<PAGE> 1
PROSPECTUS DATED MAY 1, 2000
FOR
MAINSTAY ACCESS VARIABLE ANNUITY
FROM
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
51 MADISON AVENUE, NEW YORK, NEW YORK 10010
INVESTING IN
NYLIAC VARIABLE ANNUITY SEPARATE ACCOUNT-III
This Prospectus describes the individual flexible premium MainStay Access
Variable Annuity policies issued by New York Life Insurance and Annuity
Corporation ("NYLIAC"). We designed these policies to assist individuals with
their long-term retirement planning needs. You can use the policies with
retirement plans that do or do not qualify for special federal income tax
treatment. The policies offer flexible premium payments, access to your money
through partial withdrawals (some withdrawals may be subject to a tax penalty),
a choice of when income payments commence, and a guaranteed death benefit if the
owner or annuitant dies before income payments have commenced.
Your premium payments accumulate on a tax-deferred basis. This means your
earnings are not taxed until you take money out of your policy, which can be
done in several ways. You can split your premium payments among a guaranteed
interest option and the twenty-six variable investment divisions listed below.
<TABLE>
<S> <C>
- MainStay VP Capital Appreciation
- MainStay VP Cash Management
- MainStay VP Convertible
- MainStay VP Government
- MainStay VP High Yield Corporate Bond
- MainStay VP International Equity
- MainStay VP Total Return
- MainStay VP Value
- MainStay VP Bond
- MainStay VP Growth Equity
- MainStay VP Indexed Equity
- American Century Income & Growth
- Dreyfus Large Company Value
- Eagle Asset Management Growth Equity
- Lord Abbett Developing Growth
- Alger American Small Capitalization
- Calvert Social Balanced
- Fidelity VIP II Contrafund(R)
- Fidelity VIP Equity-Income
- Janus Aspen Series Balanced
- Janus Aspen Series Worldwide Growth
- MFS(R) Growth With Income Series
- MFS(R) Research Series
- Morgan Stanley UIF Emerging Markets Equity
- T. Rowe Price Equity Income
- Van Eck Worldwide Hard Assets
</TABLE>
We do not guarantee the investment performance of these variable investment
divisions. Depending on market conditions, you can make or lose money in any of
the investment divisions.
You should read this Prospectus carefully before investing and keep it for
future reference. This Prospectus is not valid unless attached to current
prospectuses for the MainStay VP Series Fund, Inc., the Alger American Fund, the
Calvert Variable Series, Inc., the Fidelity Variable Insurance Products Fund II
(VIP II), the Fidelity Variable Insurance Products Fund (VIP), the Janus Aspen
Series, the MFS(R) Variable Insurance Trust(SM), The Universal Institutional
Funds, Inc., the T. Rowe Price Equity Series, Inc. and the Van Eck Worldwide
Insurance Trust (the "Funds", each individually a "Fund"). Each Investment
Division invests in shares of a corresponding Fund portfolio.
To learn more about the policy, you can obtain a copy of the Statement of
Additional Information ("SAI") dated May 1, 2000. The SAI has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated by reference
into this Prospectus. The table of contents for the SAI appears at the end of
this Prospectus. For a free copy of the SAI, call us at (800) 762-6212 or write
to us at the address above.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE POLICIES INVOLVE RISKS, INCLUDING POTENTIAL LOSS OF PRINCIPAL INVESTED.
THE POLICIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS............................ 3
FEE TABLE.............................. 4
QUESTIONS AND ANSWERS ABOUT MAINSTAY
ACCESS VARIABLE ANNUITY.............. 7
FINANCIAL STATEMENTS................... 9
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION AND THE SEPARATE
ACCOUNT.............................. 10
New York Life Insurance and Annuity
Corporation....................... 10
The Separate Account................. 10
The Portfolios....................... 10
Additions, Deletions or Substitutions
of Investments.................... 11
Reinvestment......................... 12
THE POLICIES........................... 12
Selecting the Variable Annuity That's
Right for You..................... 12
Qualified and Non-Qualified
Policies.......................... 13
Policy Application and Premium
Payments.......................... 13
Payments Returned for Insufficient
Funds............................. 14
Your Right to Cancel ("Free Look")... 14
Issue Ages........................... 14
Transfers............................ 14
Procedures for Telephone
Transactions...................... 15
Dollar Cost Averaging Program........ 15
Automatic Asset Reallocation......... 16
Accumulation Period.................. 16
(a) Crediting of Premium
Payments..................... 16
(b) Valuation of Accumulation
Units........................ 16
Third Party Investment Advisory
Arrangements...................... 16
Policy Owner Inquiries............... 17
CHARGES AND DEDUCTIONS................. 17
Separate Account Charge.............. 17
Policy Service Charge................ 17
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Transfer Fees........................ 17
Group and Sponsored Arrangements..... 17
Taxes................................ 18
Fund Charges......................... 18
DISTRIBUTIONS UNDER THE POLICY......... 18
Surrenders and Withdrawals........... 18
(a) Surrenders.................... 18
(b) Partial Withdrawals........... 19
(c) Periodic Partial
Withdrawals.................. 19
(d) Hardship Withdrawals.......... 19
Required Minimum Distribution........ 19
Our Right to Cancel.................. 19
Annuity Commencement Date............ 19
Death Before Annuity Commencement.... 20
Income Payments...................... 21
(a) Election of Income Payment
Options...................... 21
(b) Other Methods of Payment...... 21
(c) Proof of Survivorship......... 21
Delay of Payments.................... 21
Designation of Beneficiary........... 22
Restrictions Under Internal Revenue
Code Section 403(b)(11)........... 22
THE FIXED ACCOUNT...................... 22
(a) Interest Crediting............ 22
(b) Transfers to Investment
Divisions.................... 22
FEDERAL TAX MATTERS.................... 23
Introduction......................... 23
Taxation of Annuities in General..... 23
Qualified Plans...................... 24
(a) Section 403(a) Plans.......... 24
(b) Section 403(b) Plans.......... 24
(c) Individual Retirement
Annuities.................... 24
(d) Roth Individual Retirement
Annuities.................... 25
(e) Deferred Compensation Plans... 25
DISTRIBUTOR OF THE POLICIES............ 25
VOTING RIGHTS.......................... 25
TABLE OF CONTENTS FOR THE STATEMENT OF
ADDITIONAL INFORMATION............... 26
</TABLE>
THIS PROSPECTUS IS NOT CONSIDERED AN OFFERING IN ANY STATE WHERE THE SALE
OF THIS POLICY CANNOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANY INFORMATION OR
REPRESENTATIONS REGARDING THE OFFERING OTHER THAN AS DESCRIBED IN THIS
PROSPECTUS OR IN ANY ATTACHED SUPPLEMENT TO THIS PROSPECTUS OR IN ANY
SUPPLEMENTAL SALES MATERIAL WE AUTHORIZE.
2
<PAGE> 3
DEFINITIONS
ACCUMULATION UNIT--An accounting unit we use to calculate the Variable
Accumulation Value prior to the Annuity Commencement Date. Each Investment
Division of the Separate Account has a distinct variable Accumulation Unit
value.
ACCUMULATION VALUE--The sum of the Variable Accumulation Value and the Fixed
Accumulation Value of a policy.
ALLOCATION ALTERNATIVES--The Investment Divisions of the Separate Account and
the Fixed Account.
ANNUITANT--The person whose life determines the Income Payments, and upon whose
death prior to the Annuity Commencement Date, benefits under the policy may be
paid.
ANNUITY COMMENCEMENT DATE--The date on which we are to make the first Income
Payment under the policy.
BENEFICIARY--The person or entity having the right to receive the death benefit
set forth in the policy and who is the "designated beneficiary" for purposes of
Section 72 of the Internal Revenue Code in the event of the Annuitant's or the
policy owner's death.
BUSINESS DAY--Generally, any day on which the New York Stock Exchange ("NYSE")
is open for trading. Our Business Day ends at 4:00 p.m. Eastern Time or the
closing of regular trading on the NYSE, if earlier.
ELIGIBLE PORTFOLIOS ("PORTFOLIOS")--The mutual fund portfolios of the Funds that
are available for investment through the Investment Divisions of the Separate
Account.
FIXED ACCOUNT--An account that is credited with a fixed interest rate which
NYLIAC declares and is not part of the Separate Account. The Accumulation Value
of the Fixed Account is supported by assets in NYLIAC's general account, which
are subject to the claims of our general creditors.
FIXED ACCUMULATION VALUE--The sum of premium payments and transfers allocated to
the Fixed Account, plus interest credited on those premium payments and
transfers, less any transfers and partial withdrawals from the Fixed Account,
and policy service charges that may have already been assessed from the Fixed
Account.
FUND--An open-end management investment company.
INCOME PAYMENTS--Periodic payments NYLIAC makes after the Annuity Commencement
Date.
INVESTMENT DIVISION--The variable investment options available with the policy.
Each Investment Division invests exclusively in shares of a specified Eligible
Portfolio.
NON-QUALIFIED POLICIES--Policies that are not available for use in connection
with employee retirement plans that qualify for special federal income tax
treatment.
PAYMENT YEAR(S)--With respect to any premium payment, the year(s) beginning on
the date such premium payment is made to the policy.
POLICY ANNIVERSARY--An anniversary of the Policy Date shown on the Policy Data
Page.
POLICY DATA PAGE--Page 2 of the policy which contains the policy specifications.
POLICY DATE--The date from which we measure Policy Years, quarters, months and
Policy Anniversaries. It is shown on the Policy Data Page.
POLICY YEAR--A year starting on the Policy Date. Subsequent Policy Years begin
on each Policy Anniversary, unless otherwise indicated.
QUALIFIED POLICIES--Policies issued under employee retirement plans that qualify
for special federal income tax treatment.
SEPARATE ACCOUNT--NYLIAC Variable Annuity Separate Account-III, a segregated
asset account we established to receive and invest premium payments paid under
the policies. The Separate Account's Investment Divisions, in turn, purchase
shares of Eligible Portfolios.
VARIABLE ACCUMULATION VALUE--The sum of the products of the current Accumulation
Unit value(s) for each of the Investment Divisions multiplied by the number of
Accumulation Units held in the respective Investment Division.
3
<PAGE> 4
FEE TABLE
NYLIAC VARIABLE ANNUITY SEPARATE ACCOUNT-III
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP MAINSTAY VP
APPRECIATION MANAGEMENT CONVERTIBLE GOVERNMENT
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Transfer Fee.............................................. There is no transfer fee on the first 12 transfers in
any Policy Year. NYLIAC reserves the right to charge
up to $30 for each transfer in excess of 12 transfers
per Policy Year.
Annual Policy Service Charge.............................. $40 per policy for policies with less than $50,000 of
Accumulation Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55% 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.36% 0.25% 0.36% 0.30%
Administration Fees....................................... 0.20% 0.20% 0.20% 0.20%
Other Expenses............................................ 0.06% 0.06% 0.15% 0.09%
Total Fund Annual Expenses................................ 0.62% 0.51% 0.71% 0.59%
<CAPTION>
MAINSTAY VP
HIGH YIELD MAINSTAY VP
CORPORATE INTERNATIONAL
BOND EQUITY
----------- -------------
<S> <C> <C>
OWNER TRANSACTION EXPENSES
up to $30 for each transfer
in excess of 12 transfers
Transfer Fee.............................................. per Policy Year.
Annual Policy Service Charge..............................
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.30% 0.60%
Administration Fees....................................... 0.20% 0.20%
Other Expenses............................................ 0.07% 0.27%
Total Fund Annual Expenses................................ 0.57% 1.07%
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
TOTAL MAINSTAY VP MAINSTAY VP GROWTH INDEXED
RETURN VALUE BOND EQUITY EQUITY
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Transfer Fee.............................................. There is no transfer fee on the first 12 transfers in any Policy
Year. NYLIAC reserves the right to charge up to $30 for each
transfer in excess of 12 transfers per Policy Year.
Annual Policy Service Charge.............................. $40 per policy for policies with less than $50,000 of Accumulation
Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55% 1.55% 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.32% 0.36% 0.25% 0.25% 0.10%
Administration Fees....................................... 0.20% 0.20% 0.20% 0.20% 0.20%
Other Expenses............................................ 0.06% 0.07% 0.05% 0.04% 0.06%
Total Fund Annual Expenses................................ 0.58% 0.63% 0.50% 0.49% 0.36%
<CAPTION>
AMERICAN DREYFUS
CENTURY LARGE
INCOME & COMPANY
GROWTH VALUE
-------- -------
<S> <C> <C>
OWNER TRANSACTION EXPENSES
up to $30 for each
transfer in excess
of 12 transfers per
Transfer Fee.............................................. Policy Year.
Annual Policy Service Charge..............................
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.50% 0.60%
Administration Fees....................................... 0.20% 0.20%
Other Expenses............................................ 0.15%(b) 0.15%(b)
Total Fund Annual Expenses................................ 0.85% 0.95%
</TABLE>
4
<PAGE> 5
FEE TABLE--(CONTINUED)
NYLIAC VARIABLE ANNUITY SEPARATE ACCOUNT-III
<TABLE>
<CAPTION>
EAGLE
ASSET ALGER
MANAGEMENT LORD ABBETT AMERICAN CALVERT
GROWTH DEVELOPING SMALL SOCIAL
EQUITY GROWTH CAPITALIZATION BALANCED
---------- ----------- -------------- --------
<S> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Transfer Fee.............................................. There is no transfer fee on the first 12 transfers
in any Policy Year. NYLIAC reserves the right to
charge up to $30 for each transfer in excess of 12
transfers per Policy Year.
Annual Policy Service Charge.............................. $40 per policy for policies with less than $50,000
of Accumulation Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55% 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.50% 0.60% 0.85% 0.70%(c)
Administration Fees....................................... 0.20% 0.20% -- --
Other Expenses............................................ 0.15%(b) 0.15%(b) 0.05% 0.19%(c)
Total Fund Annual Expenses................................ 0.85% 0.95% 0.90% 0.89%(c)
<CAPTION>
JANUS
FIDELITY FIDELITY VIP ASPEN
VIP II EQUITY- SERIES
CONTRAFUND(R) INCOME BALANCED
------------- ------------ --------
<S> <C> <C> <C>
OWNER TRANSACTION EXPENSES
charge up to $30 for each transfer in
Transfer Fee.............................................. excess of 12 transfers per Policy Year.
Annual Policy Service Charge..............................
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.58% 0.48% 0.65%
Administration Fees....................................... -- -- --
Other Expenses............................................ 0.07% 0.08% 0.02%
Total Fund Annual Expenses................................ 0.65%(d) 0.56%(d) 0.67%(e)
</TABLE>
<TABLE>
<CAPTION>
MORGAN
STANLEY
JANUS ASPEN UIF
SERIES MFS(R) GROWTH MFS(R) EMERGING
WORLDWIDE WITH INCOME RESEARCH MARKETS
GROWTH SERIES SERIES EQUITY
----------- ------------- -------- --------
<S> <C> <C> <C> <C>
OWNER TRANSACTION EXPENSES
Transfer Fee.............................................. There is no transfer fee on the first 12 transfers in
any Policy Year. NYLIAC reserves the right to charge
up to $30 for each transfer in excess of 12 transfers
per Policy Year.
Annual Policy Service Charge.............................. $40 per policy for policies with less than $50,000 of
Accumulation Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55% 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.65% 0.75% 0.75% 0.42%
Administration Fees....................................... -- -- -- 0.25%
Other Expenses............................................ 0.05% 0.13% 0.11% 1.12%
Total Fund Annual Expenses................................ 0.70%(e) 0.88% 0.86% 1.79%(f)
<CAPTION>
T. ROWE PRICE VAN ECK
EQUITY WORLDWIDE
INCOME HARD ASSETS
------------- -----------
<S> <C> <C>
OWNER TRANSACTION EXPENSES
charge up to $30 for each
transfer in excess of 12
Transfer Fee.............................................. transfers per Policy Year.
Annual Policy Service Charge..............................
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value) (including mortality and
expense risk and administrative fees)................... 1.55% 1.55%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average net assets for the fiscal year ended
December 31, 1999)(a)
Advisory Fees............................................. 0.85%(g) 1.00%
Administration Fees....................................... -- --
Other Expenses............................................ -- 0.26%
Total Fund Annual Expenses................................ 0.85% 1.26%
</TABLE>
- ------------
(a) The Fund or its agents provided the fees and charges, which are based on
1999 expenses and may reflect estimated charges, except for Janus. We have
not verified the accuracy of the information provided by the agents.
(b) "Other Expenses" and "Total Fund Annual Expenses" for the American Century
Income & Growth, Dreyfus Large Company Value, Eagle Asset Management Growth
Equity and Lord Abbett Developing Growth Portfolios reflect an expense
reimbursement agreement that ended December 31, 1999 limiting "Other
Expenses" to 0.15% annually. In the absence of the expense reimbursement
arrangement, the "Total Fund Annual Expenses" would have been 0.92%, 1.00%,
0.87% and 1.04% for the American Century Income & Growth, Dreyfus Large
Company Value, Eagle Asset Management Growth Equity and Lord Abbett
Developing Growth Portfolios, respectively.
(c) "Other Expenses" reflect an indirect fee. Net fund operating expenses after
reductions for fees paid indirectly would be 0.86% for Social Balanced
Portfolio. Total expenses have been restated to reflect expenses expected to
be incurred in 2000.
