look cancellation.
Elective Withholding
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the TSA Certificate. The Processing Office will provide
forms for this purpose. No election out of withholding is valid unless the
recipient provides us with the correct Taxpayer Identification Number and a
United States residence address.
If a recipient does not have sufficient income tax withheld or does not make
sufficient estimated income tax payments, the recipient may incur penalties
under the estimated income tax rules. Recipients should consult their tax
advisers to determine whether they should elect out of withholding.
Periodic payments are generally subject to wage-bracket type withholding (as if
such payments were wages by an employer to an employee) unless the recipient
elects no withholding. If a recipient does not elect out of withholding or does
not specify the number of withholding exemptions, withholding will generally be
made as if the recipient is married and claiming three withholding exemptions.
There is an annual threshold of taxable income from periodic payments which is
exempt from withholding based on this assumption. For 1998, a recipient of
periodic payments (e.g., monthly or annual payments are not "eligible rollover
distributions") which total less than $14,400 taxable amount will generally be
exempt from Federal income tax withholding, unless the recipient specifies a
different choice of withholding exemption. However, if a recipient fails to
provide a correct Taxpayer Identification Number, withholding is made as if the
recipient is single with no exemptions.
A recipient of a partial or total non-periodic distribution (other than
"eligible rollover distributions" discussed below) will generally be subject to
withholding at a flat 10% rate. A recipient who provides a United States
residence address and a correct Taxpayer Identification Number will generally be
permitted not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right, if any, to make
withholding elections.
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Mandatory Withholding from TSAs
All "eligible rollover distributions" are subject to mandatory Federal income
tax withholding of 20% unless you elect to have the distribution directly rolled
over to a qualified plan or individual retirement arrangement. The following are
not eligible rollover distributions subject to mandatory 20% withholding:
o any distribution to the extent that the distribution is a "required minimum
distribution" under Section 401(a)(9) of the Code;
o any distribution which is one of a series of substantially equal periodic
payments made not less frequently than annually (1) for your life (or life
expectancy) or the joint lives (or joint life expectancies) of you and your
designated beneficiary, or (2) for a specified period of 10 years or more;
o certain corrective distributions under Code Sections 401(k), 401(m) and
402(g);
o loans that are treated as deemed distributions;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants); and
o a distribution to a beneficiary other than to your surviving spouse or your
current or former spouse under a qualified domestic relations order.
If a distribution is made to your surviving spouse, or to your current or former
spouse under a qualified domestic relations order, the distribution may be an
eligible rollover distribution, subject to mandatory 20% withholding, unless one
of the exceptions described above applies.
ERISA MATTERS
ERISA rules are designed to save and protect qualified retirement plan assets to
be paid to plan participants when they retire.
Some TSAs may be subject to Title I of ERISA, generally dependent on the level
of employer involvement in the TSA plan, for example, if the employer makes
matching contributions to salary reduction contributions made by employees.
CERTAIN RULES APPLICABLE TO PLAN LOANS
TSA loans are subject to Code limits and may also be subject to the limits of
the applicable plan. Code requirements apply even if the plan is not subject to
ERISA. For example, loans offered by TSAs are subject to the following
conditions:
o The amount of a loan to a participant, when aggregated with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the greater of $10,000 or 50% of the participant's nonforfeitable accrued
benefits, and cannot exceed $50,000 in any event. This $50,000 limit is
reduced by the excess (if any) of the highest outstanding loan balance over
the previous twelve months over the outstanding loan balance of plan loans
on the date the loan was made.
o In general, the term of the loan cannot exceed five years unless the loan
is used to acquire the participant's primary residence. Equitable
Accumulator TSA Certificates have a term limit of 10 years for loans used
to acquire the participant's primary residence.
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o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly.
o If the loan does not qualify under the conditions above, the participant
fails to repay the interest or principal when due, or in some instances, if
the participant separates from service or the plan is terminated, the
amount borrowed and not repaid may be treated as a distribution. The
participant may be required to include as ordinary income the unpaid amount
due and a 10% penalty tax on premature distributions may apply. The amount
of the unpaid loan balance is reported to the IRS on Form 1099-R as a
distribution.
In addition, certain loan rules apply only to loans under ERISA plans:
o For contracts which are subject to ERISA, the trustee or sponsoring
employer is responsible for insuring that any loan meets applicable
Department of Labor (DOL) requirements. It is the responsibility of the
plan administrator, the trustee of a qualified plan and/or the employer,
and not Equitable Life, to properly administer any loan made to plan
participants.
o With respect to specific loans made by the plan to a plan participant, the
plan administrator determines the interest rate, the maximum term
consistent with Equitable Accumulator TSA processing and all other terms
and conditions of the loan.
o Only 50% of the participant's vested account balance may serve as security
for a loan. To the extent that a participant borrows an amount which should
be secured by more than 50% of the participant's vested account balance, it
is the responsibility of the trustee or plan administrator to obtain the
additional security.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances.
o Loans must be available to all plan participants, former participants (or
death beneficiaries of participants) who still have account balances under
the plan, and alternate payees on a reasonably equivalent basis.
o Plans subject to ERISA provide that the participant's spouse must consent
in writing to the loan.
CERTAIN RULES APPLICABLE TO PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF
ERISA
Section 404(c) of ERISA, and the related DOL regulations, provide that if a plan
participant or beneficiary exercises control over the assets in his or her plan
account, plan fiduciaries will not be liable for any loss that is the direct and
necessary result of the plan participant's or beneficiary's exercise of control.
As a result, if the plan complies with Section 404(c) and the DOL regulation
thereunder, the plan participant can make and is responsible for the results of
his or her own investment decisions.
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and must
provide such plan participants and beneficiaries with enough information to make
informed investment decisions. Compliance with the Section 404(c) regulation is
completely voluntary by the plan sponsor, and the plan sponsor may choose not to
comply with Section 404(c).
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The Equitable Accumulator TSA program provides the broad range of investment
choices and information needed in order to meet the requirements of the Section
404(c) regulation. If the plan is intended to be a Section 404(c) plan, it is,
however, the plan sponsor's responsibility to see that the requirements of the
DOL regulation are met. Equitable Life and its representatives shall not be
responsible if a plan fails to meet the requirements of Section 404(c).
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