-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IQdVG9m0zleuN5SOgdTtX27mRgAKwPryh+kYriS5cjqZMJ+zQT8sJLGhflKX0okT UENblX/rB9I0be4PhFOBqQ== 0000771726-99-000049.txt : 19990503 0000771726-99-000049.hdr.sgml : 19990503 ACCESSION NUMBER: 0000771726-99-000049 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES /NY/ CENTRAL INDEX KEY: 0000727920 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 135570651 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: SEC FILE NUMBER: 333-24009 FILM NUMBER: 99606937 BUSINESS ADDRESS: STREET 1: 1290 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10104 BUSINESS PHONE: 2125541234 MAIL ADDRESS: STREET 1: 787 SEVENTH AVE CITY: NEW YORK STATE: NY ZIP: 10019 POS AM 1 POST EFFECTIVE AMENDMENT Registration No. 333-24009 - -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - -------------------------------------------------------------------------- POST-EFFECTIVE AMENDMENT NO. 8 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Exact name of registrant as specified in its charter) NEW YORK (State or other jurisdiction of incorporation or organization) 13-5570651 (I.R.S. Employer Identification No.) 1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104 (212) 554-1234 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) MARY JOAN HOENE, VICE PRESIDENT AND COUNSEL THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES 1290 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10104 (212) 554-1234 (Name, address, including zip code, and telephone number, including area code, of agent for service) Please send copies of all communications to: PETER E. PANARITES FREEDMAN, LEVY, KROLL & SIMONDS 1050 CONNECTICUT AVENUE, N.W., SUITE 825 WASHINGTON, D.C. 20036 (202) 457-5100 - ------------------------------------------------------------------------------- Equitable Accumulator(SM) A combination variable and fixed deferred annuity contract PROSPECTUS DATED MAY 1, 1999 Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing, or taking any other action under your contract. Also, at the end of this prospectus you will find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain important information about their Portfolios. - -------------------------------------------------------------------------------- WHAT IS THE EQUITABLE ACCUMULATOR? Equitable Accumulator is a deferred annuity contract issued by The Equitable Life Assurance Society of the United States. It provides for the accumulation of retirement savings and for income. The contract offers income and death benefit protection. It also offers a number of payout options. You invest to accumulate value on a tax-deferred basis in one or more of our variable investment options, fixed maturity options or the account for special dollar cost averaging ("investment options"). - -------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS - -------------------------------------------------------------------------------- o Alliance Money Market o Lazard Large Cap Value o Alliance High Yield o Lazard Small Cap Value o Alliance Common Stock o MFS Growth with Income o Alliance Aggressive Stock o MFS Research o Alliance Small Cap Growth o MFS Emerging Growth Companies o EQ/Alliance Premier Growth o Morgan Stanley Emerging Markets Equity o BT Equity 500 Index o EQ/Putnam Growth & Income Value o BT Small Company Index o EQ/Putnam Investors Growth o BT International Equity Index o EQ/Putnam International Equity o Capital Guardian U.S. Equity o Capital Guardian Research o Capital Guardian International o JPM Core Bond - -------------------------------------------------------------------------------- You may allocate amounts to any of the variable investment options. They, in turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson River Trust or EQ Advisors Trust. Your investment results in a variable investment option will depend on the investment performance of the related Portfolio. Each variable investment option is a subaccount of our Separate Account No. 49. FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity options. These amounts will receive a fixed rate of interest for a specified period. Interest is earned at a guaranteed rate we set. We make a market value adjustment (up or down) if you make transfers or withdrawals from a fixed maturity option before its maturity date. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed interest at guaranteed rates. It may be used for dollar cost averaging during your contract's first year only. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An individual retirement annuity ("IRA"), either traditional IRA or Roth IRA. We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible Premium IRA." We also offer two versions of the Roth IRA: "Roth Conversion IRA" and "Roth Flexible Premium IRA." o An annuity which is an investment vehicle for a qualified defined contribution or defined benefit plan ("QP"). o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") - ("Rollover TSA"). A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA, Roth Conversion IRA, QP, or Rollover TSA contract. For Flexible Premium IRA or Roth Flexible Premium IRA contracts, we require a contribution of $2,000 to purchase a contract. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The statement of additional information ("SAI") dated May 1, 1999, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our Processing Office or calling 1-800-789-7771. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL. PROS 1A (5/99) - -------------------------------------------------------------------------------- 2 Contents of this prospectus - -------------------------------------------------------------------------------- Contents of this prospectus - -------------------------------------------------------------------------------- EQUITABLE ACCUMULATOR(SM) - -------------------------------------------------------------------------------- Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 Equitable Accumulator at a glance -- key features 8 - -------------------------------------------------------------------------------- FEE TABLE 11 - -------------------------------------------------------------------------------- Examples 14 Condensed financial information 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1 CONTRACT FEATURES AND BENEFITS 16 - -------------------------------------------------------------------------------- How you can purchase and contribute to your contract 16 Owner and annuitant requirements 20 How you can make your contributions 20 What are your investment options under the contract? 20 Portfolios of The Hudson River Trust 21 Portfolios of EQ Advisors Trust 21 Allocating your contributions 24 Our baseBUILDER option 25 Guaranteed minimum death benefit 28 Your right to cancel within a certain number of days 29 - -------------------------------------------------------------------------------- 2 DETERMINING YOUR CONTRACT'S VALUE 30 - -------------------------------------------------------------------------------- Your account value 30 Your contract's value in the variable investment options 30 Your contract's value in the fixed maturity options 30 Your contract's value in the account for special dollar cost averaging 30 - -------------------------------------------------------------------------------- "We," "our" and "us" refer to Equitable Life. When we address the reader of this prospectus with words such as "you" and "your," we mean the person who has the right or responsibility that the prospectus is discussing at that point. This is usually the contract owner. When we use the word "contract" it also includes certificates that are issued under group contracts in some states. - -------------------------------------------------------------------------------- Contents of this prospectus 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 31 - -------------------------------------------------------------------------------- Transferring your account value 31 Rebalancing your account value 31 - -------------------------------------------------------------------------------- 4 ACCESSING YOUR MONEY 32 - -------------------------------------------------------------------------------- Withdrawing your account value 32 How withdrawals are taken from your account value 33 How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit 33 Loans under Rollover TSA contracts 34 Surrendering your contract to receive its cash value 35 When to expect payments 35 Choosing your annuity payout options 36 - -------------------------------------------------------------------------------- 5 CHARGES AND EXPENSES 39 - -------------------------------------------------------------------------------- Charges that Equitable Life deducts 39 Charges that the trusts deduct 41 Group or sponsored arrangements 41 Other distribution arrangements 42 - -------------------------------------------------------------------------------- 6 PAYMENT OF DEATH BENEFIT 43 - -------------------------------------------------------------------------------- Your beneficiary and payment of benefit 43 How death benefit payment is made 43 Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts 44 - -------------------------------------------------------------------------------- 7 TAX INFORMATION 45 - -------------------------------------------------------------------------------- Overview 45 Transfers among investment options 45 Taxation of nonqualified annuities 45 Special rules for NQ contracts issued in Puerto Rico 46 Individual retirement arrangements ("IRAs") 46 Special rules for nonqualified contracts in qualified plans 57 Tax Sheltered Annuity contracts (TSAs) 57 Federal and state income tax withholding and information reporting 62 Impact of taxes to Equitable Life 63 - -------------------------------------------------------------------------------- 8 MORE INFORMATION 64 - -------------------------------------------------------------------------------- About our Separate Account No. 49 64 About The Hudson River Trust and EQ Advisors Trust 64 About our fixed maturity options 64 About the general account 66 About other methods of payment 66 Dates and prices at which contract events occur 67 About your voting rights 68 About our year 2000 progress 68 About legal proceedings 69 About our independent accountants 69 Transfers of ownership, collateral assignments, loans, and borrowing 69 Distribution of the contracts 69 - -------------------------------------------------------------------------------- 9 INVESTMENT PERFORMANCE 71 - -------------------------------------------------------------------------------- Benchmarks 71 Communicating performance data 80 - -------------------------------------------------------------------------------- 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 82 - -------------------------------------------------------------------------------- Appendices I -- Condensed financial information A-1 II -- Purchase considerations for QP contracts B-1 III -- Market value adjustment example C-1 IV -- Guaranteed minimum death benefit example D-1 - -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 Index of key words and phrases - -------------------------------------------------------------------------------- Index of key words and phrases - -------------------------------------------------------------------------------- This index should help you locate more information on the terms used in this prospectus. PAGE account for special dollar cost averaging 24 account value 30 annuitant 16 baseBUILDER 25 beneficiary 43 benefit base 26 business day 67 cash value 30 conduit IRA 51 contract date 9 contract date anniversary 9 contract year 9 contributions to Roth IRAs 54 regular contributions 54 rollover contributions 55 conversion contributions 55 direct custodian-to-custodian transfers 55 contributions to traditional IRAs 47 regular contributions 48 rollover contributions 50 direct custodian-to-custodian transfers 50 ERISA 34 fixed maturity amount 22 fixed maturity options 22 Flexible Premium IRA cover guaranteed minimum death benefit 28 guaranteed minimum income benefit 26 IRA 47 IRS 45 investment options 20 loan reserve account 35 market adjusted amount 23 market value adjustment 23 maturity value 23 NQ 45 participant 20 payout option 36 Portfolio cover Processing Office 6 QP 57 rate to maturity 22 required beginning date 52 Rollover IRA cover Rollover TSA cover Roth Conversion IRA cover Roth Flexible Premium IRA cover Roth IRA 54 SAI cover SEC cover TOPS 6 TSA 57 traditional IRA 47 unit 30 variable investment options 20 To make this prospectus easier to read, we sometimes use different words than in the contract or supplemental materials. This is illustrated below. Although we use different words, they have the same meaning in this prospectus as in the contract or supplemental materials. Your registered representative can provide further explanation about your contract. - -------------------------------------------------------------------------------- PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS - -------------------------------------------------------------------------------- fixed maturity options Guarantee Periods (Guaranteed Fixed Interest Accounts in supplemental materials) variable investment options Investment Funds account value Annuity Account Value rate to maturity Guaranteed Rates - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Who is Equitable Life? 5 - -------------------------------------------------------------------------------- Who is Equitable Life? - -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies Incorporated ("Equitable Companies"), whose majority shareholder is AXA, a French holding company for an international group of insurance and related financial services companies. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contract. During 1999, Equitable Companies plans to change its name to AXA Financial, Inc. Equitable Companies and its consolidated subsidiaries managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. - -------------------------------------------------------------------------------- 6 Who is Equitable Life? - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REACH US You may communicate with our Processing Office as listed below for any of the following purposes: - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 13014 Newark, NJ 07188-0014 - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator c/o First Chicago National Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator 200 Plaza Drive, 4th Floor Secaucus, NJ 07094 - -------------------------------------------------------------------------------- REPORTS WE PROVIDE: - -------------------------------------------------------------------------------- o written confirmation of financial transactions; o statement of your contract values at the close of each calendar quarter (four per year); o annual statement of your contract values as of the close of the contract year. - -------------------------------------------------------------------------------- TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM: - -------------------------------------------------------------------------------- TOPS is designed to provide you with up-to-date information via touch-tone telephone. You can obtain information on: o your current account value; o your current allocation percentages; o the number of units you have in the variable investment options; o rates to maturity for the fixed maturity options; and o the daily unit values for the variable investment options. You can also: o change your allocation percentages and/or transfer among the investment options; and o change your personal identification number (PIN). TOPS is normally available seven days a week, 24 hours a day, by calling toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service may sometimes be unavailable. We have established procedures to reasonably confirm that the instructions communicated by telephone are genuine. For example, we will require certain personal identification information before we will act on telephone instructions and we will provide written confirmation of your transfers. We will not be liable for following telephone instructions we reasonably believe to be genuine. - -------------------------------------------------------------------------------- BY INTERNET: - -------------------------------------------------------------------------------- You can also access information about your contract on the Internet. Please visit our website at http://www.equitable.com, and click on EQAccess. - -------------------------------------------------------------------------------- Who is Equitable Life? 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER SERVICE REPRESENTATIVE: - -------------------------------------------------------------------------------- You may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. You should send all contributions, notices, and requests to our Processing Office at the address above. WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE: (1) authorization for telephone transfers by your registered representative; (2) conversion of a traditional IRA to a Roth Conversion IRA or Roth Flexible Premium IRA contract; (3) cancellation of your Roth Conversion IRA contract or Roth Flexible Premium IRA and return to a Rollover IRA or Flexible Premium IRA contract; (4) election of the automatic investment program; (5) election of the rebalancing program; (6) to obtain a PIN required for TOPS; (7) requests for loans under Rollover TSA contracts; (8) spousal consent for loans under Rollover TSA contracts; (9) tax withholding election; and (10) beneficiary continuation option election. WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: (1) address changes; (2) beneficiary changes; (3) transfers between investment options; (4) withdrawal requests; (5) contract surrender; and (6) requests to exercise your guaranteed minimum income benefit. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION: (1) automatic investment program; (2) general dollar cost averaging; (3) rebalancing; (4) special dollar cost averaging; (5) substantially equal withdrawals; (6) systematic withdrawals; and (7) the date annuity payments are to begin. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. - -------------------------------------------------------------------------------- 8 Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- PROFESSIONAL INVESTMENT Equitable Accumulator's variable investment options invest in 22 different Portfolios MANAGEMENT managed by professional investment advisers. - ----------------------------------------------------------------------------------------------------------------------- FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years. OPTIONS o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. -- If you make withdrawals or transfers from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value that you have left in that fixed maturity option. - ----------------------------------------------------------------------------------------------------------------------- ACCOUNT FOR SPECIAL DOLLAR Available for dollar cost averaging of your initial contribution. COST AVERAGING - ----------------------------------------------------------------------------------------------------------------------- TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you contract make withdrawals from your contract or receive annuity payments. ------------------------------------------------------------------------------------------ o On transfers inside the No tax on transfers among investment options. contract ------------------------------------------------------------------------------------------ If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. - ----------------------------------------------------------------------------------------------------------------------- BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum death PROTECTION benefit. This optional feature provides income protection for you while the annuitant lives, as well as a death benefit for the beneficiary should the annuitant die. - ----------------------------------------------------------------------------------------------------------------------- CONTRIBUTION AMOUNTS o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts o Initial minimum: $5,000 o Additional minimum: $1,000 $100 monthly, and $300 quarterly under our automatic investment program (NQ contracts) ------------------------------------------------------------------------------------------ o Flexible Premium IRA and Roth Flexible Premium IRA contracts o Initial minimum: $2,000 o Additional minimum: $50 ($50 under our automatic investment program) ------------------------------------------------------------------------------------------ Maximum investment limitations may apply. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Equitable Accumulator at a glance -- key features 9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- ACCESS TO YOUR MONEY o Lump sum withdrawals o Several withdrawal options on a periodic basis o Loans under Rollover TSA contracts o Contract surrender You may incur a withdrawal charge for certain withdrawals. You may also incur income tax and a tax penalty. - ----------------------------------------------------------------------------------------------------------------------- PAYOUT ALTERNATIVES o Annuity payout options o Income Manager(R) payout annuity options - ----------------------------------------------------------------------------------------------------------------------- ADDITIONAL FEATURES o Dollar cost averaging o Automatic investment program o Account value rebalancing (quarterly, semiannually and annually) o Unlimited free transfers o Waiver of withdrawal charge for disability, terminal illness or confinement to a nursing home - ----------------------------------------------------------------------------------------------------------------------- FEES AND CHARGES o Daily charges on amounts invested in variable investment options for mortality and expense risks and administrative charges at an annual rate of 1.35%. o Annual 0.30% benefit base charge or the optional baseBUILDER benefit. The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." No additional charge if you want a guaranteed minimum death benefit only. o Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, if your account value at the end of the contract year is less than $25,000, we deduct an annual administrative charge equal to $30 or during the first two contract years 2% of your account value, if less. If your account value is $25,000 or more, we will not deduct the charge. o No sales charge deducted at the time you make contributions. o During the first seven contract years following a contribution, a charge will be deducted from amounts that you withdraw that exceed 15% of your account value. We use the account value on the most recent contract date anniversary to calculate the 15% amount available. The charge begins at 7% in the first contract year following a contribution. It declines each year to 1% in the seventh contract year. There is no withdrawal charge in the eighth and later contract years following a contribution. ---------------------------------------------------------------------------------------------- The 12-month period beginning on your contract date and each 12-month period after that date is a "contract year." The end of each 12-month period is your "contract date anniversary." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution. Your contract date will be shown in your contract. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 10 Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- FEES AND o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. CHARGES (CONTINUED) This charge is generally deducted from the amount applied to an annuity payout option. o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life annuity payout options. o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a percentage of the average daily net assets invested in each Portfolio. These expenses include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other expenses. - ----------------------------------------------------------------------------------------------------------------------- Annuitant issue ages NQ: 0-83 Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA: 20-83 Flexible Premium IRA: 20-70 QP: 20-75 - -----------------------------------------------------------------------------------------------------------------------
The above is not a complete description of all material provisions of the contract. In some cases restrictions or exceptions apply. Also, all features of the contract are not necessarily available in your state or at certain ages. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your registered representative, or call us, if you have any questions. - -------------------------------------------------------------------------------- Fee table 11 - -------------------------------------------------------------------------------- Fee table - -------------------------------------------------------------------------------- The fee table below will help you understand the various charges and expenses that apply to your contract. The table reflects charges you will directly incur under the contract, as well as charges and expenses of the Portfolios that you will bear indirectly. Charges for taxes, such as premium taxes, may also apply. Also, an administrative fee may apply when your annuity payments are to begin. Each of the charges and expenses is more fully described under "Charges and expenses" later in this prospectus. For a complete description of Portfolio charges and expenses, please see the attached prospectuses for The Hudson River Trust and EQ Advisors Trust. The fixed maturity options and the account for special dollar cost averaging are not covered by the fee table and examples. Generally, the only charges shown in the table that are applicable to the fixed maturity options and the account for special dollar cost averaging are the annual administrative charge and the withdrawal charge. A market value adjustment (up or down) may apply as a result of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
- ----------------------------------------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS - ----------------------------------------------------------------------------------------------------------------------- Mortality and expense risks (1) 1.10% Administrative (2) 0.25% ----- Total annual expenses 1.35% - ----------------------------------------------------------------------------------------------------------------------- FLEXIBLE PREMIUM IRA AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY: CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY - ----------------------------------------------------------------------------------------------------------------------- Maximum annual administrative charge If your account value is less than $25,000 $ 30(3) If you account value is $25,000 or more $ 0 - ----------------------------------------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS - ----------------------------------------------------------------------------------------------------------------------- WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted if you surrender your Contract contract or make certain withdrawals. The withdrawal charge percentage we use is year determined by the contract year in which you make the withdrawal or surrender your contract. 1 ................ 7.00% For each contribution, we consider the contract year in which we receive that contribution 2 ................ 6.00 to be "contract year 1")(4) 3 ................ 5.00 4 ................ 4.00 5 ................ 3.00 6 ................ 2.00 7 ................ 1.00 8+ ............... 0.00 - ----------------------------------------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT - ----------------------------------------------------------------------------------------------------------------------- BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base. Deducted annually on each contract date anniversary)(5) 0.30% - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 12 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO) - --------------------------------------------------------------------------------
TOTAL ANNUAL INVESTMENT EXPENSES(6) MANAGEMENT OTHER (AFTER EXPENSE ADVISORY FEES 12B-1 FEES(6) EXPENSES LIMITATION) - ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62% Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88% Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64% Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82% Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20% - ----------------------------------------------------------------------------------------------------------------------- EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO) - ----------------------------------------------------------------------------------------------------------------------- OTHER TOTAL ANNUAL INVESTMENT EXPENSES (8) EXPENSES(8) MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE ADVISORY FEES 12B-1 FEES(6) LIMITATION) LIMITATION) EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15% BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55% BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75% BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00% Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95% Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95% Capital Guardian International(8) 0.75% 0.25% 0.20% 1.20% JPM Core Bond(8) 0.45% 0.25% 0.10% 0.80% Lazard Large Cap Value(8) 0.55% 0.25% 0.15% 0.95% Lazard Small Cap Value(8) 0.80% 0.25% 0.15% 1.20% MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85% MFS Research(8) 0.55% 0.25% 0.05% 0.85% MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85% Morgan Stanley Emerging Markets Equity(8) 1.15% 0.25% 0.35% 1.75% EQ/Putnam Growth & Income Value(8) 0.55% 0.25% 0.05% 0.85% EQ/Putnam Investors Growth(8) 0.55% 0.25% 0.15% 0.95% EQ/Putnam International Equity(8) 0.70% 0.25% 0.25% 1.20% - -----------------------------------------------------------------------------------------------------------------------
Notes: (1) A portion of this charge is for providing the guaranteed minimum death benefit. (2) We reserve the right to increase this charge to a maximum annual rate of 0.35%. (3) For Flexible Premium IRA and Roth Flexible Premium IRA contracts, during the first two contract years this charge is equal to the lesser of $30 or 2% of your account value. Thereafter, the charge is $30 for each contract year. (4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal amount, and upon surrender of a contract. (5) The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." - -------------------------------------------------------------------------------- Fee table 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (6) Portfolio shares are all subject to fees imposed under distribution plans (the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee will not be increased for the life of the contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio attributable to Class IB shares and (b) an amount that, when added to certain other expenses of the Class IB shares, would result in the ratio of expenses to average daily net assets attributable to Class IB shares equaling 1.20%. Absent the expense limitation, the total annual expenses for 1998 for the Alliance Small Cap Growth Portfolio would have been 1.21%. (7) The fees and expenses shown for all Portfolios are for the year ended December 31, 1998. The investment management and advisory fees for each Portfolio of The Hudson River Trust may vary from year to year depending upon the average daily net assets of the respective Portfolio. The maximum investment management and advisory fees, however, cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for The Hudson River Trust. The other direct operating expenses will also fluctuate from year to year depending on actual expenses. (8) The maximum investment management and advisory fees for each Portfolio of EQ Advisors Trust cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for EQ Advisors Trust. The amounts shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an expense limitation agreement with respect to each Portfolio. Under this agreement EQF has agreed to waive or limit its fees and assume other expenses. Under the expense limitation agreement, total annual operating expenses of each Portfolio (other than interest, taxes, brokerage commissions, capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited for the average daily net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index; 0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S. Equity and Capital Guardian Research; 0.95% for Capital Guardian International; 0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value; 0.95% for Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS Research, and MFS Emerging Growth Companies; 1.50% for Morgan Stanley Emerging Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70% for EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity. The expenses shown for the BT International Equity Index, BT Small Company Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value Portfolios reflect an increase effective on May 1, 1999. During 1999, EQF plans to change its name to AXA Advisors, Inc. Absent the expense limitation, the "Other Expenses" for 1998 on an annualized basis for each of the Portfolios would have been as follows: 0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research; 0.24% for MFS Emerging Growth Companies; 1.23% for Morgan Stanley Emerging Markets Equity; 0.24% for EQ/Putnam Growth & Income Value; 0.29% for EQ/Putnam Investors Growth; 0.51% for EQ/Putnam International Equity. For the following Portfolios, the "Other Expenses" for 1999, absent the expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier Growth; 0.74% for Capital Guardian U.S. Equity and Capital Guardian Research; 1.03% for Capital Guardian International; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; 0.59% for MFS Growth with Income. Initial seed capital was invested on December 31, 1998 for the MFS Growth with Income Portfolio. The EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian International Portfolios commenced operations on May 1, 1999. Each Portfolio may at a later date make a reimbursement to EQF for any of the management fees waived or limited and other expenses assumed and paid by EQF pursuant to the expense limitation agreement provided that, among other things, such Portfolio has reached sufficient size to permit such reimbursement to be made and provided that the Portfolio's current annual operating expenses do not exceed the operating expense limit determined for such Portfolio. - -------------------------------------------------------------------------------- 14 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES The examples below show the expenses that a hypothetical contract owner (who has purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract and elected baseBUILDER) would pay in the two situations (surrender and nonsurrender) illustrated. We assume that a $1,000 contribution is invested in one of the variable investment options listed and a 5% annual return is earned on the assets in that option.(1) The annual administrative charge is based on an estimated $10,000 average account value at the end of the contract year and the maximum charge of $30, so that the administrative charge per $1,000 is $3. Since the annual administrative charge only applies under Flexible Premium IRA and Flexible Premium Roth IRA contracts, the charges shown in the examples would be lower for the NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts. These examples should not be considered a representation of past or future expenses for each option. Actual expenses may be greater or less than those shown. Similarly, the annual rate of return assumed in the examples is not an estimate or guarantee of future investment performance. IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ---------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- Alliance Money Market $ 93.00 $ 126.88 $ 163.38 $ 287.23 Alliance High Yield $ 95.58 $ 134.62 $ 176.30 $ 312.98 Alliance Common Stock $ 93.19 $ 127.47 $ 164.38 $ 289.23 Alliance Aggressive Stock $ 94.98 $ 132.84 $ 173.34 $ 307.10 Alliance Small Cap Growth $ 98.76 $ 144.12 $ 192.03 $ 343.81 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 98.26 $ 142.63 -- -- BT Equity 500 Index $ 92.30 $ 124.78 $ 159.88 $ 280.19 BT Small Company Index $ 94.29 $ 130.75 $ 169.85 $ 300.17 BT International Equity Index $ 96.77 $ 138.19 $ 182.22 $ 324.65 Capital Guardian U.S. Equity $ 96.27 $ 136.71 -- -- Capital Guardian Research $ 96.27 $ 136.71 -- -- Capital Guardian International $ 98.76 $ 144.12 -- -- JPM Core Bond $ 94.78 $ 132.24 $ 172.34 $ 305.12 Lazard Large Cap Value $ 96.27 $ 136.71 $ 179.76 $ 319.80 Lazard Small Cap Value $ 98.76 $ 144.12 $ 192.03 $ 343.81 MFS Growth with Income $ 95.28 $ 133.74 -- -- MFS Research $ 95.28 $ 133.74 $ 174.83 $ 310.05 MFS Emerging Growth Companies $ 95.28 $ 133.74 $ 174.83 $ 310.05 - -------------------------------------------------------------------------------- IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ---------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- Alliance Money Market $ 26.15 $ 80.35 $ 137.22 $ 292.13 Alliance High Yield $ 28.73 $ 88.10 $ 150.14 $ 317.87 Alliance Common Stock $ 26.34 $ 80.94 $ 138.21 $ 294.12 Alliance Aggressive Stock $ 28.13 $ 86.31 $ 147.16 $ 311.98 Alliance Small Cap Growth $ 31.91 $ 97.59 $ 165.86 $ 348.69 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 31.41 $ 96.11 -- -- BT Equity 500 Index $ 25.45 $ 78.25 $ 133.71 $ 285.07 BT Small Company Index $ 27.44 $ 84.23 $ 143.69 $ 305.09 BT International Equity Index $ 29.92 $ 91.66 $ 156.05 $ 329.53 Capital Guardian U.S. Equity $ 29.42 $ 90.17 -- -- Capital Guardian Research $ 29.42 $ 90.17 -- -- Capital Guardian International $ 31.91 $ 97.59 -- -- JPM Core Bond $ 27.93 $ 85.72 $ 146.17 $ 310.01 Lazard Large Cap Value $ 29.42 $ 90.17 $ 153.58 $ 324.68 Lazard Small Cap Value $ 31.91 $ 97.59 $ 165.86 $ 348.69 MFS Growth with Income $ 28.43 $ 87.20 -- -- MFS Research $ 28.43 $ 87.20 $ 148.64 $ 314.93 MFS Emerging Growth Companies $ 28.43 $ 87.20 $ 148.64 $ 314.93 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Fee table 15 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: -------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 104.22 $ 160.29 $ 218.58 $ 394.59 EQ/Putnam Growth & Income Value $ 95.28 $ 133.74 $ 174.83 $ 310.05 EQ/Putnam Investors Growth $ 96.27 $ 136.71 $ 179.76 $ 319.80 EQ/Putnam International Equity $ 98.76 $ 144.12 $ 192.03 $ 343.81 - ------------------------------------------------------------------------------------------- IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: -------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 37.37 $ 113.76 $ 192.41 $ 399.49 EQ/Putnam Growth & Income Value $ 28.43 $ 87.20 $ 148.64 $ 314.93 EQ/Putnam Investors Growth $ 29.42 $ 90.17 $ 153.58 $ 324.68 EQ/Putnam International Equity $ 31.91 $ 97.59 $ 165.86 $ 348.69 - -------------------------------------------------------------------------------------------
- ---------- (1) The amount accumulated from the $1,000 contribution could not be paid in the form of an annuity payout option at the end of any of the periods shown in the examples. This is because if the amount applied to purchase an annuity payout option is less than $2,000, or the initial payment is less than $20, we may pay the amount to you in a single sum instead of as payments under an annuity payout option. See "Accessing your money." IF YOU ELECT AN ANNUITY PAYOUT OPTION: Assuming an annuity payout option could be issued (see note (1) above), and you elect a life annuity payout option, the expenses shown in the example for "if you do not surrender your contract" would, in each case, be increased by $4.43 based on the average amount applied to annuity payout options in 1998. See "Annuity administrative fee" under "Charges and expenses." CONDENSED FINANCIAL INFORMATION Please see Appendix I, at the end of this prospectus for the unit values and the number of units outstanding as of the end of the periods shown for each of the variable investment options. - -------------------------------------------------------------------------------- 16 Contract features and benefits - -------------------------------------------------------------------------------- Contract features and benefits - -------------------------------------------------------------------------------- HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase a contract by making payments to us we call "contributions." We require a minimum contribution amount for each type of contract. The following table summarizes our rules regarding contributions to your contract. All ages in the table refer to the age of the annuitant named in the contract. - -------------------------------------------------------------------------------- The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner. - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- NQ 0 through 83 o $5,000 (initial) o After-tax money. o No additional contributions after o $1,000 (additional) o Paid to us by check or age 84. transfer of contract value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. - ----------------------------------------------------------------------------------------------------------------------- Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular Premium IRA contributions. IRA contributions in the o $50 (additional after calendar year you turn the first contract year) o Rollovers from a age 70 1/2 and qualified plan. thereafter. o Rollovers from a TSA. o Total regular contributions may not o Rollovers from another exceed $2,000 each traditional individual year. retirement arrangement. o No additional rollover or direct transfer o Direct custodian- contributions after to-custodian transfers age 71. from another traditional individual o Rollover and direct retirement transfer contributions arrangement. after age 70 1/2 must be net of required minimum distributions. Although we accept rollover and direct transfer contributions under the Flexible Premium IRA contract, we intend that this contract be used for ongoing regular contributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 17 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Rollover IRA 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover qualified plan. or direct transfer o $1,000 (additional) contributions after o Rollovers from a TSA. age 84. o Rollovers from another o Contributions after traditional individual age 70 1/2 must be net retirement of required minimum arrangement. distributions. o Direct o Regular IRA custodian-to-custodian contributions are not transfers from another permitted. traditional individual retirement arrangement. Only rollover and direct transfer contributions are permitted under the Rollover IRA contract. - ----------------------------------------------------------------------------------------------------------------------- Roth Flexible 20 through 83 o $2,000 (initial) o "Regular" after-tax o No additional regular Premium IRA contributions. after-tax contributions o $50 (additional after after age 84. the first contract year) o Rollovers from another Roth IRA. o No additional rollover or direct transfer o Conversion rollovers contributions after from a traditional IRA. age 84. o Direct transfers from o Contributions are another Roth IRA. subject to income limits. See "Tax information- Contributions to Both IRAs.". Although we accept rollover and direct transfer contributions under the Flexible Premium Roth IRA contract, we intend that this contract be used for ongoing regular contributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 18 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover Conversion IRA Roth IRA. or direct transfer o $1,000 (additional) contributions after o Conversion rollovers age 84. from a traditional IRA. o Conversion rollovers o Direct transfers from after age 70 1/2 must be another Roth IRA. net of required minimum distributions for the traditional IRA you are rolling over. o You cannot roll over funds from a traditional IRA if your adjusted gross income is $100,000 or more. o Regular after-tax contributions are not permitted. Only rollover and direct transfer contributions are permitted under the Roth Conversion IRA contract. - ----------------------------------------------------------------------------------------------------------------------- QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing contributions from an payroll contributions o $1,000 (additional) existing qualified plan are not permitted. trust as a change of investment vehicle o No additional transfer under the plan. contributions after age 76. o The plan must be qualified under Section o For defined benefit 401(a) of the Internal plans, employee Revenue Code. contributions are not permitted. o For 401(k) plans, transferred o Contributions after age contributions may only 70 1/2 must be net of include employee any required minimum pre-tax contributions. distributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 19 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Rollover TSA 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover TSA contract or or direct transfer o $1,000 (additional) arrangement. contributions after age 84. o Rollovers from a traditional IRA which o Contributions after age was a "conduit" for 70 1/2 must be net of TSA funds previously required minimum rolled over. distributions. o Direct transfers from another contract or arrangement under Section 403(b) of the Internal Revenue Code, complying with IRS Revenue Ruling 90-24. - -----------------------------------------------------------------------------------------------------------------------
See "Tax information" for a more detailed discussion of sources of contributions and certain contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Equitable Accumulator contracts with the same annuitant would then total more than $1,500,000. We reserve the right to limit aggregate contributions made after the first contract year to 150% of first-year contributions. We may also refuse to accept any contribution if the sum of all contributions under all Equitable Life annuity accumulation contracts that you own would then total more than $2,500,000. For information on when contributions are credited under your contract see "Dates and prices at which contract events occur" later in this prospectus. - -------------------------------------------------------------------------------- 20 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER AND ANNUITANT REQUIREMENTS Under NQ contracts, the annuitant can be different than the owner. A joint owner may also be named. Only natural persons can be joint owners. This means that an entity such as a corporation cannot be a joint owner. Under all IRA and Rollover TSA contracts, the owner and annuitant must be the same person. Under QP contracts, the owner must be the trustee of the qualified plan and the annuitant must be the plan participant/employee. See Appendix II for more information on QP contracts. - -------------------------------------------------------------------------------- A participant is an individual who is currently, or was formerly participating in an eligible employer's QP or TSA plan. - -------------------------------------------------------------------------------- HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. For your convenience, we will accept initial and additional contributions by wire transmittal from certain broker-dealers who have agreements with us for this purpose. Additional contributions may also be made under our automatic investment program. These methods of payment are discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days after we receive an incomplete application or form, we will inform the registered representative submitting the application on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. - -------------------------------------------------------------------------------- Our "business day" is any day the New York Stock Exchange is open for trading. - -------------------------------------------------------------------------------- SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Equitable Accumulator NQ contract in a tax-free exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT? Your investment options are the variable investment options, the fixed maturity options, and the account for special dollar cost averaging. VARIABLE INVESTMENT OPTIONS Your investment results in any one of the 22 variable investment options will depend on the investment performance of the underlying Portfolios. Listed below are the currently available Portfolios, their investment objectives, and their advisers. - -------------------------------------------------------------------------------- You can choose among 22 variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contract features and benefits 21 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF THE HUDSON RIVER TRUST - ----------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - ----------------------------------------------------------------------------------------------------------------------- Alliance Money Market High level of current income while preserving Alliance Capital Management L.P. assets and maintaining liquidity - ----------------------------------------------------------------------------------------------------------------------- Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P. to the extent consistent with that objective, capital appreciation - ----------------------------------------------------------------------------------------------------------------------- Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P. income - ----------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P. - ----------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P. - -----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - ----------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - ----------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P. - ----------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Standard & Poor's 500 Composite Stock Price Index - ----------------------------------------------------------------------------------------------------------------------- BT Small Company Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Russell 2000 Index - ----------------------------------------------------------------------------------------------------------------------- BT International Equity Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Morgan Stanley Capital International Europe, Australia, Far East Index - ----------------------------------------------------------------------------------------------------------------------- Capital Guardian U.S. Equity Long-term growth of capital and income Capital Guardian Trust Company - ----------------------------------------------------------------------------------------------------------------------- Capital Guardian Research Long-term growth of capital and income Capital Guardian Trust Company - ----------------------------------------------------------------------------------------------------------------------- Capital Guardian International Long-term growth of capital and future income Capital Guardian Trust Company - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 22 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - ----------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - ----------------------------------------------------------------------------------------------------------------------- JPM Core Bond High total return consistent with moderate J. P. Morgan Investment Management Inc. risk of capital and maintenance of liquidity - ----------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value Capital appreciation Lazard Asset Management - ----------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value Capital appreciation Lazard Asset Management - ----------------------------------------------------------------------------------------------------------------------- MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company growth of capital and income - ----------------------------------------------------------------------------------------------------------------------- MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company - ----------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company Companies - ----------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management Markets Equity - ----------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc. Value objective - ----------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth Long-term growth of capital and any increased Putnam Investment Management, Inc. income that results from this growth - ----------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Capital appreciation Putnam Investment Management, Inc. Equity - -----------------------------------------------------------------------------------------------------------------------
Other important information about the Portfolios is included in the separate prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the end of this prospectus. FIXED MATURITY OPTIONS We offer fixed maturity options with maturity dates ranging from one to ten years. You can allocate your contributions to one or more of these fixed maturity options. These amounts become part of our general account assets. They will accumulate interest at the "rate to maturity" for each fixed maturity option. The total amount you allocate to and accumulate in each fixed maturity option is called the "fixed maturity amount." The fixed maturity options are not available in contracts issued in Maryland. - -------------------------------------------------------------------------------- Fixed maturity options ranging from one to ten years to maturity. - -------------------------------------------------------------------------------- The rate to maturity you will receive for each fixed maturity option is the rate to maturity in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals or transfers from a fixed maturity option before the maturity date, we will make a "market value adjustment" that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We will discuss the market value - -------------------------------------------------------------------------------- Contract features and benefits 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- adjustment below and in greater detail later in this prospectus under "More information." On the maturity date of a fixed maturity option your fixed maturity amount, assuming you have not made any withdrawals or transfers, will equal your contribution to that fixed maturity option plus interest, at the rate to maturity for that contribution, to the date of the calculation. This is the fixed maturity option's "maturity value." Before maturity, the current value we will report for your fixed maturity amounts will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amounts on the date of the report. We call this your "market adjusted amount." FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity options ending on February 15th for each of the maturity years 2000 through 2009. Not all of these fixed maturity options will be available for annuitant ages 76 and older. See "Allocating your contributions" below. As fixed maturity options expire, we expect to add maturity years so that generally 10 are available at any time. We will not accept allocations to a fixed maturity option if on the date the contribution is to be applied: o the fixed maturity option's maturity date is within the current calendar year; or o the rate to maturity is 3%; or o for annuitants ages 76 or older, the fixed maturity option's maturity date is later than the February 15th immediately following the date annuity payments are to begin. OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the year before each of your fixed maturity options is scheduled to mature. At that time, you may choose to have one of the following options take place on the maturity date, as long as none of the conditions listed above or in "Allocating your contributions," below would apply: (a) transfer the maturity value into another available fixed maturity option, or into any of the variable investment options; or (b) withdraw the maturity value (there may be a withdrawal charge). If we do not receive your choice on or before the fixed maturity option's maturity date, we will automatically transfer your maturity value into the fixed maturity option that will mature next. MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers, surrender of your contract or when we make deductions for charges) from a fixed maturity option before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that you originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. Therefore, it is possible that the market value adjustment could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an illustration of the market adjusted amount of specified maturity values, an explanation of how we calculate the market value adjustment, and information concerning our general account and investments purchased with amounts allocated to the fixed maturity options, under - -------------------------------------------------------------------------------- 24 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- "More information" later in this prospectus. Appendix III of this prospectus provides an example of how the market value adjustment is calculated. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING The account for special dollar cost averaging is part of our general account. We pay interest at guaranteed rates in this account. We will credit interest to the amounts that you have in the account for special dollar cost averaging every day. We set the interest rates periodically, according to procedures that we have. We reserve the right to change these procedures. The account for special dollar cost averaging is available for allocation of your initial contribution only under the special dollar cost averaging program. It is available only for the first year of your contract. We will guarantee to pay our current interest rate that is in effect on the date that your contribution is allocated to this account. Your guaranteed interest rate will be shown in your contract. The rate will never be less than 3%. See "Allocating your contributions," below for the rules and restrictions that apply to the special dollar cost averaging program. ALLOCATING YOUR CONTRIBUTIONS You may choose from among three ways to allocate your contributions under your contract: self-directed, principal assurance or dollar cost averaging. SELF-DIRECTED ALLOCATION You may allocate your contributions to one or more, or all, of the variable investment options and fixed maturity options. Allocations must be in whole percentages and you may change your allocations at any time. However, the total of your allocations must equal 100%. If the annuitant is age 76 or older, you may allocate contributions to fixed maturity options if their maturities are five years or less. Also, you may not allocate amounts to fixed maturity options with maturity dates that are later than the February 15th immediately following the date annuity payments are to begin. PRINCIPAL ASSURANCE ALLOCATION Under this allocation program you select a fixed maturity option. We specify the portion of your initial contribution to be allocated to that fixed maturity option in an amount that will cause the maturity value to equal the amount of your entire initial contribution on the fixed maturity option's maturity date. The maturity date you select generally may not be later than 10 years, or earlier than seven years from your contract date. You allocate the rest of your contribution to the variable investment options however you choose. For example, if your initial contribution is $10,000, and on April 1, 1999 you chose the fixed maturity option with a maturity date of February 15, 2009, since the rate to maturity was 4.97% on April 1, 1999, we would have allocated $6,191.16 to that fixed maturity option and the balance to your choice of variable investment options. On the maturity date your value in the fixed maturity option would be $10,000. The principal assurance allocation is only available for annuitant ages 75 or younger when the contract is issued. If you are purchasing a Rollover IRA, Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity year that would extend beyond the year in which you will reach age 70 1/2, you should consider whether your value in the variable investment options, or your other traditional IRA or TSA funds are sufficient to meet your required minimum distributions. See "Tax information." DOLLAR COST AVERAGING We offer two dollar cost averaging programs. Each program allows you to gradually allocate amounts to the variable investment options by periodically transferring approximately the same dollar amount to the variable investment options you select. This will cause you to purchase more units if the unit's value is low and fewer units if the unit's value is high. Therefore, you may get a lower average cost per unit over the long term. These plans of investing, however, do not guarantee that you will earn a profit or be protected against losses. - -------------------------------------------------------------------------------- Contract features and benefits 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Units measure your value in each variable investment option. - -------------------------------------------------------------------------------- SPECIAL DOLLAR COST AVERAGING PROGRAMS. You may dollar cost average from the account for special dollar cost averaging into any of the variable investment options. You must allocate your entire initial contribution into the account. We will transfer your value in the account for special dollar cost averaging into the variable investment options that you select over the next 12 months. The transfer date will be the same day of the month as the contract date, but not later than the 28th. All amounts will be transferred out by the end of the first contract year. You may not allocate additional contributions to the account for special dollar cost averaging. - -------------------------------------------------------------------------------- The account for special dollar cost averaging provides guaranteed interest. - -------------------------------------------------------------------------------- The only amounts that should be transferred from the account for special dollar cost averaging are your regularly scheduled monthly transfers to the variable investment options. If you request to transfer or withdraw any other amounts, we will transfer all of the value that you have remaining in the account for special dollar cost averaging to the investment options according to the allocation percentages we have on file for you. As a result, you will no longer be able to participate in the special dollar cost averaging program. You may also ask us to cancel your participation at any time. If the account for special dollar cost averaging is not available in your state, we offer a special dollar cost averaging program in the Alliance Money Market option. Under this program we will not deduct the mortality and expense risks and administrative charges from assets in the Alliance Money Market option. You may not allocate amounts other than your initial contribution to this program, which is in effect only for your first contract year. We reserve the right to discontinue offering the Alliance Money Market special dollar cost averaging program for new contracts once the account for special dollar cost averaging becomes available in a state. Your registered representative can provide information about state availability. You may also contact us directly. GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money Market option is at least $5,000, you may choose, at any time, to have a specified dollar amount or percentage of your value transferred from that option to the other variable investment options. You can select to have transfers made on a monthly, quarterly or annual basis. The transfer date will be the same calendar day of the month as the contract date, but not later than the 28th day of the month. The minimum amount that we will transfer each time is $250. The maximum amount we will transfer is equal to your value in the Alliance Money Market option at the time the program is elected, divided by the number of transfers scheduled. If, on any transfer date, your value in the Alliance Money Market option is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred. The general dollar cost averaging program will then end. You may change the transfer amount once each contract year, or cancel this program at any time. ---------------------------------------- You may not elect dollar cost averaging if you are participating in the rebalancing program. See "Transferring your money among investment options" below. OUR BASEBUILDER OPTION The baseBUILDER option offers you a combined guaranteed minimum income benefit and guaranteed minimum death benefit. The combined benefit is available if the annuitant is between the ages of 20 and 75. There is an additional charge for this benefit. See "baseBUILDER benefits charge" under "Charges and expenses." - -------------------------------------------------------------------------------- baseBUILDER provides income protection if you elect an income payout while the annuitant is alive and a death benefit if the annuitant dies. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 26 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The guaranteed minimum income benefit component of baseBUILDER is described below under "Your guaranteed minimum income benefit under baseBUILDER." As part of baseBUILDER you have a choice of two guaranteed minimum death benefit options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The two options are described under "Guaranteed minimum death benefit." The guaranteed minimum death benefit is provided under the contract even if you do not elect baseBUILDER, and for a broader range of annuitant ages at contract issue than those available under baseBUILDER. baseBUILDER is not currently available in New York. YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER The guaranteed minimum income benefit guarantees you a minimum amount of lifetime income under our Income Manager (Life Annuity with a Period Certain) payout annuity contract. The Income Manager (Life Annuity with a Period Certain) payout annuity contract provides payments during a specified period of time (called a period certain) that will continue for the rest of the annuitant's life thereafter. If the annuitant dies before the period certain has ended, payments will continue to the beneficiary for the time remaining in the period certain. - -------------------------------------------------------------------------------- We also refer to the guaranteed minimum income benefit as the "Living Benefit." - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE. On the contract date, your guaranteed minimum income benefit's benefit base ("benefit base") is equal to the initial contribution. Thereafter, the benefit base will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, the fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after age 80. If you make an additional contribution to your contract, we will increase your current benefit base by the dollar amount of the additional contribution on the date that the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your benefit base for the withdrawal on the date that you make the withdrawal. See "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing Your Money" for more detailed information. The benefit base will be reduced by any withdrawal charge remaining when you exercise your guaranteed minimum income benefit. Under Rollover TSA contracts, we will also reduce your benefit base by the amount of any outstanding loan plus accrued interest on the date that you exercise your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- Your benefit base is not an account value or a cash value and is used solely for purposes of calculating your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE. If you exercise the guaranteed minimum income benefit, the annual lifetime income that you will receive under the Income Manager (Life Annuity with a Period Certain) payout annuity contract, will be the greater of (i) your guaranteed minimum income benefit, and (ii) the income provided by applying your actual account value at our then current annuity purchase factors. The guaranteed minimum income benefit is based on conservative actuarial factors. Therefore, even if your account value is less than your benefit base, you may generate more income by applying your account value to current annuity purchase factors. We will make this comparison for you when the need arises. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit should be regarded as a safety net only. - -------------------------------------------------------------------------------- ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT. The table below illustrates the guaranteed minimum income benefit amounts per $100,000 of initial contribution, for a - -------------------------------------------------------------------------------- Contract features and benefits 27 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- male annuitant age 60 (at issue) on the contract date anniversaries indicated, assuming no additional contributions, withdrawals, or loans under Rollover TSA contracts, and assuming there were no allocations to the Alliance Money Market option or the fixed maturity options. - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT -- ANNUAL INCOME CONTRACT DATE PAYABLE FOR LIFE WITH ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN - -------------------------------------------------------------------------------- 7 $ 8,315 10 10,341 15 14,924 - -------------------------------------------------------------------------------- Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income benefit only within 30 days following the seventh or later contract date anniversary under your contract. However, you may not exercise the benefit before the annuitant is age 60, or after the annuitant is age 83. There is an exception if the annuitant is between ages 20 and 44 when your contract is issued. In this case you may exercise the benefit following the 15th or later contract date anniversary, but not after the annuitant is age 83. See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA contracts" below regarding exercising the benefit under QP and Rollover TSA contracts. Your contract will terminate when you exercise your guaranteed minimum income benefit. You will then receive an Income Manager (Life Annuity with a Period Certain) payout annuity contract. Your period certain will be based on the annuitant's age at the time the benefit is exercised, as follows: - ---------------------------------------- LEVEL PAYMENTS* - ---------------------------------------- PERIOD CERTAIN YEARS -------------------- ANNUITANT'S AGE AT EXERCISE IRAS NQ - ---------------------------------------- 60 to 75 10 10 76 9 10 77 8 10 78 7 10 79 7 10 80 7 10 81 7 9 82 7 8 83 7 7 - ---------------------------------------- * Other forms and periods certain may also be available. For Rollover IRA and Flexible Premium IRA contracts, please see "Minimum distributions" under "Tax information," as to how this option may be affected if exercised after age 70 1/2. You will begin receiving payments one payment period after the payout annuity contract is issued. For example, if you select monthly annuity payments, we will send your first payment to you approximately one month from the date your contract is issued. Each year on your contract date anniversary, if you are eligible to exercise the guaranteed minimum income benefit, we will send you an eligibility notice illustrating how much income could be provided as of the contract date anniversary. You may then notify us within 30 days following the contract date anniversary if you want to exercise the guaranteed minimum income benefit. You must return your contract to us in order to exercise this benefit. The amount of income you actually receive will be determined when we receive your request to exercise the benefit. You may also apply your cash value at any time to an Income Manager (Life Annuity with a Period Certain) payout annuity contract, and you may always apply your account value to any of our annuity payout options. The traditional annuity payout options are discussed under "Accessing your money." These options differ from the Income Manager payout annuity contracts. They may provide higher or lower income levels, but do not have all the features of the Income Manager payout annuity contract. You may request an - -------------------------------------------------------------------------------- 28 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- illustration of the Income Manager payout annuity contract from your registered representative. The Income Manager (Life Annuity with a Period Certain) payout annuity contracts are offered through our prospectus for the Income Manager payout annuities. You may obtain a copy of the most current version from your registered representative. You should read it carefully before you decide to exercise your guaranteed minimum income benefit. SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner (discussed under "More information" later in this prospectus) elects to continue the contract after your death, the guaranteed minimum income benefit will continue to be available on the contract date anniversaries specified above based on the contract date. However, the guaranteed minimum income benefit must be exercised based on the age of the successor annuitant/contract owner. EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be exercised in the same manner as described above only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. Similarly, under Rollover TSA contracts the contract owner must convert the Rollover TSA contract in a direct rollover to a Rollover IRA contract according to our rules. The rollover to a Rollover IRA contract may only occur when you are eligible for a rollover distribution from a TSA. This may generally occur when you are age 59 1/2, or you are separated from service from the employer who provided the Rollover TSA funds. See "Rollover or direct transfer contributions" under "Tax information" later in this prospectus. GUARANTEED MINIMUM DEATH BENEFIT Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through 79 at issue of Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA contracts; and 20 through 75 at issue of QP contracts. You may elect either the "5% roll up to age 80" or the "annual ratchet to age 80" guaranteed minimum death benefit when you apply for a contract. Once you have made your election, you may not change it. 5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit equals your initial contribution. Thereafter, the guaranteed minimum death benefit will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, the fixed maturity options and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after the annuitant is age 80. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the additional contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit for the withdrawal on the date you take the withdrawal. The 5% roll up to age 80 guaranteed minimum death benefit is not available in New York. ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Then, on each contract date anniversary, we will determine your guaranteed minimum death benefit by comparing your current guaranteed minimum death benefit to your account value on that contract date anniversary. If your account value is higher than your guaranteed minimum death benefit, we will increase your guaranteed minimum - -------------------------------------------------------------------------------- Contract features and benefits 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- death benefit to equal your account value. On the other hand, if your account value on the contract date anniversary is less than your guaranteed minimum death benefit, we will not adjust your guaranteed minimum death benefit either up or down. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit on the date you take the withdrawal. Applicable for annuitant ages 80 through 83 when the contract is issued. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Thereafter, it will be increased by the dollar amount of any additional contributions. We will adjust your guaranteed minimum death benefit if you take any withdrawals. ---------------------------------------- Please see "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for information on how withdrawals affect your guaranteed minimum death benefit. For contracts issued in New York, the guaranteed minimum death benefit at the annuitant's death will never be less than your value in the variable investment options, plus the sum of the fixed maturity amounts in each fixed maturity option. See Appendix IV for an example of how we calculate the guaranteed minimum death benefit. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract and will reflect (i) any investment gain or loss in the variable investment options, (ii) any positive or negative market value adjustments in the fixed maturity options, and (iii) any guaranteed interest in the account for special dollar cost averaging, through the date we receive your contract. However, some states require that we refund the full amount of your contribution (not reflecting (i), (ii) or (iii) above). For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. We may require that you wait six months before you may apply for a contract with us again if: o you cancel your contract during the free look period; or o you change your mind before you receive your contract whether we have received your contribution or not. Please see "Tax information" for possible consequences of cancelling your contract. If you fully convert an existing traditional IRA contract to a Roth Conversion IRA or Roth Flexible Premium IRA contract, you may cancel your Roth Conversion IRA or Roth Flexible Premium IRA contract and return to a Rollover IRA or Flexible Premium IRA contract, whichever applies. Our Processing Office, or your registered representative, can provide you with the cancellation instructions. - -------------------------------------------------------------------------------- 30 Determining your contract's value - -------------------------------------------------------------------------------- Determining your contract's value - -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE Your "account value" is the total of the values you have allocated to the (i) variable investment options, (ii) fixed maturity options, and (iii) account for special dollar cost averaging. These amounts are subject to certain fees and charges discussed under "Charges and expenses." Under Rollover TSA contracts, if you have any outstanding loan your account value will include any amount in the loan reserve account. Your contract also has a "cash value." At any time before annuity payments begin, your contract's cash value is equal to the account value, less the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, and less any withdrawal charge that may apply if you surrender your contract. If you have a Rollover TSA contract with an outstanding loan, your cash value also is reduced by the amount of any outstanding loan plus accrued interest. Please see "Surrendering your contract to receive its cash value" below. YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS Each variable investment option invests in shares of a corresponding Portfolio. Your value in each variable investment option is measured by "units." The value of your units will increase or decrease as though you had invested it in the corresponding Portfolio's shares directly. Your value, however, will be reduced by the amount of the fees and charges that we deduct under the contract. Your value will also be reduced by the dollar amount of any withdrawals that you make. The unit value for each variable investment option depends on the investment performance of that option, minus daily charges for mortality and expense risks and administrative expenses. On any day, your value in any variable investment option equals the number of units credited to your contract under that option, multiplied by that day's value for one unit. The number of your contract units in any variable investment option does not change unless you make additional contributions, make a withdrawal, or transfer amounts among investment options, or we transfer your loan amount to the loan reserve account under a TSA contract. In addition, when we deduct the baseBUILDER benefits charge and any withdrawal charge the number of units credited to your contract will be reduced. Your units are also reduced under Flexible Premium IRA and Roth Flexible Premium IRA contracts when we deduct the annual administrative charge. A description of how unit values are calculated is found in the SAI. YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS Your value in each fixed maturity option at any time before the maturity date is the market adjusted amount in each option. This is equivalent to your fixed maturity amount increased or decreased by the market value adjustment. Your value, therefore, may be higher or lower than your contributions (less withdrawals) accumulated at the rate to maturity. At the maturity date, your value in the fixed maturity option will equal its maturity value. YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING Your value in the account for special dollar cost averaging at any time will equal your initial contribution allocated to that option, plus interest, less the sum of all amounts that have been transferred to the variable investment options you have selected. - -------------------------------------------------------------------------------- Transferring your money among investment options 31 - -------------------------------------------------------------------------------- Transferring your money among investment options - -------------------------------------------------------------------------------- TRANSFERRING YOUR ACCOUNT VALUE At any time before the date annuity payments are to begin, you can transfer some or all of your account value among the investment options, subject to the following: o You may not transfer any amount to the account for special dollar cost averaging. o You may not transfer to a fixed maturity option that matures in the current calendar year, or if its rate to maturity is 3%. o If the annuitant is 76 or older, you must limit your transfers to fixed maturity options to those with maturities of five years or less. Also, the maturity dates may be no later than the February 15th immediately following the date annuity payments are to begin. o If you make transfers out of a fixed maturity option other than at its maturity date the transfer may cause a market value adjustment. You may request a transfer in writing or by telephone using TOPS. You must send in all written transfer requests directly to our Processing Office. Transfer requests should specify: (1) the contract number, (2) the dollar amounts or percentages of your current account value to be transferred, and (3) the investment options to and from which you are transferring. We may, at any time, restrict the use of market timers and other agents acting under a power of attorney who are acting on behalf of more than one contract owner. Any agreements to use market timing services to make transfers are subject to our rules in effect at that time. We will confirm all transfers in writing. REBALANCING YOUR ACCOUNT VALUE We currently offer a rebalancing program that you can use to automatically reallocate your account value among the variable investment options. You must tell us: (a) the percentage you want invested in each variable investment option (whole percentages only), and (b) how often you want the rebalancing to occur (quarterly, semiannually, or annually on a contract year basis. However, it will occur on the same day of the month as the contract date). While your rebalancing program is in effect, we will transfer amounts among each variable investment option so that the percentage of your account value that you specify is invested in each option at the end of each rebalancing date. - -------------------------------------------------------------------------------- Rebalancing does not assure a profit or protect against loss. You should periodically review your allocation percentages as your needs change. You may want to discuss the rebalancing program with your registered representative or other financial adviser before electing the program. - -------------------------------------------------------------------------------- You may elect the rebalancing program at any time. You may also change your allocation instructions or cancel the program at any time. If you request a transfer while the rebalancing program is in effect, we will process the transfer as requested and then cancel the rebalancing program. You may not elect the rebalancing program if you are participating in a dollar cost averaging program. Rebalancing is not available for amounts you have allocated in the fixed maturity options. - -------------------------------------------------------------------------------- 32 Accessing your money - -------------------------------------------------------------------------------- Accessing your money - -------------------------------------------------------------------------------- WITHDRAWING YOUR ACCOUNT VALUE You have several ways to withdraw your account value before annuity payments begin. The table below shows the methods available under each type of contract. More information follows the table. For the tax consequences of withdrawals, see "Tax information." - -------------------------------------------------------------------------------- METHOD OF WITHDRAWAL - -------------------------------------------------------------------------------- SUBSTANTIALLY MINIMUM CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION - -------------------------------------------------------------------------------- NQ Yes Yes No No - -------------------------------------------------------------------------------- Rollover IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Flexible Premium IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Conversion IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Flexible Premium IRA Yes Yes Yes No - -------------------------------------------------------------------------------- QP Yes No No Yes - -------------------------------------------------------------------------------- Rollover TSA Yes* No No Yes - -------------------------------------------------------------------------------- * For some Rollover TSA contracts, your ability to take withdrawals, loans or surrender your contract may be limited. You must provide withdrawal restriction information when you apply for a contract. See "Tax information -- Tax Sheltered Annuity contracts (TSAs)" below. LUMP SUM WITHDRAWALS (All contracts) You may take lump sum withdrawals from your account value at any time. (Rollover TSA contracts may have restrictions.) The minimum amount you may withdraw is $1,000. If you request to withdraw more than 90% of a contract's current cash value we will treat it as a request to surrender the contract for its cash value. See "Surrendering your contract to receive its cash value" below. Lump sum withdrawals in excess of the 15% free withdrawal amount may be subject to a withdrawal charge. Under Rollover TSA contracts, if a loan is outstanding, you may only take lump sum withdrawals as long as the cash value remaining after any withdrawal equals at least 10% of the outstanding loan plus accrued interest. SYSTEMATIC WITHDRAWALS (NQ and all IRA contracts) You may take systematic withdrawals of a particular dollar amount or a particular percentage of your account value. You may take systematic withdrawals on a monthly, quarterly or annual basis as long as the withdrawals do not exceed the following percentages of your account value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you may take in each systematic withdrawal is $250. If the amount withdrawn would be less than $250 on the date a withdrawal is to be taken, we will not make a payment and we will terminate your systematic withdrawal election. We will make the withdrawals on any day of the month that you select as long as it is not later than the 28th day of the month. If you do not select a date, we will make the withdrawals on the same calendar day of the month as the contract date. You must wait at least 28 days after your contract is issued before your systematic withdrawals can begin. You may elect to take systematic withdrawals at any time. If you own an IRA contract, you may elect this withdrawal method only if you are between ages 59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you have balances in the account for special dollar cost averaging. You may change the payment frequency, or the amount or percentage of your systematic withdrawals, once each contract year. However, you may not change the amount or percentage in any contract year in which you have already taken a lump sum withdrawal. You can cancel the systematic withdrawal option at any time. Systematic withdrawals are not subject to a withdrawal charge, except to the extent that, when added to a lump sum withdrawal previously taken in the same contract year, the systematic withdrawal exceeds the 15% free withdrawal amount. - -------------------------------------------------------------------------------- Accessing your money 33 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBSTANTIALLY EQUAL WITHDRAWALS (All IRA contracts) The substantially equal withdrawals option allows you to receive distributions from your account value without triggering the 10% additional federal tax penalty, which normally applies to distributions made before age 59 1/2. See "Tax information." Once you begin to take substantially equal withdrawals, you should not stop them or change the pattern of your withdrawals until the later of age 59 1/2 or five full years after the first withdrawal. If you stop or change the withdrawals or take a lump sum withdrawal, you may be liable for the 10% federal tax penalty that would have otherwise been due on prior withdrawals made under this option and for any interest on those withdrawals. You may elect to take substantially equal withdrawals at any time before age 59 1/2. We will make the withdrawal on any day of the month that you select as long as it is not later than the 28th day of the month. You may not elect to receive the first payment in the same contract year in which you took a lump sum withdrawal. We will calculate the amount of your substantially equal withdrawals based on the method you choose from the choices we offer. The payments will be made monthly, quarterly or annually as you select. These payments will continue until we receive written notice from you to cancel this option or you take a lump sum withdrawal. You may elect to start receiving substantially equal withdrawals again, but the payments may not restart in the same contract year in which you took a lump sum withdrawal. We will calculate the new withdrawal amount. You may not elect substantially equal withdrawals if you have balances in the account for special dollar cost averaging. Substantially equal withdrawals are not subject to a withdrawal charge. MINIMUM DISTRIBUTION WITHDRAWALS (Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only -- See "Tax information") We offer the minimum distribution withdrawal option to help you meet required minimum distributions under federal income tax rules. You may elect this option in the year in which you reach age 70 1/2. The minimum amount we will pay out is $250. You may elect the method you want us to use to calculate your minimum distribution withdrawals from the choices we offer. Currently, minimum distribution withdrawal payments will be made annually. We do not impose a withdrawal charge on minimum distribution withdrawals except if when added to a lump sum withdrawal previously taken in the same contract year, the minimum distribution withdrawal exceeds the 15% free withdrawal amount. We will calculate your annual payment based on your account value at the end of the prior calendar year based on the method you choose. Under Rollover TSA contracts, you may not elect minimum distribution withdrawals if a loan is outstanding. - -------------------------------------------------------------------------------- For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, we will send a form outlining the distribution options available before you reach age 70 1/2 (if you have not begun your annuity payments before that time). - -------------------------------------------------------------------------------- HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE Unless you specify otherwise, we will subtract your withdrawals on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the withdrawal required or the total amount of the withdrawal will be withdrawn from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar basis or on a pro rata basis as explained below: - -------------------------------------------------------------------------------- 34 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INCOME BENEFIT Benefit base -- Your current benefit base will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current benefit base on a pro rata basis. DEATH BENEFIT 5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed minimum death benefit, your current guaranteed minimum death benefit will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current guaranteed minimum death benefit on a pro rata basis. Annual ratchet to age 80 -- If you elect the annual ratchet to age 80 guaranteed minimum death benefit, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. Annuitant issue ages 80 through 83 -- If your contract was issued when the annuitant was between ages 80 and 83, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. ---------------------------------------- Reduction on a dollar-for-dollar basis means that your current benefit will be reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis means that we calculate the percentage of your current account value that is being withdrawn and we reduce your current benefit by that same percentage. For example, if your account value is $30,000 and you withdraw $12,000, you have withdrawn 40% of your account value. If your guaranteed minimum death benefit was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x.40) and your new guaranteed minimum death benefit after the withdrawal would be $24,000 ($40,000-$16,000). The timing of your withdrawals and whether they exceed the 5% threshold described above can have a significant impact on your guaranteed minimum income benefit or guaranteed minimum death benefit. LOANS UNDER ROLLOVER TSA CONTRACTS You may take loans from a Rollover TSA unless restricted by the employer who provided the Rollover TSA funds. If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the funds told us when you purchased your contract. The employer must also tell us whether special employer plan rules of the Employee Retirement Income Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan while you are taking minimum distribution withdrawals. You should read the terms and conditions on our loan request form carefully before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may only take a loan with the written consent of your spouse. Your contract contains further details of the loan provision. Also, see "Tax information" for general rules applicable to loans. We will permit you to have only one loan outstanding at a time. The minimum loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account value, subject to any limits under the federal income tax rules. The term of a loan is five years. However, if you use the loan to acquire your primary residence, the term is 10 years. The term may not extend beyond the earliest of: (1) the date annuity payments begin, (2) the date the contract terminates, and - -------------------------------------------------------------------------------- Accessing your money 35 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (3) the date a death benefit is paid (the outstanding loan will be deducted from the death benefit amount). Interest will accrue daily on your outstanding loan at a rate we set. The loan interest rate will be equal to the Moody's Corporate Bond Yield Averages for the calendar month ending two months before the day of the calendar quarter in which the rate is determined. LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the amount of your loan to the loan reserve account. Unless you specify otherwise, we will subtract your loan on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the loan will be subtracted from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. We will credit interest to the amount in the loan reserve account at a rate of 2% lower than the loan interest rate that applies for the time your loan is outstanding. On each contract date anniversary after the date the loan is processed, we will transfer the amount of interest earned in the loan reserve account to the variable investment options on a pro rata basis. When you make a loan repayment, unless you specify otherwise, we will transfer the dollar amount of the loan repaid from the loan reserve account to the investment options according to the allocation percentages we have on our records. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time while the annuitant is living and before you begin to receive annuity payments. (Rollover TSA contracts may have restrictions.) For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under the contract will terminate as of that date. You may receive your cash value in a single sum payment or apply it to one or more of the annuity payout options. See "Choosing your annuity payout options" below. We will usually pay the cash value within seven calendar days, but we may delay payment as described in "When to expect payments," below. For the tax consequences of surrenders, see "Tax information." WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments out of the variable investment options within seven calendar days after the date of the transaction to which the request relates. These transactions may include applying proceeds to a variable annuity, payment of a death benefit, payment of any amount you withdraw (less any withdrawal charge) and, upon surrender, payment of the cash value. We may postpone such payments or applying proceeds for any period during which: (1) the New York Stock Exchange is closed or restricts trading, (2) sales of securities or determination of the fair value of a variable investment option's assets is not reasonably practicable because of an emergency, or (3) the SEC, by order, permits us to defer payment to protect people remaining in the variable investment options. We can defer payment of any portion of your value in the fixed maturity options and the account for special dollar cost averaging (other than for death benefits) for up to six months while you are living. We also may defer payments for a reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. All payments are made by check and are mailed to you (or the payee named in a tax-free exchange) by U.S. mail, unless you request that we use an express delivery service at your expense. - -------------------------------------------------------------------------------- 36 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CHOOSING YOUR ANNUITY PAYOUT OPTIONS The Equitable Accumulator offers you several choices for receiving retirement income. Each choice enables you to receive fixed or, in some cases, variable annuity payments. You can choose from among the six different annuity payout options listed below. Restrictions apply, depending on the type of contract you own. - -------------------------------------------------------------------------------- Annuity payout options Life annuity Life annuity -- period certain Life annuity -- refund certain Period certain annuity - -------------------------------------------------------------------------------- Income Manager payout Life annuity with a period options certain Period certain annuity - -------------------------------------------------------------------------------- ANNUITY PAYOUT OPTIONS You can choose from among the following annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because there is no continuation of benefits following the annuitant's death with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. o Life annuity -- period certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the end of a selected period of time ("period certain"), payments continue to the beneficiary for the balance of the period certain. A life annuity with a period certain of 10 years is the normal form of annuity under the contracts. The period certain cannot extend beyond the annuitant's life expectancy. o Life annuity -- refund certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments to the beneficiary will continue until that amount has been recovered. This payout option is available only as a fixed annuity. o Period certain annuity: An annuity that guarantees payments for a specific period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. Currently, this payout option is available only as a fixed annuity. All of the above payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for you. The life annuity, life annuity -- period certain, and life annuity -- refund certain payout options are available on a single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, payments continue to the survivor. The following annuity payout options are available as variable annuities: o Life annuity (except in New York). o Life annuity -- period certain. o Joint and survivor life annuity (100% to survivor). o Joint and survivor life period certain annuity (100% to survivor). Variable annuities may be funded through your choice of variable investment options investing in Portfolios of The Hudson River Trust. The amount of each variable annuity payment will fluctuate, depending upon the performance of the variable investment options, and whether the actual rate of investment return is higher or lower than an assumed base rate. Please see "Annuity Unit Values" in the SAI. - -------------------------------------------------------------------------------- Accessing your money 37 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We may offer other payout options not outlined here. Your registered representative can provide details. SELECTING AN ANNUITY PAYOUT OPTION When you select a payout option, we will issue you a separate written agreement confirming your right to receive annuity payments. We require you to return your contract before annuity payments begin. For NQ and IRA contracts, unless you choose a different payout option, we will pay annuity payments under a life annuity with a certain period of 10 years. The only payout options available under QP contracts and Rollover TSA contracts are the life annuity 10 year period certain and the joint and survivor life annuity 10 year period certain. You can choose the date annuity payments begin but it may not be earlier than one year from the contract date. You can change the date your annuity payments are to begin anytime before that date as long as you do not choose a date later than the 28th day of any month. Also, that date may not be later than the contract date anniversary that follows the annuitant's 90th birthday. This may be different in some states. Before your annuity payments are to begin, we will notify you by letter that the annuity payout options are available. Once you have selected a payout option and payments have begun, no change can be made other than transfers (if permitted in the future) among the variable investment options if a variable annuity is selected. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and whether it is fixed or variable, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). The amount we apply to provide annuity payments will depend on the type of payout option you select. If you select a payout option that provides for payments for the rest of the annuitant's life, then we will apply your account value. If you select a payout option that provides for payments for a period certain, then we will apply your cash value. However, if the period certain is more than five years, we will apply not less than 95% of the account value. Amounts in the fixed maturity options that are applied to a payout option before a maturity date will result in a market value adjustment. If, at the time you elect a payout option, the amount to be applied is less than $2,000 or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. INCOME MANAGER PAYOUT OPTIONS For NQ and IRA contracts, two Income Manager payout options are also available. These are the Income Manager (Life Annuity with a Period Certain) and the Income Manager (Period Certain). For QP contracts, the Income Manager payout options are available only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and the change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. For Rollover TSA contracts, the Income Manager payout annuity options are available only after the Rollover TSA contract is rolled over to a Rollover IRA contract. This may generally occur when you are age 59 1/2, or you have separated from service with the employer who provided the Rollover TSA funds. The Income Manager (Life Annuity with a Period Certain) provides guaranteed payments for the annuitant's life or for the annuitant's life and the life of a joint annuitant. The Income Manager (Period Certain) provides payments for a specified period. The contract owner and annuitant must meet the issue age and payment requirements. Both Income Manager annuities provide guaranteed level payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also provides guaranteed increasing payments (NQ contracts only). - -------------------------------------------------------------------------------- 38 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- If you apply only part of the account value of your contract to either of the Income Manager payout annuities we will consider it a withdrawal and may deduct a withdrawal charge. We will not deduct a withdrawal charge if you apply all of your account value at a time when the dollar amount of the withdrawal charge is greater than 2% of remaining contributions (after withdrawals). However, a new withdrawal charge schedule will apply under the Income Manager annuity. For purposes of the withdrawal charge schedule, the year in which your account value is applied under the Income Manager annuity will be "contract year 1." In addition, we will not deduct a withdrawal charge if you apply all of your account value from your Equitable Accumulator contract when the dollar amount of the withdrawal charge under such contract is 2% or less. This means that no withdrawal charge schedule will apply under the Income Manager payout annuity contract. You should consider the timing of your purchase as it relates to the potential for withdrawal charges under the Income Manager annuity. No additional contributions will be permitted under an Income Manager (Life Annuity with a Period Certain). You also may apply your account value to an Income Manager (Period Certain) annuity once withdrawal charges are no longer in effect under your contract. No withdrawal charges will apply under that Income Manager annuity. The Income Manager annuities are described in a separate prospectus. Copies of the most current version are available from your registered representative. To purchase an Income Manager annuity we also require the return of your contract. We will issue an Income Manager annuity to put one of the payout annuities into effect. Depending upon your circumstances, this may be done on a tax-free basis. Please consult your tax adviser. - -------------------------------------------------------------------------------- Charges and expenses 39 - -------------------------------------------------------------------------------- Charges and expenses - -------------------------------------------------------------------------------- CHARGES THAT EQUITABLE LIFE DEDUCTS We deduct the following charges each day from the net assets of each variable investment option. These charges are reflected in the unit values of each variable investment option: o A mortality and expense risks charge. o An administrative charge. We deduct the following charges from your account value. When we deduct these charges from your variable investment options, we reduce the number of units credited to your contract: o On each contract date anniversary -- an annual administrative charge (Flexible Premium IRA and Roth Flexible Premium IRA contracts only) o At the time you make certain withdrawals or surrender your contract -- a withdrawal charge. o If you elect the optional benefit -- a charge for the optional baseBUILDER benefit. o At the time annuity payments are to begin -- charges for state premium and other taxes. More information about these charges appears below. We will not increase these charges for the life of your contract, except as noted. We may reduce certain charges under group or sponsored arrangements. See "Group or sponsored arrangements" below. MORTALITY AND EXPENSE RISKS CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality and expense risks, including the guaranteed minimum death benefit. The daily charge is equivalent to an annual rate of 1.10% of the net assets in each variable investment option. The mortality risk we assume is the risk that annuitants as a group will live for a longer time than our actuarial tables predict. If that happens, we would be paying more in annuity income than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each contract, will differ from actual mortality experience. Lastly, we assume a mortality risk to the extent that at the time of death, the guaranteed minimum death benefit exceeds the cash value of the contract. The expense risk we assume is the risk that it will cost us more to issue and administer the contracts than we expect. ADMINISTRATIVE CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for administrative expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. We reserve the right under the contracts to increase this charge to an annual rate of 0.35%. ANNUAL ADMINISTRATIVE CHARGE (FLEXIBLE PREMIUM IRA AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY) Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, we deduct an administrative charge from your account value on each contract date anniversary. We deduct the charge if your account value on the last business day of the contract year, before the deduction of any other charges, is less than $25,000. If your account value on such date is $25,000 or more, this charge will equal zero. During the first two contract years, the charge is equal to $30 or, if less, 2% of your account value. The charge is $30 for contract years three and later. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. If you surrender your contract during the contract year we will deduct a pro rata portion of the charge. WITHDRAWAL CHARGE A withdrawal charge applies in two circumstances: (1) if you make one or more withdrawals during a contract - -------------------------------------------------------------------------------- 40 Charges and expenses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- year that, in total, exceed the 15% free withdrawal amount, described below, or (2) if you surrender your contract to receive its cash value. The withdrawal charge equals a percentage of the contributions withdrawn. The percentage that applies depends on how long each contribution has been invested in the contract. We determine the withdrawal charge separately for each contribution according to the following table: - -------------------------------------------------------------------------------- CONTRACT YEAR - -------------------------------------------------------------------------------- 1 2 3 4 5 6 7 8+ - -------------------------------------------------------------------------------- Percentage of contribution 7% 6% 5% 4% 3% 2% 1% 0% - -------------------------------------------------------------------------------- For purposes of calculating the withdrawal charge, we treat the contract year in which we receive a contribution as "contract year 1." Amounts withdrawn up to the free withdrawal amount are not considered withdrawal of any contribution. We also treat contributions that have been invested the longest as being withdrawn first. We treat contributions as withdrawn before earnings for purposes of calculating the withdrawal charge. However, federal income tax rules treat earnings under your contract as withdrawn first. See "Tax information." In order to give you the exact dollar amount of the withdrawal you request, we deduct the amount of the withdrawal and the withdrawal charge from your account value. Any amount deducted to pay a withdrawal charge is also subject to a withdrawal charge. We deduct the charge in proportion to the amount of the withdrawal subtracted from each investment option. The withdrawal charge helps cover our sales expenses. The withdrawal charge does not apply in the circumstances described below. 15% FREE WITHDRAWAL AMOUNT. Each contract year you can withdraw up to 15% of your account value without paying a withdrawal charge. The 15% free withdrawal amount is determined using your account value on the most recent contract date anniversary, minus any other withdrawals made during the contract year. The 15% free withdrawal amount does not apply if you surrender your contract. Note the following special rule for NQ contracts issued to a charitable remainder trust, the free withdrawal amount will equal the greater of: (1) the current account value, less contributions that have not been withdrawn (earnings in the contract), and (2) the 15% free withdrawal amount defined above. MINIMUM DISTRIBUTIONS. The withdrawal charge does not apply to withdrawals taken under our minimum distribution withdrawal option. However, those withdrawals are counted towards the 15% free withdrawal amount if you also make a lump sum withdrawal in any contract year. DISABILITY, TERMINAL ILLNESS OR CONFINEMENT TO NURSING HOME. The withdrawal charge also does not apply if: o The annuitant has qualified to receive Social Security disability benefits as certified by the Social Security Administration; or o We receive proof satisfactory to us (including certification by a licensed physician) that the annuitant's life expectancy is six months or less; or o The annuitant has been confined to a nursing home for more than 90 days (or such other period, as required in your state) as verified by a licensed physician. A nursing home for this purpose means one that is (a) approved by Medicare as a provider of skilled nursing care service, or (b) licensed as a skilled nursing home by the state or territory in which it is located (it must be within the United States, Puerto Rico, or U.S. Virgin Islands) and meets all of the following: -- its main function is to provide skilled, intermediate, or custodial nursing care; -- it provides continuous room and board to three or more persons; -- it is supervised by a registered nurse or licensed practical nurse; - -------------------------------------------------------------------------------- Charges and expenses 41 - -------------------------------------------------------------------------------- -- it keeps daily medical records of each patient; -- it controls and records all medications dispensed; and -- its primary service is other than to provide housing for residents. We reserve the right to impose a withdrawal charge, in accordance with your contract and applicable state law, if the disability is caused by a preexisting condition or a condition that began within 12 months of the contract date. Some states may not permit us to waive the withdrawal charge in the above circumstances, or may limit the circumstances for which the withdrawal charge may be waived. Your registered representative can provide more information or you may contact our Processing Office. BASEBUILDER BENEFITS CHARGE If you elect the baseBUILDER combined guaranteed minimum income benefit and guaranteed minimum death benefit, we deduct a charge annually from your account value on each contract date anniversary. The charge is equal to 0.30% of the benefit base in effect on the contract date anniversary. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. Generally, we deduct the charge from the amount applied to provide an annuity payout. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands). ANNUITY ADMINISTRATIVE FEE We generally deduct a fee of up to $350 from the amount to be applied to purchase a life annuity payout option. CHARGES THAT THE TRUSTS DEDUCT The Hudson River Trust and EQ Advisors Trust each deducts charges for the following types of fees and expenses: o Investment advisory fees ranging from 0.25% to 1.15%. o 12b-1 fees of 0.25%. o Operating expenses, such as trustees' fees, independent auditors' fees, legal counsel fees, administrative service fees, custodian fees, and liability insurance. o Investment-related expenses, such as brokerage commissions. These charges are reflected in the daily share price of each Portfolio. Since shares of each trust are purchased at their net asset value, these fees and expenses are, in effect, passed on to the variable investment options and are reflected in their unit values. For more information about these charges, please refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust following this prospectus. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the withdrawal charge or the mortality and expense risks charge, or change the minimum initial contribution requirements. We also may change the guaranteed minimum income benefit and the guaranteed minimum death benefit, or offer variable investment options that invest in shares of The Hudson River Trust or EQ Advisors Trust that are not subject to the 12b-1 fee. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. Group arrangements are not available for IRA contracts. Sponsored arrangements include those in which an employer allows us to sell contracts 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 or sponsoring organization, among other factors. We take all these factors into account when reducing charges. To qualify for reduced - -------------------------------------------------------------------------------- 42 Charges and expenses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- charges, a group or sponsored arrangement must meet certain requirements, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We also may establish different rates to maturity for the fixed maturity options under different classes of contracts for group or sponsored arrangements. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variation in the withdrawal charge will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, ERISA, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. OTHER DISTRIBUTION ARRANGEMENTS We may reduce or eliminate charges when sales are made in a manner that result in savings of sales and administrative expenses, such as sales through persons who are compensated by clients for recommending investments and who receive no commission or reduced commissions in connection with the sale of the contracts. We will not permit a reduction or elimination of charges where it would be unfairly discriminatory. - -------------------------------------------------------------------------------- Payment of death benefit 43 - -------------------------------------------------------------------------------- Payment of death benefit - -------------------------------------------------------------------------------- YOUR BENEFICIARY AND PAYMENT OF BENEFIT You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for the change is signed. Under jointly owned contracts, the surviving owner is considered the beneficiary, and will take the place of any other beneficiary. You may be limited as to the beneficiary you can designate in a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee. The death benefit is equal to your account value, or, if greater, the guaranteed minimum death benefit. The guaranteed minimum death benefit is part of your contract, whether you select the combined baseBUILDER benefit or not. We determine the amount of the death benefit as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. Under Rollover TSA contracts we will deduct the amount of any outstanding loan plus accrued interest from the amount of the death benefit. EFFECT OF THE ANNUITANT'S DEATH If the annuitant dies before the annuity payments begin, we will pay the death benefit to your beneficiary. Generally, the death of the annuitant terminates the contract. However, a beneficiary who is the surviving spouse of the owner/annuitant can choose to be treated as the successor owner/annuitant and continue the contract. Only a spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you cannot have a successor owner/annuitant. For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a surviving spouse may be able to have limited ownership. WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT Under certain conditions the owner can change after the original owner's death. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the successor owner. If you do not want the person named to receive the death benefit upon the annuitant's death to be the successor owner, you should name a successor owner. You may name a different person that will become the successor owner at any time by sending satisfactory notice to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the "beneficiary" for purposes of the distribution rules described in this section. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the owner who has died (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the successor owner for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value of the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The successor owner may instead elect to receive the cash value as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy). Payments must begin no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the successor owner or joint owner, the spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and annuitant are living. HOW DEATH BENEFIT PAYMENT IS MADE We will pay the death benefit to the beneficiary in the form of the annuity payout option you have chosen. If you have - -------------------------------------------------------------------------------- 44 Payment of death benefit - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- not chosen an annuity payout option as of the time of the annuitant's death, the beneficiary will receive the death benefit in a single sum. However, subject to any exceptions in the contract, our rules and any applicable requirements under federal income tax rules, the beneficiary may elect to apply the death benefit to one or more annuity payout options we offer at the time. See "Choosing your annuity payout options" earlier in this prospectus. Please note that if you are both the contract owner and the annuitant, you may elect only a life annuity or an annuity that does not extend beyond the life expectancy of the beneficiary. SUCCESSOR OWNER AND ANNUITANT If you are both the contract owner and the annuitant, and your spouse is the sole beneficiary or the joint owner, then your spouse may elect to receive the death benefit or continue the contract as successor owner/annuitant. If your surviving spouse decides to continue the contract, then on the contract date anniversary following your death, we will increase the account value to equal your current guaranteed minimum death benefit, if it is higher than the account value. In determining whether the guaranteed minimum death benefit will continue to grow, we will use your surviving spouse's age (as of the contract date anniversary). BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA CONTRACTS Upon your death under a Rollover IRA or Flexible Premium IRA contract, a non-spouse beneficiary may generally elect to keep the contract in your name and receive distributions under the contract instead of the death benefit being paid in a single sum. If you die AFTER the "required beginning date" (see "Tax information") for required minimum distributions, the contract will continue if: (a) you were receiving minimum distribution withdrawals from this contract; and (b) the pattern of minimum distribution withdrawals you chose was based in part on the life of the designated beneficiary. The withdrawals will then continue to be paid to the beneficiary on the same basis as you chose before your death. We will be able to tell your beneficiary whether this option is available to them. You should contact our Processing Office for further information. If you die BEFORE the "required beginning date" (and therefore you were not taking minimum distribution withdrawals under the contract), the beneficiary may begin taking minimum distribution withdrawals under the contract. We will increase the account value to equal the death benefit if the death benefit is greater than the account value. That amount will be used to provide the withdrawals. These withdrawals will begin by December 31st of the calendar year following your death and will be based on the beneficiary's life expectancy. If there is more than one beneficiary, the shortest life expectancy is used. The designated beneficiary must be a natural person and of legal age at the time of election. The beneficiary must elect this option within 30 days following the date we receive proof of your death. While the contract continues in your name, the beneficiary may make transfers among the investment options. However, additional contributions will not be permitted and the guaranteed minimum income benefit and the death benefit (including the guaranteed minimum death benefit) provisions will no longer be in effect. Although the only withdrawals that will be permitted are minimum distribution withdrawals, the beneficiary may choose at any time to withdraw all of the account value and no withdrawal charges will apply. - -------------------------------------------------------------------------------- Tax information 45 - -------------------------------------------------------------------------------- Tax information - -------------------------------------------------------------------------------- OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Equitable Accumulator contracts owned by United States taxpayers. The tax rules can differ, depending on the type of contract, whether NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Roth Flexible Premium IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TRANSFERS AMONG INVESTMENT OPTIONS You can make transfers among investment options inside the contract without triggering taxable income. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal or as an annuity payment. However, earnings are taxable, even without a distribution: o if a contract fails investment diversification requirements as specified in federal income tax rules (these rules are based on or are similar to those specified for mutual funds under the securities laws); o if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse); o if you use a contract as security for a loan (in this case, the amount pledged will be treated as a distribution); and o if the owner is other than an individual (such as a corporation, partnership, trust, or other non-natural person). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract for calculating the taxable amount of any distribution from any of those contracts. ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get back the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. For fixed annuity payments, the tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount of the payment. For variable annuity payments, your - -------------------------------------------------------------------------------- 46 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- investment in the contract divided by the number of expected payments is your tax-free portion of each payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Equitable Accumulator NQ contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Equitable Accumulator NQ contract. Surrenders If you surrender or cancel the contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. Death benefit payments made to a beneficiary after your death For the rules applicable to death benefits, see "Payment of Death Benefit" and "When an NQ contract owner dies before the annuitant" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and a beneficiary. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The calculation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your - -------------------------------------------------------------------------------- Tax information 47 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis; and o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with employer-sponsored retirement plans. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (http://www.irs.ustreas.gov). The Equitable Accumulator IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. You may purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth IRA available are the Roth Conversion IRA and Roth Flexible Premium IRA. This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are not discussed in this prospectus because they are not available in individual retirement annuity form. The Equitable Accumulator IRA contract has been approved by the IRS as to form for use as a traditional IRA. We expect to submit the Roth IRA version for formal IRS approval in 1999. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Equitable Accumulator IRA contract. CANCELLATION You can cancel an Equitable Accumulator IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA contract issued as a result of a full conversion of an Equitable Accumulator Rollover IRA or Flexible Premium IRA contract by following the instructions in the request for full conversion form. The form is available from our Processing Office or your registered representative. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a traditional IRA: - -------------------------------------------------------------------------------- 48 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o regular contributions out of earned income or compensation; or o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other traditional IRAs ("direct transfers"). Regular traditional IRA, direct transfer, and rollover contributions may be made to a Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under a Rollover IRA contract. See "Rollovers and transfers" below. REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS Limits on contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a traditional IRA. You cannot make regular traditional IRA contributions for the tax year in which you reach age 70 1/2 or any tax year after that. Special rules for spouses If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to traditional IRAs (and Roth IRAs discussed below). Even if one spouse has no compensation or compensation under $2,000, married individuals filing jointly can contribute up to $4,000 for any taxable year to any combination of traditional IRAs and Roth IRAs. (Any contributions to Roth IRAs reduce the ability to contribute to traditional IRAs and vice versa.) The maximum amount may be less if earned income is less and the other spouse has made IRA contributions. No more than a combined total of $2,000 can be contributed annually to either spouse's traditional and Roth IRAs. Each spouse owns his or her traditional IRAs and Roth IRAs even if the other spouse funded the contributions. A working spouse age 70 1/2 or over can contribute up to the lesser of $2,000 or 100% of "earned income" to a traditional IRA for a nonworking spouse until the year in which the nonworking spouse reaches age 70 1/2. Deductibility of contributions The amount of traditional IRA contributions that you can deduct for a tax year depends on whether you are covered by an employer-sponsored tax-favored retirement plan, as defined under special federal income tax rules. Your Form W-2 will indicate whether or not you are covered by such a retirement plan. IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can make fully deductible contributions to your traditional IRAs for each tax year up to $2,000 or, if less, your earned income. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT RANGE, you can make fully deductible contributions to your traditional IRAs. For each tax year, your fully deductible contribution can be up to $2,000 or, if less, your earned income. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE CONTRIBUTIONS to your traditional IRAs. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any of your regular contributions to your traditional IRAs. If you are single and covered by a retirement plan during any part of the taxable year, the deduction for IRA contributions phases out with AGI between $31,000 and $41,000 in 1999. This range will increase every year until 2005 when the range is $50,000-$60,000. If you are married and file a joint return, and you are covered by a retirement plan during any part of the taxable year, the - -------------------------------------------------------------------------------- Tax information 49 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- deduction for traditional IRA contributions phases out with AGI between $51,000 and $61,000 in 1999. This range will increase every year until 2007 when the range is $80,000-$100,000. Married individuals filing separately and living apart at all times are not considered married for purposes of this deductible contribution calculation. Generally, the active participation in an employer-sponsored retirement plan of an individual is determined independently for each spouse. Where spouses have "married filing jointly" status, however, the maximum deductible traditional IRA contribution for an individual who is not an active participant (but whose spouse is an active participant) is phased out for taxpayers with AGI of between $150,000 and $160,000. To determine the deductible amount of the contribution in 1999, you determine AGI and subtract $31,000 if you are single, or $51,000 if you are married and file a joint return with your spouse. The resulting amount is your excess AGI. You then determine the limit on the deduction for traditional IRA contributions using the following formula: ($10,000-excess AGI) times $2,000 (or earned Equals the adjusted - -------------------- x income, if less) = deductible divided by $10,000 contribution limit Nondeductible regular contributions If you are not eligible to deduct part or all of the traditional IRA contribution, you may still make nondeductible contributions on which earnings will accumulate on a tax-deferred basis. The combined deductible and nondeductible contributions to your traditional IRA (or the nonworking spouse's traditional IRA) may not, however, exceed the maximum $2,000 per person limit. See "Excess contributions" below. You must keep your own records of deductible and nondeductible contributions in order to prevent double taxation on the distribution of previously taxed amounts. See "Withdrawals, payments and transfer of funds out of traditional IRAs" below. If you are making nondeductible contributions in any taxable year, or you have made nondeductible contributions to a traditional IRA in prior years and are receiving distributions from any traditional IRA, you must file the required information with the IRS. Moreover, if you are making nondeductible traditional IRA contributions, you must retain all income tax returns and records pertaining to such contributions until interests in all traditional IRAs are fully distributed. When you can make regular contributions If you file your tax returns on a calendar year basis like most taxpayers, you have until the April 15 return filing deadline (without extensions) of the following calendar year to make your regular traditional IRA contributions for a tax year. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o regular contributions of more than $2,000; or o regular contributions of more than earned income for the year, if that amount is under $2,000; or o regular contributions to a traditional IRA made after you reach age 70 1/2; or o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or regular) before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess regular traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions, discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. - -------------------------------------------------------------------------------- 50 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. ROLLOVERS AND TRANSFERS Rollover contributions may be made to a traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other traditional IRAs. You may also change your mind about amounts contributed as Roth IRA funds to traditional IRA funds, in accordance with special federal income tax rules, if you use the forms we prescribe. This is referred to as having "recharacterized" your contribution. Any amount contributed to a traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions, unless the distribution is: o only after-tax contributions you made to the plan; or o "required minimum distributions" after age 70 1/2 or separation from service; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; or o a hardship withdrawal; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one traditional IRA to one or more of your other traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited traditional IRA to one or more other traditional IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free basis - -------------------------------------------------------------------------------- Tax information 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a traditional IRA at any time. You do not need to wait for a special event like retirement. Taxation of payments Earnings in traditional IRAs are not subject to federal income tax until you or your beneficiary receives them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any traditional IRA (it does not have to be to this particular traditional IRA contract), those contributions are recovered tax free when you get distributions from any traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to traditional IRAs. At the end of any year in which you have received a distribution from any traditional IRA, you calculate the ratio of your total nondeductible traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all traditional IRAs you own at the end of the year plus all traditional IRA distributions made during the year. Multiply this by all distributions from the traditional IRA during the year to determine the nontaxable portion of each distribution. In addition, a distribution is not taxable if: o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; or o the entire amount received is rolled over to another traditional IRA (see "Rollovers and transfers" above); or o in certain limited circumstances, where the traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" traditional IRA treatment: o the source of funds you used to establish the traditional IRA must have been a rollover contribution from a qualified plan, and o the entire amount received from the traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. The Rollover IRA contract can be used as a conduit IRA if amounts are not commingled. Distributions from a traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the - -------------------------------------------------------------------------------- 52 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1-April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year -- the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions - "account-based" or "annuity-based." Account-based method. If you choose an "account-based" method, you divide the value of your traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you have to use the "term certain" method of calculating that person's life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). For example, if you anticipate exercising your guaranteed minimum income benefit or selecting any other form of life annuity payout after you are age 70 1/2, you must have elected to recalculate life expectancies. Annuity-based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your traditional IRA based on the method you choose? No, unless you affirmatively select an annuity payout option or an account-based withdrawal option such as our minimum distribution withdrawal option. Because the options we offer do not cover every option permitted under federal income tax rules, you may prefer to do your own required minimum distribution calculations for one or more of your traditional IRAs. What if you take more than you need to for any year? The required minimum distribution amount for your traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you - -------------------------------------------------------------------------------- Tax information 53 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- take from your qualified plans to the amounts you have to take from your traditional IRAs and vice-versa. However, the IRS will let you calculate the required minimum distribution for each traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall traditional IRA required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal income tax rules require complete distribution of your entire value in the contract within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your traditional IRA into his or her own traditional IRA. Successor annuitant and owner If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a traditional IRA. You cannot use a traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o used to pay certain extraordinary medical expenses (special federal income tax definition); or o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); or o used to pay certain first-time home buyer expenses (special federal income tax definition); or - -------------------------------------------------------------------------------- 54 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o used to pay certain higher education expenses (special federal income tax definition); or o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. To meet this last exception, you could elect to apply your contract value to an Income Manager (Life Annuity with a Period Certain) payout annuity contract (level payments version). You could also elect the substantially equal withdrawals option. We will calculate the substantially equal annual payments under a method we select based on guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question and Answer 12). Although substantially equal withdrawals and Income Manager payments are not subject to the 10% penalty tax, they are taxable as discussed in "Withdrawals, payments and transfers of funds out of traditional IRAs" above. Once substantially equal withdrawals or Income Manager annuity payments begin, the distributions should not be stopped or changed until the later of your reaching age 59 1/2 or five years after the date of the first distribution, or the penalty tax, including an interest charge for the prior penalty avoidance, may apply to all prior distributions under this option. Also, it is possible that the IRS could view any additional withdrawal or payment you take from your contract as changing your pattern of substantially equal withdrawals or Income Manager payments for purposes of determining whether the penalty applies. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS) This section of the prospectus covers some of the special tax rules that apply to Roth IRAs. If the rules are the same as those that apply to the traditional IRA, we will refer you to the same topic under "traditional IRAs." The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth individual retirement annuity under Sections 408A and 408(b) of the Internal Revenue Code. CONTRIBUTIONS TO ROTH IRAS Individuals may make four different types of contributions to a Roth IRA: o regular after-tax contributions out of earnings; or o taxable "rollover" contributions from traditional IRAs ("conversion" contributions); or o tax-free rollover contributions from other Roth IRAs; o tax-free direct custodian-to-custodian transfers from other Roth IRAs ("direct transfers"). Regular after-tax, direct transfer, and rollover contributions may be made to a Roth Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under the Roth Conversion IRA contract. See "Rollovers and direct transfers" below. If you use the forms we require, we will also accept traditional IRA funds which are subsequently recharacterized as Roth IRA funds following special federal income tax rules. REGULAR CONTRIBUTIONS TO ROTH IRAS Limits on regular contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a Roth IRA. Any contributions to Roth IRAs reduce your ability to contribute to traditional IRAs and vice versa. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to Roth IRAs and traditional IRAs. See the discussion above under traditional IRAs. With a Roth IRA, you can make regular contributions when you reach 70 1/2, as long as you have sufficient earnings. But, you cannot make contributions for any year that: - -------------------------------------------------------------------------------- Tax information 55 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o your federal income tax filing status is "married filing jointly" and your adjusted gross income is over $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is over $110,000. However, you can make regular Roth IRA contributions in reduced amounts when: o your federal income tax filing status is "married filing jointly" and your adjusted gross income is between $150,000 and $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is between $95,000 and $110,000. If you are married and filing separately and your adjusted gross income is between $0 and $10,000 the amount of regular contribution you are permitted to make is phased out. If your adjusted gross income is more than $10,000 you cannot make a regular Roth IRA contribution. When you can make contributions Same as traditional IRAs. Deductibility of contributions Roth IRA contributions are not tax deductible. ROLLOVERS AND DIRECT TRANSFERS What is the difference between rollover and direct transfer transactions? You may make rollover contributions to a Roth IRA from only two sources: o another Roth IRA ("tax-free rollover contribution"); or o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable "conversion" rollover ("conversion contribution"). You may not make contributions to a Roth IRA from a qualified plan under Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the Internal Revenue Code. You may make direct transfer contributions to a Roth IRA only from another Roth IRA. The difference between a rollover transaction and a direct transfer transaction is the following: in a rollover transaction you actually take possession of the funds rolled over, or are considered to have received them under tax law in the case of a change from one type of plan to another. In a direct transfer transaction, you never take possession of the funds, but direct the first Roth IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly to Equitable Life, as the Roth IRA issuer. You can make direct transfer transactions only between identical plan types (for example, Roth IRA to Roth IRA). You can also make rollover transactions between identical plan types. However, you can only use rollover transactions between different plan types (for example, traditional IRA to Roth IRA). You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to Roth IRA direct transfer transactions. This can be accomplished on a completely tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions only once in any 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers can be made more frequently than once a year. Also, if you send us the rollover contribution to apply it to a Roth IRA, you must do so within 60 days after you receive the proceeds from the original IRA to get rollover treatment. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some cases, Roth IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. Conversion contributions to Roth IRAs In a conversion rollover transaction, you withdraw (or are considered to have withdrawn) all or a portion of funds from a traditional IRA you maintain and convert it to a Roth IRA within 60 days after you receive (or are considered to have received) the traditional IRA proceeds. Unlike a rollover from - -------------------------------------------------------------------------------- 56 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- a traditional IRA to another traditional IRA, the conversion rollover transaction is not tax-free. Instead, the distribution from the traditional IRA is generally fully taxable. For this reason, we are required to withhold 10% federal income tax from the amount converted unless you elect out of such withholding. (If you have ever made nondeductible regular contributions to any traditional IRA -- whether or not it is the traditional IRA you are converting - a pro rata portion of the distribution is tax-free.) There is, however, no early distribution penalty tax on the traditional IRA withdrawal that you are converting to a Roth IRA, even if you are under age 59 1/2. You cannot make conversion contributions to a Roth IRA for any taxable year in which your adjusted gross income exceeds $100,000. (For this purpose, your adjusted gross income is computed without the gross income stemming from the traditional IRA conversion.) You also cannot make conversion contributions to a Roth IRA for any taxable year in which your federal income tax filing status is "married filing separately." Finally, you cannot make conversion contributions to a Roth IRA to the extent that the funds in your traditional IRA are subject to the annual required minimum distribution rule applicable to traditional IRAs beginning at age 70 1/2. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Roth IRA at any time; you do not need to wait for a special event like retirement. DISTRIBUTIONS FROM ROTH IRAS Distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also distributions. The following distributions from Roth IRAs are free of income tax: o Rollovers from a Roth IRA to another Roth IRA; o Direct transfers from a Roth IRA to another Roth IRA; o "Qualified Distributions" from Roth IRAs; and o Return of excess contributions or amounts recharacterized to a traditional IRA. Qualified distributions from Roth IRAs Qualified distributions from Roth IRAs made because of one of the following four qualifying events or reasons are not includable in income: o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o your distribution is a "qualified first-time homebuyer distribution" (special federal income tax definition; $10,000 lifetime total limit for these distributions from all of your traditional and Roth IRAs). You also have to meet a five-year aging period. A qualified distribution is any distribution made after the five-taxable year period beginning with the first taxable year for which you made any contribution to any Roth IRA (whether or not the one from which the distribution is being made). It is not possible to have a tax-free qualified distribution before the year 2003 because of the five-year aging requirement. Nonqualified distributions from Roth IRAs Nonqualified distributions from Roth IRAs are distributions that do not meet the qualifying event and five-year aging period tests described above. Such distributions are potentially taxable as ordinary income. Nonqualified distributions receive return-of-investment-first treatment. Only the difference between the amount of the distribution and the amount of contributions to all of your Roth IRAs is taxable. You have to reduce the amount of contributions to all of your Roth IRAs to reflect any previous tax-free recoveries. - -------------------------------------------------------------------------------- Tax information 57 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You must keep your own records of regular and conversion contributions to all Roth IRAs to assure appropriate taxation. You may have to file information on your contributions to and distributions from any Roth IRA on your tax return. You may have to retain all income tax returns and records pertaining to such contributions and distributions until your interests in all Roth IRAs are distributed. Like traditional IRAs, taxable distributions from a Roth IRA are not entitled to the special favorable five-year averaging method (or, in certain cases, favorable ten-year averaging and long-term capital gain treatment) available in certain cases to distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS AT DEATH Same as traditional IRA under "What are the required minimum distribution payments after you die?" Lifetime required minimum distributions do not apply. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Distributions to a beneficiary generally receive the same tax treatment as if the distribution had been made to you. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS Same as traditional IRA. EXCESS CONTRIBUTIONS Same as traditional IRA, except that regular contributions made after age 70 1/2 are not "excess contributions." Excess rollover contributions to Roth IRAs are contributions not eligible to be rolled over (for example, conversion contributions from a traditional IRA if your adjusted gross income is in excess of $100,000 in the conversion year). You can withdraw or recharacterize any contribution to a Roth IRA before the due date (including extensions) for filing your federal income tax return for the tax year. If you do this, you must also withdraw or recharacterize any earnings attributable to the contribution. EARLY DISTRIBUTION PENALTY TAX Same as traditional IRA. For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable to 1998 conversion rollovers. SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS Under QP contracts your plan administrator or trustee notifies you as to tax consequences. See Appendix II. TAX SHELTERED ANNUITY CONTRACTS (TSAS) GENERAL This section of the prospectus covers some of the special tax rules that apply to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If the rules are the same as those that apply to another kind of contract, for example, traditional IRAs, we will refer you to the same topic under "traditional IRAs." CONTRIBUTIONS TO TSAS There are two ways you can make contributions to this Equitable Accumulator Rollover TSA contract: o a rollover from another TSA contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code, or o a full or partial direct transfer of assets ("direct transfer") from another contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24. With appropriate written documentation satisfactory to us, we will accept rollover contributions from "conduit IRAs" for TSA funds. If you make a direct transfer, you must fill out our transfer form. Employer-remitted contributions The Equitable Accumulator Rollover TSA contract does not accept employer-remitted contributions. However, we provide the following discussion as part of our description of - -------------------------------------------------------------------------------- 58 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- restrictions on the distribution of funds directly transferred, which include employer-remitted contributions to other TSAs. Employer-remitted contributions to TSAs made through the employer's payroll are subject to annual limits. (Tax-free transfer or tax-deferred rollover contributions from another 403(b) arrangement are not subject to these annual contribution limits.) Commonly, some or all of the contributions made to a TSA are made under a salary reduction agreement between the employee and the employer. These contributions are called "salary reduction" or "elective deferral" contributions. However, a TSA can also be wholly or partially funded through nonelective employer contributions or after-tax employee contributions. Amounts attributable to salary reduction contributions to TSAs are generally subject to withdrawal restrictions. Also, all amounts attributable to investments in a 403(b)(7) custodial account are subject to withdrawal restrictions discussed below. Rollover or direct transfer contributions You may make rollover contributions to your Equitable Accumulator Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally, you may make a rollover contribution to a TSA when you have a distributable event from an existing TSA as a result of your: o termination of employment with the employer who provided the TSA funds; or o reaching age 59 1/2 even if you are still employed; or o disability (special federal income tax definition). A transfer occurs when changing the funding vehicle, even if there is no distributable event. Under a direct transfer, you do not receive a distribution. We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if: o you give us acceptable written documentation as to the source of the funds, and o the Equitable Accumulator contract receiving the funds has provisions at least as restrictive as the source contract. Before you transfer funds to an Equitable Accumulator Rollover TSA contract, you may have to obtain your employer's authorization or demonstrate that you do not need employer authorization. For example, the transferring TSA may be subject to Title I of ERISA, if the employer makes matching contributions to salary reduction contributions made by employees. In that case, the employer must continue to approve distributions from the plan or contract. Your contribution to the Equitable Accumulator Rollover TSA must be net of the required minimum distribution for the tax year in which we issue the contract if: o you are or will be at least age 70 1/2 in the current calendar year, and o you have separated from service with the employer who provided the funds to purchase the TSA you are transferring or rolling over to the Equitable Accumulator Rollover TSA. This rule applies regardless of whether the source of funds is a: o rollover by check of the proceeds from another TSA; or o direct rollover from another TSA; or o direct transfer under Revenue Ruling 90-24 from another TSA. Further, you must use the same elections regarding recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you have already begun to receive required minimum distributions from or with respect to the TSA from which you are making your contribution to the Equitable Accumulator Rollover TSA. You must also elect or have elected a minimum distribution calculation method requiring recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you elect an annuity payout for the funds in this contract subsequent to this year. - -------------------------------------------------------------------------------- Tax information 59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DISTRIBUTIONS FROM TSAS General Depending on the terms of the employer plan and your employment status, you may have to get your employer's consent to take a loan or withdrawal. Your employer will tell us this when you establish the TSA through a direct transfer. Withdrawal restrictions If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts transferred to this contract and any future earnings on the amount transferred as not eligible for withdrawal until one of the following events happens: o you are separated from service with the employer who provided the funds to purchase the TSA you are transferring to the Equitable Accumulator Rollover TSA; o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o you take a "hardship" withdrawal (special federal income tax definition). If any portion of the funds directly transferred to your TSA contract is attributable to amounts that you invested in a 403(b)(7) custodial account, such amounts, including earnings, are subject to withdrawal restrictions. With respect to the portion of the funds that were never invested in a 403(b)(7) custodial account, these restrictions apply to the salary reduction (elective deferral) contributions to a TSA annuity contract you made and any earnings on them. These restrictions do not apply to the amount directly transferred to your TSA contract that represents your December 31, 1988 account balance attributable to salary reduction contributions to a TSA annuity contract and earnings. To take advantage of this grandfathering you must properly notify us in writing at our Processing Office of your December 31, 1988 account balance if you have qualifying amounts transferred to your TSA contract. This paragraph applies only to participants in a Texas Optional Retirement Program. Texas Law permits withdrawals only after one of the following distributable events occur: (1) the requirements for minimum distribution (discussed under "Required minimum distributions" below) are met; or (2) death; or (3) retirement; or (4) termination of employment in all Texas public institutions of higher education. For you to make a withdrawal, we must receive a properly completed written acknowledgement from the employer. If a distributable event occurs before you are vested, we will refund to the employer any amounts provided by an employer's first-year matching contribution. We reserve the right to change these provisions without your consent, but only to the extent necessary to maintain compliance with applicable law. Loans are not permitted under Texas Optional Retirement Programs. Tax treatment of distributions Amounts held under TSAs are generally not subject to federal income tax until benefits are distributed. Distributions include withdrawals from your TSA contract and annuity payments from your TSA contract. Death benefits paid to a beneficiary are also taxable distributions. Unless an exception applies, amounts distributed from TSAs are includable in gross income as ordinary income. Distributions from TSAs may be subject to 20% federal income tax withholding. See "Federal and state income tax withholding and information reporting" below. In addition, TSA distributions may be subject to additional tax penalties. If you have made after-tax contributions, you will have a tax basis in your TSA contract, which will be recovered tax-free. Since we do not track your investment in the contract, if any, it is your responsibility to determine how much of the distribution is taxable. - -------------------------------------------------------------------------------- 60 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Distributions before annuity payments begin. On a total surrender, the amount received in excess of the investment in the contract is taxable. We will report the total amount of the distribution. The amount of any partial distribution from a TSA prior to the annuity starting date is generally taxable, except to the extent that the distribution is treated as a withdrawal of after-tax contributions. Distributions are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. Annuity payments. If you elect an annuity payout option, you will recover any investment in the contract as each payment is received by dividing the investment in the contract by an expected return determined under an IRS table prescribed for qualified annuities. The amount of each payment not excluded from income under this exclusion ratio is fully taxable. The full amount of the payments received after your investment in the contract is recovered is fully taxable. If you (and your beneficiary under a joint and survivor annuity) die before recovering the full investment in the contract, a deduction is allowed on your (or your beneficiary's) final tax return. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Death benefit distributions from a TSA generally receive the same tax treatment as distributions during your lifetime. In some instances, distributions from a TSA made to your surviving spouse may be rolled over to a traditional IRA. LOANS FROM TSAS You may take loans from a TSA unless restricted by the employer (for example, under an employer plan subject to ERISA). If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the TSA funds told us when you purchased your contract. Loans are generally not treated as a taxable distribution. If the amount of the loan exceeds permissible limits under federal income tax rules when made, the amount of the excess is treated (solely for tax purposes) as a taxable distribution. Additionally, if the loan is not repaid at least quarterly, amortizing (paying down) interest and principal, the amount not repaid when due will be treated as a taxable distribution. Under Proposed Treasury Regulations the entire unpaid balance of the loan is includable in income in the year of the default. TSA loans are subject to federal income tax limits and may also be subject to the limits of the plan from which the funds came. Federal income tax rule requirements apply even if the plan is not subject to ERISA. For example, loans offered by TSAs are subject to the following conditions: o The amount of a loan to a participant, when combined with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding loan balance of plan loans on the date the loan was made. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. Equitable Accumulator Rollover TSA contracts have a term limit of 10 years for loans used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. The amount borrowed and not repaid may be treated as a distribution if: o the loan does not qualify under the conditions above, o the participant fails to repay the interest or principal when due, or o in some instances, the participant separates from service with the employer who provided the funds or the plan is terminated. In this case, the participant may have to include the unpaid amount due as ordinary income. In addition, the 10% early - -------------------------------------------------------------------------------- Tax information 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- distribution penalty tax may apply. The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a distribution. TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS You may roll over any "eligible rollover distribution" from a TSA into another eligible retirement plan, either directly or within 60 days of your receiving the distribution. To the extent rolled over, a distribution remains tax-deferred. You may roll over a distribution from a TSA to another TSA or to a traditional IRA. A spousal beneficiary may roll over death benefits only to a traditional IRA. The taxable portion of most distributions will be eligible for rollover, except as specifically excluded under federal income tax rules. Distributions that you cannot roll over generally include periodic payments for life or for a period of 10 years or more, hardship withdrawals, and required minimum distributions under federal income tax rules. Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24 are not distributions. REQUIRED MINIMUM DISTRIBUTIONS Same as traditional IRA with these differences: When you have to take the first required minimum distribution The minimum distribution rules force TSA participants to start calculating and taking annual distributions from their TSAs by a required date. Generally, you must take the first required minimum distribution for the calendar year in which you turn age 70 1/2. You may be able to delay the start of required minimum distributions for all or part of your account balance until after age 70 1/2, as follows: o For TSA participants who have not retired from service with the employer who provided the funds for the TSA by the calendar year the participant turns age 70 1/2, the required beginning date for minimum distributions is extended to April 1 following the calendar year of retirement. o TSA plan participants may also delay the start of required minimum distributions to age 75 of the portion of their account value attributable to their December 31, 1986 TSA account balance, even if retired at age 70 1/2. We will know whether or not you qualify for this exception because it will only apply to people who establish their Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give us the amount of your December 31, 1986 account balance that is being transferred to the Equitable Accumulator Rollover TSA on the form used to establish the TSA, you do not qualify. SPOUSAL CONSENT RULES This will only apply to you if you establish your Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the form used to establish the TSA whether or not you need to get spousal consent for loans, withdrawals, or other distributions. If you do, you will need such consent if you are married when you request a withdrawal under the TSA contract. In addition, unless you elect otherwise with the written consent of your spouse, the retirement benefits payable under the plan must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is payable for the life of the annuitant with a survivor annuity for the life of the spouse in an amount not less than one-half of the amount payable to the annuitant during his or her lifetime. In addition, if you are married, the beneficiary must be your spouse, unless your spouse consents in writing to the designation of another beneficiary. If you are married and you die before annuity payments have begun, payments will be made to your surviving spouse in the form of a life annuity unless at the time of your death a contrary election was in effect. However, your surviving spouse may elect, before payments begin, to receive payments in any form permitted under the terms of the TSA contract and the plan of the employer who provided the funds for the TSA. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a TSA before you reach age - -------------------------------------------------------------------------------- 62 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 59 1/2. This is in addition to any income tax. There are exceptions to the extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o to pay for certain extraordinary medical expenses (special federal income tax definition); or o if you are separated from service, any form of payout after you are age 55; or o only if you are separated from service, a payout in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. You should note the following special situations: o We might have to withhold on amounts we pay under a free look or cancellation. o We are generally required to withhold on conversion rollovers of traditional IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA and is taxable. o We are required to withhold on the gross amount of a distribution from a Roth IRA unless you elect out of withholding. This may result in tax being withheld even though the Roth IRA distribution is not taxable in whole or in part. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at the toll-free number. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999, your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. - -------------------------------------------------------------------------------- Tax information 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS) For a non-periodic distribution (total surrender or partial withdrawal), we generally withhold at a flat 10% rate. We apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs and Roth IRAs. You cannot elect out of withholding if the payment is an "eligible rollover distribution" from a qualified plan or TSA. If a non-periodic distribution from a qualified plan or TSA is not an "eligible rollover distribution" then the 10% withholding rate applies. MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS Unless you have the distribution go directly to the new plan, eligible rollover distributions from qualified plans and TSAs are subject to mandatory 20% withholding. An eligible rollover distribution from a TSA can be rolled over to another TSA or a traditional IRA. An eligible rollover distribution from a qualified plan can be rolled over to another qualified plan or traditional IRA. All distributions from a TSA or qualified plan are eligible rollover distributions unless they are on the following list of exceptions: o any after-tax contributions you made to the plan; or o any distributions which are "required minimum distributions" after age 70 1/2 or separation from service; or o hardship withdrawals; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and your designated beneficiary; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. A death benefit payment to your surviving spouse, or a qualified domestic relations order distribution to your current or former spouse, may be a distribution subject to mandatory 20% withholding. IMPACT OF TAXES TO EQUITABLE LIFE The contracts provide that we may charge Separate Account No. 49 for taxes. We do not now, but may in the future set up reserves for such taxes. - -------------------------------------------------------------------------------- 64 More information - -------------------------------------------------------------------------------- More information - -------------------------------------------------------------------------------- ABOUT OUR SEPARATE ACCOUNT NO. 49 Each variable investment option is a subaccount of our Separate Account No. 49. We established Separate Account No. 49 in 1996 under special provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our variable investment options for owners of our variable annuity contracts, including these contracts. We are the legal owner of all of the assets in Separate Account No. 49 and may withdraw any amounts that exceed our reserves and other liabilities with respect to variable investment options under our contracts. The results of Separate Account No. 49's operations are accounted for without regard to Equitable Life's other operations. Separate Account No. 49 is registered under the Investment Company Act of 1940 and is classified by that act as a "unit investment trust." The SEC, however, does not manage or supervise Equitable Life or Separate Account No. 49. Each subaccount (variable investment option) within Separate Account No. 49 invests solely in class IB shares issued by the corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust. We reserve the right subject to compliance with laws that apply: (1) to add variable investment options to, or to remove variable investment options from, Separate Account No. 49, or to add other separate accounts; (2) to combine any two or more variable investment options; (3) to transfer the assets we determine to be the shares of the class of contracts to which the contracts belong from any variable investment option to another variable investment option; (4) to operate Separate Account No. 49 or any variable investment option as a management investment company under the Investment Company Act of 1940 (in which case, charges and expenses that otherwise would be assessed against an underlying mutual fund would be assessed against Separate Account No. 49 or a variable investment option directly); (5) to deregister Separate Account No. 49 under the Investment Company Act of 1940; (6) to restrict or eliminate any voting rights as to Separate Account No. 49; and (7) to cause one or more variable investment options to invest some or all of their assets in one or more other trusts or investment companies. ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST The Hudson River Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each trust issues different shares relating to each Portfolio. The Hudson River Trust and EQ Advisors Trust do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on a trust's shares are reinvested in full. The Board of Trustees of The Hudson River Trust and EQ Advisors Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about The Hudson River Trust and EQ Advisors Trust, their investment objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans relating to their Class IB shares, and other aspects of their operations, appears in their prospectuses, or in their SAIs which are available upon request. ABOUT OUR FIXED MATURITY OPTIONS RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE We can determine the amount required to be allocated to one or more fixed maturity options in order to produce specified maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. - -------------------------------------------------------------------------------- More Information 65 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows: - -------------------------------------------------------------------------------- FIXED MATURITY OPTIONS WITH FEBRUARY 15TH RATE TO MATURITY PRICE MATURITY DATE OF AS OF PER $100 OF MATURITY YEAR APRIL 1, 1999 MATURITY VALUE - -------------------------------------------------------------------------------- 2000 3.25% $97.23 2001 4.04% $92.83 2002 4.33% $88.51 2003 4.46% $84.43 2004 4.52% $80.60 2005 4.67% $76.45 2006 4.77% $72.56 2007 4.79% $69.16 2008 4.87% $65.55 2009 4.97% $61.91 - -------------------------------------------------------------------------------- HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw all of your value from a fixed maturity option before its maturity date. (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. - -------------------------------------------------------------------------------- Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation. - -------------------------------------------------------------------------------- If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. Any withdrawal charges that are deducted from a fixed maturity option will result in a market value adjustment calculated in the same way. See Appendix III for an example. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. INVESTMENTS UNDER THE FIXED MATURITY OPTIONS Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides an additional measure of assurance that we will make full - -------------------------------------------------------------------------------- 66 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- payment of amounts due under the fixed maturity options. Under New York Insurance Law, the portion of the separate account's assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your value in the fixed maturity options, regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the fixed maturity options under the contracts, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options and the account for special dollar cost averaging, as well as our general obligations. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account (other than market value adjustment interests). The disclosure with regard to the general account, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ABOUT OTHER METHODS OF PAYMENT WIRE TRANSMITTALS We accept initial contributions sent by wire to our Processing Office by agreement with certain broker-dealers. The transmittals must be accompanied by information we require to allocate your contribution. Wire orders not accompanied by complete information may be retained as described under "How you can make your contributions." Even if we accept the wire order and essential information, a contract generally will not be issued until we receive and accept a properly completed application. In certain cases we may issue a contract based on information forwarded electronically. In these cases, you must sign our Acknowledgement of Receipt form. Where we require a signed application, no financial transactions will be permitted until we receive the signed application and have issued the contract. Where we require an Acknowledgement of Receipt form, financial transactions are only permitted if you request them in writing, sign the request and have it signature guaranteed, until we receive the signed Acknowledgement of Receipt form. After your contract has been issued, additional contributions may be transmitted by wire. - -------------------------------------------------------------------------------- More information 67 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENT PROGRAM -- FOR NQ, FLEXIBLE PREMIUM IRA, AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY You may use our automatic investment program, or "AIP," to have a specified amount automatically deducted from a checking account, money market account, or credit union checking account and contributed as an additional contribution into an NQ, Flexible Premium IRA or Roth Flexible Premium IRA contract on a monthly or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts. For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300 quarterly. Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, the minimum amount is $50. AIP additional contributions may be allocated to any of the variable investment options and available fixed maturity options, but not the account for special dollar cost averaging. You choose the day of the month you wish to have your account debited as long as it is not later than the 28th day of the month. You may cancel AIP at any time by notifying our Processing Office. We are not responsible for any debits made to your account before the time written notice of cancellation is received at our Processing Office. DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR We describe below the general rules for when, and at what prices, events under your contract will occur. Other portions of this prospectus describe circumstances that may cause exceptions. We generally do not repeat those exceptions below. BUSINESS DAY Our business day is any day the New York Stock Exchange is open for trading. Each business day ends at the time trading on the exchange closes (or is suspended) for the day. We calculate unit values for our variable investment options as of the end of each business day. This usually is 4:00 p.m., Eastern Time. Contributions will be applied and any other transaction requests will be processed when they are received along with all the required information. o If your contribution, transfer or any other transaction request, containing all the required information, reaches us on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. o A loan request under your Rollover TSA contract will be processed on the first business day of the month following the date on which the properly completed loan request form is received. o If your transaction is set to occur on the same day of the month as the contract date and that date is the 29th, 30th or 31st of the month, then the transaction will occur on either the 28th day of the month or the 1st day of the next month, whichever is the closest business day. o When a charge is to be deducted on a contract date anniversary that is a non-business day, we will deduct the charge on the next business day. CONTRIBUTIONS AND TRANSFERS o Contributions allocated to the variable investment options are invested at the value next determined after the close of the business day. o Contributions allocated to a fixed maturity option will receive the rate to maturity in effect for that fixed maturity option on that business day. o Initial contributions allocated to the account for special dollar cost averaging receive the interest rate in effect on that business day. At certain times, we may offer the opportunity to lock in the interest rate for an initial contribution to be received under Section 1035 exchanges and trustee to trustee transfers. Your registered representative can provide information or you can call our Processing Office. o Transfers to or from variable investment options will be made at the value next determined after the close of the business day. o Transfers to a fixed maturity option will be based on the - -------------------------------------------------------------------------------- 68 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- rate to maturity in effect for that fixed maturity option on the business day of the transfer. ABOUT YOUR VOTING RIGHTS As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we have the right to vote on certain matters involving the Portfolios, such as: o The election of trustees. o The formal approval of independent auditors selected for each trust. o Any other matters described in the prospectuses for the trusts or requiring a shareholders' vote under the Investment Company Act of 1940. We will give contract owners the opportunity to instruct us how to vote the number of shares attributable to their contracts if a shareholder vote is taken. If we do not receive instructions in time from all contract owners, we will vote the shares of a Portfolio for which no instructions have been received in the same proportion as we vote shares of that Portfolio for which we have received instructions. We will also vote any shares that we are entitled to vote directly because of amounts we have in a Portfolio in the same proportions that contract owners vote. VOTING RIGHTS OF OTHERS Currently, we control each trust. EQ Advisors Trust shares are sold only to our separate accounts and an affiliated qualified plan trust. The Hudson River Trust shares are held by other separate accounts of ours and by separate accounts of insurance companies unaffiliated with us. Shares held by these separate accounts will probably be voted according to the instructions of the owners of insurance policies and contracts issued by those insurance companies. While this will dilute the effect of the voting instructions of the contract owners, we currently do not foresee any disadvantages because of this. The Hudson River Trust Board of Trustees intends to monitor events in order to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a response to any of those events insufficiently protects our contract owners, we will see to it that appropriate action is taken. SEPARATE ACCOUNT NO. 49 VOTING RIGHTS If actions relating to Separate Account No. 49 require contract owner approval, contract owners will be entitled to one vote for each unit they have in the variable investment options. Each contract owner who has elected a variable annuity payout option may cast the number of votes equal to the dollar amount of reserves we are holding for that annuity in a variable investment option divided by the annuity unit value for that option. We will cast votes attributable to any amounts we have in the variable investment options in the same proportion as votes cast by contract owners. CHANGES IN APPLICABLE LAW The voting rights we describe in this prospectus are created under applicable federal securities laws. To the extent that those laws or the regulations published under those laws eliminate the necessity to submit matters for approval by persons having voting rights in separate accounts of insurance companies, we reserve the right to proceed in accordance with those laws or regulations. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting to - -------------------------------------------------------------------------------- More information 69 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission-critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system that is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon Separate Account No. 49, our ability to meet our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The financial statements of Equitable Life incorporated in this prospectus by reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and for the three years ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING You can transfer ownership of an NQ contract at any time before annuity payments begin. We will continue to treat you as the owner until we receive notification of any change at our Processing Office. You cannot assign your NQ contract as collateral or security for a loan. Loans are also not available under your NQ contract. In some cases, an assignment or change of ownership may have adverse tax consequences. See "Tax information." You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract except by surrender to us. Loans are not available and you cannot assign IRA and QP contracts as security for a loan or other obligation. If the employer that provided the funds does not restrict them, loans are available under a Rollover TSA contract. For limited transfers of ownership after the owner's death see "Payment of death benefit" and "Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts." You may direct the transfer of the values under your IRA, QP or Rollover TSA contract to another similar arrangement. Under federal income tax rules, in the case of such a transfer, we will impose a withdrawal charge, if one applies. DISTRIBUTION OF THE CONTRACTS Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of Equitable Life, is the distributor of the contracts and has responsibility for sales and marketing functions for Separate Account No. 49. EDI serves as the principal underwriter of Separate - -------------------------------------------------------------------------------- 70 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Account No. 49. EDI also acts as distributor for other Equitable Life annuity products with different features, expenses, and fees. EDI is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. EDI's principal business address is 1290 Avenue of the Americas, New York, New York 10104. Under a distribution agreement between EDI, Equitable Life, and certain of Equitable Life's separate accounts, including Separate Account No. 49, Equitable Life paid EDI distribution fees of $35,452,793 for 1998, $9,566,343 for 1997, and $87,157 for 1996, as the distributor of certain contracts, including these contracts, and as the principal underwriter of several Equitable Life separate accounts, including Separate Account No. 49. The contracts will be sold by registered representatives of EDI, as well as by affiliated and unaffiliated broker-dealers with which EDI has entered into selling agreements. Broker-dealer sales compensation will generally not exceed 7% of total contributions made under the contracts. EDI may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. Broker-dealers receiving sales compensation will generally pay a portion of it to their registered representatives as commissions related to sales of the contracts. The offering of the contracts is intended to be continuous. - -------------------------------------------------------------------------------- Investment performance 71 - -------------------------------------------------------------------------------- Investment performance - -------------------------------------------------------------------------------- We provide the following tables to show five different measurements of the investment performance of the variable investment options and/or the Portfolios in which they invest. We include these tables because they may be of general interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR RESULTS WILL DIFFER. Table 1 shows the average annual total return of the variable investment options. Average annual total return is the annual rate of growth that would be necessary to achieve the ending value of a contribution invested in the variable investment options for the periods shown. Table 2 shows the growth of a hypothetical $1,000 investment in the variable investment options over the periods shown. Both Tables 1 and 2 take into account all fees and charges under the contract, including the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, but do not take the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee, into account. Tables 3, 4, and 5 show the rates of return of the variable investment options on an annualized, cumulative, and year-by-year basis. These tables take into account all fees and charges under the contract, but do not reflect the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge or the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee. If the charges were reflected they would effectively reduce the rates of return shown. In all cases the results shown are based on the actual historical investment experience of the Portfolios in which the variable investment options invest. In some cases, the results shown relate to periods when the variable investment options and/or the contracts were not available. In those cases, we adjusted the results of the Portfolios to reflect the charges under the contracts that would have applied had the investment options and/or contracts been available. The contracts were first offered on May 1, 1997. In addition, we have adjusted the results prior to October 1996, when The Hudson River Trust Class IB shares were not available, to reflect the 12b-1 fees currently imposed. Finally, the results shown for the Alliance Money Market and Alliance Common Stock options for periods before March 22, 1985 reflect the results of the variable investment options that preceded them. The "Since inception" figures for these options are based on the date of inception of the preceding variable investment options. We have adjusted these results to reflect the maximum investment advisory fee payable for the Portfolios, as well as an assumed charge of 0.06% for direct operating expenses. EQ Advisors Trust commenced operations on May 1, 1997. All rates of return presented are time-weighted and include reinvestment of investment income, including interest and dividends. BENCHMARKS Tables 3 and 4 compare the performance of variable investment options to market indices that serve as benchmarks. Market indices are not subject to any charges for investment advisory fees, brokerage commission or other operating expenses typically associated with a managed portfolio. Also, they do not reflect other contract charges such as the mortality and expense risks charge, administrative charges, or any withdrawal or optional benefit charge. Comparisons with these benchmarks, therefore, may be of limited use. We include them because they are widely known and may help you to understand the universe of securities from which each Portfolio is likely to select its holdings. Benchmark data reflect the reinvestment of dividend income. The benchmarks include: - -------------------------------------------------------------------------------- 72 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index. ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index. ALLIANCE COMMON STOCK: Standard & Poor's 500 Index. ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard & Poor's Mid-Cap Total Return Index. ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index. EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index. CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index. CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index. CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital International Europe, Australia, Far East Index. BT EQUITY 500 INDEX: Standard & Poor's 500 Index. BT SMALL COMPANY INDEX: Russell 2000 Index. BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe, Australia, Far East Index. JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond. LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index. LAZARD SMALL CAP VALUE: Russell 200 Index. MFS GROWTH WITH INCOME: Standard & Poor's 500 Index. MFS RESEARCH: Standard & Poor's 500 Index. MFS EMERGING GROWTH COMPANIES: Russell 2000 Index. MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International Emerging Markets Free Price Return Index. EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index. EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index. EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital International Europe, Australia, Far East Index. - -------------------------------------------------------------------------------- LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis Survey (Lipper Survey) records the performance of a large group of variable annuity products, including managed separate accounts of insurance companies. According to Lipper Analytical Services, Inc., the data are presented net of investment management fees, direct operating expenses and asset-based charges applicable under annuity contracts. Lipper data provide a more accurate picture than market benchmarks of the Equitable Accumulator performance relative to other variable annuity products. - -------------------------------------------------------------------------------- Investment performance 73 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 1 AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD -------------------------------------------------------------------------------- SINCE SINCE PORTFOLIO 1 3 5 10 OPTION PORTFOLIO INCEPTION VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE - ----------------------------------------------------------------------------------------------------------------------------- Alliance Money Market (3.64)% 1.59% 2.40% 3.35% -- -- 7/13/81 - ----------------------------------------------------------------------------------------------------------------------------- Alliance High Yield (13.96)% 7.72% 7.28% 8.93% -- -- 1/2/87 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock 20.02% 24.05% 19.18% 16.35% -- -- 1/13/76 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock (8.60)% 7.09% 8.76% 16.79% -- -- 1/27/86 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth (13.03)% -- -- -- 5.51% 5.51% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index 16.14% -- -- -- 16.14% 16.14% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- BT Small Company Index (10.93)% -- -- -- (10.93)% (10.93)% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- BT International Equity Index 11.17% -- -- -- 11.17% 11.17% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- JPM Core Bond 0.26% -- -- -- 0.26% 0.26% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value 11.14% -- -- -- 11.14% 11.14% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value (15.62)% -- -- -- (15.62)% (15.62)% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- MFS Research 15.13% -- -- -- 15.64% 15.64% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies 25.40% -- -- -- 24.05% 24.05% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity (35.31) -- -- -- (35.31)% (28.99)% 8/20/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value 4.00% -- -- -- 10.08% 10.08% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth 27.15% -- -- -- 26.08% 26.08% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity 10.56% -- -- -- 9.98% 9.98% 5/1/97 - -----------------------------------------------------------------------------------------------------------------------------
- ---------- * The since inception dates for the variable investment options are as follows: Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance Aggressive Stock, Alliance Small Cap Growth, MFS Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, and EQ/Putnam International Equity (May 1, 1997); BT Equity 500 Index, BT Small Company Index, BT International Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, and Morgan Stanley Emerging Markets Equity (December 31, 1997). The inception dates for the Portfolios that became available on or after December 31, 1998 and are therefore not shown in the tables are: MFS Growth with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian International (May 1, 1999). - -------------------------------------------------------------------------------- 74 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 2 GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- --------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD ---------------------------------------------------------------------- SINCE 1 3 5 10 PORTFOLIO VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* - --------------------------------------------------------------------------------------------------------------- Alliance Money Market $ 963.60 $ 1,048.36 $ 1,126.12 $ 1,390.07 -- - --------------------------------------------------------------------------------------------------------------- Alliance High Yield $ 860.40 $ 1,250.11 $ 1,421.32 $ 2,352.06 -- - --------------------------------------------------------------------------------------------------------------- Alliance Common Stock $ 1,200.20 $ 1,908.73 $ 2,404.59 $ 4,547.90 -- - --------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 914.00 $ 1,228.21 $ 1,521.63 $ 4,719.54 -- - --------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth $ 869.70 -- -- -- $ 1,113.16 - --------------------------------------------------------------------------------------------------------------- BT Equity 500 Index $ 1,161.40 -- -- -- $ 1,161.40 - --------------------------------------------------------------------------------------------------------------- BT Small Company Index $ 890.70 -- -- -- $ 890.70 - --------------------------------------------------------------------------------------------------------------- BT International Equity Index $ 1,111.70 -- -- -- $ 1,111.70 - --------------------------------------------------------------------------------------------------------------- JPM Core Bond $ 1,002.60 -- -- -- $ 1,002.60 - --------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value $ 1,111.40 -- -- -- $ 1,111.40 - --------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value $ 843.80 -- -- -- $ 843.80 - --------------------------------------------------------------------------------------------------------------- MFS Research $ 1,151.30 -- -- -- $ 1,337.29 - --------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies $ 1,254.00 -- -- -- $ 1,538.76 - --------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 646.90 -- -- -- $ 504.25 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value $ 1,040.00 -- -- -- $ 1,211.78 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth $ 1,271.50 -- -- -- $ 1,589.59 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity $ 1,105.60 -- -- -- $ 1,209.59 - ---------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 75 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 3 ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ---------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% -- 5.38% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% -- 8.73% - ---------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% -- 15.88% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 10.53% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 16.72% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 16.58% - ---------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - ---------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - ---------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.17% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - ---------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.56% -- -- -- -- 7.56% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - ---------------------------------------------------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.16% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 76 Investment performance - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 22.75% - ------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 33.03% - ------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 22.72% - ------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 14.53% - ------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (33.62)% - ------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)% - ------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (28.92)% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 16.03% - ------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 35.53% - ------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 15.94% - ------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 9.06% - ------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 13.43% - -------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 77 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 4 CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% -- 149.59% - --------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% -- 172.86% - --------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10% - --------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% -- 572.32% - --------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 18.19% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 28.98% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 29.23% - --------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - --------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.49% - --------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - --------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - --------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.23% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - --------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.56% -- -- -- -- 7.56% - --------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - --------------------------------------------------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44% - --------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.09% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - --------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 78 Investment performance - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ----------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 40.79% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 60.99% - ----------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 42.16% - ----------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 25.40% - ----------------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (42.83)% - ----------------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)% - ----------------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (36.71)% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 28.16% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 38.49% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 66.08% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 27.98% - ----------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 15.88% - ----------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 23.42% - -----------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 79 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 5 YEAR-BY-YEAR RATES OF RETURN
- ------------------------------------------------------------------------------------------------------------------------------------ 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32% 2.36% 4.06% 3.64% 3.74% 3.66% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19% (4.33)% 18.01% 20.91% 16.58% (6.66)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83% (3.70)% 30.34% 22.28% 27.16% 27.32% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89% (5.35)% 29.54% 20.24% 9.04% (1.30)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.38%+ (5.73)% - ------------------------------------------------------------------------------------------------------------------------------------ BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.44% - ------------------------------------------------------------------------------------------------------------------------------------ BT Small Company Index -- -- -- -- -- -- -- -- -- (3.63)% - ------------------------------------------------------------------------------------------------------------------------------------ BT International Equity Index -- -- -- -- -- -- -- -- -- 18.47% - ------------------------------------------------------------------------------------------------------------------------------------ JPM Core Bond -- -- -- -- -- -- -- -- -- 7.56% - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Large Cap Value -- -- -- -- -- -- -- -- -- 18.44% - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Small Cap Value -- -- -- -- -- -- -- -- -- (8.32)% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research -- -- -- -- -- -- -- -- 14.99%+ 22.43% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.32%+ 32.70% - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.59)%+ (28.01)% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 15.15%+ 11.30% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Investors Growth -- -- -- -- -- -- -- -- 23.53%+ 34.45% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam International Equity -- -- -- -- -- -- -- -- 8.59%+ 17.86% - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- + Returns for these options represent less than 12 months of performance. The returns are as of each Portfolio inception date as shown in Table 1. - -------------------------------------------------------------------------------- 80 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMMUNICATING PERFORMANCE DATA In reports or other communications to contract owners or in advertising material, we may describe general economic and market conditions affecting our variable investment options, and the Portfolios and may compare the performance or ranking of those options and the Portfolios with: o those of other insurance company separate accounts or mutual funds included in the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS, or similar investment services that monitor the performance of insurance company separate accounts or mutual funds; o other appropriate indices of investment securities and averages for peer universes of mutual funds which are shown under "Benchmarks" above; or o data developed by us derived from such indices or averages. We also may furnish to present or prospective contract owners advertisements or other communications that include evaluations of a variable investment option or Portfolio by nationally recognized financial publications. Examples of such publications are: - -------------------------------------------------------------------------------- Barron's Money Management Letter - -------------------------------------------------------------------------------- Morningstar's Variable Annuity Sourcebook Investment Dealers Digest - -------------------------------------------------------------------------------- Business Week National Underwriter - -------------------------------------------------------------------------------- Forbes Pension & Investments - -------------------------------------------------------------------------------- Fortune USA Today - -------------------------------------------------------------------------------- Institutional Investor Investor's Business Daily - -------------------------------------------------------------------------------- Money The New York Times - -------------------------------------------------------------------------------- Kiplinger's Personal Finance The Wall Street Journal - -------------------------------------------------------------------------------- Financial Planning The Los Angeles Times - -------------------------------------------------------------------------------- Investment Adviser The Chicago Tribune - -------------------------------------------------------------------------------- Investment Management Weekly - -------------------------------------------------------------------------------- Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer universes of funds with similar investment objectives in its Lipper Survey. Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life Report (Morningstar Report). The Lipper Survey records performance data as reported to it by over 800 mutual funds underlying variable annuity and life insurance products. It divides these actively managed portfolios into 25 categories by portfolio objectives. The Lipper Survey contains two different universes, which reflect different types of fees in performance data: o The "separate account" universe reports performance data net of investment management fees, direct operating expenses and asset-based charges applicable under variable insurance and annuity contracts, and o The "mutual fund" universe reports performance net only of investment management fees and direct operating expenses, and therefore reflects only charges that relate to the underlying mutual fund. The Morningstar Variable Annuity/Life Report consists of nearly 700 variable life and annuity funds, all of which report their data net of investment management fees, direct operating expenses and separate account level charges. VARDS is a monthly reporting service that monitors approximately 2,500 variable life and variable annuity funds on performance and account information. YIELD INFORMATION Current yield for the Alliance Money Market option will be based on net changes in a hypothetical investment over a given seven-day period, exclusive of capital changes, and then "annualized" (assuming that the same seven-day result would occur each week for 52 weeks). Current yield for the Alliance High Yield option will be based on net changes in a hypothetical investment over a given 30-day period, exclusive of capital changes, and then "annualized" (assuming that the same 30-day result would occur each month for 12 months). "Effective yield" is calculated in a similar manner, but when annualized, any income earned by the investment is assumed to be reinvested. The "effective yield" will be slightly higher than the "current yield" because any earnings are compounded weekly for the Alliance Money Market option and monthly for the Alliance High Yield option. The yields and effective yields assume the deduction of all contract charges and expenses other than the withdrawal charge, the optional baseBUILDER benefits charge, the annual - -------------------------------------------------------------------------------- Investment performance 81 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- administrative charge, and any charge for taxes such as premium tax. The yields and effective yields for the Alliance Money Market option, when used for the special dollar cost averaging program, assume that no contract charges are deducted. For more information, see "Yield Information for the Alliance Money Market Option and Alliance High Yield Option" in the SAI. - -------------------------------------------------------------------------------- 82 Incorporation of certain documents by reference - -------------------------------------------------------------------------------- Incorporation of certain documents by reference - -------------------------------------------------------------------------------- Equitable Life's annual report on Form 10-K for the year ended December 31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to be a part of this prospectus because they are incorporated by reference. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is, or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered, a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). - -------------------------------------------------------------------------------- Appendix I: Condensed financial information A-1 - -------------------------------------------------------------------------------- Appendix I: Condensed financial information - -------------------------------------------------------------------------------- UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE INVESTMENT OPTION - -------------------------------------------------------------------------------- For the years ending ------------------------------------ Dec. 31, 1997 Dec. 31, 1998 - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK - -------------------------------------------------------------------------------- Unit value $70.28 $69.37 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 380 939 - -------------------------------------------------------------------------------- ALLIANCE COMMON STOCK - -------------------------------------------------------------------------------- Unit value $186.29 $237.18 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 434 1,542 - -------------------------------------------------------------------------------- ALLIANCE HIGH YIELD - -------------------------------------------------------------------------------- Unit value $29.96 $27.96 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1,256 4,521 - -------------------------------------------------------------------------------- ALLIANCE MONEY MARKET - -------------------------------------------------------------------------------- Unit value $25.00 $25.92 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1,153 5,158 - -------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH - -------------------------------------------------------------------------------- Unit value $12.54 $11.82 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2,521 6,101 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- BT EQUITY 500 INDEX - -------------------------------------------------------------------------------- Unit value $10.00 $12.34 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 12,279 - -------------------------------------------------------------------------------- BT SMALL COMPANY INDEX - -------------------------------------------------------------------------------- Unit value $10.00 $9.64 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,610 - -------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX - -------------------------------------------------------------------------------- Unit value $10.00 $11.85 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,827 - -------------------------------------------------------------------------------- JPM CORE BOND - -------------------------------------------------------------------------------- Unit value $10.00 $10.76 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 8,661 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-2 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For the years ending --------------------------------- Dec. 31, 1997 Dec. 31, 1998 - -------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE - -------------------------------------------------------------------------------- Unit value $10.00 $11.84 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 5,696 - -------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE - -------------------------------------------------------------------------------- Unit value $10.00 $9.17 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 4,733 - -------------------------------------------------------------------------------- MFS RESEARCH - -------------------------------------------------------------------------------- Unit value $11.50 $14.08 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 5,257 14,913 - -------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES - -------------------------------------------------------------------------------- Unit value $12.13 $16.10 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 3,327 9,117 - -------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY - -------------------------------------------------------------------------------- Unit value $7.94 $5.72 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,805 - -------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE - -------------------------------------------------------------------------------- Unit value $11.52 $12.82 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 8,113 24,343 - -------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH - -------------------------------------------------------------------------------- Unit value $12.35 $16.61 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2,581 10,072 - -------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY - -------------------------------------------------------------------------------- Unit value $10.86 $12.80 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 4,609 10,607 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts B-1 - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts - -------------------------------------------------------------------------------- Trustees who are considering the purchase of an Equitable Accumulator QP contract should discuss with their tax advisers whether this is an appropriate investment vehicle for the employer's plan. Trustees should consider whether the plan provisions permit the investment of plan assets in the QP contract, the distribution of such an annuity, the purchase of the guaranteed minimum income benefit, and the payment of death benefits in accordance with the requirements of the federal income tax rules. The QP contract and this prospectus should be reviewed in full, and the following factors, among others, should be noted. Assuming continued plan qualification and operation, earnings on qualified plan assets will accumulate value on a tax-deferred basis even if the plan is not funded by the Equitable Accumulator QP contract or another annuity. Therefore, you should purchase an Equitable Accumulator QP contract to fund a plan for the contract's features and benefits other than tax deferral. This QP contract accepts transfer contributions only and not regular, ongoing payroll contributions. For 401(k) plans under defined contribution plans, no employee after-tax contributions are accepted. Under defined benefit plans, we will not accept rollovers from a defined contribution plan to a defined benefit plan. We will only accept transfers from a defined benefit plan or a change of investment vehicles in the plan. For defined benefit plans, the maximum percentage of actuarial value of the plan participant/employee's "normal retirement benefit" that can be funded by a QP contract is 80%. The account value under a QP contract may at any time be more or less than the lump sum actuarial equivalent of the "accrued benefit" for a defined benefit plan participant/employee. Equitable Life does not guarantee that the account value under a QP contract will at any time equal the actuarial value of 80% of a participant/employee's accrued benefit. If overfunding of a plan occurs, withdrawals from the QP contract may be required. A withdrawal charge and/or market value adjustment may apply. Further, Equitable Life will not perform or provide any plan recordkeeping services with respect to the QP contracts. The plan's administrator will be solely responsible for performing or providing for all such services. There is no loan feature offered under the QP contracts, so if the plan provides for loans and a participant/employee takes a loan from the plan, other plan assets must be used as the source of the loan and any loan repayments must be credited to other investment vehicles and/or accounts available under the plan. Given that required minimum distributions must commence from the plan for annuitants after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan funds) trustees should consider whether the QP contract is an appropriate purchase for annuitants approaching or over age 70 1/2. Finally, because the method of purchasing the QP contract and the features of the QP contract may appeal more to plan participants/employees who are older and tend to be highly paid, and because certain features of the QP contract are available only to plan participants/employees who meet certain minimum and/or maximum age requirements, plan trustees should discuss with their advisers whether the purchase of the QP contract would cause the plan to engage in prohibited discrimination in contributions, benefits or otherwise. - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example C-1 - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example - -------------------------------------------------------------------------------- The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a maturity value at the maturity date of $183,846. We further assume that a withdrawal of $50,000 is made four years later on February 15, 2004.