(d) Through arrangements with certain funds or FMR on behalf of certain funds'
custodian, credits realized as a result of uninvested cash balances were
used to reduce a portion of each applicable fund's expenses. Without these
reductions, total operating expenses presented in the table would have been
0.67% for the Fidelity VIP II Contrafund(R) Portfolio and 0.57% for the
Fidelity VIP Equity-Income Portfolio.
(e) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Worldwide
Growth and Balanced portfolios. Expenses are stated both with and without
contractual waivers by Janus Capital. Waivers, if applicable, are first
applied against the management fee and then against other expenses, and will
continue until at least the next annual renewal of the advisory agreement.
All expenses are shown without the effect of any expense offset
arrangements.
(f) Morgan Stanley Asset Management has voluntarily agreed to waive its
"Advisory Fees" and/or reimburse the Portfolio, if necessary, to the extent
that the "Total Fund Annual Expenses" of the Portfolio exceeds 1.75% of
average daily net assets. For purposes of determining the amount of the
voluntary advisory fee waiver and/or reimbursement, if any, the portfolio's
annual operating expenses include certain investment related expenses such
as foreign country tax expense and interest expense on amounts borrowed
which were 0.04% of the average daily net assets for 1999. The fee waivers
and reimbursements described above may be terminated by Morgan Stanley
Asset Management at any time without notice. Absent such reductions,
"Advisory Fees," "Administration Fees" and "Total Fund Annual Expenses"
would have been 1.25%, 0.25% and 2.62% respectively.
(g) The "Advisory Fees" include the ordinary operating expenses of the Fund.
5
<PAGE> 6
EXAMPLES(1)
The table below will help you understand the various costs and expenses
that you will bear directly and indirectly. The table reflects charges and
expenses of the Separate Account and the Funds. Charges and expenses may be
higher or lower in future years. For more information on the charges reflected
in this table, see "Charges and Deductions" at page 17 and the Fund prospectuses
which accompany this Prospectus. NYLIAC may, where premium taxes are imposed by
state law, deduct premium taxes on surrender of the policy or on the Annuity
Commencement Date.
You would pay the following expenses on a $1,000 investment in one of the
Investment Divisions listed, assuming a 5% annual return on assets, whether you
surrender, annuitize or do not surrender your policy at the end of the stated
time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
MainStay VP Capital Appreciation........................ $25.32 $ 77.86 $133.03 $283.31
MainStay VP Cash Management............................. $24.21 $ 74.50 $127.42 $272.14
MainStay VP Convertible................................. $26.25 $ 80.63 $137.63 $292.37
MainStay VP Government.................................. $25.02 $ 76.95 $131.50 $280.27
MainStay VP High Yield Corporate Bond................... $24.81 $ 76.34 $130.48 $278.24
MainStay VP International Equity........................ $29.93 $ 91.58 $155.76 $327.78
MainStay VP Total Return................................ $24.91 $ 76.64 $131.00 $279.27
MainStay VP Value....................................... $25.43 $ 78.18 $133.54 $284.31
MainStay VP Bond........................................ $24.10 $ 74.19 $126.92 $271.13
MainStay VP Growth Equity............................... $24.00 $ 73.87 $126.38 $270.08
MainStay VP Indexed Equity.............................. $22.67 $ 69.88 $119.71 $256.70
Morgan Stanley UIF Emerging Markets Equity.............. $37.29 $113.28 $191.22 $394.91
American Century Growth & Income........................ $27.68 $ 84.90 $144.69 $306.27
Dreyfus Large Company Value............................. $28.70 $ 87.95 $149.74 $316.12
Eagle Asset Management Growth Equity.................... $27.68 $ 84.90 $144.69 $306.27
Lord Abbett Developing Growth........................... $28.70 $ 87.95 $149.74 $316.12
Alger American Small Capitalization..................... $28.18 $ 86.42 $147.22 $311.21
Calvert Social Balanced................................. $28.08 $ 86.12 $146.72 $310.24
Fidelity VIP II Contrafund(R)........................... $25.63 $ 78.78 $134.56 $286.33
Fidelity VIP Equity-Income.............................. $24.72 $ 76.03 $129.98 $277.23
Janus Aspen Series Balanced............................. $25.84 $ 79.40 $135.58 $288.34
Janus Aspen Series Worldwide Growth..................... $26.14 $ 80.31 $137.10 $291.36
MFS(R) Growth With Income Series........................ $27.99 $ 85.82 $146.22 $309.25
MFS(R) Research Series.................................. $27.78 $ 85.19 $145.20 $307.26
T. Rowe Price Equity Income............................. $27.68 $ 84.90 $144.69 $306.27
Van Eck Worldwide Hard Assets........................... $31.86 $ 97.34 $165.21 $345.96
</TABLE>
- ------------
(1) For purposes of calculating these examples, we have expressed the annual
policy service charge as an annual percentage of assets based on an
estimated average size of policies having an Accumulation Value of less than
$50,000. This calculation method reasonably reflects the annual policy
service charge applicable to policies having an Accumulation Value of less
than $50,000. The annual policy service charge does not apply to policies
having an Accumulation Value of $50,000 or greater. The expenses shown,
therefore, would be slightly lower if your policy's Accumulation Value is
$50,000 or greater.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
PERFORMANCE OR EXPENSES. THE ACTUAL EXPENSES PAID OR PERFORMANCE ACHIEVED MAY BE
GREATER OR LESS THAN THOSE SHOWN.
6
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT MAINSTAY ACCESS VARIABLE ANNUITY
NOTE: THE FOLLOWING SECTION CONTAINS BRIEF QUESTIONS AND ANSWERS ABOUT
MAINSTAY ACCESS VARIABLE ANNUITY. YOU SHOULD REFER TO THE BODY OF THIS
PROSPECTUS FOR MORE DETAILED INFORMATION.
1. WHAT IS MAINSTAY ACCESS VARIABLE ANNUITY?
MainStay Access Variable Annuity is a flexible premium deferred variable
retirement annuity policy. NYLIAC issues the policy. You may allocate premium
payments to one or more of the Investment Divisions of the Separate Account, or
to the Fixed Account. The Accumulation Value will fluctuate according to the
performance of the Investment Divisions selected and the interest credited on
amounts in the Fixed Account.
2. WHERE CAN I ALLOCATE MY PREMIUM PAYMENT?
You can allocate your premium payments to one or more of the following
Allocation Alternatives:
SEPARATE ACCOUNT
The Separate Account currently consists of twenty-six Investment
Divisions. They are listed on the first page of this Prospectus. When
you allocate a premium payment to one of the Investment Divisions, the
Separate Account will invest your premium payment exclusively in shares
of the corresponding Eligible Portfolio of the relevant Fund.
FIXED ACCOUNT
Each premium payment, or the portion of any premium payment, you
allocate to the Fixed Account will reflect a guaranteed interest rate.
(See "The Fixed Account" at page 23.)
3. CAN I MAKE TRANSFERS AMONG THE INVESTMENT DIVISIONS AND THE FIXED ACCOUNT?
You can transfer all or part of the Accumulation Value of your policy
between the Investment Divisions or from the Investment Divisions to the Fixed
Account at least 30 days before the Annuity Commencement Date. Generally, you
can transfer a minimum amount of $500, unless we agree otherwise. You can make
unlimited transfers each Policy Year. We reserve the right to charge up to $30
for each transfer after the first twelve in a given Policy Year. (See
"Transfers" at page 15.) You may not transfer money into the Fixed Account if
you transferred money out of the Fixed Account during the previous 6-month
period.
You can make transfers from the Fixed Account, but certain restrictions may
apply. (See "The Fixed Account" at page 23). In addition, you can request
transfers through the Dollar Cost Averaging or Automatic Asset Reallocation
options described at pages 15 and 16 of this Prospectus.
4. WHAT CHARGES ARE ASSESSED AGAINST THE POLICY?
Before the date we start making Income Payments to you, we will deduct a
$40 policy service charge on each Policy Anniversary or upon surrender of the
policy if on that date the Accumulation Value is below $50,000. In addition, we
deduct a daily charge for certain mortality and expense risks NYLIAC assumes and
for policy administration expenses. This charge, on an annual basis, is 1.55% of
the average net asset value of the Separate Account. (See "Separate Account
Charge" at page 17.)
We do not impose any surrender charge on withdrawals or surrenders of the
policies.
The value of the shares of each Fund reflects advisory fees, administration
fees and other expenses deducted from the assets of each Fund. (See the Fund
prospectuses which are attached to this Prospectus.)
5. WHAT ARE THE MINIMUM INITIAL AND MAXIMUM ADDITIONAL PREMIUM PAYMENTS?
Unless we permit otherwise, the minimum initial premium payment is $2,000
for Qualified Policies and $15,000 for Non-Qualified Policies. You can make
additional premium payments of at least $1,000 or such lower amount as we may
permit at any time. You have a choice of sending premium payments directly to
NYLIAC or through pre-authorized monthly deductions from banks, credit unions or
similar accounts. We may agree to other methods of payment. The maximum
aggregate amount of premium payments we accept is $1,000,000 without prior
approval. For Qualified Policies, you may not make premium payments in excess of
the amount permitted by law for the plan.
7
<PAGE> 8
6. HOW ARE PREMIUM PAYMENTS ALLOCATED?
We will allocate the initial premium payment to the Investment Divisions
and Fixed Account you have selected within two Business Days after receipt,
subject to our receipt of all information necessary to issue a policy.
Subsequent premium payments will be allocated at the close of the Business Day
on which they are received.
You may allocate the initial premium payment in a maximum of 18 Allocation
Alternatives, and thereafter, may maintain the Accumulation Value in up to 26
Investment Divisions plus the Fixed Account at any one time. (See "Automatic
Asset Reallocation" at page 16.) Moreover, you may raise or lower the
percentages (which must be in whole numbers) of the premium payment you place in
each Allocation Alternative at the time you make a premium payment. The minimum
amount which you may place in any one Allocation Alternative is $100, or such
lower amount as we may permit. We reserve the right to limit the amount of a
premium payment that may be placed in any one Allocation Alternative and the
number of Allocation Alternatives to which you allocate your Accumulation Value.
7. WHAT HAPPENS IF PREMIUM PAYMENTS ARE NOT MADE?
If we do not receive any premium payments for a period of two years, and
both the Accumulation Value of your policy and your total premium payments less
any withdrawals are less than $2,000, we reserve the right to terminate your
policy. We will notify you of our intention to exercise this right and give you
90 days to make a premium payment. If we terminate your policy, we will pay you
the Accumulation Value of your policy in one lump sum.
8. CAN I WITHDRAW MONEY FROM THE POLICY BEFORE THE ANNUITY COMMENCEMENT DATE?
You may make withdrawals from your policy before the Annuity Commencement
Date and while the Annuitant is alive. Your withdrawal request must be in a form
that is acceptable to us. Under most circumstances, you may make a minimum
partial withdrawal of $500. You may have to pay income tax and a 10% penalty tax
may apply if you are under age 59 1/2. (See "Distributions Under the Policy" at
page 19 and "Federal Tax Matters" at page 23.)
9. HOW WILL NYLIAC MAKE INCOME PAYMENTS ON THE ANNUITY COMMENCEMENT DATE?
We will make Income Payments on a fixed basis. We do not currently offer a
variable income payment option. We will make payments under the Life Income
Payment Option over the life of the Annuitant with a guarantee of 10 years of
payments, even if the Annuitant dies sooner. Income Payments will always be the
same specified amount. (See "Income Payments" at page 21.) We may offer other
options, at our discretion, where permitted by state law.
10. WHAT HAPPENS IF I DIE OR THE ANNUITANT DIES BEFORE THE ANNUITY COMMENCEMENT
DATE?
If you or the Annuitant dies before the Annuity Commencement Date, we will
pay the Beneficiary under the policy an amount equal to the greater of:
(a) the Accumulation Value,
(b) the sum of all premium payments made, less any partial withdrawals,
or
(c) the "reset value" (as described on page 20 of this Prospectus) plus
any additional premium payments made since the most recent "reset
date," less any proportional withdrawals since the most recent
"reset date."
If the Beneficiary is the spouse of the Annuitant or the owner, see
Question 11. (Also see "Death Before Annuity Commencement" at page 20 and
"Federal Tax Matters" at page 23.)
11. WHAT HAPPENS IF MY SPOUSE IS THE BENEFICIARY?
If you are the owner and Annuitant and you die before the Annuity
Commencement Date, your spouse may continue the policy as the new owner and
Annuitant if he/she is also the sole Beneficiary (for Non-Qualified, IRA, Roth
IRA, TSA or SEP policies only). If your spouse chooses to continue the policy,
we will not pay the death benefit proceeds as a consequence of your death, or
the Annuitant's death.
8
<PAGE> 9
12. MAY I RETURN THE POLICY AFTER IT IS DELIVERED?
You may cancel the policy by returning it to us, or to the registered
representative through whom you purchased it, within 10 days of delivery of the
policy or such longer period as required under state law. In states where
approved, you will receive the policy's Accumulation Value on the date we
receive the policy without any deduction for premium taxes. This amount may be
more or less than your premium payments. Otherwise, you will receive from us the
greater of (i) the initial premium payment less any prior partial withdrawals or
(ii) the Accumulation Value on the date we receive the policy, without any
deduction for premium taxes. We will set forth the provision in your policy.
13. WHAT ABOUT VOTING RIGHTS?
You can instruct NYLIAC how to vote shares of the Funds in which you have a
voting interest through the Separate Account. (See "Voting Rights" at page 25.)
14. ARE POLICY LOANS AVAILABLE?
Policy loans are not available.
15. HOW DO I CONTACT MAINSTAY ANNUITIES OR NYLIAC?
<TABLE>
<S> <C> <C>
GENERAL INQUIRIES AND WRITTEN PREMIUM PAYMENTS
REQUESTS ------------------------------
----------------------------------
REGULAR MAIL MainStay Annuities--Client MainStay Annuities
Services P.O. Box 13886
51 Madison Avenue Newark, NJ 07188-0886
Room 3300
New York, NY 10010
EXPRESS MAIL MainStay Annuities--Client MainStay Annuities
Services (Box 13886) 3rd Floor
51 Madison Avenue 300 Harmon Meadow Boulevard
Room 3300 Secaucus, NJ 07094
New York, NY 10010
CUSTOMER SERVICE (800) 762-6212
AND UNIT VALUES
</TABLE>
FINANCIAL STATEMENTS
The audited financial statements of NYLIAC (including the auditor's report)
for the fiscal years ended December 31, 1999, 1998 and 1997 are included in the
Statement of Additional Information. As of December 31, 1999, the sale of
MainStay Access Variable Annuity policies had not begun. Therefore, no financial
statements for the Separate Account are presented.
9
<PAGE> 10
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
AND THE SEPARATE ACCOUNT
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
New York Life Insurance and Annuity Corporation ("NYLIAC") is a stock life
insurance company incorporated in Delaware in 1980. NYLIAC is licensed to sell
life, accident and health insurance and annuities in the District of Columbia
and all states. In addition to the policies we describe in this Prospectus,
NYLIAC offers other life insurance policies and annuities.
NYLIAC is a wholly-owned subsidiary of New York Life Insurance Company
("New York Life"), a mutual life insurance company doing business in New York
since 1845. NYLIAC held assets of $29.669 billion at the end of 1999. New York
Life has invested in NYLIAC, and will occasionally make additional contributions
to NYLIAC in order to maintain capital and surplus in accordance with state
requirements.
THE SEPARATE ACCOUNT
The Separate Account was established on November 30, 1994, pursuant to
resolutions of the NYLIAC Board of Directors. The Separate Account is registered
as a unit investment trust with the Securities and Exchange Commission under the
Investment Company Act of 1940. The Securities and Exchange Commission, however,
does not supervise the management, or the investment practices or policies, of
the Separate Account.
Although the assets of the Separate Account belong to NYLIAC, these assets
are held separately from our other assets. The Separate Account assets are not
chargeable with liabilities incurred in any of NYLIAC's other business
operations (except to the extent that assets in the Separate Account exceed the
reserves and other liabilities of that Separate Account). The income, capital
gains and capital losses incurred on the assets of the Separate Account are
credited to or charged against the assets of the Separate Account, without
regard to the income, capital gains or capital losses arising out of any other
business NYLIAC may conduct. Therefore, the investment performance of the
Separate Account is entirely independent of the investment performance of the
Fixed Account and any other separate account of NYLIAC.
The Separate Account currently has 26 Investment Divisions. Premium
payments allocated to the Investment Divisions are invested solely in the
corresponding Eligible Portfolios of the relevant Fund.
THE PORTFOLIOS
The assets of each Eligible Portfolio are separate from the others and each
Portfolio has different investment objectives and policies. As a result, each
Eligible Portfolio operates as a separate investment Fund and the investment
performance of one Portfolio has no effect on the investment performance of any
other Portfolio. Portfolios described in this prospectus are different from
portfolios available directly to the general public. Investment results may
differ.
WE OFFER NO ASSURANCE THAT ANY OF THE ELIGIBLE PORTFOLIOS WILL ATTAIN THEIR
RESPECTIVE STATED OBJECTIVES.
