As filed with the SEC on January __, 1999 Registration No. 333-06701
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
Form N-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933 ___
PRE-EFFECTIVE AMENDMENT NO. 1 ___
POST-EFFECTIVE AMENDMENT NO. 4 _X_
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 ___
POST-EFFECTIVE AMENDMENT NO. 4 _X_
(Check appropriate box or boxes)
-------------------
PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 Washington Street
Newark, New Jersey 07102-2992
(888) PRU-2888
(Address and telephone number of depositor's principal executive offices)
-------------------
THOMAS C. CASTANO
Assistant Secretary
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
(Name and address of agent for service)
Copies to:
Christopher E. Palmer Lee D. Augsburger
Shea & Gardner Assistant General Counsel
1800 Massachusetts Avenue, N.W. The Prudential Insurance
Washington, D.C. 20036 Company of America
(202) 828-2093 751 Broad Street
Newark, New Jersey 07102
(973) 367-1388
-------------------------
It is proposed that this filing will become effective (Check appropriate space):
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on February 16, 1999 pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[_] on ___________ pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Interests in Individual Variable
Annuity Contracts
<PAGE>
<TABLE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495(A) UNDER THE 1933 ACT)
<CAPTION>
N-4 Item Number and Caption Location
- --------------------------- --------
PART A
<S> <C> <C>
1. Cover Page.............................................Cover Page
2. Definitions ...........................................Index of Special Terms
3. Synopsis or Highlights.................................Summary
4. Condensed Financial Information........................Accumulation Unit Values Chart
5. General Description of Registrant,
Depositor, and Portfolio.............................Cover Page; (Pruco Life Insurance Company,
The Separate Account); What Investment Options
Can I Choose?; Other Information
6. Deductions and Expenses................................Summary; Summary of Contract
Expenses; What are the Expenses
Associated with the Discovery Select
Contract?; Other Information (Sale of
the Contract; Distributor)
7. General Description of Variable Annuity Contract.......Cover Page; Summary; Index of
Special Terms; What is the Discovery
Select Variable Annuity?; What
Investment Options Can I Choose?; Other
Information
8. Annuity Period.........................................Summary; Payment Provisions
9. Death Benefit..........................................Summary; What is the Death Benefit?
Purchases and Contract Value Summary;
How Can I Purchase a Discovery Select Variable
Annuity Contract?; Sale of the Contract;
Distributor
10. Purchases and Contract Value ..........................Summary; What is the Discovery Select
Variable Annuity?; Calculating
Contract Value
11. Redemptions............................................Summary; If I Need To, How Can I Get
My Money?; Short Term Cancellation
Right or "Free Look"
12. Taxes..................................................Summary; What are the Tax
Considerations Associated with the
Discovery Select Contract?
13. Legal Proceedings......................................Not Applicable
14. Table of Contents of the Statement of
Additional Information...............................Other Information
PART B
15. Cover Page.............................................Cover Page
16. Table of Contents......................................Table of Contents
17. General Information and History........................Cover Page; Company
18. Services...............................................Performance Information
19. Purchase of Securities Being Offered...................Part A: Summary; How Can I Purchase
A Discovery Select Contract?
20. Underwriters...........................................Part A: Other Information; Part B:
Distribution of Discovery Select
21. Calculation of Performance Data........................Appendix A: Performance Information
22. Annuity Payments.......................................Part A: What Kind of Payments Will I
Receive During the Income Phase?
PART C
23. Financial Statements...................................Part B: Appendix B-Discovery Select
Financial Information; Appendix D
Pruco Life Financial Information
Information required to be included in Part C is set forth under the appropriate
Item, so numbered in Part C to this Registration Statement.