- ------------------------------------------------------------------------------------------------------------------ ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004 --------------------------------------------- 5.00% 9.00% - ------------------------------------------------------------------------------------------------------------------ AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------------ (1) Market adjusted amount $144,048 $119,487 - ------------------------------------------------------------------------------------------------------------------ (2) Fixed maturity amount 131,080 131,080 - ------------------------------------------------------------------------------------------------------------------ (3) Market value adjustment: (1)-(2) 12,968 (11,593) - ------------------------------------------------------------------------------------------------------------------ ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------------ (4) Portion of market value adjustment associated with withdrawal: (3) x [$50,000/(1)] $ 4,501 $ (4,851) - ------------------------------------------------------------------------------------------------------------------ (5) Reduction in fixed maturity amount: [$50,000-(4)] 45,499 54,851 - ------------------------------------------------------------------------------------------------------------------ (6) Fixed maturity amount: (2)-(5) 85,581 76,229 - ------------------------------------------------------------------------------------------------------------------ (7) Maturity value 120,032 106,915 - ------------------------------------------------------------------------------------------------------------------ (8) Market adjusted amount of (7) 94,048 69,487 - ------------------------------------------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example D-1 - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- The death benefit under the contracts is equal to the account value or, if greater, the guaranteed minimum death benefit. The following illustrates the guaranteed minimum death benefit calculation. Assuming $100,000 is allocated to the variable investment options (with no allocation to the Alliance Money Market option or the fixed maturity options), no additional contributions, no transfers and no withdrawals, and no loans under a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant age 45 would be calculated as follows:
- ----------------------------------------------------------------------------------------- 5% ROLL UP TO END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED CONTRACT GUARANTEED MINIMUM MINIMUM YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT - ----------------------------------------------------------------------------------------- 1 $105,000 $105,000(1) $105,000(3) - ----------------------------------------------------------------------------------------- 2 $115,500 $110,250(2) $115,500(3) - ----------------------------------------------------------------------------------------- 3 $129,360 $115,763(2) $129,360(3) - ----------------------------------------------------------------------------------------- 4 $103,488 $121,551(1) $129,360(4) - ----------------------------------------------------------------------------------------- 5 $113,837 $127,628(1) $129,360(4) - ----------------------------------------------------------------------------------------- 6 $127,497 $134,010(1) $129,360(4) - ----------------------------------------------------------------------------------------- 7 $127,497 $140,710(1) $129,360(4) - -----------------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We are using these rates solely to illustrate how the benefit is determined. The return rates bear no relationship to past or future investment results. 5% ROLL UP TO AGE 80 (1) At the end of contract year 1, and again at the end of contract years 4 through 7, the death benefit will be equal to the guaranteed minimum death benefit. (2) At the end of contract years 2 and 3, the death benefit will be equal to the current account value since it is higher than the current guaranteed minimum death benefit. ANNUAL RATCHET TO AGE 80 (3) At the end of contract years 1 through 3, the guaranteed minimum death benefit is equal to the current account value. (4) At the end of contract years 4 through 7, the guaranteed minimum death benefit is equal to the guaranteed minimum death benefit at the end of the prior year since it is equal to or higher than the current account value. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Statement of additional information - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page Unit Values 2 Annuity Unit Values 2 Custodian and Independent Accountants 3 Yield Information for the Alliance Money Market Option and Alliance High Yield Option 3 Long-Term Market Trends 4 Key Factors in Retirement Planning 6 Financial Statements 9 HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT NO. 49 Send this request form to: Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- Please send me an Equitable Accumulator SAI for Separate Account No. 49 dated May 1, 1999. ________________________________________________________________________________ Name: ________________________________________________________________________________ Address: ________________________________________________________________________________ City State Zip (EDISAI) Equitable Accumulator(SM) A combination variable and fixed deferred annuity contract PROSPECTUS DATED MAY 1, 1999 Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing, or taking any other action under your contract. Also, at the end of this prospectus you will find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain important information about their Portfolios. - -------------------------------------------------------------------------------- WHAT IS THE EQUITABLE ACCUMULATOR? Equitable Accumulator is a deferred annuity contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation of retirement savings and for income. The contract offers income and death benefit protection. It also offers a number of payout options. You invest to accumulate value on a tax-deferred basis in one or more of our variable investment options, fixed maturity options or the account for special dollar cost averaging ("investment options"). - -------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS - -------------------------------------------------------------------------------- o Alliance Money Market o Lazard Large Cap Value o Alliance High Yield o Lazard Small Cap Value o Alliance Common Stock o MFS Growth with Income o Alliance Aggressive Stock o MFS Research o Alliance Small Cap Growth o MFS Emerging Growth Companies o EQ/Alliance Premier Growth o Merrill Lynch Basic Value Equity o BT Equity 500 Index o Merrill Lynch World Strategy o BT Small Company Index o Morgan Stanley Emerging o BT International Equity Index Markets Equity o Capital Guardian U.S. Equity o EQ/Putnam Growth & Income o Capital Guardian Research Value o Capital Guardian International o EQ/Putnam Investors Growth o EQ/Evergreen o EQ/Putnam International Equity o EQ/Evergreen Foundation o JPM Core Bond - -------------------------------------------------------------------------------- You may allocate amounts to any of the variable investment options. They, in turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson River Trust or EQ Advisors Trust. Your investment results in a variable investment option will depend on the investment performance of the related Portfolio. Each variable investment option is a subaccount of our Separate Account No. 49. FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity options. These amounts will receive a fixed rate of interest for a specified period. Interest is earned at a guaranteed rate we set. We make a market value adjustment (up or down) if you make transfers or withdrawals from a fixed maturity option before its maturity date. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed interest at guaranteed rates. It may be used for dollar cost averaging during your contract's first year only. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An individual retirement annuity ("IRA"), either traditional IRA or Roth IRA. We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible Premium IRA." We also offer two versions of the Roth IRA: "Roth Conversion IRA" and "Roth Flexible Premium IRA." o An annuity which is an investment vehicle for a qualified defined contribution or defined benefit plan ("QP"). o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") - ("Rollover TSA"). A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA, Roth Conversion IRA, QP, or Rollover TSA contract. For Flexible Premium IRA or Roth Flexible Premium IRA contracts, we require a contribution of $2,000 to purchase a contract. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The statement of additional information ("SAI") dated May 1, 1999, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our Processing Office or calling 1-800-789-7771. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL. PROS 1AML (5/99) - -------------------------------------------------------------------------------- 2 Contents of this prospectus - -------------------------------------------------------------------------------- Contents of this prospectus - -------------------------------------------------------------------------------- EQUITABLE ACCUMULATOR(SM) - -------------------------------------------------------------------------------- Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 Equitable Accumulator at a glance -- key features 8 - -------------------------------------------------------------------------------- FEE TABLE 11 - -------------------------------------------------------------------------------- Examples 14 Condensed financial information 15 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1 CONTRACT FEATURES AND BENEFITS 16 - -------------------------------------------------------------------------------- How you can purchase and contribute to your contract 16 Owner and annuitant requirements 20 How you can make your contributions 20 What are your investment options under the contract? 20 Portfolios of The Hudson River Trust 21 Portfolios of EQ Advisors Trust 21 Allocating your contributions 24 Our baseBUILDER option 25 Guaranteed minimum death benefit 28 Your right to cancel within a certain number of days 29 - -------------------------------------------------------------------------------- 2 DETERMINING YOUR CONTRACT'S VALUE 30 - -------------------------------------------------------------------------------- Your account value 30 Your contract's value in the variable investment options 30 Your contract's value in the fixed maturity options 30 Your contract's value in the account for special dollar cost averaging 30 - -------------------------------------------------------------------------------- "We," "our" and "us" refer to Equitable Life. When we address the reader of this prospectus with words such as "you" and "your," we mean the person who has the right or responsibility that the prospectus is discussing at that point. This is usually the contract owner. When we use the word "contract" it also includes certificates that are issued under group contracts in some states. - -------------------------------------------------------------------------------- Contents of this prospectus 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 31 - -------------------------------------------------------------------------------- Transferring your account value 31 Rebalancing your account value 31 - -------------------------------------------------------------------------------- 4 ACCESSING YOUR MONEY 32 - -------------------------------------------------------------------------------- Withdrawing your account value 32 How withdrawals are taken from your account value 33 How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit 33 Loans under Rollover TSA contracts 34 Surrendering your contract to receive its cash value 35 When to expect payments 35 Choosing your annuity payout options 36 - -------------------------------------------------------------------------------- 5 CHARGES AND EXPENSES 39 - -------------------------------------------------------------------------------- Charges that Equitable Life deducts 39 Charges that the trusts deduct 41 Group or sponsored arrangements 41 Other distribution arrangements 42 - -------------------------------------------------------------------------------- 6 PAYMENT OF DEATH BENEFIT 43 - -------------------------------------------------------------------------------- Your beneficiary and payment of benefit 43 How death benefit payment is made 43 Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts 44 - -------------------------------------------------------------------------------- 7 TAX INFORMATION 45 - -------------------------------------------------------------------------------- Overview 45 Transfers among investment options 45 Taxation of nonqualified annuities 45 Special rules for NQ contracts issued in Puerto Rico 46 Individual retirement arrangements ("IRAs") 47 Special rules for nonqualified contracts in qualified plans 57 Tax Sheltered Annuity contracts (TSAs) 57 Federal and state income tax withholding and information reporting 62 Impact of taxes to Equitable Life 63 - -------------------------------------------------------------------------------- 8 MORE INFORMATION 64 - -------------------------------------------------------------------------------- About our Separate Account No. 49 64 About The Hudson River Trust and EQ Advisors Trust 64 About our fixed maturity options 64 About the general account 66 About other methods of payment 66 Dates and prices at which contract events occur 67 About your voting rights 68 About our year 2000 progress 68 About legal proceedings 69 About our independent accountants 69 Transfers of ownership, collateral assignments, loans, and borrowing 69 Distribution of the contracts 69 - -------------------------------------------------------------------------------- 9 INVESTMENT PERFORMANCE 71 - -------------------------------------------------------------------------------- Benchmarks 71 Communicating performance data 80 - -------------------------------------------------------------------------------- 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 82 - -------------------------------------------------------------------------------- Appendices I -- Condensed financial information A-1 II -- Purchase considerations for QP contracts B-1 III -- Market value adjustment example C-1 IV -- Guaranteed minimum death benefit example D-1 - -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 Index of key words and phrases - -------------------------------------------------------------------------------- Index of key words and phrases - -------------------------------------------------------------------------------- This index should help you locate more information on the terms used in this prospectus. PAGE account for special dollar cost averaging 24 account value 30 annuitant 16 baseBUILDER 25 beneficiary 43 benefit base 26 business day 67 cash value 30 conduit IRA 51 contract date 9 contract date anniversary 9 contract year 9 contributions to Roth IRAs 54 regular contributions 54 rollover contributions 55 conversion contributions 55 direct custodian-to-custodian transfers 55 contributions to traditional IRAs 47 regular contributions 48 rollover contributions 50 direct custodian-to-custodian transfers 50 ERISA 34 fixed maturity amount 22 fixed maturity options 22 Flexible Premium IRA cover guaranteed minimum death benefit 28 guaranteed minimum income benefit 26 IRA 47 IRS 45 investment options 20 loan reserve account 35 market adjusted amount 23 market value adjustment 23 maturity value 23 NQ 45 participant 20 payout option 36 Portfolio cover Processing Office 6 QP 57 rate to maturity 22 required beginning date 52 Rollover IRA cover Rollover TSA cover Roth Conversion IRA cover Roth Flexible Premium IRA cover Roth IRA 54 SAI cover SEC cover TOPS 6 TSA 57 traditional IRA 47 unit 30 variable investment options 20 To make this prospectus easier to read, we sometimes use different words than in the contract or supplemental materials. This is illustrated below. Although we use different words, they have the same meaning in this prospectus as in the contract or supplemental materials. Your registered representative can provide further explanation about your contract. - -------------------------------------------------------------------------------- PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS - -------------------------------------------------------------------------------- fixed maturity options Guarantee Periods (Guaranteed Fixed Interest Accounts in supplemental materials) variable investment options Investment Funds account value Annuity Account Value rate to maturity Guaranteed Rates - -------------------------------------------------------------------------------- Who is Equitable Life? 5 - -------------------------------------------------------------------------------- Who is Equitable Life? - -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies Incorporated ("Equitable Companies"), whose majority shareholder is AXA, a French holding company for an international group of insurance and related financial services companies. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contract. During 1999, Equitable Companies plans to change its name to AXA Financial, Inc. Equitable Companies and its consolidated subsidiaries managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. - -------------------------------------------------------------------------------- 6 Who is Equitable Life? - -------------------------------------------------------------------------------- HOW TO REACH US You may communicate with our Processing Office as listed below for any of the following purposes: - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 13014 Newark, NJ 07188-0014 - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator c/o First Chicago National Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator 200 Plaza Drive, 4th Floor Secaucus, NJ 07094 - -------------------------------------------------------------------------------- REPORTS WE PROVIDE: - -------------------------------------------------------------------------------- o written confirmation of financial transactions; o statement of your contract values at the close of each calendar quarter (four per year); o annual statement of your contract values as of the close of the contract year. - -------------------------------------------------------------------------------- TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM: - -------------------------------------------------------------------------------- TOPS is designed to provide you with up-to-date information via touch-tone telephone. You can obtain information on: o your current account value; o your current allocation percentages; o the number of units you have in the variable investment options; o rates to maturity for the fixed maturity options; and o the daily unit values for the variable investment options. You can also: o change your allocation percentages and/or transfer among the investment options; and o change your personal identification number (PIN). TOPS is normally available seven days a week, 24 hours a day, by calling toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service may sometimes be unavailable. We have established procedures to reasonably confirm that the instructions communicated by telephone are genuine. For example, we will require certain personal identification information before we will act on telephone instructions and we will provide written confirmation of your transfers. We will not be liable for following telephone instructions we reasonably believe to be genuine. - -------------------------------------------------------------------------------- BY INTERNET: - -------------------------------------------------------------------------------- You can also access information about your contract on the Internet. Please visit our website at http://www.equitable.com, and click on EQAccess. - -------------------------------------------------------------------------------- Who is Equitable Life? 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER SERVICE REPRESENTATIVE: - -------------------------------------------------------------------------------- You may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. You should send all contributions, notices, and requests to our Processing Office at the address above. WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE: (1) authorization for telephone transfers by your registered representative; (2) conversion of a traditional IRA to a Roth Conversion IRA or Roth Flexible Premium IRA contract; (3) cancellation of your Roth Conversion IRA or Roth Flexible Premium IRA contract and return to a Rollover IRA or Flexible Premium IRA contract; (4) election of the automatic investment program; (5) election of the rebalancing program; (6) to obtain a PIN required for TOPS; (7) requests for loans under Rollover TSA contracts; (8) spousal consent for loans under Rollover TSA contracts; (9) tax withholding election; and (10) beneficiary continuation option election. WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: (1) address changes; (2) beneficiary changes; (3) transfers between investment options; (4) withdrawal requests; (5) contract surrender; and (6) requests to exercise your guaranteed minimum income benefit. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION: (1) automatic investment program; (2) general dollar cost averaging; (3) rebalancing; (4) special dollar cost averaging; (5) substantially equal withdrawals; (6) systematic withdrawals; and (7) the date annuity payments are to begin. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. - -------------------------------------------------------------------------------- 8 Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- PROFESSIONAL INVESTMENT Equitable Accumulator's variable investment options invest in 26 different Portfolios MANAGEMENT managed by professional investment advisers. - ----------------------------------------------------------------------------------------------------------------------- FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years. OPTIONS o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. -- If you make withdrawals or transfers from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value that you have left in that fixed maturity option. - ----------------------------------------------------------------------------------------------------------------------- ACCOUNT FOR SPECIAL DOLLAR Available for dollar cost averaging of your initial contribution. COST AVERAGING - ----------------------------------------------------------------------------------------------------------------------- TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you contract make withdrawals from your contract or receive annuity payments. ------------------------------------------------------------------------------------------ o On transfers inside the No tax on transfers among investment options. contract ------------------------------------------------------------------------------------------ If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. - ----------------------------------------------------------------------------------------------------------------------- BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum death PROTECTION benefit. This optional feature provides income protection for you while the annuitant lives, as well as a death benefit for the beneficiary should the annuitant die. - ----------------------------------------------------------------------------------------------------------------------- CONTRIBUTION AMOUNTS o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts o Initial minimum: $5,000 o Additional minimum: $1,000 $100 monthly, and $300 quarterly under our automatic investment program (NQ contracts) ------------------------------------------------------------------------------------------ o Flexible Premium IRA and Roth Flexible Premium IRA contracts o Initial minimum: $2,000 o Additional minimum: $50 ($50 under our automatic investment program) ------------------------------------------------------------------------------------------ Maximum investment limitations may apply. ------------------------------------------------------------------------------------------ - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Equitable Accumulator at a glance -- key features 9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- ACCESS TO YOUR MONEY o Lump sum withdrawals o Several withdrawal options on a periodic basis o Loans under Rollover TSA contracts o Contract surrender You may incur a withdrawal charge for certain withdrawals. You may also incur income tax and a tax penalty. - ----------------------------------------------------------------------------------------------------------------------- PAYOUT ALTERNATIVES o Annuity payout options o Income Manager(R) payout annuity options - ----------------------------------------------------------------------------------------------------------------------- ADDITIONAL FEATURES o Dollar cost averaging o Automatic investment program o Account value rebalancing (quarterly, semiannually and annually) o Unlimited free transfers o Waiver of withdrawal charge for disability, terminal illness or confinement to a nursing home - ----------------------------------------------------------------------------------------------------------------------- FEES AND CHARGES o Daily charges on amounts invested in variable investment options for mortality and expense risks and administrative charges at an annual rate of 1.35%. o Annual 0.30% benefit base charge or the optional baseBUILDER benefit. The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." No additional charge if you want a guaranteed minimum death benefit only. o Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, if your account value at the end of the contract year is less than $25,000, we deduct an annual administrative charge equal to $30 or during the first two contract years 2% of your account value, if less. If your account value is $25,000 or more, we will not deduct the charge. o No sales charge deducted at the time you make contributions. o During the first seven contract years following a contribution, a charge will be deducted from amounts that you withdraw that exceed 15% of your account value. We use the account value on the most recent contract date anniversary to calculate the 15% amount available. The charge begins at 7% in the first contract year following a contribution. It declines each year to 1% in the seventh contract year. There is no withdrawal charge in the eighth and later contract years following a contribution. ---------------------------------------------------------------------------------------------- The 12-month period beginning on your contract date and each 12-month period after that date is a "contract year." The end of each 12-month period is your "contract date anniversary." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution. Your contract date will be shown in your contract. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 10 Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- FEES AND o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. CHARGES (CONTINUED) This charge is generally deducted from the amount applied to an annuity payout option. o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life annuity payout options. o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a percentage of the average daily net assets invested in each Portfolio. These expenses include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other expenses. - ----------------------------------------------------------------------------------------------------------------------- ANNUITANT ISSUE AGES NQ: 0-83 Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA: 20-83 Flexible Premium IRA: 20-70 QP: 20-75 - -----------------------------------------------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your registered representative, or call us, if you have any questions. - -------------------------------------------------------------------------------- Fee table 11 - -------------------------------------------------------------------------------- Fee table - -------------------------------------------------------------------------------- The fee table below will help you understand the various charges and expenses that apply to your contract. The table reflects charges you will directly incur under the contract, as well as charges and expenses of the Portfolios that you will bear indirectly. Charges for taxes, such as premium taxes, may also apply. Also, an administrative fee may apply when your annuity payments are to begin. Each of the charges and expenses is more fully described under "Charges and expenses" later in this prospectus. For a complete description of Portfolio charges and expenses, please see the attached prospectuses for The Hudson River Trust and EQ Advisors Trust. The fixed maturity options and the account for special dollar cost averaging are not covered by the fee table and examples. Generally, the only charges shown in the table that are applicable to the fixed maturity options and the account for special dollar cost averaging are the annual administrative charge and the withdrawal charge. A market value adjustment (up or down) may apply as a result of a withdrawal, transfer or surrender of amounts from a fixed maturity option. CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS - ------------------------------------------------------------------------------------------------------------------ Mortality and expense risks (1) 1.10% Administrative (2) 0.25% ----- Total annual expenses 1.35% - ------------------------------------------------------------------------------------------------------------------ FLEXIBLE PREMIUM IRA AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY: CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY - ------------------------------------------------------------------------------------------------------------------ Maximum annual administrative charge If your account value is less than $25,000 $30(3) If you account value is $25,000 or more $ 0 - ------------------------------------------------------------------------------------------------------------------ CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS - ------------------------------------------------------------------------------------------------------------------ WITHDRAWAL CHARGE AS A PERCENTAGE OF CONTRIBUTIONS (deducted if you surrender Contract Contract your contract or make certain withdrawals. The withdrawal charge year percentage we use is determined by the contract year in which you make the 1 ...........7.00% withdrawal or surrender your contract. For each contribution, we 2 ...........6.00 consider the contract year in which we receive that contribution to be 3 ...........5.00 "contract year 1")(4) 4 ...........4.00 5 ...........3.00 6 ...........2.00 7 ...........1.00 8+ ..........0.00 - ------------------------------------------------------------------------------------------------------------------ CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT - ------------------------------------------------------------------------------------------------------------------ BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base. Deducted annually on each contract date anniversary)(5) 0.30% - ------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 12 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
- ----------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL INVESTMENT EXPENSES(6) MANAGEMENT OTHER (AFTER EXPENSE ADVISORY FEES 12B-1 FEES(6) EXPENSES LIMITATION) - ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62% Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88% Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64% Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82% Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20% - ----------------------------------------------------------------------------------------------------------------------- EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO) - ----------------------------------------------------------------------------------------------------------------------- OTHER TOTAL ANNUAL INVESTMENT EXPENSES (8) EXPENSES(8) MANAGEMENT (AFTER EXPENSE (AFTER EXPENSE ADVISORY FEES 12B-1 FEES(6) LIMITATION) LIMITATION) EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15% BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55% BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75% BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00% Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95% Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95% Capital Guardian International(8) 0.75% 0.25% 0.20% 1.20% EQ/Evergreen(8) 0.75% 0.25% 0.05% 1.05% EQ/Evergreen Foundation(8) 0.63% 0.25% 0.07% 0.95% JPM Core Bond(8) 0.45% 0.25% 0.10% 0.80% Lazard Large Cap Value(8) 0.55% 0.25% 0.15% 0.95% Lazard Small Cap Value(8) 0.80% 0.25% 0.15% 1.20% MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85% MFS Research(8) 0.55% 0.25% 0.05% 0.85% MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85% Merrill Lynch Basic Value Equity(8) 0.55% 0.25% 0.05% 0.85% Merrill Lynch World Strategy(8) 0.70% 0.25% 0.25% 1.20% Morgan Stanley Emerging Markets Equity(8) 1.15% 0.25% 0.35% 1.75% EQ/Putnam Growth & Income Value(8) 0.55% 0.25% 0.05% 0.85% EQ/Putnam Investors Growth(8) 0.55% 0.25% 0.15% 0.95% EQ/Putnam International Equity(8) 0.70% 0.25% 0.25% 1.20% - -----------------------------------------------------------------------------------------------------------------------
- ---------- Notes: (1) A portion of this charge is for providing the guaranteed minimum death benefit. (2) We reserve the right to increase this charge to a maximum annual rate of 0.35%. (3) For Flexible Premium IRA and Roth Flexible Premium IRA contracts, during the first two contract years this charge is equal to the lesser of $30 or 2% of your account value. Thereafter, the charge is $30 for each contract year. (4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal amount, and upon surrender of a contract. - -------------------------------------------------------------------------------- Fee table 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (5) The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." (6) Portfolio shares are all subject to fees imposed under distribution plans (the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee will not be increased for the life of the contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio attributable to Class IB shares and (b) an amount that, when added to certain other expenses of the Class IB shares, would result in the ratio of expenses to average daily net assets attributable to Class IB shares equaling 1.20%. Absent the expense limitation, the total annual expenses for 1998 for the Alliance Small Cap Growth Portfolio would have been 1.21%. (7) The fees and expenses shown for all Portfolios are for the year ended December 31, 1998. The investment management and advisory fees for each Portfolio of The Hudson River Trust may vary from year to year depending upon the average daily net assets of the respective Portfolio. The maximum investment management and advisory fees, however, cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for The Hudson River Trust. The other direct operating expenses will also fluctuate from year to year depending on actual expenses. (8) The maximum investment management and advisory fees for each Portfolio of EQ Advisors Trust cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for EQ Advisors Trust. The amounts shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an expense limitation agreement with respect to each Portfolio. Under this agreement EQF has agreed to waive or limit its fees and assume other expenses. Under the expense limitation agreement, total annual operating expenses of each Portfolio (other than interest, taxes, brokerage commissions, capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited for the average daily net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index; 0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S. Equity and Capital Guardian Research; 0.95% for Capital Guardian International; 0.80% for EQ/Evergreen; 0.70% for EQ/Evergreen Foundation; 0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value; 0.95% for Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS Research, MFS Emerging Growth Companies, and Merrill Lynch Basic Value Equity; 0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70% for EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity. The expenses shown for the BT International Equity Index, BT Small Company Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value Portfolios reflect an increase effective on May 1, 1999. During 1999, EQF plans to change its name to AXA Advisors, Inc. Absent the expense limitation, the "Other Expenses" for 1998 on an annualized basis for each of the Portfolios would have been as follows: 0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research; 0.24% for MFS Emerging Growth Companies; 0.26% for Merrill Lynch Basic Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan Stanley Emerging Markets Equity; 0.24% for EQ/Putnam Growth & Income Value; 0.29% for EQ/Putnam Investors Growth; 0.51% for EQ/Putnam International Equity. For the following Portfolios, the "Other Expenses" for 1999, absent the expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier Growth; 0.74% for Capital Guardian U.S. Equity and Capital Guardian Research; 1.03% for Capital Guardian International; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; 0.59% for MFS Growth with Income. Initial seed capital was invested on December 31, 1998 for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income Portfolios. The EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian International Portfolios commenced operations on May 1, 1999. Each Portfolio may at a later date make a reimbursement to EQF for any of the management fees waived or limited and other expenses assumed and paid by EQF pursuant to the expense limitation agreement provided that, among other things, such Portfolio has reached sufficient size to permit such reimbursement to be made and provided that the Portfolio's current annual operating expenses do not exceed the operating expense limit determined for such Portfolio. - -------------------------------------------------------------------------------- 14 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES The examples below show the expenses that a hypothetical contract owner (who has purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract and elected baseBUILDER) would pay in the two situations (surrender and nonsurrender) illustrated. We assume that a $1,000 contribution is invested in one of the variable investment options listed and a 5% annual return is earned on the assets in that option.(1) The annual administrative charge is based on an estimated $10,000 average account value at the end of the contract year and the maximum charge of $30, so that the administrative charge per $1,000 is $3. Since the annual administrative charge only applies under Flexible Premium IRA and Flexible Premium Roth IRA contracts, the charges shown in the examples would be lower for the NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts. These examples should not be considered a representation of past or future expenses for each option. Actual expenses may be greater or less than those shown. Similarly, the annual rate of return assumed in the examples is not an estimate or guarantee of future investment performance. - -------------------------------------------------------------------------------- IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ---------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- Alliance Money Market $ 93.00 $ 126.88 $ 163.38 $ 287.23 Alliance High Yield $ 95.58 $ 134.62 $ 176.30 $ 312.98 Alliance Common Stock $ 93.19 $ 127.47 $ 164.38 $ 289.23 Alliance Aggressive Stock $ 94.98 $ 132.84 $ 173.34 $ 307.10 Alliance Small Cap Growth $ 98.76 $ 144.12 $ 192.03 $ 343.81 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 98.26 $ 142.63 -- -- BT Equity 500 Index $ 92.30 $ 124.78 $ 159.88 $ 280.19 BT Small Company Index $ 94.29 $ 130.75 $ 169.85 $ 300.17 BT International Equity Index $ 96.77 $ 138.19 $ 182.22 $ 324.65 Capital Guardian U.S. Equity $ 96.27 $ 136.71 -- -- Capital Guardian Research $ 96.27 $ 136.71 -- -- Capital Guardian International $ 98.76 $ 144.12 -- -- EQ/Evergreen $ 97.27 $ 139.68 -- -- EQ/Evergreen Foundation $ 96.27 $ 136.71 -- -- JPM Core Bond $ 94.78 $ 132.24 $ 172.34 $ 305.12 Lazard Large Cap Value $ 96.27 $ 136.71 $ 179.76 $ 319.80 Lazard Small Cap Value $ 98.76 $ 144.12 $ 192.03 $ 343.81 MFS Growth with Income $ 95.28 $ 133.74 -- -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ---------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- Alliance Money Market $ 26.15 $ 80.35 $ 137.22 $ 292.13 Alliance High Yield $ 28.73 $ 88.10 $ 150.14 $ 317.87 Alliance Common Stock $ 26.34 $ 80.94 $ 138.21 $ 294.12 Alliance Aggressive Stock $ 28.13 $ 86.31 $ 147.16 $ 311.98 Alliance Small Cap Growth $ 31.91 $ 97.59 $ 165.86 $ 348.69 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 31.41 $ 96.11 -- -- BT Equity 500 Index $ 25.45 $ 78.25 $ 133.71 $ 285.07 BT Small Company Index $ 27.44 $ 84.23 $ 143.69 $ 305.09 BT International Equity Index $ 29.92 $ 91.66 $ 156.05 $ 329.53 Capital Guardian U.S. Equity $ 29.42 $ 90.17 -- -- Capital Guardian Research $ 29.42 $ 90.17 -- -- Capital Guardian International $ 31.91 $ 97.59 -- -- EQ/Evergreen $ 30.42 $ 93.15 -- -- EQ/Evergreen Foundation $ 29.42 $ 90.17 -- -- JPM Core Bond $ 27.93 $ 85.72 $ 146.17 $ 310.01 Lazard Large Cap Value $ 29.42 $ 90.17 $ 153.58 $ 324.68 Lazard Small Cap Value $ 31.91 $ 97.59 $ 165.86 $ 348.69 MFS Growth with Income $ 28.43 $ 87.20 -- -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Fee table 15 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------ IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------ MFS Research $ 95.28 $ 133.74 $ 174.83 $ 310.05 MFS Emerging Growth Companies $ 95.28 $ 133.74 $ 174.83 $ 310.05 Merrill Lynch Basic Value Equity $ 95.28 $ 133.74 $ 174.83 $ 310.05 Merrill Lynch World Strategy $ 98.76 $ 144.12 $ 192.03 $ 343.81 Morgan Stanley Emerging Markets Equity $ 104.22 $ 160.29 $ 218.58 $ 394.59 EQ/Putnam Growth & Income Value $ 95.28 $ 133.74 $ 174.83 $ 310.05 EQ/Putnam Investors Growth $ 96.27 $ 136.71 $ 179.76 $ 319.80 EQ/Putnam International Equity $ 98.76 $ 144.12 $ 192.03 $ 343.81 - ------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------ IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: ------------------------------------------------ 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------ MFS Research $ 28.43 $ 87.20 $ 148.64 $ 314.93 MFS Emerging Growth Companies $ 28.43 $ 87.20 $ 148.64 $ 314.93 Merrill Lynch Basic Value Equity $ 28.43 $ 87.20 $ 148.64 $ 314.93 Merrill Lynch World Strategy $ 31.91 $ 97.59 $ 165.86 $ 348.69 Morgan Stanley Emerging Markets Equity $ 37.37 $ 113.76 $ 192.41 $ 399.49 EQ/Putnam Growth & Income Value $ 28.43 $ 87.20 $ 148.64 $ 314.93 EQ/Putnam Investors Growth $ 29.42 $ 90.17 $ 153.58 $ 324.68 EQ/Putnam International Equity $ 31.91 $ 97.59 $ 165.86 $ 348.69 - ------------------------------------------------------------------------------------------
- ---------- (1) The amount accumulated from the $1,000 contribution could not be paid in the form of an annuity payout option at the end of any of the periods shown in the examples. This is because if the amount applied to purchase an annuity payout option is less than $2,000, or the initial payment is less than $20, we may pay the amount to you in a single sum instead of as payments under an annuity payout option. See "Accessing your money." IF YOU ELECT AN ANNUITY PAYOUT OPTION: Assuming an annuity payout option could be issued (see note (1) above), and you elect a life annuity payout option, the expenses shown in the example for "if you do not surrender your contract" would, in each case, be increased by $4.43 based on the average amount applied to annuity payout options in 1998. See "Annuity administrative fee" under "Charges and expenses." CONDENSED FINANCIAL INFORMATION Please see Appendix I, at the end of this prospectus for the unit values and the number of units outstanding as of the end of the periods shown for each of the variable investment options. - -------------------------------------------------------------------------------- 16 Contract features and benefits - -------------------------------------------------------------------------------- Contract features and benefits - -------------------------------------------------------------------------------- HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase a contract by making payments to us we call "contributions." We require a minimum contribution amount for each type of contract. The following table summarizes our rules regarding contributions to your contract. All ages in the table refer to the age of the annuitant named in the contract. - ------------------------------------------------------------------------------ The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner. - ------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- NQ 0 through 83 o $5,000 (initial) o After-tax money. o No additional contributions after o $1,000 (additional) o Paid to us by check or age 84. transfer of contract value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. - ----------------------------------------------------------------------------------------------------------------------- Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular Premium IRA contributions. IRA contributions in the o $50 (additional after calendar year you turn the first contract year) o Rollovers from a age 70 1/2 and qualified plan. thereafter. o Rollovers from a TSA. o Total regular contributions may not o Rollovers from another exceed $2,000 each traditional individual year. retirement arrangement. o No additional rollover or direct transfer o Direct custodian- contributions after to-custodian transfers age 71. from another traditional individual o Rollover and direct retirement transfer contributions arrangement. after age 70 1/2 must be net of required minimum distributions. Although we accept rollover and direct transfer contributions under the Flexible Premium IRA contract, we intend that this contract be used for ongoing regular contributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 17 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Rollover IRA 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover qualified plan. or direct transfer o $1,000 (additional) contributions after o Rollovers from a TSA. age 84. o Rollovers from another o Contributions after traditional individual age 70 1/2 must be net retirement of required minimum arrangement. distributions. o Direct o Regular IRA custodian-to-custodian contributions are not transfers from another permitted. traditional individual retirement arrangement. Only rollover and direct transfer contributions are permitted under the Rollover IRA contract. - ----------------------------------------------------------------------------------------------------------------------- Roth Flexible 20 through 83 o $2,000 (initial) o "Regular" after-tax o No additional regular Premium IRA contributions. after-tax contributions o $50 (additional after after age 84. the first contract year) o Rollovers from another Roth IRA. o No additional rollover or direct transfer o Conversion rollovers contributions after from a traditional IRA. age 84. o Direct transfers from o Contributions are another Roth IRA. subject to income limits. See "Tax information- Contributions to Roth IRAs." Although we accept rollover and direct transfer contributions under the Flexible Premium Roth IRA contract, we intend that this contract be used for ongoing regular contributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 18 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover Conversion IRA Roth IRA. or direct transfer o $1,000 (additional) contributions after o Conversion rollovers age 84. from a traditional IRA. o Conversion rollovers o Direct transfers from after age 70 1/2 must be another Roth IRA. net of required minimum distributions for the traditional IRA you are rolling over. o You cannot roll over funds from a traditional IRA if your adjusted gross income is $100,000 or more. o Regular after-tax contributions are not permitted. Only rollover and direct transfer contributions are permitted under the Roth Conversion IRA contract. - ----------------------------------------------------------------------------------------------------------------------- QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing contributions from an payroll contributions o $1,000 (additional) existing qualified plan are not permitted. trust as a change of investment vehicle o No additional transfer under the plan. contributions after age 76. o The plan must be qualified under Section o For defined benefit 401(a) of the Internal plans, employee Revenue Code. contributions are not permitted. o For 401(k) plans, transferred o Contributions after age contributions may only 70 1/2 must be net of include employee any required minimum pre-tax contributions. distributions. - -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 19 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT MINIMUM LIMITATIONS ON TYPE ISSUE AGES CONTRIBUTIONS SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------- Rollover TSA 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover TSA contract or or direct transfer o $1,000 (additional) arrangement. contributions after age 84. o Rollovers from a traditional IRA which o Contributions after age was a "conduit" for 70 1/2 must be net of TSA funds previously required minimum rolled over. distributions. o Direct transfers from another contract or arrangement under Section 403(b) of the Internal Revenue Code, complying with IRS Revenue Ruling 90-24. - -----------------------------------------------------------------------------------------------------------------------
See "Tax information" for a more detailed discussion of sources of contributions and certain contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Equitable Accumulator contracts with the same annuitant would then total more than $1,500,000. We reserve the right to limit aggregate contributions made after the first contract year to 150% of first-year contributions. We may also refuse to accept any contribution if the sum of all contributions under all Equitable Life annuity accumulation contracts that you own would then total more than $2,500,000. For information on when contributions are credited under your contract see "Dates and prices at which contract events occur" later in this prospectus. - -------------------------------------------------------------------------------- 20 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER AND ANNUITANT REQUIREMENTS Under NQ contracts, the annuitant can be different than the owner. A joint owner may also be named. Only natural persons can be joint owners. This means that an entity such as a corporation cannot be a joint owner. Under all IRA and Rollover TSA contracts, the owner and annuitant must be the same person. Under QP contracts, the owner must be the trustee of the qualified plan and the annuitant must be the plan participant/employee. See Appendix II for more information on QP contracts. - -------------------------------------------------------------------------------- A participant is an individual who is currently, or was formerly participating in an eligible employer's QP or TSA plan. - -------------------------------------------------------------------------------- HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. For your convenience, we will accept initial and additional contributions by wire transmittal from certain broker-dealers who have agreements with us for this purpose. Additional contributions may also be made under our automatic investment program. These methods of payment are discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days after we receive an incomplete application or form, we will inform the registered representative submitting the application on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. - -------------------------------------------------------------------------------- Our "business day" is any day the New York Stock Exchange is open for trading. - -------------------------------------------------------------------------------- SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Equitable Accumulator NQ contract in a tax-free exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT? Your investment options are the variable investment options, the fixed maturity options, and the account for special dollar cost averaging. VARIABLE INVESTMENT OPTIONS Your investment results in any one of the 26 variable investment options will depend on the investment performance of the underlying Portfolios. Listed below are the currently available Portfolios, their investment objectives, and their advisers. - -------------------------------------------------------------------------------- You can choose among 26 variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contract features and benefits 21 - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF THE HUDSON RIVER TRUST - --------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - --------------------------------------------------------------------------------------------------------------------- Alliance Money Market High level of current income while preserving Alliance Capital Management L.P. assets and maintaining liquidity - --------------------------------------------------------------------------------------------------------------------- Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P. to the extent consistent with that objective, capital appreciation - --------------------------------------------------------------------------------------------------------------------- Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P. income - --------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P. - --------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P. - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - --------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - --------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P. - --------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Standard & Poor's 500 Composite Stock Price Index - --------------------------------------------------------------------------------------------------------------------- BT Small Company Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Russell 2000 Index - --------------------------------------------------------------------------------------------------------------------- BT International Equity Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Morgan Stanley Capital International Europe, Australia, Far East Index - --------------------------------------------------------------------------------------------------------------------- Capital Guardian U.S. Equity Long-term growth of capital and income Capital Guardian Trust Company - --------------------------------------------------------------------------------------------------------------------- Capital Guardian Research Long-term growth of capital and income Capital Guardian Trust Company - --------------------------------------------------------------------------------------------------------------------- Capital Guardian International Long-term growth of capital and future income Capital Guardian Trust Company - --------------------------------------------------------------------------------------------------------------------- EQ/Evergreen Capital appreciation Evergreen Asset Management Corp. - ---------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 22 Contract features and benefits - --------------------------------------------------------------------------------
PORTFOLIOS OF EQ ADVISORS TRUST - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO NAME OBJECTIVE ADVISER - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp. conservation of capital, and capital appreciation - ------------------------------------------------------------------------------------------------------------------------------------ JPM Core Bond High total return consistent with moderate risk of J. P. Morgan Investment Management Inc. capital and maintenance of liquidity - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Large Cap Value Capital appreciation Lazard Asset Management - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Small Cap Value Capital appreciation Lazard Asset Management - ------------------------------------------------------------------------------------------------------------------------------------ MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company growth of capital and income - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company Companies - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management, L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management Markets Equity - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc. Value objective - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Investors Growth Long-term growth of capital and any increased Putnam Investment Management, Inc. income that results from this growth - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam International Equity Capital appreciation Putnam Investment Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------