The Funds also make their shares available to certain other separate
accounts funding variable life insurance policies offered by NYLIAC. This is
called "mixed funding." Except for the MainStay VP Series Fund, all other Funds
also make their shares available to separate accounts of insurance companies
unaffiliated with NYLIAC. This is called "shared funding." Although we do not
anticipate any inherent difficulties arising from mixed and shared funding, it
is theoretically possible that, due to differences in tax treatment or other
considerations, the interests of owners of various contracts participating in a
certain Fund might at some time be in conflict. The Board of Directors/Trustees
of each Fund, each Fund's investment advisers, and NYLIAC are required to
monitor events to identify any material conflicts that arise from the use of the
Funds for mixed and shared funding. For more information about the risks of
mixed and shared funding, please refer to the relevant Fund prospectus.
We provide certain services to you in connection with the investment of
premium payments in the Investment Divisions, which, in turn, invest in the
Eligible Portfolios. These services include, among others, providing information
about the Eligible Portfolios. We receive a service fee from the investment
advisers or other service providers of some of the Funds in return for providing
services of this type. Currently, we receive service fees at annual rates
ranging from .10% to .21% of the aggregate net asset value of the shares of some
of the Eligible Portfolios held by the Investment Divisions.
10
<PAGE> 11
The Eligible Portfolios of the relevant Funds, along with their investment
advisers, are listed in the following table:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISERS ELIGIBLE PORTFOLIOS
- -
<S> <C> <C>
MainStay VP Series Fund, Inc. MacKay Shields LLC MainStay VP Capital Appreciation; MainStay VP
Cash Management; MainStay VP Convertible;
MainStay VP Government; MainStay VP High Yield
Corporate Bond; MainStay VP International Equity;
MainStay VP Total Return; MainStay VP Value
MainStay VP Series Fund, Inc. Monitor Capital Advisors LLC MainStay VP Indexed Equity
MainStay VP Series Fund, Inc. Madison Square Advisors LLC MainStay VP Bond;
MainStay VP Growth Equity
MainStay VP Series Fund, Inc. New York Life Insurance Company MainStay VP American Century Income & Growth;
MainStay VP Dreyfus Large Company Value;
MainStay VP Eagle Asset Management Growth
Equity;
MainStay VP Lord Abbett Developing Growth
The Alger American Fund Fred Alger Management, Inc. Alger American Small Capitalization
Calvert Variable Series, Inc. Calvert Asset Management Company, Calvert Social Balanced
Inc.
Fidelity Variable Insurance Fidelity Management and Research Fidelity VIP II Contrafund(R)
Products Fund II Company
Fidelity Variable Insurance Fidelity Management and Research Fidelity VIP Equity-Income
Products Fund Company
Janus Aspen Series Janus Capital Corporation Janus Aspen Series Balanced;
Janus Aspen Series Worldwide Growth
MFS(R) Variable Insurance MFS(R) Investment Management MFS(R) Growth With Income Series;
Trust(SM) MFS(R) Research Series
The Universal Institutional Funds, Morgan Stanley Asset Management Morgan Stanley UIF Emerging Markets Equity
Inc.
T. Rowe Price Equity Series, Inc. T. Rowe Price Associates, Inc. T. Rowe Price Equity Income
Van Eck Worldwide Insurance Trust Van Eck Associates Corporation Van Eck Worldwide Hard Assets
</TABLE>
Please refer to the attached prospectuses of the respective Funds for a complete
description of the Funds, the investment advisers and the Portfolios. The Funds'
prospectuses should be read carefully before any decision is made concerning the
allocation of premium payments to an Investment Division corresponding to a
particular Eligible Portfolio.
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
NYLIAC retains the right, subject to any applicable law, to make additions
to, deletions from, or substitutions for, the Eligible Portfolio shares held by
any Investment Division. NYLIAC reserves the right to eliminate the shares of
any of the Eligible Portfolios and to substitute shares of another portfolio of
a Fund, or of another registered open-end management investment company. We may
do this if the shares of the Eligible Portfolios are no longer available for
investment or if we believe investment in any Eligible Portfolio would become
inappropriate in view of the purposes of the Separate Account. To the extent
required by law, we will not make substitutions of shares attributable to your
interest in an Investment Division until you have been notified of the change.
This does not prevent the Separate Account from purchasing other securities for
other series or classes of policies, or from processing a conversion between
series or classes of policies on the basis of requests made by policy owners.
We may establish new Investment Divisions when we determine, in our sole
discretion, that marketing, tax, investment or other conditions so warrant. We
will make any new Investment Divisions available to existing
11
<PAGE> 12
policy owners on a basis we determine. We may also eliminate one or more
Investment Divisions, if we determine, in our sole discretion, that marketing,
tax, investment or other conditions warrant.
In the event of any substitution or change, NYLIAC may, by appropriate
endorsement, change the policies to reflect such substitution or change. We also
reserve the right to: (a) operate the Separate Account as a management company
under the Investment Company Act of 1940, (b) deregister it under such Act in
the event such registration is no longer required, (c) combine the Separate
Account with one or more other separate accounts, and (d) restrict or eliminate
the voting rights of persons having voting rights as to the Separate Accounts,
as permitted by law.
REINVESTMENT
We automatically reinvest all dividends and capital gain distributions from
Eligible Portfolios in shares of the distributing Portfolio at their net asset
value on the payable date.
THE POLICIES
This is a flexible premium deferred policy which means additional premium
payments can be made. It is issued on the lives of individual Annuitants.
The policies are variable. This means that the Accumulation Value will
fluctuate based on the investment experience of the Investment Divisions you
select. The interest credited on the Fixed Accumulation Value also will vary.
NYLIAC does not guarantee the investment performance of the Separate Account or
of the Funds. You bear the entire investment risk with respect to amounts
allocated to the Investment Divisions of the Separate Account. We offer no
assurance that the investment objectives of the Investment Divisions will be
achieved. Accordingly, amounts allocated to the Investment Divisions of the
Separate Account are subject to the risks inherent in the securities markets
and, specifically, to price fluctuations in the Funds' investments.
As the owner of the policy, you have the right to (a) change the
Beneficiary, (b) name a new owner (on Non-Qualified Policies only), (c) receive
Income Payments, and (d) name a payee to receive Income Payments. You cannot
lose these rights. However, all rights of ownership cease upon your death.
SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU
In addition to the policy described in this prospectus, we offer other
variable annuities, with different features, fees and charges. Your registered
representative can help you decide which is best for you based on your
individual circumstances, time horizon and liquidity preferences. The MainStay
Plus Variable Annuity is designed generally for purchasers with an intermediate
time horizon. The MainStay Access Variable Annuity is designed generally for
purchasers with a shorter time horizon. Although there is no surrender charge
under a MainStay Access Variable Annuity, other charges are somewhat higher than
those in other policies.
The chart below outlines some of the different features for each variable
annuity we offer. Your registered representative can provide you with a
prospectus for one or more of these annuities, which contains more complete
information.
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
MAINSTAY PLUS MAINSTAY ACCESS
VARIABLE ANNUITY VARIABLE ANNUITY
<S> <C> <C>
DCA Advantage Plan Yes (6, 12, 18 month No
accounts are available)
Surrender Charge Period 6 years (7%, 7%, 7%, 6%, 5%, 4%) (Based N/A
on each premium payment date)
Death Benefit Guarantee Annual Reset to age 85* Annual Reset to age 80
Total Separate Account Charges 1.40% 1.55%
(mortality and expense risk charge and
administration fee)
Annual Policy Fee $30 $40
Minimum Cash Value Required to Waive $20,000 $50,000
Policy Fee
</TABLE>
All policies and features may not be available in all states.
* Every 3 years in some states.
12
<PAGE> 13
QUALIFIED AND NON-QUALIFIED POLICIES
We designed the policies primarily for the accumulation of retirement
savings, and to provide income at a future date. We issue both Qualified and
Non-Qualified Policies. Both types of policies offer tax-deferred accumulation.
You may purchase a Non-Qualified Policy with after-tax dollars to provide for
retirement income other than through a tax-qualified plan. You may purchase a
Qualified Policy with pre-tax dollars for use with any one of the tax-qualified
plans listed below.
(1) Section 403(b) Tax Sheltered Annuities purchased by employees of
certain tax-exempt organizations and certain state-supported
educational institutions;
(2) Section 408 or 408A Individual Retirement Annuities ("IRAs"), including
Roth IRAs;
(3) Section 457 Deferred Compensation Plans; and
(4) Section 403(a) annuities.
Please see "Federal Tax Matters" at page 23 for a detailed description of
these plans.
If you are considering a Qualified Policy, you should be aware that this
annuity will fund a retirement plan that already provides tax deferral under the
Internal Revenue Code. In such situations, the tax deferral of the annuity does
not provide additional benefits. In addition, you should be aware that there are
fees and charges in an annuity that may not be included in other types of
investments which may be more or less costly. However, the fees and charges
under the policies are designed to provide for certain payment guarantees and
features other than tax deferral that may not be available in these other types
of investments. They include:
(1) a Fixed Account option, which features a guaranteed fixed interest
rate;
(2) a death benefit that is payable should you die while the policy is in
force, which is reset every year (or longer if required by state law)
and is guaranteed to be at least the amount of your premium payments,
less any partial withdrawals;
(3) the option for your Beneficiary to receive a guaranteed amount of
monthly income for his or her lifetime should you die prior to the
Annuity Commencement Date; and
(4) the option to receive a guaranteed amount of monthly income for life
after the first Policy Year.
These features are explained in detail in this Prospectus. You should consult
with your tax or legal advisor to determine if the policy is suitable for your
tax qualified plan.
POLICY APPLICATION AND PREMIUM PAYMENTS
You can purchase a policy by completing an application. The application is
sent to us with your initial premium payment. In addition, in states where
permitted, you can also instruct a broker-dealer with whom NYLIAC has entered
into an agreement to forward the initial premium payment along with our "Policy
Request" form to us. If the application or Policy Request supplied by a
broker-dealer is complete and accurate, and we have received all other
information necessary to process the application, we will credit the initial
premium payment to the Allocation Alternatives you have selected within two
Business Days after receipt. If we cannot credit the initial premium payment
within five Business Days after we receive it because the application or Policy
Request is incomplete or inaccurate, we will contact you or the broker-dealer
providing the application or Policy Request and explain the reason for the
delay. Unless you consent to NYLIAC's retaining the initial premium payment and
crediting it as soon as the necessary requirements are fulfilled, we will offer
to refund the initial premium payment immediately. Acceptance of applications is
subject to NYLIAC's rules. We reserve the right to reject any application or
initial premium payment.
If we issue your policy based on a Policy Request, we will require you to
provide to us either a signed acknowledgement of the information contained in
the Policy Request in a form acceptable to us, or, where required by applicable
state law or regulation, a signed application form. From the time we issue the
policy until we receive the signed acknowledgement or application, the
Beneficiary under the policy will be the policy owner (or the estate). Also
policy transactions may not be made unless the Beneficiary designation or
transaction request is signature guaranteed. Upon receipt of the signed
acknowledgement or application form, the Beneficiary will be specified under the
policy and we will process transactions requested with respect to the policy
without requiring a signature guarantee.
You may allocate the initial premium payments in up to 18 Allocation
Alternatives, and thereafter, may maintain the Accumulation Value in up to 18
Investment Divisions plus the Fixed Account at any one time. We will credit
subsequent premium payments to the policy at the close of the Business Day on
which they are received at MainStay Annuities--Client Services. Moreover, you
may increase or decrease the percentages of the premium payments (which must be
in whole number percentages) allocated to each Allocation Alternative at
13
<PAGE> 14
the time a premium payment is made. However, any change to the policy's
allocations may not result in the Accumulation Value being allocated to more
than 18 Investment Divisions plus the Fixed Account.
Unless we permit otherwise, the minimum initial premium payment is $2,000
for Qualified Policies and $15,000 for Non-Qualified Policies. You may make
additional premium payments of at least $1,000 or such lower amount as we may
permit at any time or by any method NYLIAC makes available. The currently
available methods of payment are direct payments to NYLIAC, pre-authorized
monthly deductions from your bank, a credit union or similar accounts and any
other method agreed to by us. You may make additional premium payments at any
time before the Annuity Commencement Date and while you and the Annuitant are
living. The maximum aggregate amount of premium payments we accept is $1,000,000
without prior approval. NYLIAC reserves the right to limit the dollar amount of
any premium payment.
For Qualified Policies, you may not make premium payments in any Policy
Year that exceed the amount permitted by the plan or by law.
PAYMENTS RETURNED FOR INSUFFICIENT FUNDS
If your premium payment is returned for insufficient funds, we reserve the
right to reverse the investment options chosen and charge you a $20.00 fee for
each returned payment. In addition, the Fund may also redeem shares to cover any
losses it incurs as a result of a returned payment. If a payment is returned for
insufficient funds for two consecutive periods, the privilege to pay by check or
electronically will be suspended until you notify us to reinstate it, and we
agree.
YOUR RIGHT TO CANCEL ("FREE LOOK")
You may cancel the policy by returning it to us, or to the registered
representative through whom you purchased it, within 10 days of delivery of the
policy or such longer period as required under state law. In states where
approved, you will receive the policy's Accumulation Value on the date we
receive the policy, without any deduction for premium taxes. This amount may be
more or less than your premium payments. Otherwise, you will receive from us the
greater of (i) the initial premium payment less any prior partial withdrawals or
(ii) the Accumulation Value on the date we receive the policy, without any
deduction for premium taxes or a surrender charge. We will set forth the
provision in your policy.
ISSUE AGES
We can issue Non-Qualified Policies if both you and the Annuitant are not
older than age 90 (some states may have lower age limits). We will accept
additional premium payments until either you or the Annuitant reaches the age of
90, unless we agree otherwise. For IRA, Roth IRA, TSA and SEP plans, you must
also be the Annuitant. We can issue Qualified Policies if the Owner/Annuitant is
between the ages of 18 and 80. We will accept additional premium payments until
the Owner/Annuitant reaches the age of 80, unless otherwise limited by the terms
of a particular plan or unless we agree otherwise.
TRANSFERS
You may transfer amounts between Investment Divisions of the Separate
Account or to the Fixed Account at least 30 days before the Annuity Commencement
Date. Except in connection with transfers made pursuant to Dollar Cost Averaging
and Automatic Asset Reallocation, the minimum amount that you may transfer from
one Investment Division to other Investment Divisions or to the Fixed Account,
is $500. Except for the Dollar Cost Averaging and Automatic Asset Reallocation
options, if the value of the remaining Accumulation Units in an Investment
Division or Fixed Account would be less than $500 after you make a transfer, we
will transfer the entire value unless NYLIAC in its discretion determines
otherwise. The amount(s) transferred to other Investment Divisions must be a
minimum of $500 for each Investment Division. Transfers into the Fixed Account
may be subject to restrictions. (See "The Fixed Accounts" at page 23.)
There is no charge for the first twelve transfers in any one Policy Year.
NYLIAC reserves the right to charge up to $30 for each transfer in excess of
twelve, subject to any applicable state insurance law requirements. Any transfer
made in connection with Dollar Cost Averaging or Automatic Asset Reallocation
will not count as a transfer toward the twelve transfer limit. You may make
transfers from the Fixed Account to the Investment Divisions in certain
situations. (See "The Fixed Account" at page 23.)
Your transfer requests must be in writing on a form approved by NYLIAC or
by telephone in accordance with established procedures. (See "Procedures for
Telephone Transactions" below.) We will make transfers from Investment Divisions
based on the Accumulation Unit values at the end of the Business Day on which we
receive the transfer request. (See "Delay of Payments" at page 22.) Transfers
may be limited in connection with Third Party Investment Advisory Arrangements.
(See page 17.)
14
<PAGE> 15
PROCEDURES FOR TELEPHONE TRANSACTIONS
You may authorize us to accept telephone instructions from you or other
persons you designate for the following types of transactions: premium
allocations, transfers among Allocation Alternatives, partial withdrawals,
periodic partial withdrawals, Dollar Cost Averaging, or Automatic Asset
Reallocation. You can elect this feature by completing and signing a Telephone
Authorization form. Telephone Authorization may be elected, changed or canceled
at any time. You, or other persons you designate, may effect telephone
transactions by speaking with a service representative at (800) 762-6212.
Furthermore, we will confirm all telephone transactions in writing.
NYLIAC is not liable for any loss, cost or expense for action on telephone
instructions which are believed to be genuine in accordance with these
procedures. We must receive telephone transfer requests no later than 4:00 p.m.
Eastern Time in order to assure same day processing. We will process requests
received after 4:00 p.m. Eastern Time on the next Business Day.
DOLLAR COST AVERAGING PROGRAM
The main objective of dollar cost averaging is to achieve an average cost
per share that is lower than the average price per share during volatile market
conditions. Since you transfer the same dollar amount to an Investment Division
with each transfer, you purchase more units in an Investment Division if the
value per unit is low and fewer units if the value per unit is high. Therefore,
you achieve a lower than average cost per unit if prices fluctuate over the long
term. Similarly, for each transfer out of an Investment Division, you sell more
units in an Investment Division if the value per unit is low and fewer units if
the value per unit is high. Dollar cost averaging does not assure a profit or
protect against a loss in declining markets. Because it involves continuous
investing regardless of price levels, you should consider your financial ability
to continue to make purchases during periods of low price levels. We do not
count transfers under dollar cost averaging as part of your 12 free transfers
each Policy Year.