</TABLE>
<PAGE>
PART A
Incorporated by reference to Post-effective Amendment No. 3; filed on December
18, 1998.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[MAY 1], 1999
PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The DISCOVERY SELECT(SM) Annuity Contract* (the "contract") is an individual
variable annuity contract issued by the Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company that is a wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential") and is funded through the
Pruco Life Flexible Premium Variable Annuity Account (the "Account"). The
contract is purchased by making an initial purchase payment of $10,000 or more;
subsequent payments must be $1,000 or more.
This statement of additional information is not a prospectus and should be read
in conjunction with the Discovery Select prospectus, dated [May 1], 1999. To
obtain a copy of the prospectus, without charge, you can write to the Prudential
Annuity Service Center, P.O. Box 14205, New Brunswick, New Jersey 08906-4205, or
by telephoning (888) PRU-2888.
TABLE OF CONTENTS
PAGE
----
COMPANY................................................ B-2
EXPERTS................................................ B-2
LEGAL OPINIONS......................................... B-2
PRINCIPAL UNDERWRITER.................................. B-2
DETERMINATION OF SUBACCOUNT UNIT VALUES................ B-2
PERFORMANCE INFORMATION................................ B-3
COMPARATIVE PERFORMANCE INFORMATION.................... B-7
FEDERAL TAX STATUS..................................... B-7
FINANCIAL INFORMATION.................................. B-11
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 WASHINGTON STREET P.O. BOX 14205
NEWARK, NEW JERSEY 07102-2992 NEW BRUNSWICK, NEW JERSEY 08906-4205
TELEPHONE: (888) PRU-2888
* DISCOVERY SELECT is a service mark of Prudential.
Catalog No. [40MZ259J]
B-1
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COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company
organized in 1971 under the laws of the State of Arizona. Pruco Life is licensed
to sell life insurance and annuities in the District of Columbia, Guam and all
states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"), a mutual life insurance company founded in 1875 under
the laws of the State of New Jersey.
Prudential is considering converting from a mutual insurance company to a stock
insurance company. This process is called demutualization. Legislation allowing
Prudential to demutualize has been enacted by the state of New Jersey, However,
no plan of demutualization has been adopted by the Board of Directors or
approved by policyholders. Approval by state insurance regulators must also be
granted. Once the plan of demutualization has been adopted, the process could
take two or more years to complete. There will be a continuing evaluation by the
Board of Directors and senior management of the company to monitor the potential
impact of this process on contractowners.
EXPERTS
The consolidated financial statements of Pruco Life for the years ended December
31, 199_ and December 31, 199_ have been audited by PricewaterhouseCoopers LLP,
independent accountants ("PwC"). The report certifying this audit is included in
this prospectus. Pruco Life has relied upon this report based on PwC's authority
as experts in accounting and auditing. PwC's principal business address is 1777
Avenue of the Americas, New York, New York, 10036.
LEGAL OPINIONS
Shea & Gardner of Washington, D.C., has provided advice on certain matters
relating to the federal securities laws in connection with the contracts.
PRINCIPAL UNDERWRITER
Prudential Investment Management Services LLC ("PIMS"), 751 Broad Street,
Newark, New Jersey 07102-377, acts as a distributior for the contract. PIMS is a
wholly-owned subsidiary of Prudential which was organized in 1996 as a limited
liability corporation under Delaware law. PIMS is registered as a broker-dealer
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc.
The contract is currently sold by registered representatives of broker-dealers
authorized by the principal underwriter and which are affiliated with
Prudential. PIMS may enter into selling agreements with broker-dealers otherwise
unaffiliated with Prudential. Registered representatives of such other
unaffiliated broker-dealers may be paid on a different basis than registered
representatives of the principal underwriter or broker-dealers affiliated with
Prudential. The maximum commission that will be paid to the broker-dealer to
cover both the individual representative's commission and other distribution
expenses will not exceed 6% of the purchase payment. In addition, trail
commissions based on the amount of the contract value may be paid.