Other important information about the Portfolios is included in the separate prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the end of this prospectus. FIXED MATURITY OPTIONS We offer fixed maturity options with maturity dates ranging from one to ten years. You can allocate your contributions to one or more of these fixed maturity options. These amounts become part of our general account assets. They will accumulate interest at the "rate to maturity" for each fixed maturity option. The total amount you allocate to and accumulate in each fixed maturity option is called the "fixed maturity amount." The fixed maturity options are not available in contracts issued in Maryland. - -------------------------------------------------------------------------------- Contract features and benefits 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Fixed maturity options ranging from one to ten years to maturity. - -------------------------------------------------------------------------------- The rate to maturity you will receive for each fixed maturity option is the rate to maturity in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals or transfers from a fixed maturity option before the maturity date, we will make a "market value adjustment" that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We will discuss the market value adjustment below and in greater detail later in this prospectus under "More information." On the maturity date of a fixed maturity option your fixed maturity amount, assuming you have not made any withdrawals or transfers, will equal your contribution to that fixed maturity option plus interest, at the rate to maturity for that contribution, to the date of the calculation. This is the fixed maturity option's "maturity value." Before maturity, the current value we will report for your fixed maturity amounts will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amounts on the date of the report. We call this your "market adjusted amount." FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity options ending on February 15th for each of the maturity years 2000 through 2009. Not all of these fixed maturity options will be available for annuitant ages 76 and older. See "Allocating your contributions" below. As fixed maturity options expire, we expect to add maturity years so that generally 10 are available at any time. We will not accept allocations to a fixed maturity option if on the date the contribution is to be applied: o the fixed maturity option's maturity date is within the current calendar year; or o the rate to maturity is 3%; or o for annuitants ages 76 or older, the fixed maturity option's maturity date is later than the February 15th immediately following the date annuity payments are to begin. OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the year before each of your fixed maturity options is scheduled to mature. At that time, you may choose to have one of the following options take place on the maturity date, as long as none of the conditions listed above or in "Allocating your contributions," below would apply: (a) transfer the maturity value into another available fixed maturity option, or into any of the variable investment options; or (b) withdraw the maturity value (there may be a withdrawal charge). If we do not receive your choice on or before the fixed maturity option's maturity date, we will automatically transfer your maturity value into the fixed maturity option that will mature next. MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers, surrender of your contract or when we make deductions for charges) from a fixed maturity option before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that you originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. - -------------------------------------------------------------------------------- 24 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Therefore, it is possible that the market value adjustment could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an illustration of the market adjusted amount of specified maturity values, an explanation of how we calculate the market value adjustment, and information concerning our general account and investments purchased with amounts allocated to the fixed maturity options, under "More information" later in this prospectus. Appendix III of this prospectus provides an example of how the market value adjustment is calculated. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING The account for special dollar cost averaging is part of our general account. We pay interest at guaranteed rates in this account. We will credit interest to the amounts that you have in the account for special dollar cost averaging every day. We set the interest rates periodically, according to procedures that we have. We reserve the right to change these procedures. The account for special dollar cost averaging is available for allocation of your initial contribution only under the special dollar cost averaging program. It is available only for the first year of your contract. We will guarantee to pay our current interest rate that is in effect on the date that your contribution is allocated to this account. Your guaranteed interest rate will be shown in your contract. The rate will never be less than 3%. See "Allocating your contributions," below for the rules and restrictions that apply to the special dollar cost averaging program. ALLOCATING YOUR CONTRIBUTIONS You may choose from among three ways to allocate your contributions under your contract: self-directed, principal assurance or dollar cost averaging. SELF-DIRECTED ALLOCATION You may allocate your contributions to one or more, or all, of the variable investment options and fixed maturity options. Allocations must be in whole percentages and you may change your allocations at any time. However, the total of your allocations must equal 100%. If the annuitant is age 76 or older, you may allocate contributions to fixed maturity options if their maturities are five years or less. Also, you may not allocate amounts to fixed maturity options with maturity dates that are later than the February 15th immediately following the date annuity payments are to begin. PRINCIPAL ASSURANCE ALLOCATION Under this allocation program you select a fixed maturity option. We specify the portion of your initial contribution to be allocated to that fixed maturity option in an amount that will cause the maturity value to equal the amount of your entire initial contribution on the fixed maturity option's maturity date. The maturity date you select generally may not be later than 10 years, or earlier than seven years from your contract date. You allocate the rest of your contribution to the variable investment options however you choose. For example, if your initial contribution is $10,000, and on April 1, 1999 you chose the fixed maturity option with a maturity date of February 15, 2009, since the rate to maturity was 4.97% on April 1, 1999, we would have allocated $6,191.16 to that fixed maturity option and the balance to your choice of variable investment options. On the maturity date your value in the fixed maturity option would be $10,000. The principal assurance allocation is only available for annuitant ages 75 or younger when the contract is issued. If you are purchasing a Rollover IRA, Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity year that would extend beyond the year in which you will reach age 70 1/2, you should consider whether your value in the variable investment options, or your other traditional IRA or TSA funds are sufficient to meet your required minimum distributions. See "Tax information." DOLLAR COST AVERAGING We offer two dollar cost averaging programs. Each program allows you to gradually allocate amounts to the variable - -------------------------------------------------------------------------------- Contract features and benefits 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- investment options by periodically transferring approximately the same dollar amount to the variable investment options you select. This will cause you to purchase more units if the unit's value is low and fewer units if the unit's value is high. Therefore, you may get a lower average cost per unit over the long term. These plans of investing, however, do not guarantee that you will earn a profit or be protected against losses. - -------------------------------------------------------------------------------- Units measure your value in each variable investment option. - -------------------------------------------------------------------------------- SPECIAL DOLLAR COST AVERAGING PROGRAMS. You may dollar cost average from the account for special dollar cost averaging into any of the variable investment options. You must allocate your entire initial contribution into the account. We will transfer your value in the account for special dollar cost averaging into the variable investment options that you select over the next 12 months. The transfer date will be the same day of the month as the contract date, but not later than the 28th. All amounts will be transferred out by the end of the first contract year. You may not allocate additional contributions to the account for special dollar cost averaging. - -------------------------------------------------------------------------------- The account for special dollar cost averaging provides guaranteed interest. - -------------------------------------------------------------------------------- The only amounts that should be transferred from the account for special dollar cost averaging are your regularly scheduled monthly transfers to the variable investment options. If you request to transfer or withdraw any other amounts, we will transfer all of the value that you have remaining in the account for special dollar cost averaging to the investment options according to the allocation percentages we have on file for you. As a result, you will no longer be able to participate in the special dollar cost averaging program. You may also ask us to cancel your participation at any time. If the account for special dollar cost averaging is not available in your state, we offer a special dollar cost averaging program in the Alliance Money Market option. Under this program we will not deduct the mortality and expense risks and administrative charges from assets in the Alliance Money Market option. You may not allocate amounts other than your initial contribution to this program, which is in effect only for your first contract year. We reserve the right to discontinue offering the Alliance Money Market special dollar cost averaging program for new contracts once the account for special dollar cost averaging becomes available in a state. Your registered representative can provide information about state availability. You may also contact us directly. GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money Market option is at least $5,000, you may choose, at any time, to have a specified dollar amount or percentage of your value transferred from that option to the other variable investment options. You can select to have transfers made on a monthly, quarterly or annual basis. The transfer date will be the same calendar day of the month as the contract date, but not later than the 28th day of the month. The minimum amount that we will transfer each time is $250. The maximum amount we will transfer is equal to your value in the Alliance Money Market option at the time the program is elected, divided by the number of transfers scheduled. If, on any transfer date, your value in the Alliance Money Market option is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred. The general dollar cost averaging program will then end. You may change the transfer amount once each contract year, or cancel this program at any time. ---------------------------------------- You may not elect dollar cost averaging if you are participating in the rebalancing program. See "Transferring your money among investment options" below. OUR BASEBUILDER OPTION The baseBUILDER option offers you a combined guaranteed minimum income benefit and guaranteed minimum death - -------------------------------------------------------------------------------- 26 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- benefit. The combined benefit is available if the annuitant is between the ages of 20 and 75. There is an additional charge for this benefit. See "baseBUILDER benefits charge" under "Charges and expenses." - -------------------------------------------------------------------------------- baseBUILDER provides income protection if you elect an income payout while the annuitant is alive and a death benefit if the annuitant dies. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit component of baseBUILDER is described below under "Your guaranteed minimum income benefit under baseBUILDER." As part of baseBUILDER you have a choice of two guaranteed minimum death benefit options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The two options are described under "Guaranteed minimum death benefit." The guaranteed minimum death benefit is provided under the contract even if you do not elect baseBUILDER, and for a broader range of annuitant ages at contract issue than those available under baseBUILDER. baseBUILDER is not currently available in New York. YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER The guaranteed minimum income benefit guarantees you a minimum amount of lifetime income under our Income Manager (Life Annuity with a Period Certain) payout annuity contract. The Income Manager (Life Annuity with a Period Certain) payout annuity contract provides payments during a specified period of time (called a period certain) that will continue for the rest of the annuitant's life thereafter. If the annuitant dies before the period certain has ended, payments will continue to the beneficiary for the time remaining in the period certain. - -------------------------------------------------------------------------------- We also refer to the guaranteed minimum income benefit as the "Living Benefit." - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE. On the contract date, your guaranteed minimum income benefit's benefit base ("benefit base") is equal to the initial contribution. Thereafter, the benefit base will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, the fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after age 80. If you make an additional contribution to your contract, we will increase your current benefit base by the dollar amount of the additional contribution on the date that the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your benefit base for the withdrawal on the date that you make the withdrawal. See "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing Your Money" for more detailed information. The benefit base will be reduced by any withdrawal charge remaining when you exercise your guaranteed minimum income benefit. Under Rollover TSA contracts, we will also reduce your benefit base by the amount of any outstanding loan plus accrued interest on the date that you exercise your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- Your benefit base is not an account value or a cash value and is used solely for purposes of calculating your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE. If you exercise the guaranteed minimum income benefit, the annual lifetime income that you will receive under the Income Manager (Life Annuity with a Period Certain) payout annuity contract, will be the greater of (i) your guaranteed minimum income benefit, and (ii) the income provided by applying your actual account value at our then current annuity purchase factors. The guaranteed minimum income benefit is based on conservative actuarial factors. Therefore, even if your account value is less than your benefit base, you may generate more income by applying your account value to - -------------------------------------------------------------------------------- Contract features and benefits 27 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- current annuity purchase factors. We will make this comparison for you when the need arises. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit should be regarded as a safety net only. - -------------------------------------------------------------------------------- ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT. The table below illustrates the guaranteed minimum income benefit amounts per $100,000 of initial contribution, for a male annuitant age 60 (at issue) on the contract date anniversaries indicated, assuming no additional contributions, withdrawals, or loans under Rollover TSA contracts, and assuming there were no allocations to the Alliance Money Market option or the fixed maturity options. - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT -- ANNUAL INCOME CONTRACT DATE PAYABLE FOR LIFE WITH ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN - -------------------------------------------------------------------------------- 7 $ 8,315 10 10,341 15 14,924 - -------------------------------------------------------------------------------- Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income benefit only within 30 days following the seventh or later contract date anniversary under your contract. However, you may not exercise the benefit before the annuitant is age 60, or after the annuitant is age 83. There is an exception if the annuitant is between ages 20 and 44 when your contract is issued. In this case you may exercise the benefit following the 15th or later contract date anniversary, but not after the annuitant is age 83. See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA contracts" below regarding exercising the benefit under QP and Rollover TSA contracts. Your contract will terminate when you exercise your guaranteed minimum income benefit. You will then receive an Income Manager (Life Annuity with a Period Certain) payout annuity contract. Your period certain will be based on the annuitant's age at the time the benefit is exercised, as follows: - ---------------------------------------- LEVEL PAYMENTS* - ---------------------------------------- PERIOD CERTAIN YEARS -------------------- ANNUITANT'S AGE AT EXERCISE IRAS NQ - ---------------------------------------- 60 to 75 10 10 76 9 10 77 8 10 78 7 10 79 7 10 80 7 10 81 7 9 82 7 8 83 7 7 - ---------------------------------------- * Other forms and periods certain may also be available. For Rollover IRA and Flexible Premium IRA contracts, please see "Minimum distributions" under "Tax information," as to how this option may be affected if exercised after age 70 1/2. You will begin receiving payments one payment period after the payout annuity contract is issued. For example, if you select monthly annuity payments, we will send your first payment to you approximately one month from the date your contract is issued. Each year on your contract date anniversary, if you are eligible to exercise the guaranteed minimum income benefit, we will send you an eligibility notice illustrating how much income could be provided as of the contract date anniversary. You may then notify us within 30 days following the contract date anniversary if you want to exercise the guaranteed minimum income benefit. You must return your contract to us in order to exercise this benefit. The amount of income you actually receive will be determined when we receive your request to exercise the benefit. You may also apply your cash value at any time to an Income Manager (Life Annuity with a Period Certain) payout annuity contract, and you may always apply your account value to any of our annuity payout options. The traditional annuity payout options are discussed under "Accessing your money." These options differ from the Income Manager payout annuity contracts. They may provide higher or lower income levels, but do not have all the features of the Income Manager payout annuity contract. You may request an - -------------------------------------------------------------------------------- 28 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- illustration of the Income Manager payout annuity contract from your registered representative. The Income Manager (Life Annuity with a Period Certain) payout annuity contracts are offered through our prospectus for the Income Manager payout annuities. You may obtain a copy of the most current version from your registered representative. You should read it carefully before you decide to exercise your guaranteed minimum income benefit. SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner (discussed under "More information" later in this prospectus) elects to continue the contract after your death, the guaranteed minimum income benefit will continue to be available on the contract date anniversaries specified above based on the contract date. However, the guaranteed minimum income benefit must be exercised based on the age of the successor annuitant/contract owner. EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be exercised in the same manner as described above only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. Similarly, under Rollover TSA contracts the contract owner must convert the Rollover TSA contract in a direct rollover to a Rollover IRA contract according to our rules. The rollover to a Rollover IRA contract may only occur when you are eligible for a rollover distribution from a TSA. This may generally occur when you are age 59 1/2, or you are separated from service from the employer who provided the Rollover TSA funds. See "Rollover or direct transfer contributions" under "Tax information" later in this prospectus. GUARANTEED MINIMUM DEATH BENEFIT Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through 79 at issue of Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA contracts; and 20 through 75 at issue of QP contracts. You may elect either the "5% roll up to age 80" or the "annual ratchet to age 80" guaranteed minimum death benefit when you apply for a contract. Once you have made your election, you may not change it. 5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit equals your initial contribution. Thereafter, the guaranteed minimum death benefit will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, the fixed maturity options and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after the annuitant is age 80. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the additional contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit for the withdrawal on the date you take the withdrawal. The 5% roll up to age 80 guaranteed minimum death benefit is not available in New York. ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Then, on each contract date anniversary, we will determine your guaranteed minimum death benefit by comparing your current guaranteed minimum death benefit to your account value on that contract date anniversary. If your account value is higher than your guaranteed minimum death benefit, we will increase your guaranteed minimum - -------------------------------------------------------------------------------- Contract features and benefits 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- death benefit to equal your account value. On the other hand, if your account value on the contract date anniversary is less than your guaranteed minimum death benefit, we will not adjust your guaranteed minimum death benefit either up or down. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit on the date you take the withdrawal. Applicable for annuitant ages 80 through 83 when the contract is issued. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Thereafter, it will be increased by the dollar amount of any additional contributions. We will adjust your guaranteed minimum death benefit if you take any withdrawals. ---------------------------------------- Please see "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for information on how withdrawals affect your guaranteed minimum death benefit. For contracts issued in New York, the guaranteed minimum death benefit at the annuitant's death will never be less than your value in the variable investment options, plus the sum of the fixed maturity amounts in each fixed maturity option. See Appendix IV for an example of how we calculate the guaranteed minimum death benefit. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract and will reflect (i) any investment gain or loss in the variable investment options, (ii) any positive or negative market value adjustments in the fixed maturity options, and (iii) any guaranteed interest in the account for special dollar cost averaging, through the date we receive your contract. However, some states require that we refund the full amount of your contribution (not reflecting (i), (ii) or (iii) above). For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. We may require that you wait six months before you may apply for a contract with us again if: o you cancel your contract during the free look period; or o you change your mind before you receive your contract whether we have received your contribution or not. Please see "Tax information" for possible consequences of cancelling your contract. If you fully convert an existing traditional IRA contract to a Roth Conversion IRA or Roth Flexible Premium IRA contract, you may cancel your Roth Conversion IRA contract and return to a Rollover IRA or Flexible Premium IRA contract, whichever applies. Our Processing Office, or your registered representative, can provide you with the cancellation instructions. - -------------------------------------------------------------------------------- 30 Contract features and benefits - -------------------------------------------------------------------------------- Contract features and benefits - -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE Your "account value" is the total of the values you have allocated to the (i) variable investment options, (ii) fixed maturity options, and (iii) account for special dollar cost averaging. These amounts are subject to certain fees and charges discussed under "Charges and expenses." Under Rollover TSA contracts, if you have any outstanding loan your account value will include any amount in the loan reserve account. Your contract also has a "cash value." At any time before annuity payments begin, your contract's cash value is equal to the account value, less the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, and less any withdrawal charge that may apply if you surrender your contract. If you have a Rollover TSA contract with an outstanding loan, your cash value also is reduced by the amount of any outstanding loan plus accrued interest. Please see "Surrendering your contract to receive its cash value" below. YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS Each variable investment option invests in shares of a corresponding Portfolio. Your value in each variable investment option is measured by "units." The value of your units will increase or decrease as though you had invested it in the corresponding Portfolio's shares directly. Your value, however, will be reduced by the amount of the fees and charges that we deduct under the contract. Your value will also be reduced by the dollar amount of any withdrawals that you make. The unit value for each variable investment option depends on the investment performance of that option, minus daily charges for mortality and expense risks and administrative expenses. On any day, your value in any variable investment option equals the number of units credited to your contract under that option, multiplied by that day's value for one unit. The number of your contract units in any variable investment option does not change unless you make additional contributions, make a withdrawal, or transfer amounts among investment options, or we transfer your loan amount to the loan reserve account under a TSA contract. In addition, when we deduct the baseBUILDER benefits charge and any withdrawal charge the number of units credited to your contract will be reduced. Your units are also reduced under Flexible Premium IRA and Roth Flexible Premium IRA contracts when we deduct the annual administrative charge. A description of how unit values are calculated is found in the SAI. YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS Your value in each fixed maturity option at any time before the maturity date is the market adjusted amount in each option. This is equivalent to your fixed maturity amount increased or decreased by the market value adjustment. Your value, therefore, may be higher or lower than your contributions (less withdrawals) accumulated at the rate to maturity. At the maturity date, your value in the fixed maturity option will equal its maturity value. YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING Your value in the account for special dollar cost averaging at any time will equal your initial contribution allocated to that option, plus interest, less the sum of all amounts that have been transferred to the variable investment options you have selected. - -------------------------------------------------------------------------------- Transferring your money among investment options 31 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TRANSFERRING YOUR ACCOUNT VALUE At any time before the date annuity payments are to begin, you can transfer some or all of your account value among the investment options, subject to the following: o You may not transfer any amount to the account for special dollar cost averaging. o You may not transfer to a fixed maturity option that matures in the current calendar year, or if its rate to maturity is 3%. o If the annuitant is 76 or older, you must limit your transfers to fixed maturity options to those with maturities of five years or less. Also, the maturity dates may be no later than the February 15th immediately following the date annuity payments are to begin. o If you make transfers out of a fixed maturity option other than at its maturity date the transfer may cause a market value adjustment. You may request a transfer in writing or by telephone using TOPS. You must send in all written transfer requests directly to our Processing Office. Transfer requests should specify: (1) the contract number, (2) the dollar amounts or percentages of your current account value to be transferred, and (3) the investment options to and from which you are transferring. We may, at any time, restrict the use of market timers and other agents acting under a power of attorney who are acting on behalf of more than one contract owner. Any agreements to use market timing services to make transfers are subject to our rules in effect at that time. We will confirm all transfers in writing. REBALANCING YOUR ACCOUNT VALUE We currently offer a rebalancing program that you can use to automatically reallocate your account value among the variable investment options. You must tell us: (a) the percentage you want invested in each variable investment option (whole percentages only), and (b) how often you want the rebalancing to occur (quarterly, semiannually, or annually on a contract year basis. However, it will occur on the same day of the month as the contract date). While your rebalancing program is in effect, we will transfer amounts among each variable investment option so that the percentage of your account value that you specify is invested in each option at the end of each rebalancing date. - -------------------------------------------------------------------------------- Rebalancing does not assure a profit or protect against loss. You should periodically review your allocation percentages as your needs change. You may want to discuss the rebalancing program with your registered representative or other financial adviser before electing the program. - -------------------------------------------------------------------------------- You may elect the rebalancing program at any time. You may also change your allocation instructions or cancel the program at any time. If you request a transfer while the rebalancing program is in effect, we will process the transfer as requested and then cancel the rebalancing program. You may not elect the rebalancing program if you are participating in a dollar cost averaging program. Rebalancing is not available for amounts you have allocated in the fixed maturity options. - -------------------------------------------------------------------------------- 32 Accessing your money - -------------------------------------------------------------------------------- Accessing your money - -------------------------------------------------------------------------------- WITHDRAWING YOUR ACCOUNT VALUE You have several ways to withdraw your account value before annuity payments begin. The table below shows the methods available under each type of contract. More information follows the table. For the tax consequences of withdrawals, see "Tax information." - -------------------------------------------------------------------------------- METHOD OF WITHDRAWAL - -------------------------------------------------------------------------------- SUBSTANTIALLY MINIMUM CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION - -------------------------------------------------------------------------------- NQ Yes Yes No No - -------------------------------------------------------------------------------- Rollover IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Flexible Premium IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Conversion IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Flexible Premium IRA Yes Yes Yes No - -------------------------------------------------------------------------------- QP Yes No No Yes - -------------------------------------------------------------------------------- Rollover TSA Yes* No No Yes - -------------------------------------------------------------------------------- * For some Rollover TSA contracts, your ability to take withdrawals, loans or surrender your contract may be limited. You must provide withdrawal restriction information when you apply for a contract. See "Tax information -- Tax Sheltered Annuity contracts (TSAs)" below. LUMP SUM WITHDRAWALS (All contracts) You may take lump sum withdrawals from your account value at any time. (Rollover TSA contracts may have restrictions.) The minimum amount you may withdraw is $1,000. If you request to withdraw more than 90% of a contract's current cash value we will treat it as a request to surrender the contract for its cash value. See "Surrendering your contract to receive its cash value" below. Lump sum withdrawals in excess of the 15% free withdrawal amount may be subject to a withdrawal charge. Under Rollover TSA contracts, if a loan is outstanding, you may only take lump sum withdrawals as long as the cash value remaining after any withdrawal equals at least 10% of the outstanding loan plus accrued interest. SYSTEMATIC WITHDRAWALS (NQ and all IRA contracts) You may take systematic withdrawals of a particular dollar amount or a particular percentage of your account value. You may take systematic withdrawals on a monthly, quarterly or annual basis as long as the withdrawals do not exceed the following percentages of your account value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you may take in each systematic withdrawal is $250. If the amount withdrawn would be less than $250 on the date a withdrawal is to be taken, we will not make a payment and we will terminate your systematic withdrawal election. We will make the withdrawals on any day of the month that you select as long as it is not later than the 28th day of the month. If you do not select a date, we will make the withdrawals on the same calendar day of the month as the contract date. You must wait at least 28 days after your contract is issued before your systematic withdrawals can begin. You may elect to take systematic withdrawals at any time. If you own an IRA contract, you may elect this withdrawal method only if you are between ages 59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you have balances in the account for special dollar cost averaging. You may change the payment frequency, or the amount or percentage of your systematic withdrawals, once each contract year. However, you may not change the amount or percentage in any contract year in which you have already taken a lump sum withdrawal. You can cancel the systematic withdrawal option at any time. Systematic withdrawals are not subject to a withdrawal charge, except to the extent that, when added to a lump sum withdrawal previously taken in the same contract year, the systematic withdrawal exceeds the 15% free withdrawal amount. - -------------------------------------------------------------------------------- Accessing your money 33 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBSTANTIALLY EQUAL WITHDRAWALS (All IRA contracts) The substantially equal withdrawals option allows you to receive distributions from your account value without triggering the 10% additional federal tax penalty, which normally applies to distributions made before age 59 1/2. See "Tax information." Once you begin to take substantially equal withdrawals, you should not stop them or change the pattern of your withdrawals until the later of age 59 1/2 or five full years after the first withdrawal. If you stop or change the withdrawals or take a lump sum withdrawal, you may be liable for the 10% federal tax penalty that would have otherwise been due on prior withdrawals made under this option and for any interest on those withdrawals. You may elect to take substantially equal withdrawals at any time before age 59 1/2. We will make the withdrawal on any day of the month that you select as long as it is not later than the 28th day of the month. You may not elect to receive the first payment in the same contract year in which you took a lump sum withdrawal. We will calculate the amount of your substantially equal withdrawals based on the method you choose from the choices we offer. The payments will be made monthly, quarterly or annually as you select. These payments will continue until we receive written notice from you to cancel this option or you take a lump sum withdrawal. You may elect to start receiving substantially equal withdrawals again, but the payments may not restart in the same contract year in which you took a lump sum withdrawal. We will calculate the new withdrawal amount. You may not elect substantially equal withdrawals if you have balances in the account for special dollar cost averaging. Substantially equal withdrawals are not subject to a withdrawal charge. MINIMUM DISTRIBUTION WITHDRAWALS (Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only -- See "Tax information") We offer the minimum distribution withdrawal option to help you meet required minimum distributions under federal income tax rules. You may elect this option in the year in which you reach age 70 1/2. The minimum amount we will pay out is $250. You may elect the method you want us to use to calculate your minimum distribution withdrawals from the choices we offer. Currently, minimum distribution withdrawal payments will be made annually. We do not impose a withdrawal charge on minimum distribution withdrawals except if when added to a lump sum withdrawal previously taken in the same contract year, the minimum distribution withdrawal exceeds the 15% free withdrawal amount. We will calculate your annual payment based on your account value at the end of the prior calendar year based on the method you choose. Under Rollover TSA contracts, you may not elect minimum distribution withdrawals if a loan is outstanding. - -------------------------------------------------------------------------------- For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, we will send a form outlining the distribution options available before you reach age 70 1/2 (if you have not begun your annuity payments before that time). - -------------------------------------------------------------------------------- HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE Unless you specify otherwise, we will subtract your withdrawals on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the withdrawal required or the total amount of the withdrawal will be withdrawn from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar basis or on a pro rata basis as explained below: - -------------------------------------------------------------------------------- 34 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INCOME BENEFIT Benefit base -- Your current benefit base will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current benefit base on a pro rata basis. DEATH BENEFIT 5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed minimum death benefit, your current guaranteed minimum death benefit will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current guaranteed minimum death benefit on a pro rata basis. Annual ratchet to age 80 -- If you elect the annual ratchet to age 80 guaranteed minimum death benefit, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. Annuitant issue ages 80 through 83 -- If your contract was issued when the annuitant was between ages 80 and 83, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. ---------------------------------------- Reduction on a dollar-for-dollar basis means that your current benefit will be reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis means that we calculate the percentage of your current account value that is being withdrawn and we reduce your current benefit by that same percentage. For example, if your account value is $30,000 and you withdraw $12,000, you have withdrawn 40% of your account value. If your guaranteed minimum death benefit was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x.40) and your new guaranteed minimum death benefit after the withdrawal would be $24,000 ($40,000-$16,000). The timing of your withdrawals and whether they exceed the 5% threshold described above can have a significant impact on your guaranteed minimum income benefit or guaranteed minimum death benefit. LOANS UNDER ROLLOVER TSA CONTRACTS You may take loans from a Rollover TSA unless restricted by the employer who provided the Rollover TSA funds. If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the funds told us when you purchased your contract. The employer must also tell us whether special employer plan rules of the Employee Retirement Income Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan while you are taking minimum distribution withdrawals. You should read the terms and conditions on our loan request form carefully before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may only take a loan with the written consent of your spouse. Your contract contains further details of the loan provision. Also, see "Tax information" for general rules applicable to loans. We will permit you to have only one loan outstanding at a time. The minimum loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account value, subject to any limits under the federal income tax rules. The term of a loan is five years. However, if you use the loan to acquire your primary residence, the term is 10 years. The term may not extend beyond the earliest of: (1) the date annuity payments begin, (2) the date the contract terminates, and - -------------------------------------------------------------------------------- Accessing your money 35 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (3) the date a death benefit is paid (the outstanding loan will be deducted from the death benefit amount). Interest will accrue daily on your outstanding loan at a rate we set. The loan interest rate will be equal to the Moody's Corporate Bond Yield Averages for the calendar month ending two months before the day of the calendar quarter in which the rate is determined. LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the amount of your loan to the loan reserve account. Unless you specify otherwise, we will subtract your loan on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the loan will be subtracted from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. We will credit interest to the amount in the loan reserve account at a rate of 2% lower than the loan interest rate that applies for the time your loan is outstanding. On each contract date anniversary after the date the loan is processed, we will transfer the amount of interest earned in the loan reserve account to the variable investment options on a pro rata basis. When you make a loan repayment, unless you specify otherwise, we will transfer the dollar amount of the loan repaid from the loan reserve account to the investment options according to the allocation percentages we have on our records. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time while the annuitant is living and before you begin to receive annuity payments. (Rollover TSA contracts may have restrictions.) For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under the contract will terminate as of that date. You may receive your cash value in a single sum payment or apply it to one or more of the annuity payout options. See "Choosing your annuity payout options" below. We will usually pay the cash value within seven calendar days, but we may delay payment as described in "When to expect payments," below. For the tax consequences of surrenders, see "Tax information." WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments out of the variable investment options within seven calendar days after the date of the transaction to which the request relates. These transactions may include applying proceeds to a variable annuity, payment of a death benefit, payment of any amount you withdraw (less any withdrawal charge) and, upon surrender, payment of the cash value. We may postpone such payments or applying proceeds for any period during which: (1) the New York Stock Exchange is closed or restricts trading, (2) sales of securities or determination of the fair value of a variable investment option's assets is not reasonably practicable because of an emergency, or (3) the SEC, by order, permits us to defer payment to protect people remaining in the variable investment options. We can defer payment of any portion of your value in the fixed maturity options and the account for special dollar cost averaging (other than for death benefits) for up to six months while you are living. We also may defer payments for a reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. All payments are made by check and are mailed to you (or the payee named in a tax-free exchange) by U.S. mail, unless you request that we use an express delivery service at your expense. - -------------------------------------------------------------------------------- 36 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CHOOSING YOUR ANNUITY PAYOUT OPTIONS The Equitable Accumulator offers you several choices for receiving retirement income. Each choice enables you to receive fixed or, in some cases, variable annuity payments. You can choose from among the six different annuity payout options listed below. Restrictions apply, depending on the type of contract you own. - -------------------------------------------------------------------------------- Annuity payout options Life annuity Life annuity -- period certain Life annuity -- refund certain Period certain annuity - -------------------------------------------------------------------------------- Income Manager payout Life annuity with a period options certain Period certain annuity - -------------------------------------------------------------------------------- ANNUITY PAYOUT OPTIONS You can choose from among the following annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because there is no continuation of benefits following the annuitant's death with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. o Life annuity -- period certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the end of a selected period of time ("period certain"), payments continue to the beneficiary for the balance of the period certain. A life annuity with a period certain of 10 years is the normal form of annuity under the contracts. The period certain cannot extend beyond the annuitant's life expectancy. o Life annuity -- refund certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments to the beneficiary will continue until that amount has been recovered. This payout option is available only as a fixed annuity. o Period certain annuity: An annuity that guarantees payments for a specific period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. Currently, this payout option is available only as a fixed annuity. All of the above payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for you. The life annuity, life annuity -- period certain, and life annuity -- refund certain payout options are available on a single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, payments continue to the survivor. The following annuity payout options are available as variable annuities: o Life annuity (except in New York). o Life annuity -- period certain. o Joint and survivor life annuity (100% to survivor). o Joint and survivor life period certain annuity (100% to survivor). Variable annuities may be funded through your choice of variable investment options investing in Portfolios of The Hudson River Trust. The amount of each variable annuity payment will fluctuate, depending upon the performance of the variable investment options, and whether the actual rate of investment return is higher or lower than an assumed base rate. Please see "Annuity Unit Values" in the SAI. - -------------------------------------------------------------------------------- Accessing your money 37 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We may offer other payout options not outlined here. Your registered representative can provide details. SELECTING AN ANNUITY PAYOUT OPTION When you select a payout option, we will issue you a separate written agreement confirming your right to receive annuity payments. We require you to return your contract before annuity payments begin. For NQ and IRA contracts, unless you choose a different payout option, we will pay annuity payments under a life annuity with a certain period of 10 years. The only payout options available under QP contracts and Rollover TSA contracts are the life annuity 10 year period certain and the joint and survivor life annuity 10 year period certain. You can choose the date annuity payments begin but it may not be earlier than one year from the contract date. You can change the date your annuity payments are to begin anytime before that date as long as you do not choose a date later than the 28th day of any month. Also, that date may not be later than the contract date anniversary that follows the annuitant's 90th birthday. This may be different in some states. Before your annuity payments are to begin, we will notify you by letter that the annuity payout options are available. Once you have selected a payout option and payments have begun, no change can be made other than transfers (if permitted in the future) among the variable investment options if a variable annuity is selected. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and whether it is fixed or variable, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). The amount we apply to provide annuity payments will depend on the type of payout option you select. If you select a payout option that provides for payments for the rest of the annuitant's life, then we will apply your account value. If you select a payout option that provides for payments for a period certain, then we will apply your cash value. However, if the period certain is more than five years, we will apply not less than 95% of the account value. Amounts in the fixed maturity options that are applied to a payout option before a maturity date will result in a market value adjustment. If, at the time you elect a payout option, the amount to be applied is less than $2,000 or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. INCOME MANAGER PAYOUT OPTIONS For NQ and IRA contracts, two Income Manager payout options are also available. These are the Income Manager (Life Annuity with a Period Certain) and the Income Manager (Period Certain). For QP contracts, the Income Manager payout options are available only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and the change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. For Rollover TSA contracts, the Income Manager payout annuity options are available only after the Rollover TSA contract is rolled over to a Rollover IRA contract. This may generally occur when you are age 59 1/2, or you have separated from service with the employer who provided the Rollover TSA funds. The Income Manager (Life Annuity with a Period Certain) provides guaranteed payments for the annuitant's life or for the annuitant's life and the life of a joint annuitant. The Income Manager (Period Certain) provides payments for a specified period. The contract owner and annuitant must meet the issue age and payment requirements. Both Income Manager annuities provide guaranteed level payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also provides guaranteed increasing payments (NQ contracts only). - -------------------------------------------------------------------------------- 38 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- If you apply only part of the account value of your contract to either of the Income Manager payout annuities we will consider it a withdrawal and may deduct a withdrawal charge. We will not deduct a withdrawal charge if you apply all of your account value at a time when the dollar amount of the withdrawal charge is greater than 2% of remaining contributions (after withdrawals). However, a new withdrawal charge schedule will apply under the Income Manager annuity. For purposes of the withdrawal charge schedule, the year in which your account value is applied under the Income Manager annuity will be "contract year 1." In addition, we will not deduct a withdrawal charge if you apply all of your account value from your Equitable Accumulator contract when the dollar amount of the withdrawal charge under such contract is 2% or less. This means that no withdrawal charge schedule will apply under the Income Manager payout annuity contract. You should consider the timing of your purchase as it relates to the potential for withdrawal charges under the Income Manager annuity. No additional contributions will be permitted under an Income Manager (Life Annuity with a Period Certain). You also may apply your account value to an Income Manager (Period Certain) annuity once withdrawal charges are no longer in effect under your contract. No withdrawal charges will apply under that Income Manager annuity. The Income Manager annuities are described in a separate prospectus. Copies of the most current version are available from your registered representative. To purchase an Income Manager annuity we also require the return of your contract. We will issue an Income Manager annuity to put one of the payout annuities into effect. Depending upon your circumstances, this may be done on a tax-free basis. Please consult your tax adviser. - -------------------------------------------------------------------------------- Charges and expenses 39 - -------------------------------------------------------------------------------- Charges and expenses - -------------------------------------------------------------------------------- CHARGES THAT EQUITABLE LIFE DEDUCTS We deduct the following charges each day from the net assets of each variable investment option. These charges are reflected in the unit values of each variable investment option: o A mortality and expense risks charge. o An administrative charge. We deduct the following charges from your account value. When we deduct these charges from your variable investment options, we reduce the number of units credited to your contract: o On each contract date anniversary -- an annual administrative charge (Flexible Premium IRA and Roth Flexible Premium IRA contracts only) o At the time you make certain withdrawals or surrender your contract -- a withdrawal charge. o If you elect the optional benefit -- a charge for the optional baseBUILDER benefit. o At the time annuity payments are to begin -- charges for state premium and other taxes. More information about these charges appears below. We will not increase these charges for the life of your contract, except as noted. We may reduce certain charges under group or sponsored arrangements. See "Group or sponsored arrangements" below. MORTALITY AND EXPENSE RISKS CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality and expense risks, including the guaranteed minimum death benefit. The daily charge is equivalent to an annual rate of 1.10% of the net assets in each variable investment option. The mortality risk we assume is the risk that annuitants as a group will live for a longer time than our actuarial tables predict. If that happens, we would be paying more in annuity income than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each contract, will differ from actual mortality experience. Lastly, we assume a mortality risk to the extent that at the time of death, the guaranteed minimum death benefit exceeds the cash value of the contract. The expense risk we assume is the risk that it will cost us more to issue and administer the contracts than we expect. ADMINISTRATIVE CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for administrative expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. We reserve the right under the contracts to increase this charge to an annual rate of 0.35%. ANNUAL ADMINISTRATIVE CHARGE (FLEXIBLE PREMIUM IRA AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY) Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, we deduct an administrative charge from your account value on each contract date anniversary. We deduct the charge if your account value on the last business day of the contract year, before the deduction of any other charges, is less than $25,000. If your account value on such date is $25,000 or more, this charge will equal zero. During the first two contract years, the charge is equal to $30 or, if less, 2% of your account value. The charge is $30 for contract years three and later. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. If you surrender your contract during the contract year we will deduct a pro rata portion of the charge. WITHDRAWAL CHARGE A withdrawal charge applies in two circumstances: (1) if you make one or more withdrawals during a contract - -------------------------------------------------------------------------------- 40 Charges and expenses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- year that, in total, exceed the 15% free withdrawal amount, described below, or (2) if you surrender your contract to receive its cash value. The withdrawal charge equals a percentage of the contributions withdrawn. The percentage that applies depends on how long each contribution has been invested in the contract. We determine the withdrawal charge separately for each contribution according to the following table: - -------------------------------------------------------------------------------- CONTRACT YEAR - -------------------------------------------------------------------------------- 1 2 3 4 5 6 7 8+ - -------------------------------------------------------------------------------- Percentage of contribution 7% 6% 5% 4% 3% 2% 1% 0% - -------------------------------------------------------------------------------- For purposes of calculating the withdrawal charge, we treat the contract year in which we receive a contribution as "contract year 1." Amounts withdrawn up to the free withdrawal amount are not considered withdrawal of any contribution. We also treat contributions that have been invested the longest as being withdrawn first. We treat contributions as withdrawn before earnings for purposes of calculating the withdrawal charge. However, federal income tax rules treat earnings under your contract as withdrawn first. See "Tax information." In order to give you the exact dollar amount of the withdrawal you request, we deduct the amount of the withdrawal and the withdrawal charge from your account value. Any amount deducted to pay a withdrawal charge is also subject to a withdrawal charge. We deduct the charge in proportion to the amount of the withdrawal subtracted from each investment option. The withdrawal charge helps cover our sales expenses. The withdrawal charge does not apply in the circumstances described below. 15% FREE WITHDRAWAL AMOUNT. Each contract year you can withdraw up to 15% of your account value without paying a withdrawal charge. The 15% free withdrawal amount is determined using your account value on the most recent contract date anniversary, minus any other withdrawals made during the contract year. The 15% free withdrawal amount does not apply if you surrender your contract. Note the following special rule for NQ contracts issued to a charitable remainder trust, the free withdrawal amount will equal the greater of: (1) the current account value, less contributions that have not been withdrawn (earnings in the contract), and (2) the 15% free withdrawal amount defined above. MINIMUM DISTRIBUTIONS. The withdrawal charge does not apply to withdrawals taken under our minimum distribution withdrawal option. However, those withdrawals are counted towards the 15% free withdrawal amount if you also make a lump sum withdrawal in any contract year. DISABILITY, TERMINAL ILLNESS OR CONFINEMENT TO NURSING HOME. The withdrawal charge also does not apply if: o The annuitant has qualified to receive Social Security disability benefits as certified by the Social Security Administration; or o We receive proof satisfactory to us (including certification by a licensed physician) that the annuitant's life expectancy is six months or less; or o The annuitant has been confined to a nursing home for more than 90 days (or such other period, as required in your state) as verified by a licensed physician. A nursing home for this purpose means one that is (a) approved by Medicare as a provider of skilled nursing care service, or (b) licensed as a skilled nursing home by the state or territory in which it is located (it must be within the United States, Puerto Rico, or U.S. Virgin Islands) and meets all of the following: -- its main function is to provide skilled, intermediate, or custodial nursing care; -- it provides continuous room and board to three or more persons; -- it is supervised by a registered nurse or licensed practical nurse; - -------------------------------------------------------------------------------- Charges and expenses 41 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -- it keeps daily medical records of each patient; -- it controls and records all medications dispensed; and -- its primary service is other than to provide housing for residents. We reserve the right to impose a withdrawal charge, in accordance with your contract and applicable state law, if the disability is caused by a preexisting condition or a condition that began within 12 months of the contract date. Some states may not permit us to waive the withdrawal charge in the above circumstances, or may limit the circumstances for which the withdrawal charge may be waived. Your registered representative can provide more information or you may contact our Processing Office. BASEBUILDER BENEFITS CHARGE If you elect the baseBUILDER combined guaranteed minimum income benefit and guaranteed minimum death benefit, we deduct a charge annually from your account value on each contract date anniversary. The charge is equal to 0.30% of the benefit base in effect on the contract date anniversary. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. Generally, we deduct the charge from the amount applied to provide an annuity payout. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands). ANNUITY ADMINISTRATIVE FEE We generally deduct a fee of up to $350 from the amount to be applied to purchase a life annuity payout option. CHARGES THAT THE TRUSTS DEDUCT The Hudson River Trust and EQ Advisors Trust each deducts charges for the following types of fees and expenses: o Investment advisory fees ranging from 0.25% to 1.15%. o 12b-1 fees of 0.25%. o Operating expenses, such as trustees' fees, independent auditors' fees, legal counsel fees, administrative service fees, custodian fees, and liability insurance. o Investment-related expenses, such as brokerage commissions. These charges are reflected in the daily share price of each Portfolio. Since shares of each trust are purchased at their net asset value, these fees and expenses are, in effect, passed on to the variable investment options and are reflected in their unit values. For more information about these charges, please refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust following this prospectus. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the withdrawal charge or the mortality and expense risks charge, or change the minimum initial contribution requirements. We also may change the guaranteed minimum income benefit and the guaranteed minimum death benefit, or offer variable investment options that invest in shares of The Hudson River Trust or EQ Advisors Trust that are not subject to the 12b-1 fee. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. Group arrangements are not available for IRA contracts. Sponsored arrangements include those in which an employer allows us to sell contracts 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 or sponsoring organization, among other factors. We take all these factors into account when reducing charges. To qualify for reduced - -------------------------------------------------------------------------------- 42 Charges and expenses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- charges, a group or sponsored arrangement must meet certain requirements, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We also may establish different rates to maturity for the fixed maturity options under different classes of contracts for group or sponsored arrangements. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variation in the withdrawal charge will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, ERISA, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. OTHER DISTRIBUTION ARRANGEMENTS We may reduce or eliminate charges when sales are made in a manner that result in savings of sales and administrative expenses, such as sales through persons who are compensated by clients for recommending investments and who receive no commission or reduced commissions in connection with the sale of the contracts. We will not permit a reduction or elimination of charges where it would be unfairly discriminatory. - -------------------------------------------------------------------------------- Payment of death benefit 43 - -------------------------------------------------------------------------------- Payment of death benefit - -------------------------------------------------------------------------------- YOUR BENEFICIARY AND PAYMENT OF BENEFIT You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for the change is signed. Under jointly owned contracts, the surviving owner is considered the beneficiary, and will take the place of any other beneficiary. You may be limited as to the beneficiary you can designate in a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee. The death benefit is equal to your account value, or, if greater, the guaranteed minimum death benefit. The guaranteed minimum death benefit is part of your contract, whether you select the combined baseBUILDER benefit or not. We determine the amount of the death benefit as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. Under Rollover TSA contracts we will deduct the amount of any outstanding loan plus accrued interest from the amount of the death benefit. EFFECT OF THE ANNUITANT'S DEATH If the annuitant dies before the annuity payments begin, we will pay the death benefit to your beneficiary. Generally, the death of the annuitant terminates the contract. However, a beneficiary who is the surviving spouse of the owner/annuitant can choose to be treated as the successor owner/annuitant and continue the contract. Only a spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you cannot have a successor owner/annuitant. For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a surviving spouse may be able to have limited ownership. WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT Under certain conditions the owner can change after the original owner's death. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the successor owner. If you do not want the person named to receive the death benefit upon the annuitant's death to be the successor owner, you should name a successor owner. You may name a different person that will become the successor owner at any time by sending satisfactory notice to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the "beneficiary" for purposes of the distribution rules described in this section. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the owner who has died (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the successor owner for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value of the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The successor owner may instead elect to receive the cash value as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy). Payments must begin no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the successor owner or joint owner, the spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and annuitant are living. HOW DEATH BENEFIT PAYMENT IS MADE We will pay the death benefit to the beneficiary in the form of the annuity payout option you have chosen. If you have - -------------------------------------------------------------------------------- 44 Payment of death benefit - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- not chosen an annuity payout option as of the time of the annuitant's death, the beneficiary will receive the death benefit in a single sum. However, subject to any exceptions in the contract, our rules and any applicable requirements under federal income tax rules, the beneficiary may elect to apply the death benefit to one or more annuity payout options we offer at the time. See "Choosing your annuity payout options" earlier in this prospectus. Please note that if you are both the contract owner and the annuitant, you may elect only a life annuity or an annuity that does not extend beyond the life expectancy of the beneficiary. SUCCESSOR OWNER AND ANNUITANT If you are both the contract owner and the annuitant, and your spouse is the sole beneficiary or the joint owner, then your spouse may elect to receive the death benefit or continue the contract as successor owner/annuitant. If your surviving spouse decides to continue the contract, then on the contract date anniversary following your death, we will increase the account value to equal your current guaranteed minimum death benefit, if it is higher than the account value. In determining whether the guaranteed minimum death benefit will continue to grow, we will use your surviving spouse's age (as of the contract date anniversary). BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA CONTRACTS Upon your death under a Rollover IRA or Flexible Premium IRA contract, a non-spouse beneficiary may generally elect to keep the contract in your name and receive distributions under the contract instead of the death benefit being paid in a single sum. If you die after the "required beginning date" (see "Tax information") for required minimum distributions, the contract will continue if: (a) you were receiving minimum distribution withdrawals from this contract; and (b) the pattern of minimum distribution withdrawals you chose was based in part on the life of the designated beneficiary. The withdrawals will then continue to be paid to the beneficiary on the same basis as you chose before your death. We will be able to tell your beneficiary whether this option is available to them. You should contact our Processing Office for further information. If you die before the "required beginning date" (and therefore you were not taking minimum distribution withdrawals under the contract), the beneficiary may begin taking minimum distribution withdrawals under the contract. We will increase the account value to equal the death benefit if the death benefit is greater than the account value. That amount will be used to provide the withdrawals. These withdrawals will begin by December 31st of the calendar year following your death and will be based on the beneficiary's life expectancy. If there is more than one beneficiary, the shortest life expectancy is used. The designated beneficiary must be a natural person and of legal age at the time of election. The beneficiary must elect this option within 30 days following the date we receive proof of your death. While the contract continues in your name, the beneficiary may make transfers among the investment options. However, additional contributions will not be permitted and the guaranteed minimum income benefit and the death benefit (including the guaranteed minimum death benefit) provisions will no longer be in effect. Although the only withdrawals that will be permitted are minimum distribution withdrawals, the beneficiary may choose at any time to withdraw all of the account value and no withdrawal charges will apply. - -------------------------------------------------------------------------------- Tax information 45 - -------------------------------------------------------------------------------- Tax information - -------------------------------------------------------------------------------- OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Equitable Accumulator contracts owned by United States taxpayers. The tax rules can differ, depending on the type of contract, whether NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Roth Flexible Premium IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TRANSFERS AMONG INVESTMENT OPTIONS You can make transfers among investment options inside the contract without triggering taxable income. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal or as an annuity payment. However, earnings are taxable, even without a distribution: o if a contract fails investment diversification requirements as specified in federal income tax rules (these rules are based on or are similar to those specified for mutual funds under the securities laws); o if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse); o if you use a contract as security for a loan (in this case, the amount pledged will be treated as a distribution); and o if the owner is other than an individual (such as a corporation, partnership, trust, or other non-natural person). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract for calculating the taxable amount of any distribution from any of those contracts. ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get back the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. For fixed annuity payments, the tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount of the payment. For variable annuity payments, your - -------------------------------------------------------------------------------- 46 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- investment in the contract divided by the number of expected payments is your tax-free portion of each payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Equitable Accumulator NQ contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Equitable Accumulator NQ contract. Surrenders If you surrender or cancel the contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. Death benefit payments made to a beneficiary after your death For the rules applicable to death benefits, see "Payment of Death Benefit" and "When an NQ contract owner dies before the annuitant" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and a beneficiary. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The calculation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your - -------------------------------------------------------------------------------- Tax information 47 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "Traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis; and o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with employer-sponsored retirement plans. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (http://www.irs.ustreas.gov). The Equitable Accumulator IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. You may purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth IRA available are the Roth Conversion IRA and Roth Flexible Premium IRA. This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are not discussed in this prospectus because they are not available in individual retirement annuity form. The Equitable Accumulator IRA contract has been approved by the IRS as to form for use as a traditional IRA. We expect to submit the Roth IRA version for formal IRS approval in 1999. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Equitable Accumulator IRA contract. CANCELLATION You can cancel an Equitable Accumulator IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA contract issued as a result of a full conversion of an Equitable Accumulator Rollover IRA or Flexible Premium IRA contract by following the instructions in the request for full conversion form. The form is available from our Processing Office or your registered representative. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a traditional IRA: - -------------------------------------------------------------------------------- 48 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o regular contributions out of earned income or compensation; or o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other traditional IRAs ("direct transfers"). Regular traditional IRA, direct transfer, and rollover contributions may be made to a Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under a Rollover IRA contract. See "Rollovers and transfers" below. REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS Limits on contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a traditional IRA. You cannot make regular traditional IRA contributions for the tax year in which you reach age 70 1/2 or any tax year after that. Special rules for spouses If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to traditional IRAs (and Roth IRAs discussed below). Even if one spouse has no compensation or compensation under $2,000, married individuals filing jointly can contribute up to $4,000 for any taxable year to any combination of traditional IRAs and Roth IRAs. (Any contributions to Roth IRAs reduce the ability to contribute to traditional IRAs and vice versa.) The maximum amount may be less if earned income is less and the other spouse has made IRA contributions. No more than a combined total of $2,000 can be contributed annually to either spouse's traditional and Roth IRAs. Each spouse owns his or her traditional IRAs and Roth IRAs even if the other spouse funded the contributions. A working spouse age 70 1/2 or over can contribute up to the lesser of $2,000 or 100% of "earned income" to a traditional IRA for a nonworking spouse until the year in which the nonworking spouse reaches age 70 1/2. Deductibility of contributions The amount of traditional IRA contributions that you can deduct for a tax year depends on whether you are covered by an employer-sponsored tax-favored retirement plan, as defined under special federal income tax rules. Your Form W-2 will indicate whether or not you are covered by such a retirement plan. IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can make fully deductible contributions to your traditional IRAs for each tax year up to $2,000 or, if less, your earned income. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT RANGE, you can make fully deductible contributions to your traditional IRAs. For each tax year, your fully deductible contribution can be up to $2,000 or, if less, your earned income. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE CONTRIBUTIONS to your traditional IRAs. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any of your regular contributions to your traditional IRAs. If you are single and covered by a retirement plan during any part of the taxable year, the deduction for IRA contributions phases out with AGI between $31,000 and $41,000 in 1999. This range will increase every year until 2005 when the range is $50,000-$60,000. If you are married and file a joint return, and you are covered by a retirement plan during any part of the taxable year, the - -------------------------------------------------------------------------------- 49 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- deduction for traditional IRA contributions phases out with AGI between $51,000 and $61,000 in 1999. This range will increase every year until 2007 when the range is $80,000-$100,000. Married individuals filing separately and living apart at all times are not considered married for purposes of this deductible contribution calculation. Generally, the active participation in an employer-sponsored retirement plan of an individual is determined independently for each spouse. Where spouses have "married filing jointly" status, however, the maximum deductible traditional IRA contribution for an individual who is not an active participant (but whose spouse is an active participant) is phased out for taxpayers with AGI of between $150,000 and $160,000. To determine the deductible amount of the contribution in 1999, you determine AGI and subtract $31,000 if you are single, or $51,000 if you are married and file a joint return with your spouse. The resulting amount is your excess AGI. You then determine the limit on the deduction for traditional IRA contributions using the following formula: ($10,000-excess AGI) times $2,000 (or earned Equals the adjusted - -------------------- x income, if less) = deductible divided by $10,000 contribution limit Nondeductible regular contributions If you are not eligible to deduct part or all of the traditional IRA contribution, you may still make nondeductible contributions on which earnings will accumulate on a tax-deferred basis. The combined deductible and nondeductible contributions to your traditional IRA (or the nonworking spouse's traditional IRA) may not, however, exceed the maximum $2,000 per person limit. See "Excess contributions" below. You must keep your own records of deductible and nondeductible contributions in order to prevent double taxation on the distribution of previously taxed amounts. See "Withdrawals, payments and transfer of funds out of traditional IRAs" below. If you are making nondeductible contributions in any taxable year, or you have made nondeductible contributions to a traditional IRA in prior years and are receiving distributions from any traditional IRA, you must file the required information with the IRS. Moreover, if you are making nondeductible traditional IRA contributions, you must retain all income tax returns and records pertaining to such contributions until interests in all traditional IRAs are fully distributed. When you can make regular contributions If you file your tax returns on a calendar year basis like most taxpayers, you have until the April 15 return filing deadline (without extensions) of the following calendar year to make your regular traditional IRA contributions for a tax year. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o regular contributions of more than $2,000; or o regular contributions of more than earned income for the year, if that amount is under $2,000; or o regular contributions to a traditional IRA made after you reach age 70 1/2; or o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or regular) before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess regular traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions, discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. - -------------------------------------------------------------------------------- Tax information 50 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. ROLLOVERS AND TRANSFERS Rollover contributions may be made to a traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other traditional IRAs. You may also change your mind about amounts contributed as Roth IRA funds to traditional IRA funds, in accordance with special federal income tax rules, if you use the forms we prescribe. This is referred to as having "recharacterized" your contribution. Any amount contributed to a traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions, unless the distribution is: o only after-tax contributions you made to the plan; or o "required minimum distributions" after age 70 1/2 or separation from service; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; or o a hardship withdrawal; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one traditional IRA to one or more of your other traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited traditional IRA to one or more other traditional IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free basis - -------------------------------------------------------------------------------- Tax information 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a traditional IRA at any time. You do not need to wait for a special event like retirement. Taxation of payments Earnings in traditional IRAs are not subject to federal income tax until you or your beneficiary receives them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any traditional IRA (it does not have to be to this particular traditional IRA contract), those contributions are recovered tax free when you get distributions from any traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to traditional IRAs. At the end of any year in which you have received a distribution from any traditional IRA, you calculate the ratio of your total nondeductible traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all traditional IRAs you own at the end of the year plus all traditional IRA distributions made during the year. Multiply this by all distributions from the traditional IRA during the year to determine the nontaxable portion of each distribution. In addition, a distribution is not taxable if: o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; or o the entire amount received is rolled over to another traditional IRA (see "Rollovers and transfers" above); or o in certain limited circumstances, where the traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" traditional IRA treatment: o the source of funds you used to establish the traditional IRA must have been a rollover contribution from a qualified plan, and o the entire amount received from the traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. The Rollover IRA contract can be used as a conduit IRA if amounts are not commingled. Distributions from a traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the - -------------------------------------------------------------------------------- 52 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1-April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year -- the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions - "account-based" or "annuity-based." Account-based method. If you choose an "account-based" method, you divide the value of your traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you have to use the "term certain" method of calculating that person's life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). For example, if you anticipate exercising your guaranteed minimum income benefit or selecting any other form of life annuity payout after you are age 70 1/2, you must have elected to recalculate life expectancies. Annuity-based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your traditional IRA based on the method you choose? No, unless you affirmatively select an annuity payout option or an account-based withdrawal option such as our minimum distribution withdrawal option. Because the options we offer do not cover every option permitted under federal income tax rules, you may prefer to do your own required minimum distribution calculations for one or more of your traditional IRAs. What if you take more than you need to for any year? The required minimum distribution amount for your traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you - -------------------------------------------------------------------------------- Tax information 53 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- take from your qualified plans to the amounts you have to take from your traditional IRAs and vice-versa. However, the IRS will let you calculate the required minimum distribution for each traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall traditional IRA required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal income tax rules require complete distribution of your entire value in the contract within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your traditional IRA into his or her own traditional IRA. Successor annuitant and owner If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a traditional IRA. You cannot use a traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o used to pay certain extraordinary medical expenses (special federal income tax definition); or o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); or o used to pay certain first-time home buyer expenses (special federal income tax definition); or - -------------------------------------------------------------------------------- 54 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o used to pay certain higher education expenses (special federal income tax definition); or o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. To meet this last exception, you could elect to apply your contract value to an Income Manager (Life Annuity with a Period Certain) payout annuity contract (level payments version). You could also elect the substantially equal withdrawals option. We will calculate the substantially equal annual payments under a method we select based on guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question and Answer 12). Although substantially equal withdrawals and Income Manager payments are not subject to the 10% penalty tax, they are taxable as discussed in "Withdrawals, payments and transfers of funds out of traditional IRAs" above. Once substantially equal withdrawals or Income Manager annuity payments begin, the distributions should not be stopped or changed until the later of your reaching age 59 1/2 or five years after the date of the first distribution, or the penalty tax, including an interest charge for the prior penalty avoidance, may apply to all prior distributions under this option. Also, it is possible that the IRS could view any additional withdrawal or payment you take from your contract as changing your pattern of substantially equal withdrawals or Income Manager payments for purposes of determining whether the penalty applies. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS) This section of the prospectus covers some of the special tax rules that apply to Roth IRAs. If the rules are the same as those that apply to the traditional IRA, we will refer you to the same topic under "traditional IRAs." The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth individual retirement annuity under Sections 408A and 408(b) of the Internal Revenue Code. CONTRIBUTIONS TO ROTH IRAS Individuals may make four different types of contributions to a Roth IRA: o regular after-tax contributions out of earnings; or o taxable "rollover" contributions from traditional IRAs ("conversion" contributions); or o tax-free rollover contributions from other Roth IRAs; o tax-free direct custodian-to-custodian transfers from other Roth IRAs ("direct transfers"). Regular after-tax, direct transfer, and rollover contributions may be made to a Roth Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under the Roth Conversion IRA contract. See "Rollovers and direct transfers" below. If you use the forms we require, we will also accept traditional IRA funds which are subsequently recharacterized as Roth IRA funds following special federal income tax rules. REGULAR CONTRIBUTIONS TO ROTH IRAS Limits on regular contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a Roth IRA. Any contributions to Roth IRAs reduce your ability to contribute to traditional IRAs and vice versa. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to Roth IRAs and traditional IRAs. See the discussion above under traditional IRAs. With a Roth IRA, you can make regular contributions when you reach 70 1/2, as long as you have sufficient earnings. But, you cannot make contributions for any year that: - -------------------------------------------------------------------------------- Tax information 55 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o your federal income tax filing status is "married filing jointly" and your adjusted gross income is over $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is over $110,000. However, you can make regular Roth IRA contributions in reduced amounts when: o your federal income tax filing status is "married filing jointly" and your adjusted gross income is between $150,000 and $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is between $95,000 and $110,000. If you are married and filing separately and your adjusted gross income is between $0 and $10,000 the amount of regular contribution you are permitted to make is phased out. If your adjusted gross income is more than $10,000 you cannot make a regular Roth IRA contribution. When you can make contributions Same as traditional IRAs. Deductibility of contributions Roth IRA contributions are not tax deductible. ROLLOVERS AND DIRECT TRANSFERS What is the difference between rollover and direct transfer transactions? You may make rollover contributions to a Roth IRA from only two sources: o another Roth IRA ("tax-free rollover contribution"); or o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable "conversion" rollover ("conversion contribution"). You may not make contributions to a Roth IRA from a qualified plan under Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the Internal Revenue Code. You may make direct transfer contributions to a Roth IRA only from another Roth IRA. The difference between a rollover transaction and a direct transfer transaction is the following: in a rollover transaction you actually take possession of the funds rolled over, or are considered to have received them under tax law in the case of a change from one type of plan to another. In a direct transfer transaction, you never take possession of the funds, but direct the first Roth IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly to Equitable Life, as the Roth IRA issuer. You can make direct transfer transactions only between identical plan types (for example, Roth IRA to Roth IRA). You can also make rollover transactions between identical plan types. However, you can only use rollover transactions between different plan types (for example, traditional IRA to Roth IRA). You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to Roth IRA direct transfer transactions. This can be accomplished on a completely tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions only once in any 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers can be made more frequently than once a year. Also, if you send us the rollover contribution to apply it to a Roth IRA, you must do so within 60 days after you receive the proceeds from the original IRA to get rollover treatment. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some cases, Roth IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. Conversion contributions to Roth IRAs In a conversion rollover transaction, you withdraw (or are considered to have withdrawn) all or a portion of funds from a traditional IRA you maintain and convert it to a Roth IRA within 60 days after you receive (or are considered to have received) the traditional IRA proceeds. Unlike a rollover from - -------------------------------------------------------------------------------- 56 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- a traditional IRA to another traditional IRA, the conversion rollover transaction is not tax-free. Instead, the distribution from the traditional IRA is generally fully taxable. For this reason, we are required to withhold 10% federal income tax from the amount converted unless you elect out of such withholding. (If you have ever made nondeductible regular contributions to any traditional IRA -- whether or not it is the traditional IRA you are converting - a pro rata portion of the distribution is tax-free.) There is, however, no early distribution penalty tax on the traditional IRA withdrawal that you are converting to a Roth IRA, even if you are under age 59 1/2. You cannot make conversion contributions to a Roth IRA for any taxable year in which your adjusted gross income exceeds $100,000. (For this purpose, your adjusted gross income is computed without the gross income stemming from the traditional IRA conversion.) You also cannot make conversion contributions to a Roth IRA for any taxable year in which your federal income tax filing status is "married filing separately." Finally, you cannot make conversion contributions to a Roth IRA to the extent that the funds in your traditional IRA are subject to the annual required minimum distribution rule applicable to traditional IRAs beginning at age 70 1/2. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Roth IRA at any time; you do not need to wait for a special event like retirement. DISTRIBUTIONS FROM ROTH IRAS Distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also distributions. The following distributions from Roth IRAs are free of income tax: o Rollovers from a Roth IRA to another Roth IRA; o Direct transfers from a Roth IRA to another Roth IRA; o "Qualified Distributions" from Roth IRAs; and o Return of excess contributions or amounts recharacterized to a traditional IRA. Qualified distributions from Roth IRAs Qualified distributions from Roth IRAs made because of one of the following four qualifying events or reasons are not includable in income: o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o your distribution is a "qualified first-time homebuyer distribution" (special federal income tax definition; $10,000 lifetime total limit for these distributions from all of your traditional and Roth IRAs). You also have to meet a five-year aging period. A qualified distribution is any distribution made after the five-taxable year period beginning with the first taxable year for which you made any contribution to any Roth IRA (whether or not the one from which the distribution is being made). It is not possible to have a tax-free qualified distribution before the year 2003 because of the five-year aging requirement. Nonqualified distributions from Roth IRAs Nonqualified distributions from Roth IRAs are distributions that do not meet the qualifying event and five-year aging period tests described above. Such distributions are potentially taxable as ordinary income. Nonqualified distributions receive return-of-investment-first treatment. Only the difference between the amount of the distribution and the amount of contributions to all of your Roth IRAs is taxable. You have to reduce the amount of contributions to all of your Roth IRAs to reflect any previous tax-free recoveries. - -------------------------------------------------------------------------------- Tax information 57 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You must keep your own records of regular and conversion contributions to all Roth IRAs to assure appropriate taxation. You may have to file information on your contributions to and distributions from any Roth IRA on your tax return. You may have to retain all income tax returns and records pertaining to such contributions and distributions until your interests in all Roth IRAs are distributed. Like traditional IRAs, taxable distributions from a Roth IRA are not entitled to the special favorable five-year averaging method (or, in certain cases, favorable ten-year averaging and long-term capital gain treatment) available in certain cases to distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS AT DEATH Same as traditional IRA under "What are the required minimum distribution payments after you die?" Lifetime required minimum distributions do not apply. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Distributions to a beneficiary generally receive the same tax treatment as if the distribution had been made to you. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS Same as traditional IRA. EXCESS CONTRIBUTIONS Same as traditional IRA, except that regular contributions made after age 70 1/2 are not "excess contributions." Excess rollover contributions to Roth IRAs are contributions not eligible to be rolled over (for example, conversion contributions from a traditional IRA if your adjusted gross income is in excess of $100,000 in the conversion year). You can withdraw or recharacterize any contribution to a Roth IRA before the due date (including extensions) for filing your federal income tax return for the tax year. If you do this, you must also withdraw or recharacterize any earnings attributable to the contribution. EARLY DISTRIBUTION PENALTY TAX Same as traditional IRA. For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable to 1998 conversion rollovers. SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS Under QP contracts your plan administrator or trustee notifies you as to tax consequences. See Appendix II. TAX SHELTERED ANNUITY CONTRACTS (TSAS) GENERAL This section of the prospectus covers some of the special tax rules that apply to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If the rules are the same as those that apply to another kind of contract, for example, traditional IRAs, we will refer you to the same topic under "traditional IRAs." CONTRIBUTIONS TO TSAS There are two ways you can make contributions to this Equitable Accumulator Rollover TSA contract: o a rollover from another TSA contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code, or o a full or partial direct transfer of assets ("direct transfer") from another contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24. With appropriate written documentation satisfactory to us, we will accept rollover contributions from "conduit IRAs" for TSA funds. If you make a direct transfer, you must fill out our transfer form. Employer-remitted contributions The Equitable Accumulator Rollover TSA contract does not accept employer-remitted contributions. However, we provide the following discussion as part of our description of - -------------------------------------------------------------------------------- 58 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- restrictions on the distribution of funds directly transferred, which include employer-remitted contributions to other TSAs. Employer-remitted contributions to TSAs made through the employer's payroll are subject to annual limits. (Tax-free transfer or tax-deferred rollover contributions from another 403(b) arrangement are not subject to these annual contribution limits.) Commonly, some or all of the contributions made to a TSA are made under a salary reduction agreement between the employee and the employer. These contributions are called "salary reduction" or "elective deferral" contributions. However, a TSA can also be wholly or partially funded through nonelective employer contributions or after-tax employee contributions. Amounts attributable to salary reduction contributions to TSAs are generally subject to withdrawal restrictions. Also, all amounts attributable to investments in a 403(b)(7) custodial account are subject to withdrawal restrictions discussed below. Rollover or direct transfer contributions You may make rollover contributions to your Equitable Accumulator Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally, you may make a rollover contribution to a TSA when you have a distributable event from an existing TSA as a result of your: o termination of employment with the employer who provided the TSA funds; or o reaching age 59 1/2 even if you are still employed; or o disability (special federal income tax definition). A transfer occurs when changing the funding vehicle, even if there is no distributable event. Under a direct transfer, you do not receive a distribution. We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if: o you give us acceptable written documentation as to the source of the funds, and o the Equitable Accumulator contract receiving the funds has provisions at least as restrictive as the source contract. Before you transfer funds to an Equitable Accumulator Rollover TSA contract, you may have to obtain your employer's authorization or demonstrate that you do not need employer authorization. For example, the transferring TSA may be subject to Title I of ERISA, if the employer makes matching contributions to salary reduction contributions made by employees. In that case, the employer must continue to approve distributions from the plan or contract. Your contribution to the Equitable Accumulator Rollover TSA must be net of the required minimum distribution for the tax year in which we issue the contract if: o you are or will be at least age 70 1/2 in the current calendar year, and o you have separated from service with the employer who provided the funds to purchase the TSA you are transferring or rolling over to the Equitable Accumulator Rollover TSA. This rule applies regardless of whether the source of funds is a: o rollover by check of the proceeds from another TSA; or o direct rollover from another TSA; or o direct transfer under Revenue Ruling 90-24 from another TSA. Further, you must use the same elections regarding recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you have already begun to receive required minimum distributions from or with respect to the TSA from which you are making your contribution to the Equitable Accumulator Rollover TSA. You must also elect or have elected a minimum distribution calculation method requiring recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you elect an annuity payout for the funds in this contract subsequent to this year. - -------------------------------------------------------------------------------- Tax information 59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DISTRIBUTIONS FROM TSAS General Depending on the terms of the employer plan and your employment status, you may have to get your employer's consent to take a loan or withdrawal. Your employer will tell us this when you establish the TSA through a direct transfer. Withdrawal restrictions If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts transferred to this contract and any future earnings on the amount transferred as not eligible for withdrawal until one of the following events happens: o you are separated from service with the employer who provided the funds to purchase the TSA you are transferring to the Equitable Accumulator Rollover TSA; o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o you take a "hardship" withdrawal (special federal income tax definition). If any portion of the funds directly transferred to your TSA contract is attributable to amounts that you invested in a 403(b)(7) custodial account, such amounts, including earnings, are subject to withdrawal restrictions. With respect to the portion of the funds that were never invested in a 403(b)(7) custodial account, these restrictions apply to the salary reduction (elective deferral) contributions to a TSA annuity contract you made and any earnings on them. These restrictions do not apply to the amount directly transferred to your TSA contract that represents your December 31, 1988 account balance attributable to salary reduction contributions to a TSA annuity contract and earnings. To take advantage of this grandfathering you must properly notify us in writing at our Processing Office of your December 31, 1988 account balance if you have qualifying amounts transferred to your TSA contract. This paragraph applies only to participants in a Texas Optional Retirement Program. Texas Law permits withdrawals only after one of the following distributable events occur: (1) the requirements for minimum distribution (discussed under "Required minimum distributions" below) are met; or (2) death; or (3) retirement; or (4) termination of employment in all Texas public institutions of higher education. For you to make a withdrawal, we must receive a properly completed written acknowledgement from the employer. If a distributable event occurs before you are vested, we will refund to the employer any amounts provided by an employer's first-year matching contribution. We reserve the right to change these provisions without your consent, but only to the extent necessary to maintain compliance with applicable law. Loans are not permitted under Texas Optional Retirement Programs. Tax treatment of distributions Amounts held under TSAs are generally not subject to federal income tax until benefits are distributed. Distributions include withdrawals from your TSA contract and annuity payments from your TSA contract. Death benefits paid to a beneficiary are also taxable distributions. Unless an exception applies, amounts distributed from TSAs are includable in gross income as ordinary income. Distributions from TSAs may be subject to 20% federal income tax withholding. See "Federal and state income tax withholding and information reporting" below. In addition, TSA distributions may be subject to additional tax penalties. If you have made after-tax contributions, you will have a tax basis in your TSA contract, which will be recovered tax-free. Since we do not track your investment in the contract, if any, it is your responsibility to determine how much of the distribution is taxable. - -------------------------------------------------------------------------------- 60 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Distributions before annuity payments begin. On a total surrender, the amount received in excess of the investment in the contract is taxable. We will report the total amount of the distribution. The amount of any partial distribution from a TSA prior to the annuity starting date is generally taxable, except to the extent that the distribution is treated as a withdrawal of after-tax contributions. Distributions are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. Annuity payments. If you elect an annuity payout option, you will recover any investment in the contract as each payment is received by dividing the investment in the contract by an expected return determined under an IRS table prescribed for qualified annuities. The amount of each payment not excluded from income under this exclusion ratio is fully taxable. The full amount of the payments received after your investment in the contract is recovered is fully taxable. If you (and your beneficiary under a joint and survivor annuity) die before recovering the full investment in the contract, a deduction is allowed on your (or your beneficiary's) final tax return. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Death benefit distributions from a TSA generally receive the same tax treatment as distributions during your lifetime. In some instances, distributions from a TSA made to your surviving spouse may be rolled over to a traditional IRA. LOANS FROM TSAS You may take loans from a TSA unless restricted by the employer (for example, under an employer plan subject to ERISA). If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the TSA funds told us when you purchased your contract. Loans are generally not treated as a taxable distribution. If the amount of the loan exceeds permissible limits under federal income tax rules when made, the amount of the excess is treated (solely for tax purposes) as a taxable distribution. Additionally, if the loan is not repaid at least quarterly, amortizing (paying down) interest and principal, the amount not repaid when due will be treated as a taxable distribution. Under Proposed Treasury Regulations the entire unpaid balance of the loan is includable in income in the year of the default. TSA loans are subject to federal income tax limits and may also be subject to the limits of the plan from which the funds came. Federal income tax rule requirements apply even if the plan is not subject to ERISA. For example, loans offered by TSAs are subject to the following conditions: o The amount of a loan to a participant, when combined with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding loan balance of plan loans on the date the loan was made. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. Equitable Accumulator Rollover TSA contracts have a term limit of 10 years for loans used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. The amount borrowed and not repaid may be treated as a distribution if: o the loan does not qualify under the conditions above, o the participant fails to repay the interest or principal when due, or o in some instances, the participant separates from service with the employer who provided the funds or the plan is terminated. In this case, the participant may have to include the unpaid amount due as ordinary income. In addition, the 10% early - -------------------------------------------------------------------------------- Tax information 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- distribution penalty tax may apply. The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a distribution. TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS You may roll over any "eligible rollover distribution" from a TSA into another eligible retirement plan, either directly or within 60 days of your receiving the distribution. To the extent rolled over, a distribution remains tax-deferred. You may roll over a distribution from a TSA to another TSA or to a traditional IRA. A spousal beneficiary may roll over death benefits only to a traditional IRA. The taxable portion of most distributions will be eligible for rollover, except as specifically excluded under federal income tax rules. Distributions that you cannot roll over generally include periodic payments for life or for a period of 10 years or more, hardship withdrawals, and required minimum distributions under federal income tax rules. Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24 are not distributions. REQUIRED MINIMUM DISTRIBUTIONS Same as traditional IRA with these differences: When you have to take the first required minimum distribution The minimum distribution rules force TSA participants to start calculating and taking annual distributions from their TSAs by a required date. Generally, you must take the first required minimum distribution for the calendar year in which you turn age 70 1/2. You may be able to delay the start of required minimum distributions for all or part of your account balance until after age 70 1/2, as follows: o For TSA participants who have not retired from service with the employer who provided the funds for the TSA by the calendar year the participant turns age 70 1/2, the required beginning date for minimum distributions is extended to April 1 following the calendar year of retirement. o TSA plan participants may also delay the start of required minimum distributions to age 75 of the portion of their account value attributable to their December 31, 1986 TSA account balance, even if retired at age 70 1/2. We will know whether or not you qualify for this exception because it will only apply to people who establish their Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give us the amount of your December 31, 1986 account balance that is being transferred to the Equitable Accumulator Rollover TSA on the form used to establish the TSA, you do not qualify. SPOUSAL CONSENT RULES This will only apply to you if you establish your Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the form used to establish the TSA whether or not you need to get spousal consent for loans, withdrawals, or other distributions. If you do, you will need such consent if you are married when you request a withdrawal under the TSA contract. In addition, unless you elect otherwise with the written consent of your spouse, the retirement benefits payable under the plan must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is payable for the life of the annuitant with a survivor annuity for the life of the spouse in an amount not less than one-half of the amount payable to the annuitant during his or her lifetime. In addition, if you are married, the beneficiary must be your spouse, unless your spouse consents in writing to the designation of another beneficiary. If you are married and you die before annuity payments have begun, payments will be made to your surviving spouse in the form of a life annuity unless at the time of your death a contrary election was in effect. However, your surviving spouse may elect, before payments begin, to receive payments in any form permitted under the terms of the TSA contract and the plan of the employer who provided the funds for the TSA. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a TSA before you reach age - -------------------------------------------------------------------------------- 62 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 59 1/2. This is in addition to any income tax. There are exceptions to the extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o to pay for certain extraordinary medical expenses (special federal income tax definition); or o if you are separated from service, any form of payout after you are age 55; or o only if you are separated from service, a payout in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. You should note the following special situations: o We might have to withhold on amounts we pay under a free look or cancellation. o We are generally required to withhold on conversion rollovers of traditional IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA and is taxable. o We are required to withhold on the gross amount of a distribution from a Roth IRA unless you elect out of withholding. This may result in tax being withheld even though the Roth IRA distribution is not taxable in whole or in part. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at the toll-free number. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999, your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. - -------------------------------------------------------------------------------- Tax information 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS) For a non-periodic distribution (total surrender or partial withdrawal), we generally withhold at a flat 10% rate. We apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs and Roth IRAs. You cannot elect out of withholding if the payment is an "eligible rollover distribution" from a qualified plan or TSA. If a non-periodic distribution from a qualified plan or TSA is not an "eligible rollover distribution" then the 10% withholding rate applies. MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS Unless you have the distribution go directly to the new plan, eligible rollover distributions from qualified plans and TSAs are subject to mandatory 20% withholding. An eligible rollover distribution from a TSA can be rolled over to another TSA or a traditional IRA. An eligible rollover distribution from a qualified plan can be rolled over to another qualified plan or traditional IRA. All distributions from a TSA or qualified plan are eligible rollover distributions unless they are on the following list of exceptions: o any after-tax contributions you made to the plan; or o any distributions which are "required minimum distributions" after age 70 1/2 or separation from service; or o hardship withdrawals; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and your designated beneficiary; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. A death benefit payment to your surviving spouse, or a qualified domestic relations order distribution to your current or former spouse, may be a distribution subject to mandatory 20% withholding. IMPACT OF TAXES TO EQUITABLE LIFE The contracts provide that we may charge Separate Account No. 49 for taxes. We do not now, but may in the future set up reserves for such taxes. - -------------------------------------------------------------------------------- 64 More information - -------------------------------------------------------------------------------- More information - -------------------------------------------------------------------------------- ABOUT OUR SEPARATE ACCOUNT NO. 49 Each variable investment option is a subaccount of our Separate Account No. 49. We established Separate Account No. 49 in 1996 under special provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our variable investment options for owners of our variable annuity contracts, including these contracts. We are the legal owner of all of the assets in Separate Account No. 49 and may withdraw any amounts that exceed our reserves and other liabilities with respect to variable investment options under our contracts. The results of Separate Account No. 49's operations are accounted for without regard to Equitable Life's other operations. Separate Account No. 49 is registered under the Investment Company Act of 1940 and is classified by that act as a "unit investment trust." The SEC, however, does not manage or supervise Equitable Life or Separate Account No. 49. Each subaccount (variable investment option) within Separate Account No. 49 invests solely in class IB shares issued by the corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust. We reserve the right subject to compliance with laws that apply: (1) to add variable investment options to, or to remove variable investment options from, Separate Account No. 49, or to add other separate accounts; (2) to combine any two or more variable investment options; (3) to transfer the assets we determine to be the shares of the class of contracts to which the contracts belong from any variable investment option to another variable investment option; (4) to operate Separate Account No. 49 or any variable investment option as a management investment company under the Investment Company Act of 1940 (in which case, charges and expenses that otherwise would be assessed against an underlying mutual fund would be assessed against Separate Account No. 49 or a variable investment option directly); (5) to deregister Separate Account No. 49 under the Investment Company Act of 1940; (6) to restrict or eliminate any voting rights as to Separate Account No. 49; and (7) to cause one or more variable investment options to invest some or all of their assets in one or more other trusts or investment companies. ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST The Hudson River Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each trust issues different shares relating to each Portfolio. The Hudson River Trust and EQ Advisors Trust do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on a trust's shares are reinvested in full. The Board of Trustees of The Hudson River Trust and EQ Advisors Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about The Hudson River Trust and EQ Advisors Trust, their investment objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans relating to their Class IB shares, and other aspects of their operations, appears in their prospectuses, or in their SAIs which are available upon request. ABOUT OUR FIXED MATURITY OPTIONS RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE We can determine the amount required to be allocated to one or more fixed maturity options in order to produce specified maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. - -------------------------------------------------------------------------------- More information 65 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows: - -------------------------------------------------------------------------------- FIXED MATURITY OPTIONS WITH FEBRUARY 15TH RATE TO MATURITY PRICE MATURITY DATE OF AS OF PER $100 OF MATURITY YEAR APRIL 1, 1999 MATURITY VALUE - -------------------------------------------------------------------------------- 2000 3.25% $97.23 2001 4.04% $92.83 2002 4.33% $88.51 2003 4.46% $84.43 2004 4.52% $80.60 2005 4.67% $76.45 2006 4.77% $72.56 2007 4.79% $69.16 2008 4.87% $65.55 2009 4.97% $61.91 - -------------------------------------------------------------------------------- HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw all of your value from a fixed maturity option before its maturity date. (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. - -------------------------------------------------------------------------------- Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation. - -------------------------------------------------------------------------------- If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. Any withdrawal charges that are deducted from a fixed maturity option will result in a market value adjustment calculated in the same way. See Appendix III for an example. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. INVESTMENTS UNDER THE FIXED MATURITY OPTIONS Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides an additional measure of assurance that we will make full - -------------------------------------------------------------------------------- 66 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- payment of amounts due under the fixed maturity options. Under New York Insurance Law, the portion of the separate account's assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your value in the fixed maturity options, regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the fixed maturity options under the contracts, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options and the account for special dollar cost averaging, as well as our general obligations. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account (other than market value adjustment interests). The disclosure with regard to the general account, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ABOUT OTHER METHODS OF PAYMENT WIRE TRANSMITTALS We accept initial contributions sent by wire to our Processing Office by agreement with certain broker-dealers. The transmittals must be accompanied by information we require to allocate your contribution. Wire orders not accompanied by complete information may be retained as described under "How you can make your contributions." Even if we accept the wire order and essential information, a contract generally will not be issued until we receive and accept a properly completed application. In certain cases we may issue a contract based on information forwarded electronically. In these cases, you must sign our Acknowledgement of Receipt form. Where we require a signed application, no financial transactions will be permitted until we receive the signed application and have issued the contract. Where we require an Acknowledgement of Receipt form, financial transactions are only permitted if you request them in writing, sign the request and have it signature guaranteed, until we receive the signed Acknowledgement of Receipt form. After your contract has been issued, additional contributions may be transmitted by wire. - -------------------------------------------------------------------------------- More information 67 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENT PROGRAM -- FOR NQ, FLEXIBLE PREMIUM IRA, AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY You may use our automatic investment program, or "AIP," to have a specified amount automatically deducted from a checking account, money market account, or credit union checking account and contributed as an additional contribution into an NQ, Flexible Premium IRA or Roth Flexible Premium IRA contract on a monthly or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts. For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300 quarterly. Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, the minimum amount is $50. AIP additional contributions may be allocated to any of the variable investment options and available fixed maturity options, but not the account for special dollar cost averaging. You choose the day of the month you wish to have your account debited as long as it is not later than the 28th day of the month. You may cancel AIP at any time by notifying our Processing Office. We are not responsible for any debits made to your account before the time written notice of cancellation is received at our Processing Office. DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR We describe below the general rules for when, and at what prices, events under your contract will occur. Other portions of this prospectus describe circumstances that may cause exceptions. We generally do not repeat those exceptions below. BUSINESS DAY Our business day is any day the New York Stock Exchange is open for trading. Each business day ends at the time trading on the exchange closes (or is suspended) for the day. We calculate unit values for our variable investment options as of the end of each business day. This usually is 4:00 p.m., Eastern Time. Contributions will be applied and any other transaction requests will be processed when they are received along with all the required information. o If your contribution, transfer or any other transaction request, containing all the required information, reaches us on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. o A loan request under your Rollover TSA contract will be processed on the first business day of the month following the date on which the properly completed loan request form is received. o If your transaction is set to occur on the same day of the month as the contract date and that date is the 29th, 30th or 31st of the month, then the transaction will occur on either the 28th day of the month or the 1st day of the next month, whichever is the closest business day. o When a charge is to be deducted on a contract date anniversary that is a non-business day, we will deduct the charge on the next business day. CONTRIBUTIONS AND TRANSFERS o Contributions allocated to the variable investment options are invested at the value next determined after the close of the business day. o Contributions allocated to a fixed maturity option will receive the rate to maturity in effect for that fixed maturity option on that business day. o Initial contributions allocated to the account for special dollar cost averaging receive the interest rate in effect on that business day. At certain times, we may offer the opportunity to lock in the interest rate for an initial contribution to be received under Section 1035 exchanges and trustee to trustee transfers. Your registered representative can provide information or you can call our Processing Office. o Transfers to or from variable investment options will be made at the value next determined after the close of the business day. o Transfers to a fixed maturity option will be based on the - -------------------------------------------------------------------------------- 68 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- rate to maturity in effect for that fixed maturity option on the business day of the transfer. ABOUT YOUR VOTING RIGHTS As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we have the right to vote on certain matters involving the Portfolios, such as: o The election of trustees. o The formal approval of independent auditors selected for each trust. o Any other matters described in the prospectuses for the trusts or requiring a shareholders' vote under the Investment Company Act of 1940. We will give contract owners the opportunity to instruct us how to vote the number of shares attributable to their contracts if a shareholder vote is taken. If we do not receive instructions in time from all contract owners, we will vote the shares of a Portfolio for which no instructions have been received in the same proportion as we vote shares of that Portfolio for which we have received instructions. We will also vote any shares that we are entitled to vote directly because of amounts we have in a Portfolio in the same proportions that contract owners vote. VOTING RIGHTS OF OTHERS Currently, we control each trust. EQ Advisors Trust shares are sold only to our separate accounts and an affiliated qualified plan trust. The Hudson River Trust shares are held by other separate accounts of ours and by separate accounts of insurance companies unaffiliated with us. Shares held by these separate accounts will probably be voted according to the instructions of the owners of insurance policies and contracts issued by those insurance companies. While this will dilute the effect of the voting instructions of the contract owners, we currently do not foresee any disadvantages because of this. The Hudson River Trust Board of Trustees intends to monitor events in order to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a response to any of those events insufficiently protects our contract owners, we will see to it that appropriate action is taken. SEPARATE ACCOUNT NO. 49 VOTING RIGHTS If actions relating to Separate Account No. 49 require contract owner approval, contract owners will be entitled to one vote for each unit they have in the variable investment options. Each contract owner who has elected a variable annuity payout option may cast the number of votes equal to the dollar amount of reserves we are holding for that annuity in a variable investment option divided by the annuity unit value for that option. We will cast votes attributable to any amounts we have in the variable investment options in the same proportion as votes cast by contract owners. CHANGES IN APPLICABLE LAW The voting rights we describe in this prospectus are created under applicable federal securities laws. To the extent that those laws or the regulations published under those laws eliminate the necessity to submit matters for approval by persons having voting rights in separate accounts of insurance companies, we reserve the right to proceed in accordance with those laws or regulations. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting - -------------------------------------------------------------------------------- More information 69 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- to address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission-critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system that is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon Separate Account No. 49, our ability to meet our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The financial statements of Equitable Life incorporated in this prospectus by reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and for the three years ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING You can transfer ownership of an NQ contract at any time before annuity payments begin. We will continue to treat you as the owner until we receive notification of any change at our Processing Office. You cannot assign your NQ contract as collateral or security for a loan. Loans are also not available under your NQ contract. In some cases, an assignment or change of ownership may have adverse tax consequences. See "Tax information." You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract except by surrender to us. Loans are not available and you cannot assign IRA and QP contracts as security for a loan or other obligation. If the employer that provided the funds does not restrict them, loans are available under a Rollover TSA contract. For limited transfers of ownership after the owner's death see "Payment of death benefit" and "Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts." You may direct the transfer of the values under your IRA, QP or Rollover TSA contract to another similar arrangement. Under federal income tax rules, in the case of such a transfer, we will impose a withdrawal charge, if one applies. DISTRIBUTION OF THE CONTRACTS Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of Equitable Life, is the distributor of the contracts and has responsibility for sales and marketing functions for Separate Account No. 49. EDI serves as the principal underwriter of Separate - -------------------------------------------------------------------------------- 70 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Account No. 49. EDI is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. EDI's principal business address is 1290 Avenue of the Americas, New York, New York 10104. Under a distribution agreement between EDI, Equitable Life, and certain of Equitable Life's separate accounts, including Separate Account No. 49, Equitable Life paid EDI distribution fees of $35,452,793 for 1998, $9,566,343 for 1997, and $87,157 for 1996, as the distributor of certain contracts, including these contracts, and as the principal underwriter of several Equitable Life separate accounts, including Separate Account No. 49. The contracts will be sold by registered representatives of EDI, as well as by affiliated and unaffiliated broker-dealers with which EDI has entered into selling agreements. Broker-dealer sales compensation will generally not exceed 7% of total contributions made under the contracts. EDI may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. Broker-dealers receiving sales compensation will generally pay a portion of it to their registered representatives as commissions related to sales of the contracts. The offering of the contracts is intended to be continuous. - -------------------------------------------------------------------------------- Investment performance 71 - -------------------------------------------------------------------------------- Investment performance - -------------------------------------------------------------------------------- We provide the following tables to show five different measurements of the investment performance of the variable investment options and/or the Portfolios in which they invest. We include these tables because they may be of general interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR RESULTS WILL DIFFER. Table 1 shows the average annual total return of the variable investment options. Average annual total return is the annual rate of growth that would be necessary to achieve the ending value of a contribution invested in the variable investment options for the periods shown. Table 2 shows the growth of a hypothetical $1,000 investment in the variable investment options over the periods shown. Both Tables 1 and 2 take into account all fees and charges under the contract, including the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, but do not take the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee, into account. Tables 3, 4, and 5 show the rates of return of the variable investment options on an annualized, cumulative, and year-by-year basis. These tables take into account all fees and charges under the contract, but do not reflect the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge or the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee. If the charges were reflected they would effectively reduce the rates of return shown. In all cases the results shown are based on the actual historical investment experience of the Portfolios in which the variable investment options invest. In some cases, the results shown relate to periods when the variable investment options and/or the contracts were not available. In those cases, we adjusted the results of the Portfolios to reflect the charges under the contracts that would have applied had the investment options and/or contracts been available. The contracts were first offered on August 1, 1997. In addition, we have adjusted the results prior to October 1996, when The Hudson River Trust Class IB shares were not available, to reflect the 12b-1 fees currently imposed. Finally, the results shown for the Alliance Money Market and Alliance Common Stock options for periods before March 22, 1985 reflect the results of the variable investment options that preceded them. The "Since inception" figures for these options are based on the date of inception of the preceding variable investment options. We have adjusted these results to reflect the maximum investment advisory fee payable for the Portfolios, as well as an assumed charge of 0.06% for direct operating expenses. EQ Advisors Trust commenced operations on May 1, 1997. All rates of return presented are time-weighted and include reinvestment of investment income, including interest and dividends. BENCHMARKS Tables 3 and 4 compare the performance of variable investment options to market indices that serve as benchmarks. Market indices are not subject to any charges for investment advisory fees, brokerage commission or other operating expenses typically associated with a managed portfolio. Also, they do not reflect other contract charges such as the mortality and expense risks charge, administrative charges, or any withdrawal or optional benefit charge. Comparisons with these benchmarks, therefore, may be of limited use. We include them because they are widely known and may help you to understand the universe of securities from which each Portfolio is likely to select its holdings. Benchmark data reflect the reinvestment of dividend income. The benchmarks include: - -------------------------------------------------------------------------------- 72 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Alliance Money Market: Salomon Brothers Three-Month T-Bill Index. Alliance High Yield: Merrill Lynch High Yield Master Index. Alliance Common Stock: Standard & Poor's 500 Index. Alliance Aggressive Stock: 50% Russell 2000 Small Stock Index and 50% Standard & Poor's Mid-Cap Total Return Index. Alliance Small Cap Growth: Russell 2000 Growth Index. EQ/Alliance Premier Growth: Standard & Poor's 500 Index. Capital Guardian U.S. Equity: Standard & Poor's 500 Index. Capital Guardian Research: Standard & Poor's 500 Index. Capital Guardian International: Morgan Stanley Capital International Europe, Australia, Far East Index. BT Equity 500 Index: Standard & Poor's 500 Index. BT Small Company Index: Russell 2000 Index. BT International Equity Index: Morgan Stanley Capital International Europe, Australia, Far East Index. EQ/Evergreen: Russell 2000 Index. EQ/Evergreen Foundation: 60% Standard & Poor's 500 Index/40% Lehman Brothers Aggregate Bond Index. JPM Core Bond: Salomon Brothers Broad Investment Grade Bond. Lazard Large Cap Value: Standard & Poor's 500 Index. Lazard Small Cap Value: Russell 200 Index. MFS Growth with Income: Standard & Poor's 500 Index. MFS Research: Standard & Poor's 500 Index. MFS Emerging Growth Companies: Russell 2000 Index. Merrill Lynch Basic Value Equity: Standard & Poor's 500 Index. Merrill Lynch World Strategy: 36% Standard & Poor's 500 Index/24% Morgan Stanley Capital International Europe, Australia, Far East Index/21% Salomon Brothers U.S. Treasury Bond 1 Year+ 14% Salomon Brothers World Government Bond (excluding U.S.)/and 5% Three-Month U.S. Treasury Bill. Morgan Stanley Emerging Markets Equity: Morgan Stanley Capital International Emerging Markets Free Price Return Index. EQ/Putnam Growth & Income Value: Standard & Poor's 500 Index. EQ/Putnam Investors Growth: Standard & Poor's 500 Index. EQ/Putnam International Equity: Morgan Stanley Capital International Europe, Australia, Far East Index. - -------------------------------------------------------------------------------- Lipper Survey. The Lipper Variable Insurance Products Performance Analysis Survey (Lipper Survey) records the performance of a large group of variable annuity products, including managed separate accounts of insurance companies. According to Lipper Analytical Services, Inc., the data are presented net of investment management fees, direct operating expenses and asset-based charges applicable under annuity contracts. Lipper data provide a more accurate picture than market benchmarks of the Equitable Accumulator performance relative to other variable annuity products. - -------------------------------------------------------------------------------- Investment performance 73 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 1 AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD -------------------------------------------------------------------------------- SINCE SINCE PORTFOLIO 1 3 5 10 OPTION PORTFOLIO INCEPTION VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE - ----------------------------------------------------------------------------------------------------------------------------- Alliance Money Market (3.64)% 1.59% 2.40% 3.35% -- -- 7/13/81 - ----------------------------------------------------------------------------------------------------------------------------- Alliance High Yield (13.96)% 7.72% 7.28% 8.93% -- -- 1/2/87 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock 20.02% 24.05% 19.18% 16.35% -- -- 1/13/76 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock (8.60)% 7.09% 8.76% 16.79% -- -- 1/27/86 - ----------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth (13.03)% -- -- -- 5.51% 5.51% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index 16.14% -- -- -- 16.14% 16.14% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- BT Small Company Index (10.93)% -- -- -- (10.93)% (10.93)% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- BT International Equity Index 11.17% -- -- -- 11.17% 11.17% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- JPM Core Bond 0.26% -- -- -- 0.26% 0.26% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value 11.14% -- -- -- 11.14% 11.14% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value (15.62)% -- -- -- (15.62)% (15.62)% 12/31/97 - ----------------------------------------------------------------------------------------------------------------------------- MFS Research 15.13% -- -- -- 15.64% 15.64% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies 25.40% -- -- -- 24.05% 24.05% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity 2.78% -- -- -- 9.86% 9.86% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- Merrill Lynch World Strategy (1.92)% -- -- -- 1.19% 1.19% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity (35.31)% -- -- -- (35.31)% (28.99)% 8/20/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value 4.00% -- -- -- 10.08% 10.08% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth 27.15% -- -- -- 26.08% 26.08% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity 10.56% -- -- -- 9.98% 9.98% 5/1/97 - -----------------------------------------------------------------------------------------------------------------------------