We have set forth below an example of how dollar cost averaging works. In
the example, we have assumed that you want to move $100 from the Cash Management
Investment Division to the MainStay VP Growth Equity Investment Division each
month. Assuming the Accumulation Unit values below, you would purchase the
following number of Accumulation Units:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<CAPTION>
AMOUNT ACCUMULATION ACCUMULATION UNITS
TRANSFERRED MUNIT VALUE PURCHASED
<S> <C> <C> <C>
1 $100 $10.00 10.00
2 $100 $ 8.00 12.50
3 $100 $12.50 8.00
4 $100 $ 7.50 13.33
Total $400 $38.00 43.83
</TABLE>
The average unit price is calculated as follows:
<TABLE>
<S> <C> <C> <C> <C>
Total share price $38.00
- ----------------------- = ------ = $9.50
Number of months 4
</TABLE>
The average unit cost is calculated as follows:
<TABLE>
<S> <C> <C> <C> <C>
Total amount transferred $400.00
- ---------------------------- = ------- = $9.13
Total units purchased 43.83
</TABLE>
In this example, you would have paid an average cost of $9.13 per unit
while the average price per unit is $9.50.
The Dollar Cost Averaging option permits systematic investing to be made in
equal installments over various market cycles to help reduce risk. You may
specify, prior to the Annuity Commencement Date, a specific dollar amount to be
transferred from any Investment Divisions to any combination of Investment
Divisions and/or the Fixed Account. You will specify the Investment Divisions to
transfer money from, the Investment Divisions and/ or Fixed Account to transfer
money to, the amounts to be transferred, the date on which transfers will be
made, subject to our rules, and the frequency of the transfers (either monthly,
quarterly, semi-annually or annually). You may not make transfers from the Fixed
Account, but you may make transfers into the Fixed Account. Each transfer from
an Investment Division must be at least $100. You must have a minimum
Accumulation Value of $5,000 to elect this option. NYLIAC may reduce the minimum
transfer amount and minimum Accumulation Value at its discretion.
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<PAGE> 16
NYLIAC will make all dollar cost averaging transfers on the day of each
calendar month that you specify or on the next Business Day (if the day you have
specified is not a Business Day or does not exist in that month). You may
specify any day of the month. In order to process a transfer under our Dollar
Cost Averaging option, NYLIAC must have received a request in writing on a form
acceptable by us or by telephone (see "Procedures for Telephone Transactions" at
page 15) no later than one week prior to the date the transfers are to begin.
You may cancel the Dollar Cost Averaging option at any time in a written
request or by telephone (see "Procedures for Telephone Transactions" at page
15). NYLIAC may also cancel this option if the Accumulation Value is less than
$5,000, or such lower amount as we may determine. You may not elect the Dollar
Cost Averaging option if you have selected the Automatic Asset Reallocation
option.
AUTOMATIC ASSET REALLOCATION
This option allows you to maintain the percentage allocated to each
Investment Division at a pre-set level. For example, you might specify that 50%
of the Variable Accumulation Value of your policy be allocated to the MainStay
VP Convertible Investment Division and 50% of the Variable Accumulation Value be
allocated to the MainStay VP International Equity Investment Division. Over
time, the fluctuations in each of these Investment Division's investment results
will shift the percentages. If you elect this Automatic Asset Reallocation
option, NYLIAC will automatically transfer your Variable Accumulation Value back
to the percentages you specify. You may choose to have reallocations made
quarterly, semi-annually or annually. You must also specify the day of the month
that reallocations are to occur. The minimum Variable Accumulation Value
required to elect this option is $5,000. There is no minimum amount which you
must allocate among the Investment Divisions under this option. You may elect
Automatic Asset Reallocation by submitting the request in writing on a form
acceptable to us. You may not elect the Automatic Asset Reallocation option if
you have selected the Dollar Cost Averaging option.
You can cancel the Automatic Asset Reallocation option at any time in a
written request or by telephone (see "Procedures for Telephone Transactions" at
page 15). NYLIAC may also cancel this option if the Accumulation Value is less
than $5,000, or such a lower amount as we may determine.
ACCUMULATION PERIOD
(a) Crediting of Premium Payments
You can allocate a portion of each premium payment to one or more
Investment Divisions or the Fixed Account. The minimum amount that you may
allocate to any one Investment Division or the Fixed Account is $100 (or such
lower amount as we may permit). We will allocate the initial premium payment to
the Allocation Alternative you have specified within two Business Days after
receipt. We will allocate additional premium payments to the Allocation
Alternatives at the close of the Business Day on which they are received at
MainStay Annuities -- Client Services.
We will credit that portion of each premium payment you allocate to an
Investment Division in the form of Accumulation Units. We determine the number
of Accumulation Units we credit to a policy by dividing the amount allocated to
each Investment Division by the Accumulation Unit value for that Investment
Division on the day we are making this calculation. The value of an Accumulation
Unit will vary depending on the investment experience of the Portfolio in which
the Investment Division invests. The number of Accumulation Units we credit to a
policy will not, however, change as a result of any fluctuations in the value of
an Accumulation Unit. (See "The Fixed Account" at page 23 for a description of
interest crediting.)
(b) Valuation of Accumulation Units
The value of Accumulation Units in each Investment Division will change
daily to reflect the investment experience of the corresponding Portfolio as
well as the daily deduction of the Separate Account charges. The Statement of
Additional Information contains a detailed description of how we value the
Accumulation Units.
THIRD PARTY INVESTMENT ADVISORY ARRANGEMENTS
In some cases, the policy may be sold to policy owners who independently
utilize the services of a third party advisor offering asset allocation and/or
market timing services. NYLIAC may honor transfer and withdrawal instructions
from such asset allocation and market timing services if it has received
authorization to do so from the policy owner participating in the service. We do
not endorse, approve or recommend such services in any way and you should be
aware that fees paid for such services are separate from and in addition to fees
paid under the policy.
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<PAGE> 17
Because the amounts associated with some of these transactions may be
unusually large, the investment advisers may have difficulty processing the
transactions. In addition, execution of such transactions may possibly adversely
affect the Variable Accumulation Values of policy owners who are not utilizing
asset allocation or market timing services. Accordingly, NYLIAC reserves the
right to not accept transfer instructions which are submitted by any person,
asset allocation and/or market timing services on behalf of policy owners. We
will exercise this right only in accordance with uniform procedures that we may
establish from time to time and that will not unfairly discriminate against
similarly situated policy owners.
POLICY OWNER INQUIRIES
Your inquiries should be addressed to MainStay Annuities. (See page 10).
CHARGES AND DEDUCTIONS
THERE ARE NO SURRENDER OR WITHDRAWAL CHARGES UNDER THE POLICIES.
SEPARATE ACCOUNT CHARGE
Prior to the Annuity Commencement Date, we deduct a daily charge from the
assets of the Separate Account to compensate us for certain mortality and
expense risks we assume under the policies and for providing policy
administration services. On an annual basis, the charge equals 1.55% of the
average net asset value of the Separate Account. We guarantee that this charge
will not increase. If the charge is insufficient to cover actual costs and
assumed risks, the loss will fall on NYLIAC. If the charge is more than
sufficient, we will add any excess to our general funds. We may use these funds
for any corporate purpose, including expenses relating to the sale of the
policies, to the extent that surrender charges do not adequately cover sales
expenses.
The mortality risk assumed is the risk that Annuitants as a group will live
for a longer time than our actuarial tables predict. As a result, we would be
paying more Income Payments than we planned. We also assume a risk that the
mortality assumptions reflected in our guaranteed annuity payment tables, shown
in each policy, will differ from actual mortality experience. Lastly, we assume
a mortality risk that, at the time of death, the guaranteed minimum death
benefit will exceed the policy's Accumulation Value. The expense risk assumed is
the risk that the cost of issuing and administering the policies will exceed the
amount we charge for these services.
POLICY SERVICE CHARGE
We deduct an annual $40 policy service charge each Policy Year on the
Policy Anniversary or upon surrender of the policy if on the Policy Anniversary
or date of surrender the Accumulation Value is less than $50,000. We deduct the
annual policy service charge from each Allocation Alternative in proportion to
its percentage of the Accumulation Value on the Policy Anniversary or date of
surrender. This charge is designed to cover the costs for providing services
under the policy such as collecting, processing and confirming premium payments
and establishing and maintaining the available methods of payment.
TRANSFER FEES
We do not impose any fee on the first 12 transfers in any Policy Year.
However, NYLIAC reserves the right to charge $30 for each transfer in excess of
12 transfers per Policy Year.
GROUP AND SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce the policy
service charge or change the minimum initial and additional premium payment
requirements. Group arrangements include those in which a trustee or an
employer, for example, purchases policies covering a group of individuals on a
group basis. Sponsored arrangements include those in which an employer allows us
to sell policies to its employees or retirees on an individual basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these factors
into account when reducing charges. To qualify for reduced charges, a group or
sponsored arrangement must meet certain requirements, including our requirements
for size and number of years in existence. Group or sponsored arrangements that
have been set up solely to buy policies or that have been in existence less than
six months will not qualify for reduced charges.
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<PAGE> 18
We will make any reductions according to our rules in effect when a request
for a policy is approved. We may change these rules from time to time. Any
variation in the policy service charge will reflect differences in costs or
services and will not be unfairly discriminatory.
TAXES
NYLIAC may, where premium taxes are imposed by state law, deduct such taxes
from your policy either (i) when a surrender or cancellation occurs, or (ii) at
the Annuity Commencement Date. Applicable premium tax rates depend upon such
factors as your current state of residency, and the insurance laws and NYLIAC's
status in states where premium taxes are incurred. Current premium tax rates
range from 0% to 3.5%. Applicable premium tax rates are subject to change by
legislation, administrative interpretations or judicial acts.
Under present laws, NYLIAC will also incur state and local taxes (in
addition to the premium taxes described above) in several states. At present,
these taxes are not significant. If they increase, however, NYLIAC may make
charges for such taxes.
NYLIAC does not expect to incur any federal income tax liability
attributable to investment income or capital gains retained as part of the
reserves under the policies. (See "Federal Tax Matters" at page 23.) Based upon
these expectations, no charge is being made currently for corporate federal
income taxes which may be attributable to the Separate Account. Such a charge
may be made in future years for any federal income taxes NYLIAC incurs.
FUND CHARGES
The value of the assets of the Separate Account will indirectly reflect the
Funds' total fees and expenses. The Funds' total fees and expenses are not part
of the policy. They may vary in amount from year to year. These fees and
expenses are described in detail in the relevant Fund's prospectus and/or
statement of additional information.
DISTRIBUTIONS UNDER THE POLICY
SURRENDERS AND WITHDRAWALS
You can make partial withdrawals, periodic partial withdrawals, hardship
withdrawals or surrender the policy to receive part or all of the Accumulation
Value at any time before the Annuity Commencement Date and while the Annuitant
is living, by sending a written request on a form acceptable to MainStay
Annuities. In addition, you may request partial withdrawals and periodic partial
withdrawals by telephone. (See "Procedures for Telephone Transactions" at page
15.) The amount available for withdrawal is the Accumulation Value at the end of
the Business Day during which we receive the written or telephonic surrender or
withdrawal request, less any outstanding premium taxes which we may deduct, and
policy service charge, if applicable. If you have not provided us with a written
election not to withhold federal income taxes at the time you make a withdrawal
or surrender request, NYLIAC must by law withhold such taxes from the taxable
portion of any surrender or withdrawal. We will remit that amount to the federal
government. In addition, some states have enacted legislation requiring
withholding. We will pay all surrenders or withdrawals within seven days of
receipt of all documents (including documents necessary to comply with federal
and state tax law), subject to postponement in certain circumstances. (See
"Delay of Payments" at page 22.)
Since you assume the investment risk with respect to amounts allocated to
the Separate Account and because certain surrenders or withdrawals are subject
to premium tax deduction, the total amount paid upon surrender of the policy
(taking into account any prior withdrawals) may be more or less than the total
premium payments made.
Surrenders and withdrawals may be taxable transactions, and the Internal
Revenue Code provides that a 10% penalty tax may be imposed on certain early
surrenders or withdrawals. (See "Federal Tax Matters--Taxation of Annuities in
General" at page 24.)
(a) Surrenders
We may deduct any state premium tax, if applicable, and the annual policy
service charge, if applicable, from the amount paid. We will pay the proceeds in
a lump sum to you unless you elect a different Income Payment method. (See
"Income Payments" at page 21.) Surrenders may be taxable transactions and the
10% penalty tax provisions may be applicable. (See "Federal Tax
Matters--Taxation of Annuities in General" at page 24.)
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<PAGE> 19
(b) Partial Withdrawals
The minimum amount that can be withdrawn is $500, unless we agree
otherwise. We will withdraw the amount from the Allocation Alternatives in
accordance with your request. If you do not specify how to allocate a partial
withdrawal among the Allocation Alternatives, we will allocate the partial
withdrawal on a pro-rata basis. Partial withdrawals may be taxable transactions
and the 10% penalty tax provisions may be applicable. (See "Federal Tax
Matters--Taxation of Annuities in General" at page 24.)
If the requested partial withdrawal is greater than the value in any of the
Allocation Alternatives from which the partial withdrawal is being made, we will
pay the entire value of that Allocation Alternative to you. We will not process
partial withdrawal requests if honoring such requests would result in an
Accumulation Value of less than $2,000.
(c) Periodic Partial Withdrawals
You may elect to receive regularly scheduled partial withdrawals from the
policy. These periodic partial withdrawals may be paid on a monthly, quarterly,
semi-annual, or annual basis. You will elect the frequency of the withdrawals
and the day of the month for the withdrawals to be made. We will make all
withdrawals on the day of each calendar month you specify, or on the next
Business Day (if the day you have specified is not a Business Day or does not
exist in that month). You must specify the Investment Divisions and/or the Fixed
Account from which the periodic partial withdrawals will be made. The minimum
amount under this feature is $100, or such lower amount as we may permit.
Periodic partial withdrawals may be taxable transactions and the 10% penalty tax
provisions may be applicable. (See "Federal Tax Matters--Taxation of Annuities
in General" at page 24.) If you do not specify otherwise, we will withdraw money
on a pro-rata basis from each Investment Division and/or the Fixed Account.
(d) Hardship Withdrawals
Under certain Qualified Policies, the Plan Administrator may allow, in its
sole discretion, certain withdrawals it determines to be "Hardship Withdrawals."
The 10% penalty tax, if applicable, and provisions applicable to partial
withdrawals apply to Hardship Withdrawals.
REQUIRED MINIMUM DISTRIBUTION
For IRAs and IRA SEPs, the policy owner is generally not required to elect
the required minimum distribution option until April 1st of the year following
the calendar year he or she attains age 70 1/2. For TSAs, the policy owner is
generally not required to elect the required minimum distribution option until
April 1st of the year following the calendar year he or she attains age 70 1/2
or until April 1st of the year following the calendar year he or she retires,
whichever occurs later.
OUR RIGHT TO CANCEL
If we do not receive any premium payments for a period of two years, and
both the Accumulation Value of your policy and your total premium payments less
any withdrawals are less than $2,000, we reserve the right to terminate your
policy subject to any applicable state insurance law or regulation. We will
notify you of our intention to exercise this right and give you 90 days to make
a premium payment. If we terminate your policy, we will pay you the Accumulation
Value of your policy in one lump sum.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is the date specified on the Policy Data
Page. The Annuity Commencement Date is the day that Income Payments are
scheduled to commence unless the policy has been surrendered or an amount has
been paid as proceeds to the designated Beneficiary prior to that date. You may
change the Annuity Commencement Date to an earlier date by providing written
notice to NYLIAC. You may defer the Annuity Commencement Date to a later date if
we agree to it, provided that we receive a written notice of the request at
least one month before the last selected Annuity Commencement Date. The Annuity
Commencement Date and Income Payment method for Qualified Policies may also be
controlled by endorsements, the plan, or applicable law.
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<PAGE> 20
DEATH BEFORE ANNUITY COMMENCEMENT
If you or the Annuitant dies prior to the Annuity Commencement Date, we
will pay an amount as proceeds to the designated Beneficiary, as of the date we
receive proof of death and all requirements necessary to make the payment. That
amount will be the greater of:
(a) the Accumulation Value;
(b) the sum of all premium payments made, less any partial withdrawals; or
(c) the "reset value" as calculated on the most recent Policy Anniversary,
plus any additional premium payments made, less any "proportional
withdrawals" made, since that Policy Anniversary.
The reset value is the greater of (a) the current Policy Anniversary's
Accumulation Value, and (b) the prior Policy Anniversary's value, plus any
premium payments since the prior Policy Anniversary, less any proportional
withdrawals since the prior Policy Anniversary.
A proportional withdrawal is an amount equal to the amount withdrawn from
the policy divided by the policy's Accumulation Value immediately preceding the
withdrawal, multiplied by the reset value immediately preceding the withdrawal.
We recalculate the reset value every Policy Anniversary until you or the
Annuitant reaches age 80. Please consult with your registered representative
regarding the reset value that is available under your particular policy.
We have set forth below an example of how the death benefit is calculated.