DETERMINATION OF SUBACCOUNT UNIT VALUES
The value for each Subaccount Unit is computed as of the end of each "valuation
period" as defined in the prospectus (also referred to in this section as
"business day"). On any given business day the value of a Unit in each
subaccount will be determined by multiplying the value of a Unit of that
subaccount for the preceding business day by the net investment factor for that
subaccount for the current business day. The net investment factor for any
business day is determined by dividing the value of the assets of the subaccount
for that day by the value of the assets of the subaccount for the preceding
business day (ignoring, for this purpose, changes resulting from new purchase
payments and withdrawals), and subtracting from the result the daily equivalent
of the 1.4% annual charge for administrative expenses and mortality and expense
risks. (See WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY SELECT CONTRACT
and CALCULATING CONTRACT VALUE in the prospectus.) The value of the assets of a
subaccount is determined by multiplying the number of shares of The Prudential
Series
B-2
<PAGE>
Fund, Inc. (the "Series Fund") or other Fund held by that subaccount by the net
asset value of each share and adding the value of dividends declared by the
Series Fund or other Fund but not yet paid.
PERFORMANCE INFORMATION
The tables that follow provide performance information for each subaccount
through December 31, 1998. The performance information is based on historical
experience and does not indicate or represent future performance.
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<PAGE>
AVERAGE ANNUAL TOTAL RETURN
The DISCOVERY SELECT Annuity is a relatively new contract. The returns shown
below were calculated using historical investment returns of the Funds. All
fees, expenses and charges associated with the DISCOVERY SELECT Annuity and the
Funds have been reflected in these returns, as if the Contract had existed from
the inception date of each Funds' portfolios.
Table 1 below shows the average annual rates of total return on hypothetical
investments of $1,000 for periods ended December 31, 1997 in each subaccount
other than the Money Market Subaccount. These figures assume withdrawal of the
investments at the end of the period other than to effect an annuity under the
Contract. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
The average annual rates of total return shown above are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
the following formula: P(1+T)(n)=ERV. In the formula, P is a hypothetical
investment of $1,000; T is the average annual total return; "n" is the number of
years; and ERV is the withdrawal value at the end of the periods shown. These
figures assume deduction of the maximum withdrawal charge that may be applicable
to a particular period.
B-4
<PAGE>
NON-STANDARD TOTAL RETURN
Table 2 below shows the average annual rates of return as in Table 1, but
assumes that the investments are not withdrawn at the end of the period or that
the Contract owner annuitizes at the end of the period. This table assumes no
deferred sales charges.
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
B-5
<PAGE>
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
B-6
<PAGE>
MONEY MARKET SUBACCOUNT YIELD
The "yield" and "effective yield" figures for the Money Market Subaccount shown
below were calculated using historical investment returns of the Money Market
Portfolio of the Prudential Series Fund. All fees, expenses and charges
associated with the DISCOVERY SELECT Annuity and the Series Fund have been
reflected.
The "yield" and "effective yield" of the Money Market Subaccount for the seven
days ended December 31, 1998 were [ ]% and [ ]%, respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the difference by the value of the subaccount at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7), with the resulting figure carried
to the nearest ten-thousandth of 1%.
The deduction referred to above consists of the 1.25% charge for mortality and
expense risks and the 0.15% charge for administration. It does not reflect the
withdrawal charge.
The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula: Effective Yield--([base period
return + 1] 365/7)-1.
The yields on amounts held in the Money Market Subaccount will fluctuate on a
daily basis. Therefore, the stated yields for any given period are not an
indication of future yields.
COMPARATIVE PERFORMANCE INFORMATION
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and
Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow
Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in
publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune,
Money Magazine, and Financial World.
FEDERAL TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON PRUCO LIFE'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. PRUCO LIFE
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE POSSIBILITY
OF SUCH CHANGES. PRUCO LIFE DOES NOT GUARANTEE THE TAX STATUS OF THE CONTRACTS.
PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE TREATED AS
"ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER
UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER NO
ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An owner is not
taxed on increases in the value of a contract until distribution occurs, either
in the form of a lump sum payment or as annuity payments under the Annuity
Option selected. For a lump sum payment received as a total withdrawal (total
surrender), the recipient is taxed on the portion of the payment that exceeds
the cost basis of the Contract. For Non-Qualified Contracts, this cost basis is
generally the purchase payments, while for Qualified Contracts there may be no
cost basis. The taxable portion of the lump sum payment is taxed at ordinary
income tax rates.
B-7
<PAGE>
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the contract (adjusted for any period or refund feature) bears
to the expected return under the contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the contract has been recovered (i.e. when the total of the
excludable amount equals the investment in the contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
Qualified Plans there may be no cost basis in the contract within the meaning of
Section 72 of the Code. Owners, Annuitants and Beneficiaries under the contracts
should seek competent financial advice about the tax consequences of any
distributions.
Pruco Life is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from Pruco
Life, and its operations form a part of Pruco Life.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in the imposition of federal income
tax to the owner with respect to earnings allocable to the contract prior to the
receipt of payments under the contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
Pruco Life intends that all investment portfolios underlying the contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which owner control of the
investments of the Separate Account will cause the owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of owner control which may be exercised under the contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as owner's ability to transfer among investment
choices or the number and type of investment choices available, would cause the
owner to be considered as the owner of the assets of the Separate Account
resulting in the imposition of federal income tax to the owner with respect to
earnings allocable to the contract prior to receipt of payments under the
contract.
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<PAGE>
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, Pruco Life reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contractowner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
contracts will be taxed currently to the owner if the owner is a non-natural
person, e.g., a corporation or certain other entities. Such contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a contract held by a trust or other entity as an
agent for a natural person nor to contracts held by Qualified Plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing
contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, which are not directly rolled
over to another eligible retirement plan or individual retirement account or
individual retirement annuity, are subject to a mandatory 20% withholding for
federal income tax. The 20% withholding requirement plan or individual
retirement account or individual retirement generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c) the
portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions). Participants should consult their own tax counsel or
other tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS--NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made
B-9
<PAGE>
not less frequently than annually for the life (or life expectancy) of the
taxpayer or for the joint lives (or joint life expectancies) of the taxpayer and
his or her beneficiary; (e) under an immediate annuity; or (f) which are
allocable to purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified Contracts.
(See "Tax Treatment of Withdrawals--Qualified Contracts" below.)
QUALIFIED PLANS
The contracts offered herein are designed to be suitable for use under various
types of Qualified Plans. Taxation of participants in each Qualified Plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
annuitants and beneficiaries are cautioned that benefits under a Qualified Plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into Pruco Life's administrative procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the contracts comply with
applicable law. Following are general descriptions of the types of Qualified
Plans with which the contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
Qualified Plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting contract provisions that may otherwise be available as described
herein. Generally, contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals--Qualified Contracts" below.)
o Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
(IRA). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals--Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
o Roth IRAs
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to a maximum
of $2,000 per year. Lower maximum limitations apply to individuals with adjusted
gross incomes between $95,000 and $110,000 in the case of single taxpayers,
between $150,000 and $160,000 in the case of married taxpayers filing joint
returns, and between $0 and $10,000 in the case of married taxpayers filing
separately. An overall $2,000 annual limitation continues to apply to all of a
taxpayer's IRA contributions, including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least five years and in addition, that the distribution is made either after
the individual reaches age 59 1/2, on the individual's death or disability, or
as a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
an individual has adjusted gross income over $100,000 or the individual is a
married taxpayer filing a separate return. The individual must pay tax on any
portion of the IRA
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<PAGE>
being rolled over that represents income or a previously deductible IRA
contribution. However, for rollovers in 1998, the individual may pay that tax
ratably over the four taxable year period beginning with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS--QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit-Sharing Plans), 403(b)(Tax-Sheltered Annuities) and 408 and 408A
(Individual Retirement Annuities). To the extent amounts are not includible in
gross income because they have been rolled over to an IRA or to another eligible
Qualified Plan, no tax penalty will be imposed. The tax penalty will not apply
to the following distributions: (a) if distribution is made on or after the date
on which the owner or annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the owner or annuitant (as
applicable) (for this purpose disability is as defined in Section 72(m)(7) of
the Code); (c) after separation from service, distributions that are part of
substantially equal periodic payments made not less frequently than annually for
the life (or life expectancy) of the owner or annuitant (as applicable) or the
joint lives (or joint life expectancies) of such owner or annuitant (as
applicable) and his or her designated beneficiary; (d) distributions to an owner
or annuitant (as applicable) who has separated from service after he has
attained age 55; (e) distributions made to the owner or annuitant (as
applicable) for amounts paid during the taxable year for medical care; (f)
distributions made to an alternate payee pursuant to a qualified domestic
relations order; (g) distributions from an Individual Retirement Annuity for the
purchase of medical insurance (as described in Section 213(d)(1)(D) of the Code)
for the owner or annuitant (as applicable) has received unemployment
compensation for at least 12 weeks (this exception will no longer apply after
the owner or annuitant (as applicable) has been re-employed for at least 60
days); (h) distributions from an Individual Retirement Annuity made to the owner
or annuitant (as applicable) to the extent such distributions do not exceed the
qualified higher education expenses (as defined in Section 72(t)(7) of the Code)
of the owner or annuitant (as applicable) for the taxable year; and (i)
distributions from an Individual Retirement Annuity made to the owner or
annuitant (as applicable) which are qualified first-time home buyer
distributions (as defined in Section 72(t)(8)of the Code.) The exceptions stated
in (d) and (f) above do not apply in the case of an Individual Retirement
Annuity. The exception stated in (c) above applies to an Individual Retirement
Annuity without the requirement that there be a separation from service.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions must be over a period not exceeding the life
expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
FINANCIAL STATEMENTS
The consolidated financial statements of Pruco Life included herein should be
considered only as bearing upon the ability of Pruco Life to meet its
obligations under the contracts.
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<PAGE>
PART C
Incorporated by reference to Post-effective Amendment No. 3, filed on December
18, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that this amendment is filed solely for one or more of the purposes
specified in Rule 485(b) under the Securities Act of 1933 and that no
material event requiring disclosure in the prospectus, other than one listed in
Rule 485(b), has occurred since the effective date of the most recent
Post-Effective Amendment to the Registration Statement which included a
prospectus.
The Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal hereunto affixed and
attested, all in the City of Newark and the State of New Jersey, on this 5th
day of January, 1999.
THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE
ANNUITY ACCOUNT
(Registrant)
By: PRUCO LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ Clifford E. Kirsch By: /s/ Esther H. Milnes
------------------------ ------------------------
Clifford E. Kirsch Esther H. Milnes
Chief Legal Officer President
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
Signature Title Date
- ---------------------- ---------------------- ------------------
*Esther Milnes President and Director January 5, 1999
- ----------------------
Esther Milnes
*James J. Avery Jr Chairman of the Board and
- ---------------------- Director
James J. Avery Jr
*James M. Schlomann Vice President and Comptroller
- ----------------------
James M. Schlomann
*William M. Bethke Director
- ----------------------
William M. Bethke
*Ira J. Kleinman Director
- ----------------------
Ira J. Kleinman
*Mendel A. Melzer Director
- ----------------------
Mendel A. Melzer
*I. Edward Price Director
- ----------------------
I. Edward Price
*Kiyofumi Sakaguchi Director
- ----------------------
Kiyofumi Sakaguchi
*By: /s/ CLIFFORD E. KIRSCH
-----------------------------
CLIFFORD E. KIRSCH
(Attorney-in-Fact)
C-8