- ---------- * The since inception dates for the variable investment options are as follows: Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance Aggressive Stock, Alliance Small Cap Growth, MFS Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, and EQ/Putnam International Equity (May 1, 1997); Merrill Lynch Basic Value Equity and Merrill Lynch World Strategy (August 1, 1997); BT Equity 500 Index, BT Small Company Index, BT International Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, and Morgan Stanley Emerging Markets Equity (December 31, 1997). The inception dates for the Portfolios that became available on or after December 31, 1998 and are therefore not shown in the tables are: EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian International (May 1, 1999). - -------------------------------------------------------------------------------- 74 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 2 GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- --------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD ---------------------------------------------------------------------- SINCE 1 3 5 10 PORTFOLIO VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* - --------------------------------------------------------------------------------------------------------------- Alliance Money Market $ 963.60 $ 1,048.36 $ 1,126.12 $ 1,390.07 -- - --------------------------------------------------------------------------------------------------------------- Alliance High Yield $ 860.40 $ 1,250.11 $ 1,421.32 $ 2,352.06 -- - --------------------------------------------------------------------------------------------------------------- Alliance Common Stock $ 1,200.20 $ 1,908.73 $ 2,404.59 $ 4,547.90 -- - --------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 914.00 $ 1,228.21 $ 1,521.63 $ 4,719.54 -- - --------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth $ 869.70 -- -- -- $ 1,113.16 - --------------------------------------------------------------------------------------------------------------- BT Equity 500 Index $ 1,161.40 -- -- -- $ 1,161.40 - --------------------------------------------------------------------------------------------------------------- BT Small Company Index $ 890.70 -- -- -- $ 890.70 - --------------------------------------------------------------------------------------------------------------- BT International Equity Index $ 1,111.70 -- -- -- $ 1,111.70 - --------------------------------------------------------------------------------------------------------------- JPM Core Bond $ 1,002.60 -- -- -- $ 1,002.60 - --------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value $ 1,111.40 -- -- -- $ 1,111.40 - --------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value $ 843.80 -- -- -- $ 843.80 - --------------------------------------------------------------------------------------------------------------- MFS Research $ 1,151.30 -- -- -- $ 1,337.29 - --------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies $ 1,254.00 -- -- -- $ 1,538.76 - --------------------------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity $ 1,027.80 -- -- -- $ 1,206.83 - --------------------------------------------------------------------------------------------------------------- Merrill Lynch World Strategy $ 980.80 -- -- -- $ 1,023.94 - --------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 646.90 -- -- -- $ 504.25 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value $ 1,040.00 -- -- -- $ 1,211.78 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth $ 1,271.50 -- -- -- $ 1,589.59 - --------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity $ 1,105.60 -- -- -- $ 1,209.59 - ---------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 75 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 3 ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ---------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% -- 5.38% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% -- 8.73% - ---------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% -- 15.88% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 10.53% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 16.72% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 16.58% - ---------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - ---------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - ---------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.17% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - ---------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.56% -- -- -- -- 7.56% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - ---------------------------------------------------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.16% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 76 Investment performance - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 22.75% - ------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 33.03% - ------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 22.72% - ------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 14.53% - ------------------------------------------------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY 10.08% -- -- -- -- 15.76% - ------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY 5.38% -- -- -- -- 5.50% - ------------------------------------------------------------------------------------------------------- Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15% - ------------------------------------------------------------------------------------------------------- Benchmark 19.55% -- -- -- -- 20.00% - ------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (33.62)% - ------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)% - ------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (28.92)% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 16.03% - ------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 35.53% - ------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 15.94% - ------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 9.06% - ------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 13.43% - -------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 77 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 4 CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% -- 149.59% - --------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% -- 172.86% - --------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10% - --------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% -- 572.32% - --------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67% - --------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 18.19% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 28.98% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 29.23% - --------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - --------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.49% - --------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - --------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - --------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.23% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - --------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.56% -- -- -- -- 7.56% - --------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - --------------------------------------------------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE 18.44% -- -- -- -- 18.44% - --------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.09% - --------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.32)% -- -- -- -- (8.32)% - --------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - --------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 78 Investment performance - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ----------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 40.79% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 60.99% - ----------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 42.16% - ----------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 25.40% - ----------------------------------------------------------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY 10.08% -- -- -- -- 27.65% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 15.59% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY 5.38% -- -- -- -- 9.34% - ----------------------------------------------------------------------------------------------------------------- Lipper Global Flexible Portfolio 9.34% -- -- -- -- 19.41% - ----------------------------------------------------------------------------------------------------------------- Benchmark 19.55% -- -- -- -- 33.33% - ----------------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (42.83)% - ----------------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)% - ----------------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (36.71)% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 28.16% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 38.49% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH 34.45% -- -- -- -- 66.08% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY 17.86% -- -- -- -- 27.98% - ----------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 15.88% - ----------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 23.42% - -----------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 79 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 5 YEAR-BY-YEAR RATES OF RETURN
- ------------------------------------------------------------------------------------------------------------------------------------ 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32% 2.36% 4.06% 3.64% 3.74% 3.66% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19% (4.33)% 18.01% 20.91% 16.58% (6.66)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83% (3.70)% 30.34% 22.28% 27.16% 27.32% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89% (5.35)% 29.54% 20.24% 9.04% (1.30)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.38%+ (5.73)% - ------------------------------------------------------------------------------------------------------------------------------------ BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.44% - ------------------------------------------------------------------------------------------------------------------------------------ BT Small Company Index -- -- -- -- -- -- -- -- -- (3.63)% - ------------------------------------------------------------------------------------------------------------------------------------ BT International Equity Index -- -- -- -- -- -- -- -- -- 18.47% - ------------------------------------------------------------------------------------------------------------------------------------ JPM Core Bond -- -- -- -- -- -- -- -- -- 7.56% - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Large Cap Value -- -- -- -- -- -- -- -- -- 18.44% - ------------------------------------------------------------------------------------------------------------------------------------ Lazard Small Cap Value -- -- -- -- -- -- -- -- -- (8.32)% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research -- -- -- -- -- -- -- -- 14.99%+ 22.43% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.32%+ 32.70% - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Basic Value Equity -- -- -- -- -- -- -- -- 15.97%+ 10.08% - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch World Strategy -- -- -- -- -- -- -- -- 3.76%+ 5.38% - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.59)%+ (28.01) - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 15.15%+ 11.30% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Investors Growth -- -- -- -- -- -- -- -- 23.53%+ 34.45% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam International Equity -- -- -- -- -- -- -- -- 8.59%+ 17.86% - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- + Returns for these options represent less than 12 months of performance. The returns are as of each Portfolio inception date as shown in Table 1. - -------------------------------------------------------------------------------- 80 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMMUNICATING PERFORMANCE DATA In reports or other communications to contract owners or in advertising material, we may describe general economic and market conditions affecting our variable investment options, and the Portfolios and may compare the performance or ranking of those options and the Portfolios with: o those of other insurance company separate accounts or mutual funds included in the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS, or similar investment services that monitor the performance of insurance company separate accounts or mutual funds; o other appropriate indices of investment securities and averages for peer universes of mutual funds which are shown under "Benchmarks" above; or o data developed by us derived from such indices or averages. We also may furnish to present or prospective contract owners advertisements or other communications that include evaluations of a variable investment option or Portfolio by nationally recognized financial publications. Examples of such publications are: - -------------------------------------------------------------------------------- Barron's Money Management Letter - -------------------------------------------------------------------------------- Morningstar's Variable Annuity Sourcebook Investment Dealers Digest - -------------------------------------------------------------------------------- Business Week National Underwriter - -------------------------------------------------------------------------------- Forbes Pension & Investments - -------------------------------------------------------------------------------- Fortune USA Today - -------------------------------------------------------------------------------- Institutional Investor Investor's Business Daily - -------------------------------------------------------------------------------- Money The New York Times - -------------------------------------------------------------------------------- Kiplinger's Personal Finance The Wall Street Journal - -------------------------------------------------------------------------------- Financial Planning The Los Angeles Times - -------------------------------------------------------------------------------- Investment Adviser The Chicago Tribune - -------------------------------------------------------------------------------- Investment Management Weekly - -------------------------------------------------------------------------------- Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer universes of funds with similar investment objectives in its Lipper Survey. Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life Report (Morningstar Report). The Lipper Survey records performance data as reported to it by over 800 mutual funds underlying variable annuity and life insurance products. It divides these actively managed portfolios into 25 categories by portfolio objectives. The Lipper Survey contains two different universes, which reflect different types of fees in performance data: o The "separate account" universe reports performance data net of investment management fees, direct operating expenses and asset-based charges applicable under variable insurance and annuity contracts, and o The "mutual fund" universe reports performance net only of investment management fees and direct operating expenses, and therefore reflects only charges that relate to the underlying mutual fund. The Morningstar Variable Annuity/Life Reports consists of nearly 700 variable life and annuity funds, all of which report their data net of investment management fees, direct operating expenses and separate account level charges. VARDS is a monthly reporting service that monitors approximately 2,500 variable life and variable annuity funds on performance and account information. YIELD INFORMATION Current yield for the Alliance Money Market option will be based on net changes in a hypothetical investment over a given seven-day period, exclusive of capital changes, and then "annualized" (assuming that the same seven-day result would occur each week for 52 weeks). Current yield for the Alliance High Yield option will be based on net changes in a hypothetical investment over a given 30-day period, exclusive of capital changes, and then "annualized" (assuming that the same 30-day result would occur each month for 12 months). "Effective yield" is calculated in a similar manner, but when annualized, any income earned by the investment is assumed to be reinvested. The "effective yield" will be slightly higher than the "current yield" because any earnings are compounded weekly for the Alliance Money Market option and monthly for the Alliance High Yield option. The yields and effective yields assume the deduction of all contract charges and expenses other than the withdrawal charge, the optional baseBUILDER benefits charge, the annual - -------------------------------------------------------------------------------- Investment performance 81 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- administrative charge, and any charge for taxes such as premium tax. The yields and effective yields for the Alliance Money Market option, when used for the special dollar cost averaging program, assume that no contract charges are deducted. For more information, see "Yield Information for the Alliance Money Market Option and Alliance High Yield Option" in the SAI. - -------------------------------------------------------------------------------- 82 Incorporation of certain documents by reference - -------------------------------------------------------------------------------- Incorporation of certain documents by reference - -------------------------------------------------------------------------------- Equitable Life's annual report on Form 10-K for the year ended December 31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to be a part of this prospectus because they are incorporated by reference. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered, a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). - -------------------------------------------------------------------------------- Appendix I: Condensed financial information A-1 - -------------------------------------------------------------------------------- Appendix I: Condensed financial information - -------------------------------------------------------------------------------- UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE INVESTMENT OPTION - -------------------------------------------------------------------------------- FOR THE YEARS ENDING ------------------------------------ DEC. 31, 1997 DEC. 31, 1998 - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK - -------------------------------------------------------------------------------- Unit value $ 70.28 $ 69.37 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 380 939 - -------------------------------------------------------------------------------- ALLIANCE COMMON STOCK - -------------------------------------------------------------------------------- Unit value $186.29 $237.18 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 434 1,542 - -------------------------------------------------------------------------------- ALLIANCE HIGH YIELD - -------------------------------------------------------------------------------- Unit value $ 29.96 $ 27.96 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1,256 4,521 - -------------------------------------------------------------------------------- ALLIANCE MONEY MARKET - -------------------------------------------------------------------------------- Unit value $ 25.00 $ 25.92 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1,153 5,158 - -------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH - -------------------------------------------------------------------------------- Unit value $ 12.54 $ 11.82 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2,521 6,101 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- BT EQUITY 500 INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 12.34 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 12,279 - -------------------------------------------------------------------------------- BT SMALL COMPANY INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 9.64 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,610 - -------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 11.85 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,827 - -------------------------------------------------------------------------------- JPM CORE BOND - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 10.76 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 8,661 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-2 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FOR THE YEARS ENDING ------------------------------------ DEC. 31, 1997 DEC. 31, 1998 - -------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE - -------------------------------------------------------------------------------- Unit value $10.00 $ 11.84 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 5,696 - -------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE - -------------------------------------------------------------------------------- Unit value $10.00 $ 9.17 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 4,733 - -------------------------------------------------------------------------------- MFS RESEARCH - -------------------------------------------------------------------------------- Unit value $11.50 $ 14.08 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 5,257 14,913 - -------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES - -------------------------------------------------------------------------------- Unit value $12.13 $ 16.10 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 3,327 9,117 - -------------------------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY - -------------------------------------------------------------------------------- Unit value $11.60 $ 12.76 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1,182 4,389 - -------------------------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY - -------------------------------------------------------------------------------- Unit value $10.38 $ 10.94 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 306 717 - -------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY - -------------------------------------------------------------------------------- Unit value $ 7.94 $ 5.72 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 1,805 - -------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE - -------------------------------------------------------------------------------- Unit value $11.52 $ 12.82 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 8,113 24,343 - -------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH - -------------------------------------------------------------------------------- Unit value $12.35 $ 16.61 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2,581 10,072 - -------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY - -------------------------------------------------------------------------------- Unit value $10.86 $ 12.80 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 4,609 10,607 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts B-1 - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts - -------------------------------------------------------------------------------- Trustees who are considering the purchase of an Equitable Accumulator QP contract should discuss with their tax advisers whether this is an appropriate investment vehicle for the employer's plan. Trustees should consider whether the plan provisions permit the investment of plan assets in the QP contract, the distribution of such an annuity, the purchase of the guaranteed minimum income benefit, and the payment of death benefits in accordance with the requirements of the federal income tax rules. The QP contract and this prospectus should be reviewed in full, and the following factors, among others, should be noted. Assuming continued plan qualification and operation, earnings on qualified plan assets will accumulate value on a tax-deferred basis even if the plan is not funded by the Equitable Accumulator QP contract or another annuity. Therefore, you should purchase an Equitable Accumulator QP Contract to fund a plan for the contract's features and benefits other than tax deferral. This QP contract accepts transfer contributions only and not regular, ongoing payroll contributions. For 401(k) plans under defined contribution plans, no employee after-tax contributions are accepted. Under defined benefit plans, we will not accept rollovers from a defined contribution plan to a defined benefit plan. We will only accept transfers from a defined benefit plan or a change of investment vehicles in the plan. For defined benefit plans, the maximum percentage of actuarial value of the plan participant/employee's "normal retirement benefit" that can be funded by a QP contract is 80%. The account value under a QP contract may at any time be more or less than the lump sum actuarial equivalent of the "accrued benefit" for a defined benefit plan participant/employee. Equitable Life does not guarantee that the account value under a QP contract will at any time equal the actuarial value of 80% of a participant/employee's accrued benefit. If overfunding of a plan occurs, withdrawals from the QP contract may be required. A withdrawal charge and/or market value adjustment may apply. Further, Equitable Life will not perform or provide any plan recordkeeping services with respect to the QP contracts. The plan's administrator will be solely responsible for performing or providing for all such services. There is no loan feature offered under the QP contracts, so if the plan provides for loans and a participant/employee takes a loan from the plan, other plan assets must be used as the source of the loan and any loan repayments must be credited to other investment vehicles and/or accounts available under the plan. Given that required minimum distributions must commence from the plan for annuitants after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan funds) trustees should consider whether the QP contract is an appropriate purchase for annuitants approaching or over age 70 1/2. Finally, because the method of purchasing the QP contract and the features of the QP contract may appeal more to plan participants/employees who are older and tend to be highly paid, and because certain features of the QP contract are available only to plan participants/employees who meet certain minimum and/or maximum age requirements, plan trustees should discuss with their advisers whether the purchase of the QP contract would cause the plan to engage in prohibited discrimination in contributions, benefits or otherwise. - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example C-1 - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example - -------------------------------------------------------------------------------- The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a maturity value at the maturity date of $183,846. We further assume that a withdrawal of $50,000 is made four years later on February 15, 2004.
- ------------------------------------------------------------------------------------------------------------------ ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004 --------------------------------------------- 5.00% 9.00% - ------------------------------------------------------------------------------------------------------------------ AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------------ (1) Market adjusted amount $144,048 $119,487 - ------------------------------------------------------------------------------------------------------------------ (2) Fixed maturity amount 131,080 131,080 - ------------------------------------------------------------------------------------------------------------------ (3) Market value adjustment: (1)-(2) 12,968 (11,593) - ------------------------------------------------------------------------------------------------------------------ ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------------ (4) Portion of market value adjustment associated with withdrawal: (3) x [$50,000/(1)] $ 4,501 $ (4,851) - ------------------------------------------------------------------------------------------------------------------ (5) Reduction in fixed maturity amount: [$50,000-(4)] 45,499 54,851 - ------------------------------------------------------------------------------------------------------------------ (6) Fixed maturity amount: (2)-(5) 85,581 76,229 - ------------------------------------------------------------------------------------------------------------------ (7) Maturity value 120,032 106,915 - ------------------------------------------------------------------------------------------------------------------ (8) Market adjusted amount of (7) 94,048 69,487 - ------------------------------------------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- The death benefit under the contracts is equal to the account value or, if greater, the guaranteed minimum death benefit. The following illustrates the guaranteed minimum death benefit calculation. Assuming $100,000 is allocated to the variable investment options (with no allocation to the Alliance Money Market option or the fixed maturity options), no additional contributions, no transfers and no withdrawals, and no loans under a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant age 45 would be calculated as follows:
- ----------------------------------------------------------------------------------------- 5% ROLL UP TO END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED CONTRACT GUARANTEED MINIMUM MINIMUM YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT - ----------------------------------------------------------------------------------------- 1 $105,000 $105,000(1) $105,000(3) - ----------------------------------------------------------------------------------------- 2 $115,500 $110,250(2) $115,500(3) - ----------------------------------------------------------------------------------------- 3 $129,360 $115,763(2) $129,360(3) - ----------------------------------------------------------------------------------------- 4 $103,488 $121,551(1) $129,360(4) - ----------------------------------------------------------------------------------------- 5 $113,837 $127,628(1) $129,360(4) - ----------------------------------------------------------------------------------------- 6 $127,497 $134,010(1) $129,360(4) - ----------------------------------------------------------------------------------------- 7 $127,497 $140,710(1) $129,360(4) - -----------------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We are using these rates solely to illustrate how the benefit is determined. The return rates bear no relationship to past or future investment results. 5% ROLL UP TO AGE 80 (1) At the end of contract year 1, and again at the end of contract years 4 through 7, the death benefit will be equal to the guaranteed minimum death benefit. (2) At the end of contract years 2 and 3, the death benefit will be equal to the current account value since it is higher than the current guaranteed minimum death benefit. ANNUAL RATCHET TO AGE 80 (3) At the end of contract years 1 through 3, the guaranteed minimum death benefit is equal to the current account value. (4) At the end of contract years 4 through 7, the guaranteed minimum death benefit is equal to the guaranteed minimum death benefit at the end of the prior year since it is equal to or higher than the current account value. Statement of Additional Information Statement of additional information - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE Unit Values 2 Annuity Unit Values 2 Custodian and Independent Accountants 3 Yield Information for the Alliance Money Market Option and Alliance High Yield Option 3 Long-Term Market Trends 4 Key Factors in Retirement Planning 6 Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT NO. 49 Send this request form to: Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- Please send me an Equitable Accumulator SAI for Separate Account No. 49 dated May 1, 1999. ________________________________________________________________________________ Name: ________________________________________________________________________________ Address: ________________________________________________________________________________ City State Zip (EDIMLFSAI) Equitable Accumulator(SM) Select A combination variable and fixed deferred annuity contract MAY 1, 1999 Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing, or taking any other action under your contract. Also, at the end of this prospectus you will find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain important information about their Portfolios. - -------------------------------------------------------------------------------- WHAT IS THE EQUITABLE ACCUMULATOR SELECT? Equitable Accumulator Select is a deferred annuity contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation of retirement savings and for income. The contract offers income and death benefit protection. It also offers a number of payout options. You invest to accumulate value on a tax-deferred basis in one or more of our variable investment options or fixed maturity options ("investment options"). There is no withdrawal charge under the contract. However, we deduct a distribution charge calculated as a percentage of the amounts in the variable investment options. We deduct this charge for the life of the contract. This contract is not available in New York. - -------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS - -------------------------------------------------------------------------------- o Alliance Money Market o Lazard Large Cap Value o Alliance High Yield o Lazard Small Cap Value o Alliance Common Stock o MFS Growth with Income o Alliance Aggressive Stock o MFS Research o Alliance Small Cap Growth o MFS Emerging Growth Companies o EQ/Alliance Premier Growth o Morgan Stanley Emerging Markets Equity o BT Equity 500 Index o EQ/Putnam Growth & Income Value o BT Small Company Index o EQ/Putnam Investors Growth o BT International Equity Index o EQ/Putnam International Equity o Capital Guardian U.S. Equity o Capital Guardian Research o Capital Guardian International o JPM Core Bond - -------------------------------------------------------------------------------- You may allocate amounts to any of the variable investment options. They, in turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson River Trust or EQ Advisors Trust. Your investment results in a variable investment option will depend on the investment performance of the related Portfolio. Each variable investment option is a subaccount of our Separate Account No. 49. FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity options. These amounts will receive a fixed rate of interest for a specified period. Interest is earned at a guaranteed rate we set. We make a market value adjustment (up or down) if you make transfers or withdrawals from a fixed maturity option before its maturity date. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An annuity which is an investment vehicle for a qualified defined contribution or defined benefit plan ("QP"). o An individual retirement annuity ("IRA"), either traditional IRA ("Rollover IRA") or Roth IRA ("Roth Conversion IRA"). o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA")-("Rollover TSA"). A contribution of at least $25,000 is required to purchase a contract. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The statement of additional information ("SAI") dated May 1, 1999, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our Processing Office or calling 1-800-789-7771. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL. PROS 4ACS (5/99) - -------------------------------------------------------------------------------- 2 Contents of this prospectus - -------------------------------------------------------------------------------- Contents of this prospectus - -------------------------------------------------------------------------------- EQUITABLE ACCUMULATOR(SM) SELECT - -------------------------------------------------------------------------------- Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 Equitable Accumulator Select at a glance -- key features 8 - -------------------------------------------------------------------------------- FEE TABLE 10 - -------------------------------------------------------------------------------- Examples 13 Condensed Financial Information 14 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1 CONTRACT FEATURES AND BENEFITS 15 - -------------------------------------------------------------------------------- How you can purchase and contribute to your contract 15 Owner and annuitant requirements 18 How you can make your contributions 18 What are your investment options under the contract? 18 Portfolios of The Hudson River Trust 19 Portfolios of EQ Advisors Trust 19 Allocating your contributions 22 Our baseBUILDER option 23 Guaranteed minimum death benefit 26 Your right to cancel within a certain number of days 26 - -------------------------------------------------------------------------------- 2 DETERMINING YOUR CONTRACT'S VALUE 28 - -------------------------------------------------------------------------------- Your account value 28 Your contract's value in the variable investment options 28 Your contract's value in the fixed maturity options 28 - -------------------------------------------------------------------------------- "We," "our" and "us" refer to Equitable Life. When we address the reader of this prospectus with words such as "you" and "your," we mean the person who has the right or responsibility that the prospectus is discussing at that point. This is usually the contract owner. When we use the word "contract" it also includes certificates that are issued under group contracts in some states. - -------------------------------------------------------------------------------- Contents of this prospectus 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 29 - -------------------------------------------------------------------------------- Transferring your account value 29 Rebalancing your account value 29 - -------------------------------------------------------------------------------- 4 ACCESSING YOUR MONEY 30 - -------------------------------------------------------------------------------- Withdrawing your account value 30 How withdrawals are taken from your account value 31 How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit 31 Loans under Rollover TSA contracts 32 Surrendering your contract to receive its cash value 33 When to expect payments 33 Choosing your annuity payout options 33 - -------------------------------------------------------------------------------- 5 CHARGES AND EXPENSES 36 - -------------------------------------------------------------------------------- Charges that Equitable Life deducts 36 Charges that trusts deduct 37 Group or sponsored arrangements 37 - -------------------------------------------------------------------------------- 6 PAYMENT OF DEATH BENEFIT 38 - -------------------------------------------------------------------------------- Your beneficiary and payment of benefit 38 How death benefit payment is made 38 Beneficiary continuation option for Rollover IRA contracts 39 - -------------------------------------------------------------------------------- 7 TAX INFORMATION 40 - -------------------------------------------------------------------------------- Overview 40 Transfers among investment options 40 Taxation of nonqualified annuities 40 Special rules for NQ contracts issued in Puerto Rico 41 Individual retirement arrangements ("IRAs") 42 Special rules for nonqualified contracts in qualified plans 50 Tax Sheltered Annuity contracts (TSAs) 50 Federal and state income tax withholding and information reporting 55 Impact of taxes to Equitable Life 56 - -------------------------------------------------------------------------------- 8 MORE INFORMATION 57 - -------------------------------------------------------------------------------- About our Separate Account No. 49 57 About The Hudson River Trust and EQ Advisors Trust 57 About our fixed maturity options 57 About the general account 59 About other methods of payment 59 Date and prices at which contract events occur 60 About your voting rights 60 About our year 2000 progress 61 About legal proceedings 62 About our independent accountants 62 Transfers of ownership, collateral assignments, loans, and borrowing 62 Distribution of the contracts 62 - -------------------------------------------------------------------------------- 9 INVESTMENT PERFORMANCE 64 - -------------------------------------------------------------------------------- Benchmarks 64 Communicating performance data 73 - -------------------------------------------------------------------------------- 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 75 - -------------------------------------------------------------------------------- Appendix I: Condensed financial information A-1 Appendix II: Purchase considerations for QP contracts B-1 Appendix III: Market value adjustment example C-1 Appendix IV: Guaranteed minimum death benefit example D-1 - -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4 Index of key words and phrases - -------------------------------------------------------------------------------- Index of key words and phrases - -------------------------------------------------------------------------------- This index should help you locate more information on the terms used in this prospectus. Page in Term Prospectus account value 28 annuitant 15 baseBUILDER 23 beneficiary 38 benefit base 24 business day 60 cash value 28 conduit IRA 45 contract date 17 contract date anniversary 17 contract year 17 contributions to Roth IRAs 48 rollover contributions 48 conversion contributions 48 direct custodian-to-custodian 48 transfers contributions to traditional IRAs 42 rollover contributions 43 direct custodian-to-custodian 43 transfers ERISA 32 fixed maturity amount 20 fixed maturity options 20 guaranteed minimum death benefit 26 guaranteed minimum income benefit 23 IRA 42 IRS 40 investment options 18 loan reserve account 32 market adjusted amount 21 market value adjustment 21 maturity value 21 NQ 40 participant 18 payout option 33 Portfolio cover Processing Office 5 QP 50 rate to maturity 20 recharacterized 43 required beginning date 45 Rollover IRA cover Rollover TSA cover Roth IRA 47 Roth Conversion IRA cover SAI cover SEC cover TOPS 6 TSA 50 traditional IRA 42 unit 28 variable investment options 18 To make this prospectus easier to read, we sometimes use different words than in the contract or supplemental materials. This is illustrated below. Although we use different words, they have the same meaning in this prospectus as in the contract. Your registered representative can provide further explanation about your contract or supplemental materials. - -------------------------------------------------------------------------------- Prospectus Contract or Supplemental Materials - -------------------------------------------------------------------------------- fixed maturity options Guarantee Periods (Guaranteed Fixed Interest Accounts in supplemental materials) variable investment options Investment Funds account value Annuity Account Value rate to maturity Guaranteed Rates - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Who is Equitable Life? 5 - -------------------------------------------------------------------------------- Who is Equitable Life? - -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies Incorporated ("Equitable Companies"), whose majority shareholder is AXA, a French holding company for an international group of insurance and related financial services companies. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contracts. During 1999, Equitable Companies plans to change its name to AXA Financial, Inc. Equitable Companies and its consolidated subsidiaries managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. - -------------------------------------------------------------------------------- 6 Who is Equitable Life? - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REACH US You may communicate with our Processing Office as listed below for any of the following purposes: - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator Select P.O. Box 13014 Newark, NJ 07188-0014 - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator Select c/o First Chicago National Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator Select P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator Select 200 Plaza Drive, 4th Floor Secaucus, NJ 07094 - -------------------------------------------------------------------------------- REPORTS WE PROVIDE: - -------------------------------------------------------------------------------- o written confirmation of financial transactions; o statement of your contract values at the close of each calendar quarter (four per year); o annual statement of your contract values as of the close of the contract year. - -------------------------------------------------------------------------------- TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM - -------------------------------------------------------------------------------- TOPS is designed to provide you with up-to-date information via touch-tone telephone. You can obtain information on: o your current account value; o your current allocation percentages; o the number of units you have in the variable investment options; o rates to maturity for the fixed maturity options; and o the daily unit values for the variable investment options. You can also: o change your allocation percentages and/or transfer among the investment options; and o change your personal identification number (PIN). TOPS is normally available seven days a week, 24 hours a day, by calling toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service may sometimes be unavailable. We have established procedures to reasonably confirm that the instructions communicated by telephone are genuine. For example, we will require certain personal identification information before we will act on telephone instructions and we will provide written confirmation of your transfers. We will not be liable for following telephone instructions we reasonably believe to be genuine. - -------------------------------------------------------------------------------- BY INTERNET: - -------------------------------------------------------------------------------- You can also access information about your contract on the Internet. Please visit our website at http://www.equitable.com, and click on EQAccess. - -------------------------------------------------------------------------------- Who is Equitable Life? 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER SERVICE REPRESENTATIVE: - -------------------------------------------------------------------------------- You may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. You should send all contributions, notices, and requests to our Processing Office at the address above. WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE: (1) authorization for telephone transfers by your registered representative; (2) conversion of a traditional IRA to a Roth Conversion IRA contract; (3) cancellation of your Roth Conversion IRA contract and return to a Rollover IRA contract; (4) election of the automatic investment program; (5) election of the rebalancing program; (6) to obtain a PIN required for TOPS; (7) requests for loans under Rollover TSA contracts; (8) spousal consent for loans under Rollover TSA contracts; (9) tax withholding election; and (10) beneficiary continuation option election. WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: (1) address changes; (2) beneficiary changes; (3) transfers between investment options; (4) withdrawal requests; (5) contract surrender; and (6) requests to exercise your guaranteed minimum income benefit. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION: (1) automatic investment program; (2) general dollar cost averaging; (3) rebalancing; (4) special dollar cost averaging (5) substantially equal withdrawals; (6) systematic withdrawals; and (7) the date annuity payments are to begin. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. - -------------------------------------------------------------------------------- 8 Equitable Accumulator Select at a glance -- key features - -------------------------------------------------------------------------------- Equitable Accumulator Select at a glance -- key features - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ PROFESSIONAL Equitable Accumulator Select's variable investment options invest in 22 different Portfolios INVESTMENT managed by professional investment advisers. MANAGEMENT - ------------------------------------------------------------------------------------------------------------------------ FIXED MATURITY o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years. OPTIONS o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. -- If you make withdrawals or transfers from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value that you have left in that fixed maturity option. - ------------------------------------------------------------------------------------------------------------------------ TAX ADVANTAGES o On earnings inside the No tax on any dividends, interest or capital gains until you contract make withdrawals from your contract or receive annuity payments. ------------------------------------------------------------------------------------------------ o On transfers inside the No tax on transfers among investment options. contract ------------------------------------------------------------------------------------------------ If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. - ------------------------------------------------------------------------------------------------------------------------ BASEBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum death PROTECTION benefit. This optional feature provides income protection for you while the annuitant lives, as well as a death benefit for the beneficiary should the annuitant die. - ------------------------------------------------------------------------------------------------------------------------ CONTRIBUTION AMOUNTS o Initial minimum: $25,000 o Additional minimum: $ 1,000 $100 monthly, and $300 quarterly under our automatic investment program (NQ contracts) ------------------------------------------------------------------------------------------------ Maximum investment limitations may apply. - ------------------------------------------------------------------------------------------------------------------------ ACCESS TO YOUR MONEY o Lump sum withdrawals o Several withdrawal options on a periodic basis o Loans under Rollover TSA contracts o Contract surrender You may incur income tax and a tax penalty. - ------------------------------------------------------------------------------------------------------------------------ PAYOUT ALTERNATIVES o Annuity payout options o Income Manager(R) payout annuity options - ------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Equitable Accumulator Select at a glance -- key features 9 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ ADDITIONAL FEATURES o Dollar cost averaging o Automatic investment program o Account value rebalancing (quarterly, semiannually and annually) o Unlimited free transfers - ------------------------------------------------------------------------------------------------------------------------ FEES AND CHARGES o Daily charges on amounts invested in variable investment options for mortality and expense risks, administrative, and distribution charges at an annual rate of 1.60%. o Annual 0.30% benefit base charge for the optional baseBUILDER benefit. The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." No additional charge if you want a guaranteed minimum death benefit only. o No sales charge deducted at the time you make contributions, no withdrawal charge, and no annual contract fee. o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. This charge is generally deducted from the amount applied to an annuity payout option. o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life annuity payout options. o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a percentage of the average daily net assets invested in each Portfolio. These expenses include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other expenses. - ------------------------------------------------------------------------------------------------------------------------ ANNUITANT ISSUE AGES NQ: 0-85 Rollover IRA, Roth Conversion IRA, and TSA: 20-85 QP: 20-75 - ------------------------------------------------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your registered representative, or call us, if you have any questions. - -------------------------------------------------------------------------------- 10 Fee table - -------------------------------------------------------------------------------- Fee table - -------------------------------------------------------------------------------- The fee table below will help you understand the various charges and expenses that apply to your contract. The table reflects charges you will directly incur under the contract, as well as charges and expenses of the Portfolios that you will bear indirectly. Charges for taxes, such as premium taxes, may also apply. Also, an administrative fee may apply when your annuity payments are to begin. Each of the charges and expenses is more fully described under "Charges and expenses" later in this prospectus. For a complete description of Portfolio charges and expenses, please see the attached prospectuses for The Hudson River Trust and EQ Advisors Trust. The fixed maturity options are not covered by the fee table and examples. A market value adjustment (up or down) may apply as a result of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
- --------------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS - --------------------------------------------------------------------------------------------- Mortality and expense risks(1) 1.10% Administrative(2) 0.25% Distribution 0.25% ---- Total annual expenses 1.60% - --------------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT - --------------------------------------------------------------------------------------------- BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base. 0.30% Deducted annually on each contract date anniversary)(3) - ---------------------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
- ---------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL INVESTMENT EXPENSES(4) MANAGEMENT & OTHER (After expense ADVISORY FEES 12B-1 FEES(4) EXPENSES limitation) - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Alliance Money Market(5) ........................... 0.35% 0.25% 0.02% 0.62% Alliance High Yield(5) ............................. 0.60% 0.25% 0.03% 0.88% Alliance Common Stock(5) ........................... 0.36% 0.25% 0.03% 0.64% Alliance Aggressive Stock(5) ....................... 0.54% 0.25% 0.03% 0.82% Alliance Small Cap Growth(5) ....................... 0.90% 0.24% 0.06% 1.20% - ---------------------------------------------------------------------------------------------------------------------------- EQ ADVISORS TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO) - ---------------------------------------------------------------------------------------------------------------------------- TOTAL OTHER ANNUAL INVESTMENT EXPENSES(6) EXPENSES(4) MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE ADVISORY FEES 12B-1 FEES(4) LIMITATION) LIMITATION) - ---------------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth(6) ...................... 0.90% 0.25% 0.00% 1.15% BT Equity 500 Index(6) ............................. 0.25% 0.25% 0.05% 0.55% BT Small Company Index(6) .......................... 0.25% 0.25% 0.25% 0.75% BT International Equity Index(6) ................... 0.35% 0.25% 0.40% 1.00% Capital Guardian U.S. Equity(6) .................... 0.65% 0.25% 0.05% 0.95% Capital Guardian Research(6) ....................... 0.65% 0.25% 0.05% 0.95% - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Fee table 11 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENT OTHER ANNUAL MANAGEMENT & EXPENSES EXPENSES(4)(6) ADVISORY FEES 12B-1 FEES(4) (AS LIMITED) (AS LIMITED) - -------------------------------------------------------------------------------------------------------------------- Capital Guardian International(6) ......... 0.75% 0.25% 0.20% 1.20% JPM Core Bond(6) .......................... 0.45% 0.25% 0.10% 0.80% Lazard Large Cap Value(6) ................. 0.55% 0.25% 0.15% 0.95% Lazard Small Cap Value(6) ................. 0.80% 0.25% 0.15% 1.20% MFS Growth with Income(6) ................. 0.55% 0.25% 0.05% 0.85% MFS Research(6) ........................... 0.55% 0.25% 0.05% 0.85% MFS Emerging Growth Companies(6) .......... 0.55% 0.25% 0.05% 0.85% Morgan Stanley Emerging Markets 1.15% 0.25% 0.35% 1.75% Equity(6) ............................... EQ/Putnam Growth & Income 0.55% 0.25% 0.05% 0.85% Value(6) ................................ EQ/Putnam Investors Growth(6) ............. 0.55% 0.25% 0.15% 0.95% EQ/Putnam International Equity(6) ......... 0.70% 0.25% 0.25% 1.20% - --------------------------------------------------------------------------------------------------------------------
- ---------- Notes: (1) A portion of this charge is for providing the guaranteed minimum death benefit. (2) We reserve the right to increase this charge to a maximum annual rate of 0.35%. (3) The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." (4) Portfolio shares are all subject to fees imposed under distribution plans (the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee will not be increased for the life of the contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio attributable to Class IB shares and (b) an amount that, when added to certain other expenses of the Class IB shares, would result in the ratio of expenses to average daily net assets attributable to Class IB shares equaling 1.20%. Absent the expense limitation, the total annual expenses for 1998 for the Alliance Small Cap Growth Portfolio would have been 1.21%. (5) The fees and expenses shown for all Portfolios are for the year ended December 31, 1998. The investment management and advisory fees for each Portfolio of The Hudson River Trust may vary from year to year depending upon the average daily net assets of the respective Portfolio. The maximum investment management and advisory fees, however, cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for The Hudson River Trust. The other direct operating expenses will also fluctuate from year to year depending on actual expenses. (6) The maximum investment management and advisory fees for each Portfolio of EQ Advisors Trust cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for EQ Advisors Trust. The amounts shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an expense limitation agreement with respect to each Portfolio. Under this agreement EQF has agreed to waive or limit its fees and assume other expenses. Under the expense limitation agreement, total annual operating expenses of each Portfolio (other than interest, taxes, brokerage commissions, capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited for the average daily net assets of each Portfolio as - -------------------------------------------------------------------------------- 12 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500 Index; 0.50% for BT Small Company Index; 0.75% for BT International Equity Index; 0.70% for Capital Guardian U.S. Equity and Capital Guardian Research; 0.95% for Capital Guardian International; 0.55% for JPM Core Bond; 0.70% for Lazard Large Cap Value; 0.95% for Lazard Small Cap Value; 0.60% for MFS Growth with Income, MFS Research, and MFS Emerging Growth Companies; 1.50% for Morgan Stanley Emerging Markets Equity; 0.60% for EQ/Putnam Growth & Income Value; 0.70% for EQ/Putnam Investors Growth; 0.95% for EQ/Putnam International Equity. The expenses shown for the BT International Equity Index, BT Small Company Index, EQ/Putnam Investors Growth, and Lazard Large Cap Value Portfolios reflect an increase effective on May 1, 1999. During 1999, EQF plans to change its name to AXA Advisors, Inc. Absent the expense limitation, the "Other Expenses" for 1998 on an annualized basis for each of the Portfolios would have been as follows: 0.33% for BT Equity 500 Index; 1.31% for BT Small Company Index; 0.89% for BT International Equity Index; 0.33% for JPM Core Bond; 0.40% for Lazard Large Cap Value; 0.49% for Lazard Small Cap Value; 0.25% for MFS Research; 0.24% for MFS Emerging Growth Companies; 1.23% for Morgan Stanley Emerging Markets Equity; 0.24% for EQ/Putnam Growth & Income Value; 0.29% for EQ/Putnam Investors Growth; 0.51% for EQ/Putnam International Equity. For the following Portfolios, the "Other Expenses" for 1999, absent the expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier Growth; 0.74% for Capital Guardian U.S. Equity and Capital Guardian Research; 1.03% for Capital Guardian International; 0.59% for MFS Growth with Income. Initial seed capital was invested on December 31, 1998 for the MFS Growth with Income Portfolio. The EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian International, and Capital Guardian Research Portfolios commenced operations on May 1, 1999. Each Portfolio may at a later date make a reimbursement to EQF for any of the management fees waived or limited and other expenses assumed and paid by EQF pursuant to the expense limitation agreement provided that, among other things, such Portfolio has reached sufficient size to permit such reimbursement to be made and provided that the Portfolio's current annual operating expenses do not exceed the operating expense limit determined for such Portfolio. - -------------------------------------------------------------------------------- Fee table 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES The example below show the expenses that a hypothetical contract owner (who has elected baseBUILDER) would pay in the situation illustrated. We assume that a $1,000 contribution is invested in one of the variable investment options listed and a 5% annual return is earned on the assets in that option.(1) The example should not be considered a representation of past or future expenses for each option. Actual expenses may be greater or less than those shown. Similarly, the annual rate of return assumed in the example is not an estimate or guarantee of future investment performance.