In this example, we have assumed the following:
(1) you purchase a policy with a $210,000 Premium Payment;
(2) the reset value on the second Policy Anniversary is $220,000;
(3) the Accumulation Value is $250,000 immediately before a $20,000 partial
withdrawal is taken during the third Policy Year;
(4) the proportional withdrawal is ($20,000/$250,000) X $220,000 = $17,600;
(5) the Accumulation Value is $195,000 on the third Policy Anniversary;
(6) The reset value is the greater of:
<TABLE>
<S> <C> <C>
(a) The current Policy Anniversary's Accumulation Value of $195,000; and
(b) The prior Policy Anniversary's value, plus any premium payments since the prior Policy
Anniversary date, less any proportional withdrawals since the last Policy Anniversary is:
$220,000 - $17,600 = $202,400.
</TABLE>
The greater is $202,400 (new reset value).
(7) If you die during the fourth Policy Year and the Accumulation Value of
the policy on the date of death has decreased to $175,000.
The death benefit is the greater of:
<TABLE>
<S> <C> <C>
(a) Accumulation Value = $175,000
(b) Premium Payments less any partial = $190,000 ($210,000 - $20,000)
withdrawals; or
(c) reset value on last Policy Anniversary) = $202,400
</TABLE>
The formula guarantees that the amount we pay will at least equal the sum
of all premium payments (less any partial withdrawals), independent of the
investment experience of the Separate Account. The Beneficiary may receive the
amount payable in a lump sum or under any life income payment option which is
then available. If more than one Beneficiary is named, each Beneficiary will be
paid a pro rata portion from each Allocation Alternative in which the policy is
invested as of the date we receive proof of death and all requirements necessary
to make the payment to that Beneficiary. We will keep the remaining balance in
the policy to pay the other Beneficiaries. Due to market fluctuations, the
remaining Accumulation Value may increase or decrease and we may pay subsequent
Beneficiaries a different amount.
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<PAGE> 21
We will make payments in a lump sum to the Beneficiary unless you have
elected or the Beneficiary elects otherwise in a signed written notice which
gives us the information that we need. If such an election is properly made, we
will apply all or part of these proceeds:
(i) under the Life Income Payment Option to provide an immediate
annuity for the Beneficiary who will be the policy owner and
Annuitant; or
(ii) under another Income Payment option we may offer at the time.
Payments under the annuity or under any other method of payment
we make available must be for the life of the Beneficiary, or for
a number of years that is not more than the life expectancy of
the Beneficiary at the time of the policy owner's death (as
determined for federal tax purposes), and must begin within one
year after the policy owner's death. (See "Income Payments"
below.)
If your spouse is the Beneficiary, we can pay the proceeds to the surviving
spouse if you die before the Annuity Commencement Date or the policy can
continue with the surviving spouse as (a) the new policy owner and, (b) if you
were the Annuitant, as the Annuitant. If a policy is jointly owned, ownership
rights and privileges under the policy must be exercised jointly and benefits
under the policy will be paid upon the death of any joint owner. (See "Federal
Tax Matters--Taxation of Annuities in General" at page 24.)
If the Annuitant and, where applicable under another Income Payment option,
the Joint Annuitant, if any, die after the Annuity Commencement Date, NYLIAC
will pay the sum required by the Income Payment option in effect.
We will make any distribution or application of policy proceeds within 7
days after NYLIAC receives all documents (including documents necessary to
comply with federal and state tax law) in connection with the event or election
that causes the distribution to take place, subject to postponement in certain
circumstances. (See "Delay of Payments" below.)
INCOME PAYMENTS
(a) Election of Income Payment Options
We will make Income Payments under the Life Income Payment Option or under
such other option we may offer at that time where permitted by state laws. We
will require that a lump sum payment be made if the Accumulation Value is less
than $2,000. At any time before the Annuity Commencement Date, you may change
the Income Payment option or request any other method of payment we agree to. If
the Life Income Payment Option is chosen, we may require proof of birth date
before Income Payments begin. For Income Payment options involving life income,
the actual age of the Annuitant will affect the amount of each payment. Since
payments based on older Annuitants are expected to be fewer in number, the
amount of each annuity payment should be greater. We will make payments under
the Life Income Payment Option in the same specified amount and over the life of
the Annuitant with a guarantee of 10 years of payments, even if the Annuitant
dies sooner. NYLIAC does not currently offer variable Income Payment options.
Under Income Payment Options involving life income, the payee may not
receive Income Payments equal to the total premium payments if the Annuitant
dies before the actuarially predicted date of death. We base Income Payment
Options involving life income on annuity tables that vary on the basis of sex,
unless the policy was issued under an employer sponsored plan or in a state
which requires unisex rates.
(b) Other Methods of Payment
If NYLIAC agrees, you (or the Beneficiary upon the death of you or the
Annuitant prior to the Annuity Commencement Date) may choose to have Income
Payments made under some other method of payment or in a lump sum.
(c) Proof of Survivorship
We may require satisfactory proof of survival from time to time before we
pay any Income Payments or other benefits. We will request the proof at least 30
days prior to the next scheduled payment date.
DELAY OF PAYMENTS
We will pay any amounts due from the Separate Account under the policy
within seven days of the date NYLIAC receives all documents (including documents
necessary to comply with federal and state tax law) in connection with a request
unless:
1. The New York Stock Exchange ("NYSE") is closed for other than usual
weekends or holidays, or trading on the NYSE is otherwise
restricted;
2. An emergency exists as defined by the Securities and Exchange
Commission ("SEC");
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<PAGE> 22
3. The SEC permits a delay for the protection of security holders; or
4. The check used to pay the premium has not cleared through the
banking system. This may take up to 15 days.
For the same reasons, we will delay transfers from the Separate Account to
the Fixed Account.
We may also delay payments of any amount due from the Fixed Account. When
permitted by law, we may defer payment of any partial withdrawal or full
surrender request for up to six months from the date of surrender from the Fixed
Account. We will pay interest of at least 3.5% per year on any partial
withdrawal or full surrender request deferred for 30 days or more.
DESIGNATION OF BENEFICIARY
You may name, in a written form acceptable to us, one or more
Beneficiaries. Thereafter, before the Annuity Commencement Date and while the
Annuitant is living, you may change the Beneficiary by written notice in a form
acceptable to NYLIAC. If before the Annuity Commencement Date, the Annuitant
dies before you and no Beneficiary for the proceeds or for a stated share of the
proceeds survives, the right to the proceeds or shares of the proceeds passes to
you. If you are the Annuitant, the proceeds pass to your estate. However, if the
policy owner who is not the Annuitant dies before the Annuity Commencement Date,
and no Beneficiary for the proceeds or for a stated share of the proceeds
survives, the right to the proceeds or shares of the proceeds passes to the
policy owner's estate.
For policies issued through a Policy Request, the Beneficiary will be the
policy owner or his/her estate until the Beneficiary is designated as described
under "Policy Application and Premium Payments" at page 14.
RESTRICTIONS UNDER INTERNAL REVENUE CODE SECTION 403(B)(11)
Distributions attributable to salary reduction contributions made in years
beginning after December 31, 1988 (including the earnings on these
contributions), as well as to earnings in such years on salary reduction
accumulations held as of the end of the last year beginning before January 1,
1989, may not begin before the employee attains age 59 1/2, separates from
service, dies or becomes disabled. The plan may also provide for distribution in
the case of hardship. However, hardship distributions are limited to amounts
contributed by salary reduction. The earnings on such amounts may not be
withdrawn. Even though a distribution may be permitted under these rules (e.g.
for hardship or after separation from service), it may still be subject to a 10%
additional income tax as a premature distribution.
Under the terms of your plan, you may have the option to invest in other
403(b) funding vehicles, including 403(b)(7) custodial accounts. You should
consult your plan document to make this determination.
THE FIXED ACCOUNT
The Fixed Account is supported by the assets in NYLIAC's general account,
which includes all of NYLIAC's assets except those assets specifically allocated
to NYLIAC's separate accounts. NYLIAC has sole discretion to invest the assets
of the Fixed Account subject to applicable law. The Fixed Account is not
registered under the federal securities laws and is generally not subject to
their provisions. Furthermore, the staff of the Securities and Exchange
Commission has not reviewed the disclosures in this Prospectus relating to the
Fixed Account. These disclosures regarding the Fixed Account may be subject to
certain applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
(a) Interest Crediting
NYLIAC guarantees that it will credit interest at an annual effective rate
of at least 3% to amounts allocated or transferred to the Fixed Account under
the policies. We credit interest on a daily basis. We will set an interest rate
in advance periodically. All premium payments allocated to, or amounts
transferred to, the Fixed Account will receive the rate in effect for the period
during which the allocation or transfer is made, until the end of the Policy
Year. Thereafter, the rate applicable to those amounts will change on each
Policy Anniversary. The new rate will be the rate in effect on the date on which
the Policy Anniversary occurs.
(b) Transfers to Investment Divisions
You may transfer amounts from the Fixed Account to the Investment Divisions
up to 30 days prior to the Annuity Commencement Date. The minimum amount that
you may transfer from the Fixed Account to the Investment Divisions is the
lesser of (i) $500 or (ii) the Fixed Accumulation Value, unless we agree
otherwise. Additionally, the remaining value in the Fixed Account must be at
least $500. If, after a contemplated transfer,
22
<PAGE> 23
the remaining values in the Fixed Account would be less than $500, that amount
must be included in the transfer, unless NYLIAC in its discretion permits
otherwise. We determine amounts transferred from the Fixed Account on a
first-in, first-out ("FIFO") basis, for purposes of determining the rate at
which we credit interest on monies remaining in the Fixed Account.
You may not transfer money into the Fixed Account if you made a transfer
out of the Fixed Account during the previous six-month period.
You must make transfer requests in writing on a form approved by NYLIAC or
by telephone in accordance with established procedures. (See "Procedures for
Telephone Transactions" at page 15.)
We will deduct partial withdrawals from the Fixed Account on a FIFO basis
(i.e., from any value in the Fixed Account attributable to premium payments or
transfers from Investment Divisions in the same order in which you allocated
such payments or transfers to the Fixed Account during the life of the policy).
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. The
Qualified Policies are designed for use by individuals in retirement plans which
are intended to qualify as plans qualified for special income tax treatment
under Sections 219, 403, 408, 408A or 457 of the Code. The ultimate effect of
federal income taxes on the Accumulation Value, on Income Payments and on the
economic benefit to you, the Annuitant or the Beneficiary depends on the type of
retirement plan for which the Qualified Policy is purchased, on the tax and
employment status of the individual concerned and on NYLIAC's tax status. The
following discussion assumes that Qualified Policies are used in retirement
plans that qualify for the special federal income tax treatment described above.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under a policy. Any person concerned about these tax implications
should consult a competent tax adviser before making a premium payment. This
discussion is based upon NYLIAC's understanding of the present federal income
tax laws as they are currently interpreted by the Internal Revenue Service. We
cannot predict the likelihood of continuation of the present federal income tax
laws or of the current interpretations by the Internal Revenue Service, which
may change from time to time without notice. Any such change could have
retroactive effects regardless of the date of enactment. Moreover, this
discussion does not take into consideration any applicable state or other tax
laws except with respect to the imposition of any state premium taxes. We
suggest you consult with your tax adviser.
TAXATION OF ANNUITIES IN GENERAL
The following discussion assumes that the policies will qualify as annuity
contracts for federal income tax purposes. The Statement of Additional
Information discusses such qualifications.
Section 72 of the Code governs taxation of annuities in general. NYLIAC
believes that an annuity policy owner generally is not taxed on increases in the
value of a policy until distribution occurs either in the form of a lump sum
received by withdrawing all or part of the Accumulation Value (i.e., surrenders
or partial withdrawals) or as Income Payments under the Income Payment option
elected. The exception to this rule is that generally, a policy owner of any
deferred annuity policy who is not a natural person must include in income any
increase in the excess of the policy owner's Accumulation Value over the policy
owner's investment in the contract during the taxable year. However, there are
some exceptions to this exception. You may wish to discuss these with your tax
counsel. The taxable portion of a distribution (in the form of an annuity or
lump sum payment) is generally taxed as ordinary income. For this purpose, the
assignment, pledge, or agreement to assign or pledge any portion of the
Accumulation Value generally will be treated as a distribution.
In the case of a withdrawal or surrender distributed to a participant or
Beneficiary under a Qualified Policy (other than a Qualified Policy used in a
retirement plan that qualifies for special federal income tax treatment under
Section 457 of the Code as to which there are special rules), a ratable portion
of the amount received is taxable, generally based on the ratio of the
investment in the contract to the total policy value. The "investment in the
contract" generally equals the portion, if any, of any premium payments paid by
or on behalf of an individual under a policy which is not excluded from the
individual's gross income. For policies issued in connection with qualified
plans, the "investment in the contract" can be zero. The law requires the use of
special simplified methods to determine the taxable amount of payments that are
based in whole or in part on
23
<PAGE> 24
the Annuitant's life and that are paid from qualified retirement plans under
Section 401(a) and from qualified annuities and Tax Sheltered Annuities under
Sections 403(a) and 403(b).
Generally, in the case of a withdrawal under a Non-Qualified Policy before
the Annuity Commencement Date, amounts received are first treated as taxable
income to the extent that the Accumulation Value immediately before the
withdrawal exceeds the "investment in the contract" at that time. Any additional
amount withdrawn is not taxable.
Although the tax consequences may vary depending on the Income Payment
option elected under the policy, in general, only the portion of the Income
Payment that represents the amount by which the Accumulation Value exceeds the
"investment in the contract" will be taxed. After the investment in the policy
is recovered, the full amount of any additional Income Payments is taxable. For
fixed Income Payments, in general, there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the Income Payments for the term of the
payments. However, the remainder of each Income Payment is taxable until the
recovery of the investment in the contract, and thereafter the full amount of
each annuity payment is taxable. If death occurs before full recovery of the
investment in the contract, the unrecovered amount may be deducted on the
annuitant's final tax return.
In the case of a distribution, a penalty tax equal to 10% of the amount
treated as taxable income may be imposed. The penalty tax is not imposed in
certain circumstances, including, generally, distributions: (1) made on or after
the date on which the taxpayer is actual age 59 1/2, (2) made as a result of the
policy owner's or Annuitant's death or disability, or (3) received in
substantially equal installments paid at least annually as a life annuity. Other
tax penalties may apply to certain distributions pursuant to a Qualified Policy.
All non-qualified, deferred annuity contracts issued by NYLIAC (or its
affiliates) to the same policy owner during any calendar year are to be treated
as one annuity contract for purposes of determining the amount includable in an
individual's gross income. In addition, there may be other situations in which
the Treasury Department may conclude (under its authority to issue regulations)
that it would be appropriate to aggregate two or more annuity contracts
purchased by the same policy owner. Accordingly, a policy owner should consult a
competent tax adviser before purchasing more than one policy or other annuity
contract.
A transfer of ownership of a policy, or designation of an Annuitant or
other Beneficiary who is not also the policy owner, may result in certain income
or gift tax consequences to the policy owner. A policy owner contemplating any
transfer or assignment of a policy should contact a competent tax adviser with
respect to the potential tax effects of such a transaction.
QUALIFIED PLANS
The Qualified Policies are designed for use with several types of tax
qualified plans. The tax rules applicable to participants and beneficiaries in
such qualified plans vary according to the type of plan and the terms and
conditions of the plan itself. Special favorable tax treatment may be available
for certain types of contributions and distributions (including special rules
for certain lump sum distributions to individuals who attained the age of 50 by
January 1, 1986). Adverse tax consequences may result from contributions in
excess of specified limits, distributions prior to age 59 1/2 (subject to
certain exceptions), distributions that do not conform to specified minimum
distribution rules and in certain other circumstances. Therefore, this
discussion only provides general information about use of the policies with the
various types of qualified plans. Policy owners and participants under qualified
plans as well as Annuitants and Beneficiaries are cautioned that the rights of
any person to any benefits under qualified plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the policy issued in connection with the plan. Purchasers of policies for use
with any qualified plan should seek competent legal and tax advice regarding the
suitability of the policy.
(a) Section 403(a) Plans. Under Section 403(a) of the Code, payments
made by employers to purchase annuity contracts, which meet certain
requirements, for their employees are excludible from the gross income of
the employee. Any amounts distributed to the employees under such annuity
contracts are taxable to them in the years in which distributions are made.
(b) Section 403(b) Plans. Under Section 403(b) of the Code, payments
made by public school systems and certain tax exempt organizations to
purchase annuity policies for their employees are excludable from the gross
income of the employee, subject to certain limitations. However, such
payments may be subject to FICA (Social Security) taxes.
(c) Individual Retirement Annuities. Sections 219 and 408 of the Code
permit individuals or their employers to contribute to an individual
retirement program known as an "Individual Retirement Annuity" or "IRA",
including an employer-sponsored Simplified Employee Pension or "SEP".
Individual Retirement Annuities
24
<PAGE> 25
are subject to limitations on the amount which may be contributed and
deducted and the time when distributions may commence. In addition,
distributions from certain other types of qualified plans may be placed
into Individual Retirement Annuities on a tax-deferred basis.
(d) Roth Individual Retirement Annuities. Section 408A of the Code
permits individuals with incomes below a certain level to contribute to an
individual retirement program known as a "Roth Individual Retirement
Annuity" or "Roth IRA." Roth IRAs are subject to limitations on the amount
that may be contributed. Contributions to Roth IRAs are not deductible, but
distributions from Roth IRAs that meet certain requirements are not
included in gross income. Certain individuals are eligible to convert their
existing non-Roth IRAs into Roth IRAs. They will be subject to income tax
at the time of conversion.
(e) Deferred Compensation Plans. Section 457 of the Code, while not
actually providing for a qualified plan as that term is normally used,
provides for certain deferred compensation plans with respect to service
for state governments, local governments, political subdivisions, agencies,
instrumentalities and certain affiliates of such entities and tax exempt
organizations which enjoy special treatment. The policies can be used with
such plans. Under such plans, a participant may specify the form of
investment in which his or her participation will be made. Such investments
are generally owned by, and are subject to, the claims of the general
creditors of the sponsoring employer, except that Section 457 plans of
state and local government must be held and used for the exclusive benefit
of participants and beneficiaries in a trust or annuity contract.
DISTRIBUTOR OF THE POLICIES
NYLIFE Distributors Inc. ("NYLIFE Distributors"), 51 Madison Avenue, New
York, New York 10010, is the principal underwriter and the distributor of the
policies. It is an indirect wholly-owned subsidiary of New York Life. The
maximum commission paid to broker-dealers who have entered into dealer
agreements with NYLIFE Distributors is not expected to exceed 7%. A portion of
this amount is paid as commissions to registered representatives.
VOTING RIGHTS
The Funds are not required to and typically do not hold routine annual
stockholder meetings. Special stockholder meetings will be called when
necessary. To the extent required by law, NYLIAC will vote the Eligible
Portfolio shares held in the Investment Divisions at special shareholder
meetings of the Funds in accordance with instructions we receive from persons
having voting interests in the corresponding Investment Division. If, however,
the federal securities laws are amended, or if NYLIAC's present interpretation
should change, and as a result, NYLIAC determines that it is allowed to vote the
Eligible Portfolio shares in its own right, we may elect to do so.
Prior to the Annuity Commencement Date, you hold a voting interest in each
Investment Division to which you have money allocated. We will determine the
number of votes which are available to you by dividing the Accumulation Value
attributable to an Investment Division by the net asset value per share of the
applicable Eligible Portfolios. We will calculate the number of votes which are
available to you separately for each Investment Division. We will determine that
number by applying your percentage interest, if any, in a particular Investment
Division to the total number of votes attributable to the Investment Division.
We will determine the number of votes of the Eligible Portfolio which are
available as of the date established by the Portfolio of the relevant Fund.
Voting instructions will be solicited by written communication prior to such
meeting in accordance with procedures established by the relevant Fund.
If we do not receive timely instructions, we will vote those shares in
proportion to the voting instructions which are received with respect to all
policies participating in that Investment Division. We will apply voting
instructions to abstain on any item to be voted upon on a pro rata basis to
reduce the votes eligible to be cast. Each person having a voting interest in an
Investment Division will receive proxy material, reports and other materials
relating to the appropriate Eligible Portfolio.
25
<PAGE> 26
TABLE OF CONTENTS FOR THE
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The SAI contains more details concerning the subjects discussed in this
Prospectus. The following is the Table of Contents for that SAI:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE POLICIES................................................ 2
INVESTMENT PERFORMANCE CALCULATIONS......................... 2
ANNUITY PAYMENTS............................................ 4
GENERAL MATTERS............................................. 4
FEDERAL TAX MATTERS......................................... 4
DISTRIBUTOR OF THE POLICIES................................. 5
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...................... 5
STATE REGULATION............................................ 6
RECORDS AND REPORTS......................................... 6
LEGAL PROCEEDINGS........................................... 6
EXPERTS..................................................... 6
OTHER INFORMATION........................................... 6
FINANCIAL STATEMENTS........................................ F-1
</TABLE>
How to obtain a MainStay Access Variable Annuity Statement of Additional
Information.
Call (800) 762-6212 or send this request form to:
MainStay Annuities--Client Services
51 Madison Avenue
Room 3300
New York, NY 10010
ATTN: CLIENT SERVICES
- --------------------------------------------------------------------------------
Please send me a MainStay Access Variable Annuity Statement of Additional
Information dated May 1, 2000:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
26
<PAGE> 27
LOGO
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INDIVIDUAL RETIREMENT ANNUITY
DISCLOSURE STATEMENT
The following information is being provided to you, the policyowner, in
accordance with the requirements of the Internal Revenue Service. This
Disclosure Statement is not part of the Prospectus. It includes non-technical
explanation of some of the changes made by the Taxpayer Relief Act of 1997
applicable to Individual Retirement Accounts or Annuities (IRAs). You should
consult your tax adviser about the specifics of these rules, and remember that
the terms of your actual contract and any endorsements will control your rights
and obligations.
1. REVOCATION OF YOUR IRA
If you have not received this Disclosure Statement at least seven calendar
days before the establishment of your Individual Retirement Annuity, you have
the right to revoke your Individual Retirement Annuity during the seven calendar
day period following its establishment. In order to revoke your Individual
Retirement Annuity, you must notify us in writing and you must mail or deliver
your revocation to NYLIAC. If your revocation is mailed, the date of the
postmark (or the date of certification or registration if sent by certified or
registered mail) will be considered your revocation date. If you revoke your
Individual Retirement Annuity during the seven day period, the entire amount of
your account, without any adjustments (for items such as administrative
expenses, fees, or fluctuation in market value) will be returned to you.
2. CONTRIBUTIONS
(a) Regular IRA. The policyowner may make periodic contributions to a
regular IRA in any amount up to the combined tax deductible and non-tax
deductible contribution limit described in Section 3 of this Disclosure
Statement. All such contributions shall be in cash and shall be invested in
accordance with this Disclosure Statement. This IRA cannot be issued as a SIMPLE
IRA.
(b) Spousal IRA. If the policyowner and the spouse file a joint federal
income tax return for the taxable year and if the spouse's compensation, if any,
includable in gross income for the year is less than the compensation includable
in the gross income of the policyowner for the year, the policyowner and the
spouse may each establish his or her own individual IRA and may make periodic
contributions to their own IRA in accordance with the rules and limits for tax
deductible and non-tax deductible contributions contained in Sections 219(c) and
408(o) of the Internal Revenue Code. Such contributions shall be in cash and
shall be invested in accordance with this Disclosure Statement.
(c) Rollover IRA. A rollover contribution by the policyowner shall be a
nonperiodic deposit in cash to be invested in accordance with this Disclosure
Statement, with respect to which contribution the policyowner warrants that (1)
the entire amount rolled over is attributable to a distribution from an
employee's trust, an employee's annuity, an annuity contract or another
individual retirement account or annuity, which meets the requirements of
Internal Revenue Code section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3); (2)
within one (1) year of receiving such distribution, the policyowner did not
receive another distribution which constituted a "rollover" referred to in
Internal Revenue Code Section 408(d)(3)(B); and (3) the contribution as made
satisfies all the requirements for rollover contributions as set forth under the
Internal Revenue Code. A rollover contribution attributable to contributions
made by an employer to an individual's SIMPLE IRA cannot be made prior to the
expiration of the 2-year period beginning on the date the individual first
participated in that employer's SIMPLE plan.
Strict limitations apply to rollovers, and you should seek competent tax
advice in order to comply with all the rules governing rollovers.
(d) Transfers. The policyowner may make an initial or subsequent
contribution hereunder by directing a Custodian or Trustee of an existing
individual retirement account or individual retirement annuity to transfer an
amount in cash to the Individual Retirement Annuity.
(e) Time to Make Contributions. You may make contributions to your IRA at
any time for a taxable year beginning on the first day of that year and ending
on the date that your income tax return for that year is due (without regard to
any extensions).
IRA-1
<PAGE> 28
(f) Simplified Employee Pension. If an IRA is established that meets the
requirements of a Simplified Employee Pension Plan, your employer may contribute
an amount not to exceed the lesser of 15% of your includable compensation
($170,000 for 2000, adjusted for inflation thereafter) or $30,000. The amount of
such contribution is not includable in your income as wages (for federal income
tax purposes). Within that overall limit you may elect to defer up to $10,500 in
2000 (as adjusted for inflation in accordance with the Internal Revenue Code) of
your includable compensation if your employer's SEP plan permits salary
reduction contributions and was established on or before December 31, 1996. The
amount of such elective deferral is excludable from your income as wages (for
federal income tax purposes). For further details, see your employer.
(g) Responsibility of the Policyowner. If the policyowner contemplates
future periodic contributions, rollovers, or transfers to the IRA, such
contributions, rollovers or transfers must be made in accordance with the
appropriate sections of the Code. It is the policyowner's full and sole
responsibility to determine the tax deductibility of all contributions, and to
make such contributions in accordance with the Code. Neither the Custodian nor
New York Life Insurance and Annuity Corporation are permitted to provide tax
advice, and will assume no liability for the tax consequences of any
contribution to the IRA.
3. DEDUCTIBILITY OF CONTRIBUTIONS
(a) Eligibility. Under the Internal Revenue Code, if neither you nor your
spouse is an active participant (see (b) below), you and your spouse may
contribute up to $4,000 together (but no more than $2,000 to each individual
account) if your combined compensation is at least equal to that amount and take
a deduction for the entire amount contributed. If you are an active participant,
but have an adjusted gross income (AGI) below a certain level (see (c) below),
you may make a deductible contribution. If you are an active participant and you
have AGI above that level (see (c) below), the amount of the deductible
contribution you may make is phased down and eventually eliminated. If you are
not an active participant, but your spouse is an active participant, you may
make a $2,000 deductible contribution provided that if your combined AGI is
above the specified level (see (c) below), the amount of the deductible
contribution you may make to an IRA is phased down and eventually eliminated.
(b) Active Participant. You are an "active participant" for a year if you
are covered by a retirement plan. You are covered by a "retirement plan" for a
year if your employer or union has a retirement plan under which money is added
to your annuity or you are eligible to earn retirement credits. For example, if
you are covered under a profit-sharing plan, a 403(b) annuity, certain
government plans, a salary reduction arrangement (such as a Tax Sheltered
Annuity 403(b) arrangement or a 401(k) plan), a Simplified Employee Pension Plan
(SEP), a SIMPLE retirement account or a plan which promises you a retirement
benefit which is based upon the number of years of service you have with the
employer, you are likely to be an active participant. Your Form W-2 for the year
should indicate your participation status.
(c) Adjusted Gross Income (AGI). If you or your spouse is an active
participant, you must look at your Adjusted Gross Income for the year (if you
and your spouse file a joint tax return, you use your combined AGI) to determine
whether you can make a deductible IRA contribution. Your tax return will show
you how to calculate your AGI for this purpose. If you are at or below a certain
AGI level, called the threshold level, you are treated as if you were not an
active participant and can make a deductible contribution under the same rules
as a person who is not an active participant.
If you are single, your threshold AGI level is $32,000 (for 2000). The
threshold level if you are married and file a joint tax return is $52,000 (for
2000), and if you are married, but file a separate tax return, the threshold
level is $0. However, if only your spouse is an active participant and you file
a joint tax return, the threshold level is $150,000 phased out at $160,000.
IRA-2
<PAGE> 29
The $32,000 and $52,000 threshold levels are to increase in future years as
shown below:
<TABLE>
<CAPTION>
JOINT RETURNS
-------------
FOR TAXABLE YEARS BEGINNING IN: THE THRESHOLD LEVEL IS:
- ------------------------------- -----------------------
<S> <C>
2001 $53,000
2002 $54,000
2003 $60,000
2004 $65,000
2005 $70,000
2006 $75,000
2007 and thereafter $80,000
</TABLE>
<TABLE>
<CAPTION>
SINGLE TAXPAYERS
----------------
FOR TAXABLE YEARS BEGINNING IN: THE THRESHOLD LEVEL IS:
- ------------------------------- -----------------------
<S> <C>
2001 $33,000
2002 $34,000
2003 $40,000
2004 $45,000
2005 and thereafter $50,000
</TABLE>
If your AGI is less than $10,000 above your threshold level, you will still
be able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your threshold level (AGI-threshold level) is
called your Excess AGI. The Maximum Allowable Deduction is $2,000 (and an
additional $2,000 for a Spousal IRA). You can calculate your Deduction Limit as
follows:
10,000 - Excess AGI X Maximum Allowable Deduction = Deduction Limit
10,000
You must round up the result to the next highest $10 level (the next
highest number which ends in zero). For example, if the result is $1,525, you
must round it up to $1,530. If the final result is below $200 but above zero,
your Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed
100% of your compensation.
(d) Restrictions. No deduction is allowed for (a) contributions other than
in cash; (b) contributions (other than those by an employer to a Simplified
Employee Pension Plan) made during your calendar year in which you attain age
70 1/2 or thereafter; or (c) for any amount you contribute which was a
distribution from another retirement plan ("rollover" contribution). However,
the limitations in paragraphs (a) and (b) do not apply to rollover
contributions.
(e) Compensation. For purposes of determining allowable contributions, the
term "Compensation" includes all earned income, including net earnings from self
employment and alimony or separate maintenance payments received and includable
in your gross income, but does not include deferred compensation or any amount
received as a pension or annuity.
4. NONDEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the threshold level and, thus, may not make a
deductible contribution of $2,000 (and an additional $2,000 for a Spousal IRA),
you may still contribute up to the lesser of 100% of compensation or $2,000 to
an IRA (and an additional $2,000 for a Spousal IRA). The amount of your
contribution which is not deductible will be a nondeductible contribution to the
IRA. You may also choose to make a contribution nondeductible even if you could
have deducted part or all of the contribution. Interest or other earnings on
your IRA contribution, whether from deductible or nondeductible contributions,
will not be taxed until taken out of your IRA and distributed to you.
If you make a nondeductible contribution to an IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
If you make a nondeductible contribution to an IRA you must report the
amount of the nondeductible contribution to the IRS as a part of your tax return
for the year.
IRA-3
<PAGE> 30
5. DISTRIBUTIONS
(a) Required Distributions. Distribution of your IRA must be made or begin
no later than April 1 of the calendar year following the calendar year in which
you attain age 70 1/2. A distribution may be made at once in a lump sum, or it
may be made in installments. Installment payments must be made over a period not
exceeding your life expectancy (as determined annually), or the joint life and
last survivor expectancy of you and the beneficiary you designate (as
redetermined annually, if that beneficiary is your spouse).
If you die before the entire interest is distributed to you, but after
distribution to you has begun, your entire annuity must be distributed to your
beneficiary at least as rapidly as your annuity was being distributed prior to
your death. If you die before you begin to receive distributions from your
annuity and if you have a designated beneficiary, distribution to your
beneficiary must be made over a period not exceeding the greater of the
beneficiary's life expectancy or five years after your death; if you have no
designated beneficiary, distribution must be completed within five years of your
death. Distributions upon your death must begin within one year following your
death or, if your beneficiary is your spouse, no later than the date on which
you would have attained age 70 1/2 (if later). If following your death before
distributions have begun, your spouse also dies, immediate distribution must
begin to be made to your spouse's beneficiary, if any, over a period no longer
than that person's life expectancy, or if your spouse has not designated a
beneficiary, full payment must be made to your spouse's estate within five
years.
(b) IRA Distributions. Because nondeductible IRA contributions are made
using income which has already been taxed (that is, they are not deductible
contributions), the portion of the IRA distributions consisting of nondeductible
contributions will not be taxed again when received by you. If you make any
nondeductible IRA contributions, each distribution from your IRAs will consist
of a nontaxable portion (return of nondeductible contributions) and a taxable
portion (return of deductible contributions, if any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year.
<TABLE>
<S> <C> <C> <C> <C>
Remaining Nondeductible contributions
- --------------------------------------------- Total distributions Nontaxable distributions
Year-end total IRA balances X (for the year) = (for the year)
</TABLE>
To figure the year-end total IRA balance, you must treat all of your IRAs
as a single IRA (other than Roth IRAs). This includes all regular IRAs, as well
as Simplified Employee Pension (SEP) IRAs, SIMPLE IRAs, and Rollover IRAs. You
also add back the distributions taken during the year.
Even if you withdrew all of the money in your IRA in a lump sum, you will
not be entitled to use any form of income averaging to reduce the federal income
tax on your distribution. Also, no portion of your distribution is taxable as a
capital gain.
(c) Withholding. Unless you elect not to have withholding apply, a 10%
federal income tax will be withheld from your IRA distributions. If payments are
delivered to foreign countries, however, tax will, generally, be withheld at a
10% rate unless you certify to the Custodian that you are not a U.S. citizen
residing abroad or a "tax avoidance expatriate" as defined in the Internal
Revenue Code (Section 877).
6. PENALTIES
(a) Excess Contributions. If at the end of any taxable year your IRA
contributions (other than rollovers or transfers) exceed the maximum allowable
(deductible and nondeductible) amount for that year, this excess contribution
amount will be subject to a nondeductible 6% excise (penalty) tax. However, if
you withdraw the excess contribution, plus any earnings on it, before the due
date for filing your federal income tax return for the year (including
extensions), the excess contribution will not be subject to the 6% penalty tax.
The amount of the excess contribution withdrawn will not be considered a
premature distribution, but the earnings withdrawn will be taxable income to you
and may be subject to an additional 10% tax on premature distributions.
Alternatively, excess contributions for one year may be carried forward as IRA
contributions in the next year to the extent that the excess, when aggregated
with your IRA contribution (if any) for the subsequent year, does not exceed the
maximum allowable (deductible and nondeductible) amount for that year. The 6%
excise tax will be imposed on excess contributions in each year they are neither
returned nor applied as contributions.
(b) Early Distributions. Since the purpose of an IRA is to accumulate
funds for retirement, your receipt or use of any portion of your IRA before you
attain age 59 1/2 constitutes an early distribution unless the distribution
occurs in the event of your death or disability or is part of a series of
substantially equal periodic payments made over your life expectancy (as
determined from tables in the income tax regulations) or the joint life
IRA-4
<PAGE> 31
expectancies of you and your beneficiary or is used to pay certain medical
expenses or is used for certain qualified first-time homebuyer expenses or
certain qualified higher education expenses. The amount of an early distribution
(excluding the nondeductible contribution included therein) is includable in
your gross income and is subject to a 10% penalty tax on the amount of the early
distribution unless you transfer it to another IRA as a qualifying rollover
contribution. If you transfer, rollover or convert a regular IRA into a Roth
IRA, the 10% penalty tax will not apply, but the distribution is taxable income.
(c) Minimum Distributions. If the minimum distribution rules described in
5a apply to a recipient of distributions and if the amount distributed during a
calendar year is less than the minimum amount required to be distributed, the
recipient will be subject to a penalty tax equal to 50% of the difference
between the amount required to be distributed and the amount actually
distributed.
(d) Excess Distributions. The 15% excise tax on excess distributions has
been repealed for excess distributions received after December 31, 1996. The 15%
excise tax on excess retirement accumulations has been repealed for estates of
decedents dying after December 31, 1996.
(e) Prohibited Transactions. If the policyowner or the beneficiary engage
in any prohibited transaction (such as any sale, exchange or leasing of any
property between the policyowner and the annuity, or any interference with the
independent status of the annuity), the annuity will lose its tax exemption and
be treated as having been distributed to the policyowner. The value of the
entire annuity (excluding the non-deductible contribution included therein) will
be includable in your gross income; if at the time of the prohibited transaction
the policyowner is under age 59 1/2, the policyowner will also be subject to the
10% penalty tax on early distributions.
(f) Overstatement of Non-deductible Contributions. If you overstate your
non-deductible IRA contributions on your federal income tax return (without
reasonable cause) you may be subject to a $100 penalty and a $50 penalty for
failure to file any form required by the IRS to report non-deductible
contributions (in addition to any generally applicable tax, interest, and
penalties to which you may be liable if you understate income upon receiving a
distribution from your account. See paragraph 5(b) of this Disclosure Statement
and IRS Form 8606.)
7. FEDERAL ESTATE AND GIFT TAXES
Any amount distributed from your IRA upon your death may be subject to
federal estate and gift taxes.
8. OTHER INFORMATION
(a) Tax Reporting. You need not file Treasury Form 5329 with the Internal
Revenue Service unless during the taxable year there is an excess contribution
to, premature distribution from, or insufficient distribution from your IRA. You
must report contributions to, and distributions from your IRA (including the
year end aggregate account balance of all IRAs) on your federal income tax
return for the year. You must designate on the return how much of your annual
contribution is deductible and how much is nondeductible.
(b) IRS Approval. This Individual Retirement Annuity has been approved as
to form by the Internal Revenue Service. Such approval is a determination only
as to the form of the annuity and does not represent a determination of the
merits of such annuity.
(c) Custodian. The Trustee or Custodian of an IRA must be either a bank or
such other person who has been approved by the Secretary of the Treasury.
(d) Vesting. Your interest in your IRA must be nonforfeitable at all
times.
(e) State Tax Law. You should consult your tax adviser about any state tax
consequences of your IRA; you should be aware that some of these laws may differ
from Federal tax law governing IRAs.
IRA-5
<PAGE> 32
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 33
LOGO
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
ROTH INDIVIDUAL RETIREMENT ANNUITY
DISCLOSURE STATEMENT
The following information is being provided to you, the policyowner, in
accordance with the requirements of the Internal Revenue Service. This
disclosure includes non-technical explanation of some of the requirements
applicable to Roth Individual Retirement Annuities (Roth IRAs). The information
provided applies to contributions made and distributions received on and after
January 1, 1998.
1. REVOCATION OF YOUR ROTH IRA
You may revoke your Roth IRA at anytime within seven days after it is
established by mailing or delivering a written notice of revocation to New York
Life Insurance and Annuity Corporation, 300 Berwyn Park, P.O. Box 3031, Berwyn,
PA 19312-0031. Any notice of revocation will be deemed mailed on the date of
postmark (or if sent be certified or registered mail, the date of certification
or registration) if it is deposited in the U.S. Postal Service in an envelope,
or other appropriate wrapper, first-class postage prepaid, properly addressed.
Upon revocation, you will be entitled to a full refund of your entire Roth IRA
without any adjustments (for items such as administrative expenses, fees, or
fluctuation in market value).
2. CONTRIBUTIONS
(a) Regular Roth IRA. The policyowner may make periodic contributions to a
Roth IRA in any amount up to the contribution limit described in Section 3
(Deductibility of Contributions). All contributions to your Roth IRA must be
made in cash. Contributions for a taxable year must be made no later than April
15 of the following year.
(b) Rollover Roth IRA. A rollover contribution by the policyowner shall be
a nonperiodic deposit in cash, with respect to which contribution the
policyowner warrants that 1) the entire amount rolled over is attributable to a
distribution from a regular Individual Retirement Annuity (a "regular IRA") or
another Roth IRA which meets the requirements of Code Section 408(d)(3); 2)
within one (1) year of receiving such distribution, the policyowner did not
receive another distribution which constituted a "rollover" of a Roth IRA to
another Roth IRA; and 3) the contribution as made satisfies all the requirements
for Roth IRA rollover contributions as set forth under the Internal Revenue Code
"Code".
Strict limitations apply to rollovers, and you should seek competent tax
advice in order to comply with all the rules governing rollovers.
(c) Transfers and Conversions. The policyowner may make an initial or
subsequent contribution hereunder, provided that your Modified Adjusted Gross
Income (MAGI) does not exceed $100,000 during the year of such transfer and you
do not file your income tax return as married filing separately, by directing a
Trustee of an existing regular IRA to directly transfer an amount in cash from
or, if permitted by the Trustee, to convert, such regular IRA into this Roth
IRA. The policyowner may also direct a Trustee of an existing Roth IRA to
directly transfer an amount in cash from an existing Roth IRA to the Trustee of
this Roth IRA without regard to such income or return filing limitations.
(d) Tax Consequences of Rollovers and Transfers. A rollover, transfer, or
conversion of a regular IRA to a Roth IRA is permitted if your MAGI does not
exceed $100,000 and you do not file your income tax return as married filing
separately. Such a rollover, transfer, or conversion will be treated as a
taxable distribution of the regular IRA, but the 10% excise tax on early
distributions will not apply. For such rollovers, transfers, and conversions of
regular IRAs into Roth IRAs during 1998, a special rule applies and any amount
required to be so included in taxable income will be included ratably over 1998,
1999, 2000, and 2001.
(e) Responsibility of the policyowner. If the policyowner contemplates
future periodic contributions, rollovers, or transfers to the Roth IRA, such
contributions, rollovers, or transfers must be made in accordance with the
appropriate sections of the Code. It is the policyowner's full and sole
responsibility to determine the tax deductibility of all contributions, and to
make such contributions in accordance with the Code. New York Life Insurance and
Annuity Corporation (NYLIAC) and its employees are not permitted to provide tax
advice, and assume no liability for the tax consequences of any contribution to,
or distribution from, the Roth IRA.
ROTH IRA-1
<PAGE> 34
3. DEDUCTIBILITY OF CONTRIBUTIONS
(a) Eligibility. Under the law, you may make a contribution of up to the
lesser of $2,000 or 100% of compensation, reduced by the amount of contributions
you make to any other regular IRA (except Education IRAs) or Roth IRA for the
taxable year, provided that if your MAGI is above the specified level, the
amount of the contribution you may make to a Roth IRA is phased down and
eventually eliminated. Contributions to a Roth IRA are not deductible for income
tax purposes.
(b) Modified Adjusted Gross Income (MAGI). You must look at your Modified
Adjusted Gross Income for the year (if you and your spouse file a joint tax
return, use your combined MAGI) to determine whether you can make a Roth IRA
contribution. Your tax return will show you how to calculate your MAGI for this
purpose, except that you should disregard any income resulting from a taxable
rollover, transfer, or conversion of a regular IRA to a Roth IRA. Only if you
are at or below a certain MAGI level, called the Threshold Level, can you make a
contribution to a Roth IRA.
If you are single, your MAGI Threshold Level is $95,000. The Threshold
Level if you are married and file a joint tax return is $150,000, and if you are
married but file a separate tax return, the Threshold Level is $0.
If your MAGI is less than $15,000 ($10,000 in the case of a joint return)
above your Threshold Level, you will still be able to make a Roth IRA
contribution, but it will be limited in amount. The amount by which your MAGI
exceeds your Threshold Level (MAGI minus the Threshold Level) is called your
Excess MAGI. The maximum allowable contribution is $2,000. You can calculate
your contribution limit as follows:
<TABLE>
<C> <C> <S> <C> <C>
$15,000 ($10,000 in the case) - Excess
(of a joint return) MAGI Maximum
- ----------------------------------------------- X Allowable = Contribution Limit
$15,000 ($10,000 in the case) Contribution
(of a joint return)
</TABLE>
You must round up the result to the next highest $10 level (the next
highest number which ends in zero). For example, if the result is $1,525, you
must round it up to $1,530. If the final result is below $200 but above zero,
your contribution limit is $200. Your contribution limit cannot, in any event,
exceed 100% of your compensation.
The maximum contribution you and your spouse may make to all your IRAs in
the aggregate, including Roth IRAs, is the lesser of 100% of your combined
compensation or $4,000 annually ($2,000 individually).
(c) Deductions. No deduction is allowed for Roth IRA contributions.
(d) Compensation. For purposes of determining allowable contributions, the
term "Compensation" includes all earned income, including net earnings from self
employment and alimony or separate maintenance payments received and includible
in your gross income, but does not include deferred compensation or any amount
received as a pension or annuity.
4. DISTRIBUTIONS
(a) Required Distributions After Death. If you die before the entire
interest is distributed to you, but after distribution to you from your Roth IRA
has begun, your entire annuity must be distributed to your beneficiary at least
as rapidly as your annuity was being distributed prior to your death. If you die
before you begin to receive distributions from your annuity and if you have a
designated beneficiary, distribution to your beneficiary must be made over a
period not exceeding the greater of the beneficiary's life expectancy or five
years after your death; if you have no designated beneficiary, distribution must
be completed within five years of your death. Distributions upon your death must
begin within one year following your death or, if your beneficiary is your
spouse, no later than the date on which you would have attained age 70 1/2 (if
later). If following your death before distributions have begun, your spouse
also dies, immediate distribution must begin to be made to your spouse's
beneficiary, if any, over a period no longer than that person's life expectancy,
or if your spouse has not designated a beneficiary, full payment must be made to
your spouse's estate within five years.
(b) Roth IRA Distributions
(i) Qualifying nontaxable distributions.
ROTH IRA-2
<PAGE> 35
A distribution from your Roth IRA will not be includible in your gross
income if it is:
(a) made on or after the date you attain age 59 1/2
(b) made after you die or become disabled, or
(c) made as a qualified first time homebuyer distribution
and is made after the five taxable year period beginning with the first
taxable year in which you or your spouse made a contribution to a Roth IRA,
or, in the case of a rollover from a regular IRA to a Roth IRA, after the
five taxable year period beginning with the taxable year of the rollover.
Distributions meeting these requirements are known as "qualifying
distributions".
(ii) Other distributions partly taxable.
If a distribution from your Roth IRA does not meet the requirements of
a qualifying distribution as described in (i), then the distribution will
be treated first as a return of nontaxable Roth IRA contributions, and
second, after all such contributions have been returned, as distributions
of taxable earnings, which in addition to income tax may be subject to the
10% penalty tax on early distributions, as discussed below.
In addition, you will not be entitled to use any form of income
averaging to reduce the federal income tax on the taxable portion of your
distribution. Also, no portion of your distribution is taxable as a capital
gain.
(c) Withholding. Unless you elect not to have withholding apply, federal
income tax will be withheld from any taxable portion of your Roth IRA
distributions. If payments are delivered to foreign countries, however, tax
will, generally, be withheld at a 10% rate unless you certify to the Trustee
that you are not a U.S. citizen residing abroad or a "tax avoidance expatriate"
as defined in the Internal Revenue Code Section 877.
5. PENALTIES
(a) Excess Contributions. If at the end of any taxable year your Roth IRA
contributions (other than rollovers or transfers) exceed the maximum allowable
annuity for that year, this excess contribution amount will be subject to a
nondeductible 6% excise (penalty) tax. However, if you withdraw the excess
contribution, plus any earnings on it, before the due date for filing your
federal income tax return for the year (including extensions), the excess
contribution will not be subject to the 6% penalty tax. The amount of the excess
contribution withdrawn will not be considered a premature distribution, but the
earnings withdrawn will be taxable income to you. Alternatively, excess
contributions for one year may be carried forward as Roth IRA contributions in
the next year to the extent that the excess, when aggregated with your Roth IRA
contributions (if any) for the subsequent year, does not exceed the maximum
allowable amount for that year. The 6% excise tax will be imposed on excess
contributions in each year they are neither returned nor applied as
contributions.
(b) Early Distributions. Since the purpose of a Roth IRA is to accumulate
funds for retirement, your receipt or use of any portion of your Roth IRA
account (for example, as collateral for a loan) which is not a qualifying
distribution before you attain age 59 1/2, to the extent it is taxable to you as
described above, constitutes an early distribution unless the distribution is a
result of death or disability, or is part of a series of substantially equal
periodic payments made over your life expectancy (as determined from tables in
the income tax regulations) or the joint life expectancies of you and your
beneficiary, is used to pay certain medical expenses, or is used for certain
qualified first-time homebuyer expenses, or certain qualified higher education
expenses. The amount of an early distribution which is not a qualifying
distribution and is not a return of previous Roth IRA contributions is
includible in your gross income and is subject to a 10% penalty tax on the
amount of the early distribution unless you transfer it to another Roth IRA as a
qualifying rollover contribution.
(c) Minimum Distributions. If the minimum distribution rules described in
4(a) apply to a recipient of distributions and if the amount distributed during
a calendar year is less than the minimum amount required to be distributed, the
recipient will be subject to a penalty tax equal to 50% of the difference
between the amount required to be distributed and the amount actually
distributed.
(d) Prohibited Transactions. If you or your beneficiary engage in any
prohibited transaction (such as any sale, exchange or leasing of any property
between you and the annuity, or any interference with the independent status of
the annuity), the annuity will lose its tax exemption and be treated as having
been distributed to you. The value of the entire annuity (excluding the
nondeductible contributions included therein) will be includible in
ROTH IRA-3
<PAGE> 36
your gross income; if at the time of the prohibited transaction you are under
age 59 1/2 you will also be subject to the 10% penalty tax on early
distributions.
6. FEDERAL ESTATE GIFT TAXES
Any amount distributed from your Roth IRA upon your death may be subject to
federal estate and gift taxes.
7. OTHER INFORMATION
(a) Tax Reporting. You need not file Treasury Form 5329 with the Internal
Revenue Service unless during the taxable year there is an excess contribution
to, or premature distribution from, your Roth IRA. You must report distributions
from your Roth IRA on your federal income tax return for the year.
(b) IRS Approval. This Roth IRA plan has not been approved as to form by
the Internal Revenue Service. Approval by the IRS of the Roth IRA plan is a
determination only as to the form of the annuity and does not represent a
determination of the merits of such annuity.
(c) Vesting. Your interest in your Roth IRA must be nonforfeitable at all
times.
ROTH IRA-4
<PAGE> 37
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
FOR
MAINSTAY ACCESS VARIABLE ANNUITY
FROM
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
INVESTING IN
NYLIAC VARIABLE ANNUITY SEPARATE ACCOUNT-III
This Statement of Additional Information ("SAI") is not a prospectus. This
SAI contains information that expands upon subjects discussed in the current
MainStay Access Variable Annuity Prospectus. You should read the SAI in
conjunction with the current MainStay Access Variable Annuity Prospectus dated
February 4, 2000. You may obtain a copy of the Prospectus by calling MainStay
Annuities at 800-762-6212 or writing to MainStay Annuities, 51 Madison Avenue,
Room 3300, New York, NY 10010, ATTN: CLIENT SERVICES. Terms used but not defined
in this SAI have the same meaning as in the current MainStay Access Variable
Annuity Prospectus.
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE POLICIES (13)........................................... 2
Valuation of Accumulation Units (16)................... 2
INVESTMENT PERFORMANCE CALCULATIONS......................... 2
MainStay VP Cash Management Investment Division........ 2
MainStay VP Government, MainStay VP High Yield
Corporate Bond and MainStay VP Bond Investment
Division Yields...................................... 3
Average Annual Total Return............................ 3
ANNUITY PAYMENTS............................................ 4
GENERAL MATTERS............................................. 4
FEDERAL TAX MATTERS (23).................................... 5
Taxation of New York Life Insurance and Annuity
Corporation.......................................... 5
Tax Status of the Policies............................. 5
DISTRIBUTOR OF THE POLICIES (25)............................ 6
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...................... 6
STATE REGULATION............................................ 6
RECORDS AND REPORTS......................................... 6
LEGAL PROCEEDINGS........................................... 6
EXPERTS..................................................... 7
OTHER INFORMATION........................................... 7
FINANCIAL STATEMENTS........................................ F-1
</TABLE>
- ------------
* (Numbers in parentheses refer to page numbers of corresponding sections of the
current MainStay Access Variable Annuity Prospectus.)
<PAGE> 38
THE POLICIES
The following provides additional information about the policies and
supplements the description in the Prospectus.
VALUATION OF ACCUMULATION UNITS
Accumulation Units are valued separately for each Investment Division of
the Separate Account. The method used for valuing Accumulation Units in each
Investment Division is the same. We arbitrarily set the value of each
Accumulation Unit as of the date operations began for the Investment Division.
Thereafter, the value of an Accumulation Unit of an Investment Division for any
Business Day equals the value of an Accumulation Unit in that Investment
Division as of the immediately preceding Business Day multiplied by the "Net
Investment Factor" for that Investment Division for the current Business Day.
We determine the Net Investment Factor for each Investment Division for any
period from the close of the preceding Business Day to the close of the current
Business Day (the "Valuation Period") by the following formula:
(a/b) - c
Where: a = the result of:
(1) the net asset value per share of the Eligible Portfolio shares
held in the Investment Division determined at the end of the current
Valuation Period, plus
(2) the per share amount of any dividend or capital gain distribution
made by the Eligible Portfolio for shares held in the Investment
Division if the "ex-dividend" date occurs during the current Valuation
Period;
b = the net asset value per share of the Eligible Portfolio shares held
in the Investment Division determined as of the end of the
immediately preceding Valuation Period; and
c = a factor representing the charge deducted from the applicable
Investment Division on a daily basis. Such factor is equal, on an
annual basis, to 1.55% of the daily net asset value of the Separate
Account. (See "Separate Account Charges" at page 17 of the
Prospectus.)
The Net Investment Factor may be greater or less than one. Therefore, the
value of an Accumulation Unit in an Investment Division may increase or decrease
from Valuation Period to Valuation Period.
INVESTMENT PERFORMANCE CALCULATIONS
MAINSTAY VP CASH MANAGEMENT INVESTMENT DIVISION
NYLIAC calculates the MainStay VP Cash Management Investment Division's
current annualized yield for a seven-day period in a manner which does not take
into consideration any realized or unrealized gains or losses on shares of the
MainStay VP Cash Management Portfolio or on its portfolio securities. This
current annualized yield is computed by determining the net change (exclusive of
realized gains and losses on the sale of securities and unrealized appreciation
and depreciation) in the value of a hypothetical account having a balance of one
unit of the MainStay VP Cash Management Investment Division at the beginning of
such seven-day period, dividing such net change in account value by the value of
the account at the beginning of the period to determine the base period return
and annualizing this quotient on a 365-day basis. The net change in account
value reflects the deductions for the administration fee and the mortality and
expense risk charge, and income and expenses accrued during the period. Because
of these deductions, the yield for the MainStay VP Cash Management Division will
be lower than the yield for the MainStay VP Cash Management Portfolio.
NYLIAC also calculates the effective yield of the MainStay VP Cash
Management Investment Division for the same seven-day period on a compounded
basis. The effective yield is calculated by compounding the unannualized base
period return by adding one to the base period return, raising the sum to a
power equal to 365 divided by 7, and subtracting one from the result.
The yield on amounts held in the MainStay VP Cash Management Investment
Division normally will fluctuate on a daily basis. Therefore, the disclosed
yield for any given past period is not an indication or representation of future
yields or rates of return. The MainStay VP Cash Management Investment Division's
actual yield is affected by changes in interest rates on money market
securities, average portfolio maturity of the MainStay VP Cash
2
<PAGE> 39
Management Portfolio, the types and quality of portfolio securities held by the
MainStay VP Cash Management Portfolio, and its operating expenses.
MAINSTAY VP GOVERNMENT, MAINSTAY VP HIGH YIELD CORPORATE BOND AND MAINSTAY
VP BOND INVESTMENT DIVISION YIELDS
The current annualized yield of the MainStay VP Government, MainStay VP
High Yield Corporate Bond and MainStay VP Bond Investment Divisions refers to
the income generated by these Investment Divisions over a specified 30-day
period. Because the yield is annualized, the yield generated by an Investment
Division during the 30-day period is assumed to be generated each 30-day period.
We compute the yield by dividing the net investment income per accumulation unit
earned during the period by the price per unit on the last day of the period,
according to the following formula:
- ---- YIELD = 2[(a-b+1)(6)-1]
cd
Where: a = net investment income earned during the period by the Portfolio
attributable to shares owned by the MainStay VP Government, MainStay
VP High Yield Corporate Bond or MainStay VP Bond Investment Division.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period.
d = the maximum offering price per accumulation unit on the last day of
the period.
Accrued expenses will include all recurring fees that are charged to all
policy owner accounts. The yield calculations do not reflect the effect of any
surrender charges that may be applicable to a particular policy. Surrender
charges range from 7% to 0% of the premium payments withdrawn depending on the
elapsed time since the relevant premium payment was made.
Because of the charges and deductions imposed by the Separate Account the
yield for the Investment Divisions will be lower than the yield for the
corresponding Portfolio of the Fund. The yield on amounts held in the Investment
Divisions normally will fluctuate over time. Therefore, the disclosed yield for
any given past period is not an indication or representation of future yields or
rates of return. The MainStay VP Government, MainStay VP High Yield Corporate
Bond or MainStay VP Bond Investment Division's actual yield will be affected by
the types and quality of portfolio securities held by the MainStay VP
Government, MainStay VP High Yield Corporate Bond and MainStay VP Bond
Portfolios of the Fund and their operating expenses.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return quotations for
the Investment Divisions are computed by finding the average annual compounded
rates of return over the periods shown that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1+T)(n) = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the one, five, or ten-year period or the inception date,
at the end of the one, five or ten-year period (or fractional portion
thereof).
All total return figures are prepared under methods the SEC requires when
advertising performance information. For periods beginning on or after the dates
when the Investment Divisions started operations, the average annual total
return (if surrendered) figures may be referred to as "standardized"
performance. For periods before the dates when the Investment Divisions started
operations, the figures are considered "non-standardized". The average annual
total return (no surrender) figures are all considered "non-standardized".
Performance data for the Investment Divisions may be compared, in
advertisements, sales literature and reports to shareholders, to: (i) the
investment returns on various mutual funds, stocks, bonds, certificates of
deposit, tax free bonds, or common stock and bond indexes; and (ii) other groups
of variable annuity separate accounts or other investment products tracked by
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds and other investment companies by overall performance, investment
3
<PAGE> 40
objectives, and assets, or tracked by other services, companies, publications,
or persons who rank such investment companies on overall performance or other
criteria.
Reports and promotional literature may also contain the ratings New York
Life and NYLIAC have received from independent rating agencies. New York Life
and NYLIAC are among only a few companies that have consistently received among
the highest possible ratings from the four major independent rating companies:
A.M. Best and Moody's (for financial stability and strength) and Standard and
Poor's and Duff & Phelps (for claims paying ability). However, neither New York
Life nor NYLIAC guarantees the investment performance of the Investment
Divisions.
ANNUITY PAYMENTS
We will make equal annuity payments each month under the Life Income
Payment Option during the lifetime of the Annuitant. Once payments begin, they
do not change and are guaranteed for 10 years even if the Annuitant dies sooner.
If the Annuitant dies before all guaranteed payments have been made, the rest
will be made to the Beneficiary. We may require that the payee submit proof of
the Annuitant's survivorship as a condition for future payments beyond the
10-year guaranteed payment period.
On the Annuity Commencement Date, we will determine the Accumulation Value
of your policy and use that value to calculate the amount of each annuity
payment. We determine each annuity payment by applying the Accumulation Value,
less any premium taxes, to the annuity factors specified in the annuity table
set forth in the policy. Those factors are based on a set amount per $1,000 of
proceeds applied. The appropriate rate must be determined by the sex (except
where, as in the case of certain Qualified Policies and other employer-sponsored
retirement plans, such classification is not permitted), date of application and
age of the Annuitant. The dollars applied are then divided by 1,000 and the
result multiplied by the appropriate annuity factor from the table to compute
the amount of the each monthly annuity payment.
GENERAL MATTERS
NON-PARTICIPATING. The policies are non-participating. Dividends are not
paid.
MISSTATEMENT OF AGE OR SEX. If the Annuitant's stated age and/or sex in
the policy are incorrect, NYLIAC will change the benefits payable to those which
the premium payments would have purchased for the correct age and sex. Sex is
not a factor when annuity benefits are based on unisex annuity payment rate
tables. (See "Income Payments--Election of Income Payment Options" at page 21 of
the Prospectus.) If we made payments based on incorrect age or sex, we will
increase or reduce a later payment or payments to adjust for the error. Any
adjustment will include interest, at 3.5% per year, from the date of the wrong
payment to the date the adjustment is made, unless required otherwise by state
law.
ASSIGNMENTS. If permitted by the plan or by law for the plan indicated in
the application for the policy, you may assign a Non-Qualified Policy or any
interest in it prior to the Annuity Commencement Date and during the Annuitant's
lifetime. NYLIAC will not be deemed to know of an assignment unless it receives
a copy of a duly executed instrument evidencing such assignment. Further, NYLIAC
assumes no responsibility for the validity of any assignment. (See "Federal Tax
Matters--Taxation of Annuities in General" at pages 24 of the Prospectus.)
MODIFICATION. NYLIAC may not modify the policy without your consent except
to make the policy meet the requirements of the Investment Company Act of 1940,
or to make the policy comply with any changes in the Internal Revenue Code or as
required by the Code in order to continue treatment of the policy as an annuity,
or by any other applicable law.
INCONTESTABILITY. We rely on statements made in the application or a
Policy Request. They are representations, not warranties. We will not contest
the policy after it has been in force during the lifetime of the Annuitant for
two years from the Policy Date.
4
<PAGE> 41
FEDERAL TAX MATTERS
TAXATION OF NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
NYLIAC is taxed as a life insurance company. Because the Separate Account
is not an entity separate from NYLIAC, and its operations form a part of NYLIAC,
it will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized net capital gains on
the assets of the Separate Account are reinvested and are taken into account in
determining the Accumulation Value. As a result, such investment income and
realized net capital gains are automatically retained as part of the reserves
under the policy. Under existing federal income tax law, NYLIAC believes that
Separate Account investment income and realized net capital gains should not be
taxed to the extent that such income and gains are retained as part of the
reserves under the policy.
TAX STATUS OF THE POLICIES
Section 817(h) of the Code requires that the investments of the Separate
Account must be "adequately diversified" in accordance with Treasury regulations
in order for the policies to qualify as annuity contracts under Section 72 of
the Code. The Separate Account intends to comply with the diversification
requirements prescribed by the Treasury under Treasury Regulation Section
1.817-5.
To comply with regulations under Section 817(h) of the Code, the Separate
Account is required to diversify its investments, so that on the last day of
each quarter of a calendar year, no more than 55% of the value of its assets is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. For this purpose,
securities of a single issuer are treated as one investment and each U.S.
Government agency or instrumentality is treated as a separate issuer. Any
security issued, guaranteed, or insured (to the extent so guaranteed or insured)
by the U.S. Government or an agency or instrumentality of the U.S. Government is
treated as a security issued by the U.S. Government or its agency or
instrumentality, whichever is applicable.
Although the Treasury Department has issued regulations on the
diversification requirements, such regulations do not provide guidance
concerning the extent to which policy owners may direct their investments to
particular subaccounts of a separate account, or the permitted number of such
subaccounts. It is unclear whether additional guidance in this regard will be
issued in the future. It is possible that if such guidance is issued, the policy
may need to be modified to comply with such additional guidance. For these
reasons, NYLIAC reserves the right to modify the policy as necessary to attempt
to prevent the policy owner from being considered the owner of the assets of the
Separate Account or otherwise to qualify the policy for favorable tax treatment.
The Code also requires that non-qualified annuity contracts contain
specific provisions for distribution of the policy proceeds upon the death of
any policy owner. In order to be treated as an annuity contract for federal
income tax purposes, the Code requires that such policies provide that (a) if
any policy owner dies on or after the Annuity Commencement Date and before the
entire interest in the policy has been distributed, the remaining portion must
be distributed at least as rapidly as under the method in effect on the policy
owner's death; and (b) if any policy owner dies before the Annuity Commencement
Date, the entire interest in the policy must generally be distributed within 5
years after the policy owner's date of death. These requirements will be
considered satisfied if the entire interest of the policy is used to purchase an
immediate annuity under which payments will begin within one year of the policy
owner's death and will be made for the life of the Beneficiary or for a period
not extending beyond the life expectancy of the Beneficiary. If the Beneficiary
is the policy owner's surviving spouse, the Policy may be continued with the
surviving spouse as the new policy owner. If the policy owner is not a natural
person, these "death of Owner" rules apply when the primary Annuitant is
changed. Non-Qualified Policies contain provisions intended to comply with these
requirements of the Code. No regulations interpreting these requirements of the
Code have yet been issued and thus no assurance can be given that the provisions
contained in these policies satisfy all such Code requirements. The provisions
contained in these policies will be reviewed and modified if necessary to assure
that they comply with the Code requirements when clarified by regulation or
otherwise.
Withholding of federal income taxes on the taxable portion of all
distributions may be required unless the recipient elects not to have any such
amounts withheld and properly notifies NYLIAC of that election. Different rules
may apply to United States citizens or expatriates living abroad. In addition,
some states have enacted legislation requiring withholding.
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Even if a recipient elects no withholding, special rules may require NYLIAC
to disregard the recipient's election if the recipient fails to supply NYLIAC
with a "TIN" or taxpayer identification number (social security number for
individuals) or if the Internal Revenue Service notifies NYLIAC that the TIN
provided by the recipient is incorrect.
DISTRIBUTOR OF THE POLICIES
NYLIFE Distributors Inc. ("NYLIFE Distributors"), the distributor of the
policies, is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. NYLIFE Distributors is an indirect wholly-owned subsidiary of New York
Life. The maximum commission paid to broker-dealers who have entered into dealer
agreements with NYLIFE Distributors is not expected to exceed 7%. A portion of
this amount is paid as commissions to registered representatives.
As these policies were offered for the first time commencing in early 2000,
no commissions were paid prior to this year.
The policies are sold and premium payments are accepted on a continuous
basis.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
NYLIAC holds title to the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from NYLIAC's general
corporate assets. Records are maintained of all purchases and redemptions of
Eligible Portfolio shares held by each of the Investment Divisions.
STATE REGULATION
NYLIAC is a stock life insurance company organized under the laws of
Delaware, and is subject to regulation by the Delaware State Insurance
Department. We file an annual statement with the Delaware Commissioner of
Insurance on or before March 1 of each year covering the operations and
reporting on the financial condition of NYLIAC as of December 31 of the
preceding calendar year. Periodically, the Delaware Commissioner of Insurance
examines the financial condition of NYLIAC, including the liabilities and
reserves of the Separate Account.
In addition, NYLIAC is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain policy
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law or regulation, the policies will be
modified accordingly.
RECORDS AND REPORTS
NYLIAC maintains all records and accounts relating to the Separate Account.
As presently required by the federal securities laws, NYLIAC will mail to you at
your last known address of record, at least semi-annually after the first Policy
Year, reports containing information required under the federal securities laws
or by any other applicable law or regulation.
LEGAL PROCEEDINGS
NYLIAC is a defendant in individual and/or alleged class action suits
arising from its agency sales force, insurance (including variable contracts
registered under the federal securities law), investment, retail securities
and/or other operations, including actions involving retail sales practices.
Most of these actions seek substantial or unspecified compensatory and punitive
damages. NYLIAC is also from time to time involved in various governmental,
administrative, and investigative proceedings and inquiries.
Notwithstanding the uncertain nature of litigation and regulatory
inquiries, the outcome of which cannot be predicted, NYLIAC nevertheless
believes that, after provisions made in the financial statements, the ultimate
liability that could result from litigation and proceedings would not have a
material adverse effect on NYLIAC's financial position; however, it is possible
that settlements or adverse determinations in one or more actions or other
proceedings in the future could have a material adverse effect on NYLIAC's
operating results for a given year.
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EXPERTS
The financial statements of NYLIAC as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 included in this
Statement of Additional Information have been so included in reliance on the
report (which includes an explanatory paragraph relating to a change in its
method of accounting for the cost of computer software developed or obtained for
internal use as described in Note 2 to the financial statements) of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
OTHER INFORMATION
NYLIAC filed a registration statement with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
policies discussed in the Prospectus and this Statement of Additional
Information. We have not included all of the information set forth in the
registration statement, amendments and exhibits to the registration statement in
the Prospectus and this Statement of Additional Information. We intend the
statements contained in the Prospectus and this Statement of Additional
Information concerning the content of the policies and other legal instruments
to be summaries. For a complete statement of the terms of these documents, you
should refer to the instruments filed with the Securities and Exchange
Commission. The omitted information may be obtained at the principal offices of
the Securities and Exchange Commission in Washington, D.C., upon payment of
prescribed fees, or through the Commission's website at www.sec.gov.
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