- ------------------------------------------------------------------------------------------------------------------------ AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: --------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------------------------------------ THE HUDSON RIVER TRUST OPTIONS - ------------------------------------------------------------------------------------------------------------------------ Alliance Money Market .................................................... $ 25.70 $ 79.22 $ 135.68 $ 290.79 Alliance High Yield ...................................................... $ 28.28 $ 86.95 $ 148.53 $ 316.23 Alliance Common Stock .................................................... $ 25.90 $ 79.81 $ 136.67 $ 292.77 Alliance Aggressive Stock ................................................ $ 27.68 $ 85.16 $ 145.57 $ 310.42 Alliance Small Cap Growth ................................................ $ 31.45 $ 96.40 $ 164.16 $ 346.68 - ------------------------------------------------------------------------------------------------------------------------ EQ ADVISORS TRUST OPTIONS - ------------------------------------------------------------------------------------------------------------------------ EQ/Alliance Premier Growth ............................................... $ 30.96 $ 94.93 -- -- BT Equity 500 Index ...................................................... $ 25.01 $ 77.13 $ 132.19 $ 283.84 BT Small Company Index ................................................... $ 26.99 $ 83.08 $ 142.11 $ 303.58 BT International Equity Index ............................................ $ 29.47 $ 90.50 $ 154.42 $ 327.76 Capital Guardian U.S. Equity ............................................. $ 28.97 $ 89.02 -- -- Capital Guardian Research ................................................ $ 28.97 $ 89.02 -- -- Capital Guardian International ........................................... $ 31.45 $ 96.40 -- -- JPM Core Bond ............................................................ $ 27.49 $ 84.57 $ 144.58 $ 308.45 Lazard Large Cap Value ................................................... $ 28.97 $ 89.02 $ 151.96 $ 322.95 Lazard Small Cap Value ................................................... $ 31.45 $ 96.40 $ 164.16 $ 346.68 MFS Growth with Income ................................................... $ 27.98 $ 86.05 -- -- MFS Research ............................................................. $ 27.98 $ 86.05 $ 147.04 $ 313.31 MFS Emerging Growth Companies ............................................ $ 27.98 $ 86.05 $ 147.04 $ 313.31 Morgan Stanley Emerging Markets Equity ................................... $ 36.91 $ 112.51 $ 190.55 $ 396.85 EQ/Putnam Growth & Income Value .......................................... $ 27.98 $ 86.05 $ 147.04 $ 313.31 EQ/Putnam Investors Growth ............................................... $ 28.97 $ 89.02 $ 151.96 $ 322.95 EQ/Putnam International Equity ........................................... $ 31.45 $ 96.40 $ 164.16 $ 346.68 - ------------------------------------------------------------------------------------------------------------------------
- ---------- (1) The amount accumulated from the $1,000 contribution could not be paid in the form of an annuity payout option at the end of any of the periods shown in the examples. This is because if the amount applied to purchase an annuity payout option is less than $2,000, or the initial payment is less than $20, we may pay the amount to you in a single sum instead of as payments under an annuity payout option. See "Accessing your money." - -------------------------------------------------------------------------------- 14 Fee table - -------------------------------------------------------------------------------- IF YOU ELECT AN ANNUITY PAYOUT OPTION: Assuming an annuity payout option could be issued (see note (1) above),and you elect a life annuity payout option, the expenses shown in the example would, in each case, be increased by $4.43 based on the average amount applied to annuity payout options in 1998. See "Annuity administrative fee" under "Charges and expenses." CONDENSED FINANCIAL INFORMATION Please see Appendix I, at the end of this prospectus for the unit values and the number of units outstanding as of the end of the periods shown for each of the variable investment options. - -------------------------------------------------------------------------------- Contract features and benefits 15 - -------------------------------------------------------------------------------- Contract features and benefits - -------------------------------------------------------------------------------- HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase a contract by making payments to us we call "contributions." We require a minimum initial contribution of $25,000 for you to purchase a contract. You may make additional contributions of at least $1,000 each, subject to limitations noted below. The following table summarizes our rules regarding contributions to your contract. All ages in the table refer to the age of the annuitant named in the contract. - ------------------------------------------------------------------------------ The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner. - ------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT LIMITATIONS ON TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------- NQ 0 through 85 o After-tax money. o No additional contributions after age 86. o Paid to us by check or transfer of contract value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. - ----------------------------------------------------------------------------------------------------------- Rollover IRA 20 through 85 o Rollovers from a qualified plan. o No additional rollover or direct transfer contributions after o Rollovers from a TSA. age 86. o Rollovers from another traditional o Contributions after age 70 1/2 individual retirement arrangement. must be net of required minimum distributions. o Direct custodian-to-custodian transfers from another traditional o Regular IRA contributions are individual retirement arrangement. not permitted. - -----------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 16 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------- AVAILABLE CONTRACT FOR ANNUITANT LIMITATIONS ON TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ----------------------------------------------------------------------------------------------------------- Roth 20 through 85 o Rollovers from another Roth o No additional rollover or direct Conversion IRA. transfer contributions after IRA age 86. o Conversion rollovers from a traditional IRA. o Conversion rollovers after age 70 1/2 must be net of o Direct transfers from another required minimum distributions Roth IRA. for the traditional IRA you are rolling over. o You cannot roll over funds from a traditional IRA if your adjusted gross income is $100,000 or more. o Regular after-tax contributions are not permitted. - ----------------------------------------------------------------------------------------------------------- QP 20 through 75 o Only transfer contributions from o Regular ongoing payroll an existing qualified plan trust contributions are not permitted. as a change of investment vehicle under the plan. o Only one additional contribution may be made during a contract o The plan must be qualified year. under Section 401(a) of the Internal Revenue Code. o No additional transfer contributions after age 76. o For 401(k) plans, transferred contributions may only include o For defined benefit plans, employee pre-tax contributions. employee contributions are not permitted. o Contributions after age 70 1/2 must be net of any required minimum distributions. - ----------------------------------------------------------------------------------------------------------- Rollover TSA 20 through 85 o Rollovers from another TSA o No additional rollover or direct contract or arrangement. transfer contributions after age 86. o Rollovers from a traditional IRA which was a "conduit" for TSA o Contributions after age 70 1/2 funds previously rolled over. must be net of required minimum distributions. o Direct transfers from another contract or arrangement under Section 403(b) of the Internal Revenue Code, complying with IRS Revenue Ruling 90-24. - -----------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 17 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- See "Tax information" for a more detailed discussion of sources of contributions and certain contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Equitable Accumulator contracts with the same annuitant would then total more than $1,500,000. We reserve the right to limit aggregate contributions made after the first contract year to 150% of first-year contributions. We may also refuse to accept any contribution if the sum of all contributions under all Equitable Life annuity accumulation contracts that you own would then total more than $2,500,000. - -------------------------------------------------------------------------------- The 12-month period beginning on your contract date and each 12-month period after that date is a "contract year." The end of each 12-month period is your "contract date anniversary." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution. Your contract date will be shown in your contract. - -------------------------------------------------------------------------------- For information on when contributions are credited under your contract see "Dates and prices at which contract events occur" later in this prospectus. - -------------------------------------------------------------------------------- 18 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER AND ANNUITANT REQUIREMENTS Under NQ contracts, the annuitant can be different than the owner. A joint owner may also be named. Only natural persons can be joint owners. This means that an entity such as a corporation cannot be a joint owner. Under Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts, the owner and annuitant must be the same person. Under QP contracts, the owner must be the trustee of the qualified plan and the annuitant must be the plan participant/employee. See Appendix II for more information on QP contracts. - -------------------------------------------------------------------------------- A participant is an individual who is currently, or was formerly participating in an eligible employer's QP or TSA plan. - -------------------------------------------------------------------------------- HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. For your convenience, we will accept initial and additional contributions by wire transmittal from certain broker-dealers who have agreements with us for this purpose. Additional contributions may also be made under our automatic investment program. These methods of payment are discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days after we receive an incomplete application or form, we will inform the registered representative submitting the application on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. - -------------------------------------------------------------------------------- Our "business day" is any day the New York Stock Exchange is open for trading. - -------------------------------------------------------------------------------- SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Equitable Accumulator Select NQ contract in a tax-free exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT? Your investment options are the variable investment options and the fixed maturity options. VARIABLE INVESTMENT OPTIONS Your investment results in any one of the 22 variable investment options will depend on the investment performance of the underlying Portfolios. Listed below are the currently available Portfolios, their investment objectives, and their advisers. - -------------------------------------------------------------------------------- You can choose among 22 variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contract features and benefits 19 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF THE HUDSON RIVER TRUST - -------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - -------------------------------------------------------------------------------------------------------------------- Alliance Money Market High level of current income while preserving Alliance Capital Management L.P. assets and maintaining liquidity - -------------------------------------------------------------------------------------------------------------------- Alliance High Yield High return by maximizing current income Alliance Capital Management L.P. and, to the extent consistent with that objective, capital appreciation - -------------------------------------------------------------------------------------------------------------------- Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P. income - -------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P. - -------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P. - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - ------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - -------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P. - -------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Standard & Poor's 500 Composite Stock Price Index - -------------------------------------------------------------------------------------------------------------------- BT Small Company Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Russell 2000 Index - -------------------------------------------------------------------------------------------------------------------- BT International Equity Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Morgan Stanley Capital International Europe, Australia, Far East Index - -------------------------------------------------------------------------------------------------------------------- Capital Guardian U.S. Equity Long-term growth of capital and income Capital Guardian Trust Company - -------------------------------------------------------------------------------------------------------------------- Capital Guardian Research Long-term growth of capital and income Capital Guardian Trust Company - -------------------------------------------------------------------------------------------------------------------- Capital Guardian International Long-term growth of capital and future income Capital Guardian Trust Company - --------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 20 Contract features and benefits - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - ------------------------------------------------------------------------------------------------------------------------- PORTFOLIO NAME OBJECTIVE ADVISER - ------------------------------------------------------------------------------------------------------------------------- JPM Core Bond High total return consistent with moderate risk J.P. Morgan Investment Management Inc. of capital and maintenance of liquidity - ------------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value Capital appreciation Lazard Asset Management - ------------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value Capital appreciation Lazard Asset Management - ------------------------------------------------------------------------------------------------------------------------- MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company growth of capital and income - ------------------------------------------------------------------------------------------------------------------------- MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company - ------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company Companies - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management Markets Equity - ------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth Capital growth, current income is a secondary Putnam Investment Management, Inc. & Income Value objective - ------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Long-term growth of capital and any increased Putnam Investment Management, Inc. Growth income that results from this growth - ------------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Capital appreciation Putnam Investment Management, Inc. Equity - -------------------------------------------------------------------------------------------------------------------------
Other important information about the Portfolios is included in the separate prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the end of this prospectus. FIXED MATURITY OPTIONS We offer fixed maturity options with maturity dates ranging from one to ten years. You can allocate your contributions to one or more of these fixed maturity options. These amounts become part of our general account assets. They will accumulate interest at the "rate to maturity" for each fixed maturity option. The total amount you allocate to and accumulate in each fixed maturity option is called the "fixed maturity amount." The fixed maturity options are not available in contracts issued in Maryland. - -------------------------------------------------------------------------------- Contract features and benefits 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Fixed maturity options ranging from one to ten years to maturity. - -------------------------------------------------------------------------------- The rate to maturity you will receive for each fixed maturity option is the rate to maturity in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals or transfers from a fixed maturity option before the maturity date, we will make a "market value adjustment" that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We discuss the market value adjustment below and in greater detail later in this prospectus under "More information." On the maturity date of a fixed maturity option your fixed maturity amount, assuming you have not made any withdrawals or transfers, will equal your contribution to that fixed maturity option plus interest, at the rate to maturity for that contribution, to the date of the calculation. This is the fixed maturity option's "maturity value." Before maturity, the current value we will report for your fixed maturity amounts will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amounts on the date of the report. We call this your "market adjusted amount." FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity options ending on February 15th for each of the maturity years 2000 through 2009. Not all of these fixed maturity options will be available for annuitant ages 76 and older. See "Allocating your contributions" below. As fixed maturity options expire, we expect to add maturity years so that generally 10 are available at any time. We will not accept allocations to a fixed maturity option if on the date the contribution is to be applied: o the fixed maturity option's maturity date is within the current calendar year; or o the rate to maturity is 3%; or o for annuitants ages 76 or older, the fixed maturity option's maturity date is later than the February 15th immediately following the date annuity payments are to begin. OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the year before each of your fixed maturity options is scheduled to mature. At that time, you may choose to have one of the following options take place on the maturity date, as long as none of the conditions listed above or in "Allocating your contributions," below would apply: (a) transfer the maturity value into another available fixed maturity option, or into any of the variable investment options; or (b) withdraw the maturity value. If we do not receive your choice on or before the fixed maturity option's maturity date, we will automatically transfer your maturity value into the fixed maturity option that will mature next. MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers, surrender of your contract or when we make deductions for charges) from a fixed maturity option before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that you originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. Therefore, it is possible that the market value adjustment - -------------------------------------------------------------------------------- 22 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an illustration of the market adjusted amount of specified maturity values, an explanation of how we calculate the market value adjustment, and information concerning our general account and investments purchased with amounts allocated to the fixed maturity options, under "More information" later in this prospectus. Appendix III of this prospectus provides an example of how the market value adjustment is calculated. ALLOCATING YOUR CONTRIBUTIONS You may choose from among three ways to allocate your contributions under your contract: self-directed, principal assurance or dollar cost averaging. SELF-DIRECTED ALLOCATION You may allocate your contributions to one or more, or all, of the variable investment options and fixed maturity options. Allocations must be in whole percentages and you may change your allocations at any time. However, the total of your allocations must equal 100%. If the annuitant is age 76 or older, you may allocate contributions to fixed maturity options if their maturities are five years or less. Also, you may not allocate amounts to fixed maturity options with maturity dates that are later than the February 15th immediately following the date annuity payments are to begin. PRINCIPAL ASSURANCE ALLOCATION Under this allocation program you select a fixed maturity option. We specify the portion of your initial contribution to be allocated to that fixed maturity option in an amount that will cause the maturity value to equal the amount of your entire initial contribution on the fixed maturity option's maturity date. The maturity date you select generally may not be later than 10 years, or earlier than seven years from your contract date. You allocate the rest of your contribution to the variable investment options however you choose. For example, if your initial contribution is $10,000, and on April 1, 1999 you chose the fixed maturity option with a maturity date of February 15, 2009, since the rate to maturity was 4.72% on April 1, 1999, we would have allocated $6,338.82 to that fixed maturity option and the balance to your choice of variable investment options. On the maturity date your value in the fixed maturity option would be $10,000. The principal assurance allocation is only available for annuitant ages 75 or younger when the contract is issued. If you are purchasing a Rollover IRA, QP or Rollover TSA contract, before you select a maturity year that would extend beyond the year in which you will reach age 70 1/2, you should consider whether your value in the variable investment options, or your other traditional IRA or TSA funds are sufficient to meet your required minimum distributions. See "Tax information." DOLLAR COST AVERAGING We offer two dollar cost averaging programs. Each program allows you to gradually transfer amounts from the Alliance Money Market option to the other variable investment options by periodically transferring approximately the same dollar amount to the other variable investment options you select. This will cause you to purchase more units if the unit's value is low and fewer units if the unit's value is high. Therefore, you may get a lower average cost per unit over the long term. These plans of investing, however, do not guarantee that you will earn a profit or be protected against losses. - -------------------------------------------------------------------------------- Units measure your value in each variable investment option. - -------------------------------------------------------------------------------- SPECIAL DOLLAR COST AVERAGING PROGRAM. You may dollar cost average from the Alliance Money Market option into any of the other variable investment options. You must allocate your entire initial contribution into the Alliance Money Market option. We will transfer your value in the Alliance Money Market option into the other variable investment options that you select over the next 12 months. The transfer date will be the same day of the month as the - -------------------------------------------------------------------------------- Contract features and benefits 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- contract date, but not later than the 28th. All amounts will be transferred out by the end of the first contract year. Under this program we will not deduct the mortality and expense risks, administrative, and distribution charges from assets in the Alliance Money Market option. You may not allocate additional contributions to the Alliance Money Market option under this program. The only amounts that should be transferred from the Alliance Money Market option are your regularly scheduled monthly transfers to the other variable investment options. If you request to transfer or withdraw any other amounts, we will transfer all of the value that you have remaining in the Alliance Money Market option to the other investment options according to the allocation percentages we have on file for you. As a result, you will no longer be able to participate in the special dollar cost averaging program. You may also ask us to cancel your participation at any time. GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money Market option is at least $5,000, you may choose, at any time, to have a specified dollar amount or percentage of your value transferred from that option to the other variable investment options. You can select to have transfers made on a monthly, quarterly or annual basis. The transfer date will be the same calendar day of the month as the contract date, but not later than the 28th day of the month. The minimum amount that we will transfer each time is $250. The maximum amount we will transfer is equal to your value in the Alliance Money Market option at the time the program is elected, divided by the number of transfers scheduled. If, on any transfer date, your value in the Alliance Money Market option is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred. The general dollar cost averaging program will then end. You may change the transfer amount once each contract year, or cancel this program at any time. ---------------------------------------- You may not elect dollar cost averaging if you are participating in the rebalancing program. See "Transferring your money among investment options" below. OUR BASEBUILDER OPTION The baseBUILDER option offers you a combined guaranteed minimum income benefit and guaranteed minimum death benefit. The combined benefit is available if the annuitant is between the ages of 20 and 75. There is an additional charge for this benefit. See "baseBUILDER benefits charge" under "Charges and expenses." - -------------------------------------------------------------------------------- baseBUILDER provides income protection if you elect an income payout while the annuitant is alive and a death benefit if the annuitant dies. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit component of baseBUILDER is described below under "Your guaranteed minimum income benefit under baseBUILDER." As part of baseBUILDER you have a choice of two guaranteed minimum death benefit options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The two options are described under "Guaranteed minimum death benefit." The guaranteed minimum death benefit is provided under the contract even if you do not elect baseBUILDER, and for a broader range of annuitant ages at contract issue than those available under baseBUILDER. YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER The guaranteed minimum income benefit guarantees you a minimum amount of lifetime income under our Income Manager (Life Annuity with a Period Certain) payout annuity contract. The Income Manager (Life Annuity with a Period Certain) payout annuity contract provides payments during a specified period of time (called a period certain) that will continue for the rest of the annuitant's life thereafter. If the annuitant dies before the period certain has ended, payments will continue to the beneficiary for the time remaining in the period certain. - -------------------------------------------------------------------------------- 24 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We also refer to the guaranteed minimum income benefit as the "Living Benefit." - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE. On the contract date, your guaranteed minimum income benefit's benefit base ("benefit base") is equal to the initial contribution. Thereafter, your benefit base will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging program. Amounts in the Alliance Money Market option, the fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after age 80. If you make an additional contribution to your contract, we will increase your current benefit base by the dollar amount of the additional contribution on the date that the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your benefit base for the withdrawal on the date that you make the withdrawal. See "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for more detailed information. Under Rollover TSA contracts, we will reduce your benefit base by the amount of any outstanding loan plus accrued interest on the date that you exercise your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- Your benefit base is not an account value or a cash value and is used solely for purposes of calculating your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE. If you exercise the guaranteed minimum income benefit, the annual lifetime income that you will receive under the Income Manager (Life Annuity with a Period Certain) payout annuity contract, will be the greater of (i) your guaranteed minimum income benefit, and (ii) the income provided by applying your actual account value at our then current annuity purchase factors. The guaranteed minimum income benefit is based on conservative actuarial factors. Therefore, even if your account value is less than your benefit base, you may generate more income by applying your account value to current annuity purchase factors. We will make this comparison for you when the need arises. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit should be regarded as a safety net only. - -------------------------------------------------------------------------------- ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT. The table below illustrates the guaranteed minimum income benefit amounts per $100,000 of initial contribution, for a male annuitant age 60 (at issue) on the contract date anniversaries indicated, assuming no additional contributions, withdrawals, or loans under Rollover TSA contracts, and assuming there were no allocations to the Alliance Money Market option or the fixed maturity options. - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT -- ANNUAL INCOME CONTRACT DATE PAYABLE FOR LIFE WITH ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN - -------------------------------------------------------------------------------- 7 $ 8,315 10 10,341 15 14,924 - -------------------------------------------------------------------------------- Under NQ, Rollover IRA, and Roth Conversion IRA contracts, you may exercise the guaranteed minimum income benefit only within 30 days following the seventh or later contract date anniversary under your contract. However, you may not exercise the benefit before the annuitant is age 60, or after the annuitant is age 83. There is an exception if the annuitant is between ages 20 and 44 when your contract is issued. In this case you may exercise the benefit following the 15th or later contract date anniversary, but not after the annuitant is age 83. See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA contracts" below regarding exercising the benefit under QP and Rollover TSA contracts. Your contract will terminate when you exercise your guaranteed minimum income benefit. You will then receive an Income Manager (Life Annuity with a Period Certain) - -------------------------------------------------------------------------------- Contract features and benefits 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- payout annuity contract. Your period certain will be based on the annuitant's age at the time the benefit is exercised, as follows: - -------------------------------------------------------------------------------- LEVEL PAYMENTS* - -------------------------------------------------------------------------------- PERIOD CERTAIN YEARS ------------------------ ROLLOVER IRA AND ROTH ANNUITANT'S CONVERSION AGE AT EXERCISE IRA NQ - -------------------------------------------------------------------------------- 60 to 75 10 10 76 9 10 77 8 10 78 7 10 79 7 10 80 7 10 81 7 9 82 7 8 83 7 7 - -------------------------------------------------------------------------------- * Other forms and periods certain may also be available. For Rollover IRA contracts, please see "Minimum distributions" under "Tax information," as to how this option may be affected if exercised after age 70 1/2. You will begin receiving payments one payment period after the payout annuity contract is issued. For example, if you select monthly annuity payments, we will send your first payment to you approximately one month from the date your contract is issued. Each year on your contract date anniversary, if you are eligible to exercise the guaranteed minimum income benefit, we will send you an eligibility notice illustrating how much income could be provided as of the contract date anniversary. You may then notify us within 30 days following the contract date anniversary if you want to exercise the guaranteed minimum income benefit. You must return your contract to us in order to exercise this benefit. The amount of income you actually receive will be determined when we receive your request to exercise the benefit. You may also apply your cash value at any time to an Income Manager (Life Annuity with a Period Certain) payout annuity contract, and you may always apply your account value to any of our annuity payout options. The annuity payout options are discussed under "Accessing your money." These options differ from the Income Manager payout annuity contracts. They may provide higher or lower income levels, but do not have all the features of the Income Manager payout annuity contract. You may request an illustration of the Income Manager payout annuity contract from your registered representative. The Income Manager (Life Annuity with a Period Certain) payout annuity contracts are offered through our prospectus for the Income Manager payout annuities. You may obtain a copy of the most current version from your registered representative. You should read it carefully before you decide to exercise your guaranteed minimum income benefit. SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner (discussed under "More information" later in this prospectus) elects to continue the contract after your death, the guaranteed minimum income benefit will continue to be available on the contract date anniversaries specified above based on the contract date. However, the guaranteed minimum income benefit must be exercised based on the age of the successor annuitant/contract owner. EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be exercised in the same manner as described above only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. Similarly, under Rollover TSA contracts the contract owner must convert the Rollover TSA contract in a direct rollover to a Rollover IRA contract according to our rules. The rollover to a Rollover IRA contract may only occur when you are eligible for a rollover distribution from a TSA. This may generally occur when you are age 59 1/2, or you are separated from service from the employer who provided the Rollover TSA funds. See "Rollover or direct transfer contributions" under "Tax information" later in this prospectus. - -------------------------------------------------------------------------------- 26 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GUARANTEED MINIMUM DEATH BENEFIT Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through 79 at issue of Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts; and 20 through 75 at issue of QP contracts. You may elect either the "5% roll up to age 80" or the "annual ratchet to age 80" guaranteed minimum death benefit when you apply for a contract. Once you have made your election, you may not change it. 5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit equals your initial contribution. Thereafter, the guaranteed minimum death benefit will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option) and in the special dollar cost averaging program. Amounts in the Alliance Money Market option, the fixed maturity options and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after the annuitant is age 80. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the additional contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit for the withdrawal on the date you take the withdrawal. ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Then, on each contract date anniversary, we will determine your guaranteed minimum death benefit by comparing your current guaranteed minimum death benefit to your account value on that contract date anniversary. If your account value is higher than your guaranteed minimum death benefit, we will increase your guaranteed minimum death benefit to equal your account value. On the other hand, if your account value on the contract date anniversary is less than your guaranteed minimum death benefit, we will not adjust your guaranteed minimum death benefit either up or down. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit on the date you take the withdrawal. Applicable for annuitant ages 80 through 85 when the contract is issued. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Thereafter, it will be increased by the dollar amount of any additional contributions. We will adjust your guaranteed minimum death benefit if you take any withdrawals. ---------------------------------------- Please see "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for information on how withdrawals affect your guaranteed minimum death benefit. See Appendix IV for an example of how we calculate the guaranteed minimum death benefit. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract and will reflect (i) any investment gain or loss in the variable investment options, and (ii) any positive or negative market value adjustments in the fixed maturity options through the date we receive your contract. However, - -------------------------------------------------------------------------------- Contract features and benefits 27 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- some states require that we refund the full amount of your contribution (not reflecting (i), (ii) or (iii) above). For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. We may require that you wait six months before you may apply for a contract with us again if: o you cancel your contract during the free look period; or o you change your mind before you receive your contract whether we have received your contribution or not. Please see "Tax information" for possible consequences of cancelling your contract. If you fully convert an existing traditional IRA contract to a Roth Conversion IRA contract, you may cancel your Roth Conversion IRA contract and return to a Rollover IRA contract. Our Processing Office, or your registered representative, can provide you with the cancellation instructions. - -------------------------------------------------------------------------------- 28 Determining your contract's value - -------------------------------------------------------------------------------- Determining your contract's value - -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE Your "account value" is the total of the values you have allocated to the (i) variable investment options and (ii) fixed maturity options. These amounts are subject to certain fees and charges discussed under "Charges and expenses." Under Rollover TSA contracts, if you have any outstanding loan your account value will include any amount in the loan reserve account. Your contract also has a "cash value." At any time before annuity payments begin, your contract's cash value is equal to the account value. If you have a Rollover TSA contract with an outstanding loan, your cash value also is reduced by the amount of any outstanding loan plus accrued interest. Please see "Surrendering your contract to receive its cash value" below. YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS Each variable investment option invests in shares of a corresponding Portfolio. Your value in each variable investment option is measured by "units." The value of your units will increase or decrease as though you had invested it in the corresponding Portfolio's shares directly. Your value, however, will be reduced by the amount of the fees and charges that we deduct under the contract. Your value will also be reduced by the dollar amount of any withdrawals that you make. The unit value for each variable investment option depends on the investment performance of that option, minus daily charges for mortality and expense risks, administrative, and distribution expenses. On any day, your value in any variable investment option equals the number of units credited to your contract under that option, multiplied by that day's value for one unit. The number of your contract units in any variable investment option does not change unless you make additional contributions, make a withdrawal, or transfer amounts between investment options. In addition, when we deduct the baseBUILDER benefits charge the number of units credited to your contract will be reduced. A description of how unit values are calculated is found in the SAI. YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS Your value in each fixed maturity option at any time before the maturity date is the market adjusted amount in each option. This is equivalent to your fixed maturity amount increased or decreased by the market value adjustment. Your value, therefore, may be higher or lower than your contributions (less withdrawals) accumulated at the rate to maturity. At the maturity date, your value in the fixed maturity option will equal its maturity value. - -------------------------------------------------------------------------------- Transferring your money among investment options 29 - -------------------------------------------------------------------------------- Transferring your money among investment options - -------------------------------------------------------------------------------- TRANSFERRING YOUR ACCOUNT VALUE At any time before the date annuity payments are to begin, you can transfer some or all of your account value among the investment options, subject to the following: o You may not transfer to a fixed maturity option that matures in the current calendar year, or if its rate to maturity is 3%. o If the annuitant is 76 or older, you must limit your transfers to fixed maturity options to those with maturities of five years or less. Also, the maturity dates may be no later than the February 15th immediately following the date annuity payments are to begin. o If you make transfers out of a fixed maturity option other than at its maturity date the transfer may cause a market value adjustment. You may request a transfer in writing or by telephone using TOPS. You must send in all written transfer requests directly to our Processing Office. Transfer requests should specify: (1) the contract number, (2) the dollar amounts or percentages of your current account value to be transferred, and (3) the investment options to and from which you are transferring. We may, at any time, restrict the use of market timers and other agents acting under a power of attorney who are acting on behalf of more than one contract owner. Any agreements to use market timing services to make transfers are subject to our rules in effect at that time. We will confirm all transfers in writing. REBALANCING YOUR ACCOUNT VALUE We currently offer a rebalancing program that you can use to automatically reallocate your account value among the variable investment options. You must tell us: (a) the percentage you want invested in each variable investment option (whole percentages only), and (b) how often you want the rebalancing to occur (quarterly, semiannually, or annually on a contract year basis. However, it will occur on the same day of the month as the contract date). While your rebalancing program is in effect, we will transfer amounts among each variable investment option so that the percentage of your account value that you specify is invested in each option at the end of each rebalancing date. - -------------------------------------------------------------------------------- Rebalancing does not assure a profit or protect against loss. You should periodically review your allocation percentages as your needs change. You may want to discuss the rebalancing program with your registered representative or other financial adviser before electing the program. - -------------------------------------------------------------------------------- You may elect the rebalancing program at any time. You may also change your allocation instructions or cancel the program at any time. If you request a transfer while the rebalancing program is in effect, we will process the transfer as requested and then cancel the rebalancing program. You may not elect the rebalancing program if you are participating in a dollar cost averaging program. Rebalancing is not available for amounts you have allocated in the fixed maturity options. - -------------------------------------------------------------------------------- 30 Accessing your money - -------------------------------------------------------------------------------- Accessing your money - -------------------------------------------------------------------------------- WITHDRAWING YOUR ACCOUNT VALUE You have several ways to withdraw your account value before annuity payments begin. The table below shows the methods available under each type of contract. More information follows the table. For the tax consequences of withdrawals, see "Tax information." - -------------------------------------------------------------------------------- METHOD OF WITHDRAWAL - -------------------------------------------------------------------------------- SUBSTANTIALLY MINIMUM CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION - -------------------------------------------------------------------------------- NQ Yes Yes No No - -------------------------------------------------------------------------------- Rollover IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Yes Yes Yes No Conversion IRA - -------------------------------------------------------------------------------- QP Yes No No Yes - -------------------------------------------------------------------------------- Rollover Yes* No No Yes TSA - -------------------------------------------------------------------------------- * For some Rollover TSA contracts, your ability to take withdrawals, loans or surrender your contract may be limited. You must provide withdrawal restriction information when you apply for a contract. See "Tax information -- Tax Sheltered Annuity contracts (TSAs)" below. LUMP SUM WITHDRAWALS (All contracts) You may take lump sum withdrawals from your account value at any time. (Rollover TSA contracts may have restrictions.) The minimum amount you may withdraw is $1,000. If you request to withdraw more than 90% of a contract's current cash value we will treat it as a request to surrender the contract for its cash value. See "Surrendering your contract to receive its cash value" below. Under Rollover TSA contracts, if a loan is outstanding, you may only take lump sum withdrawals as long as the cash value remaining after any withdrawal equals at least 10% of the outstanding loan plus accrued interest. SYSTEMATIC WITHDRAWALS (NQ, Rollover IRA, and Roth Conversion IRA contracts only) You may take systematic withdrawals of a particular dollar amount or a particular percentage of your account value. You may take systematic withdrawals on a monthly, quarterly or annual basis as long as the withdrawals do not exceed the following percentages of your account value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you may take in each systematic withdrawal is $250. If the amount withdrawn would be less than $250 on the date a withdrawal is to be taken, we will not make a payment and we will terminate your systematic withdrawal election. We will make the withdrawals on any day of the month that you select as long as it is not later than the 28th day of the month. If you do not select a date, we will make the withdrawals on the same calendar day of the month as the contract date. You must wait at least 28 days after your contract is issued before your systematic withdrawals can begin. You may elect to take systematic withdrawals at any time. If you own a Rollover IRA or Roth Conversion IRA contract, you may elect this withdrawal method only if you are between ages 59 1/2 and 70 1/2. You may change the payment frequency, or the amount or percentage of your systematic withdrawals, once each contract year. However, you may not change the amount or percentage in any contract year in which you have already taken a lump sum withdrawal. You can cancel the systematic withdrawal option at any time. SUBSTANTIALLY EQUAL WITHDRAWALS (Rollover IRA and Roth Conversion IRA contracts only) The substantially equal withdrawals option allows you to receive distributions from your account value without triggering the 10% additional federal tax penalty, which normally applies to distributions made before age 59 1/2. See "Tax information." Once you begin to take substantially equal withdrawals, you should not stop them or change the pattern of your withdrawals until the later of age 59 1/2 or five full years after the first withdrawal. If you stop or change the withdrawals or take a lump sum withdrawal, you may be liable for the 10% federal tax penalty that would have - -------------------------------------------------------------------------------- Accessing your money 31 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- otherwise been due on prior withdrawals made under this option and for any interest on those withdrawals. You may elect to take substantially equal withdrawals at any time before age 59 1/2. We will make the withdrawal on any day of the month that you select as long as it is not later than the 28th day of the month. You may not elect to receive the first payment in the same contract year in which you took a lump sum withdrawal. We will calculate the amount of your substantially equal withdrawals based on the method you choose from the choices we offer. The payments will be made monthly, quarterly or annually as you select. These payments will continue until we receive written notice from you to cancel this option or you take a lump sum withdrawal. You may elect to start receiving substantially equal withdrawals again, but the payments may not restart in the same contract year in which you took a lump sum withdrawal. We will calculate the new withdrawal amount. MINIMUM DISTRIBUTION WITHDRAWALS (Rollover IRA, QP, and Rollover TSA contracts only -- See "Tax information") We offer the minimum distribution withdrawal option to help you meet required minimum distributions under federal income tax rules. You may elect this option in the year in which you reach age 70 1/2. The minimum amount we will pay out is $250. You may elect the method you want us to use to calculate your minimum distribution withdrawals from the choices we offer. Currently, minimum distribution withdrawal payments will be made annually. We will calculate your annual payment based on your account value at the end of the prior calendar year based on the method you choose. Under Rollover TSA contracts, you may not elect minimum distribution withdrawals if a loan is outstanding. - -------------------------------------------------------------------------------- For Rollover IRA, QP, and Rollover TSA contracts, we will send a form outlining the distribution options available before you reach age 70 1/2 (if you have not begun your annuity payments before that time). - -------------------------------------------------------------------------------- HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE Unless you specify otherwise, we will subtract your withdrawals on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the withdrawal required or the total amount of the withdrawal will be withdrawn from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar basis or on a pro rata basis as explained below: INCOME BENEFIT Benefit base -- Your current benefit base will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current benefit base on a pro rata basis. DEATH BENEFIT 5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed minimum death benefit, your current guaranteed minimum death benefit will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on - -------------------------------------------------------------------------------- 32 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current guaranteed minimum death benefit on a pro rata basis. Annual ratchet to age 80 -- If you elect the annual ratchet to age 80 guaranteed minimum death benefit, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. Annuitant issue ages 80 through 85 -- If your contract was issued when the annuitant was between ages 80 and 85, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. ---------------------------------------- Reduction on a dollar-for-dollar basis means that your current benefit will be reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis means that we calculate the percentage of your current account value that is being withdrawn and we reduce your current benefit by that same percentage. For example, if your account value is $30,000 and you withdraw $12,000, you have withdrawn 40% of your account value. If your guaranteed minimum death benefit was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new guaranteed minimum death benefit after the withdrawal would be $24,000 ($40,000-$16,000). The timing of your withdrawals and whether they exceed the 5% threshold described above can have a significant impact on your guaranteed minimum income benefit or guaranteed minimum death benefit. LOANS UNDER ROLLOVER TSA CONTRACTS You may take loans from a Rollover TSA unless restricted by the employer who provided the Rollover TSA funds. If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the funds told us when you purchased your contract. The employer must also tell us whether special employer plan rules of the Employee Retirement Income Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan while you are taking minimum distribution withdrawals. You should read the terms and conditions on our loan request form carefully before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may only take a loan with the written consent of your spouse. Your contract contains further details of the loan provision. Also, see "Tax information" for general rules applicable to loans. We will permit you to have only one loan outstanding at a time. The minimum loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account value, subject to any limits under the federal income tax rules. The term of a loan is five years. However, if you use the loan to acquire your primary residence, the term is 10 years. The term may not extend beyond the earliest of: (1) the date annuity payments begin, (2) the date the contract terminates, and (3) the date a death benefit is paid (the outstanding loan will be deducted from the death benefit amount). Interest will accrue daily on your outstanding loan at a rate we set. The loan interest rate will be equal to the Moody's Corporate Bond Yield Averages for the calendar month ending two months before the day of the calendar quarter in which the rate is determined. LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the amount of your loan to the loan reserve account. Unless you specify otherwise, we will subtract your loan on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the loan will be subtracted from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. We will credit interest to the amount in the loan reserve account at a rate of 2% lower than the loan interest rate that applies for the time your loan is outstanding. On each contract date anniversary after the date the loan is - -------------------------------------------------------------------------------- Accessing your money 33 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- processed, we will transfer the amount of interest earned in the loan reserve account to the variable investment options on a pro rata basis. When you make a loan repayment, unless you specify otherwise, we will transfer the dollar amount of the loan repaid from the loan reserve account to the investment options according to the allocation percentages we have on our records. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time while the annuitant is living and before you begin to receive annuity payments. (Rollover TSA contracts may have restrictions.) For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under the contract will terminate as of that date. You may receive your cash value in a single sum payment or apply it to one or more of the annuity payout options. See "Choosing your annuity payout options" below. We will usually pay the cash value within seven calendar days, but we may delay payment as described in "When to expect payments," below. For the tax consequences of surrenders, see "Tax information." WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments out of the variable investment options within seven calendar days after the date of the transaction to which the request relates. These transactions may include applying proceeds to a variable annuity, payment of a death benefit, payment of any amount you withdraw and, upon surrender, payment of the cash value. We may postpone such payments or applying proceeds for any period during which: (1) the New York Stock Exchange is closed or restricts trading, (2) sales of securities or determination of the fair value of a variable investment option's assets is not reasonably practicable because of an emergency, or (3) the SEC, by order, permits us to defer payment to protect people remaining in the variable investment options. We can defer payment of any portion of your value in the fixed maturity options (other than for death benefits) for up to six months while you are living. We also may defer payments for a reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. All payments are made by check and are mailed to you (or the payee named in a tax-free exchange) by U.S. mail, unless you request that we use an express delivery service at your expense. CHOOSING YOUR ANNUITY PAYOUT OPTIONS The Equitable Accumulator Select offers you several choices for receiving retirement income. Each choice enables you to receive fixed or, in some cases, variable annuity payments. You can choose from among the six different annuity payout options listed below. Restrictions apply, depending on the type of contract you own. - -------------------------------------------------------------------------------- Annuity payout options Life annuity Life annuity -- period certain Life annuity -- refund certain Period certain annuity - -------------------------------------------------------------------------------- Income Manager payout options Life annuity with a period certain Period certain annuity - -------------------------------------------------------------------------------- ANNUITY PAYOUT OPTIONS You can choose from among the following annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because - -------------------------------------------------------------------------------- 34 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- there is no continuation of benefits following the annuitant's death with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. o Life annuity -- period certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the end of a selected period of time ("period certain"), payments continue to the beneficiary for the balance of the period certain. A life annuity with a period certain of 10 years is the normal form of annuity under the contracts. The period certain cannot extend beyond the annuitant's life expectancy. o Life annuity -- refund certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments to the beneficiary will continue until that amount has been recovered. This payout option is available only as a fixed annuity. o Period certain annuity: An annuity that guarantees payments for a specific period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. Currently, this payout option is available only as a fixed annuity. All of the above payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for you. The life annuity, life annuity -- period certain, and life annuity -- refund certain payout options are available on a single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, payments continue to the survivor. The following annuity payout options are available as variable annuities: o Life annuity. o Life annuity -- period certain. o Joint and survivor life annuity (100% to survivor). o Joint and survivor life period certain annuity (100% to survivor). Variable annuities may be funded through your choice of variable investment options investing in Portfolios of The Hudson River Trust. The amount of each variable annuity payment will fluctuate, depending upon the performance of the variable investment options, and whether the actual rate of investment return is higher or lower than an assumed base rate. Please see "Annuity Unit Values" in the SAI. We may offer other payout options not outlined here. Your registered representative can provide details. SELECTING AN ANNUITY PAYOUT OPTION When you select a payout option, we will issue you a separate written agreement confirming your right to receive annuity payments. We require you to return your contract before annuity payments begin. For NQ, Rollover IRA, and Roth Conversion IRA contracts, unless you choose a different payout option, we will pay annuity payments under a life annuity with a certain period of 10 years. The only payout options available under QP contracts and Rollover TSA contracts are the life annuity 10 year period certain and the joint and survivor life annuity 10 year period certain. You can choose the date annuity payments begin but it may not be earlier than one year from the contract date. You can change the date your annuity payments are to begin anytime before that date as long as you do not choose a date later than the 28th day of any month. Also, that date may not be later than the contract date anniversary that follows the annuitant's 90th birthday. This may be different in some states. - -------------------------------------------------------------------------------- Accessing your money 35 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Before your annuity payments are to begin, we will notify you by letter that the annuity payout options are available. Once you have selected a payout option and payments have begun, no change can be made other than transfers (if permitted in the future) among the variable investment options if a variable annuity is selected. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and whether it is fixed or variable, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). Amounts in the fixed maturity options that are applied to a payout option before a maturity date will result in a market value adjustment. If, at the time you elect a payout option, the amount to be applied is less than $2,000 or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. INCOME MANAGER PAYOUT OPTIONS For NQ, Rollover IRA, and Roth Conversion IRA contracts, two Income Manager payout options are also available. These are the Income Manager (Life Annuity with a Period Certain) and the Income Manager (Period Certain). For QP contracts, the Income Manager payout options are available only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and the change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. For Rollover TSA contracts, the Income Manager payout annuity options are available only after the Rollover TSA contract is rolled over to a Rollover IRA contract. This may generally occur when you are age 59 1/2, or you have separated from service with the employer who provided the Rollover TSA funds. The Income Manager (Life Annuity with a Period Certain) provides guaranteed payments for the annuitant's life or for the annuitant's life and the life of a joint annuitant. The Income Manager (Period Certain) provides payments for a specified period. The contract owner and annuitant must meet the issue age and payment requirements. Both Income Manager annuities provide guaranteed level payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also provides guaranteed increasing payments (NQ contracts only). No additional contributions will be permitted under an Income Manager (Life Annuity with a Period Certain). The Income Manager annuities are described in a separate prospectus. Copies of the most current version are available from your registered representative. To purchase an Income Manager annuity we also require the return of your contract. We will issue an Income Manager annuity to put one of the payout annuities into effect. Depending upon your circumstances, this may be done on a tax-free basis. Please consult your tax adviser. - -------------------------------------------------------------------------------- 36 Charges and expenses - -------------------------------------------------------------------------------- Charges and expenses - -------------------------------------------------------------------------------- CHARGES THAT EQUITABLE LIFE DEDUCTS We deduct the following charges each day from the net assets of each variable investment option. These charges are reflected in the unit values of each variable investment option: o A mortality and expense risks charge. o An administrative charge. o A distribution charge. We deduct the following charges from your account value. When we deduct these charges from your variable investment options, we reduce the number of units credited to your contract: o If you elect the optional benefit a charge for the optional baseBUILDER benefit. o At the time annuity payments are to begin charges for state premium and other taxes. More information about these charges appears below. We will not increase these charges for the life of your contract, except as noted. We may reduce certain charges under group or sponsored arrangements. See "Group or sponsored arrangements" below. We also offer an Equitable Accumulator contract that has a withdrawal charge but no distribution charge. This other contract may also provide higher rates to maturity for the fixed maturity options. A current prospectus for this other Equitable Accumulator contract may be obtained from your registered representative. MORTALITY AND EXPENSE RISKS CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality and expense risks, including the guaranteed minimum death benefit. The daily charge is equivalent to an annual rate of 1.10% of the net assets in each variable investment option. The mortality risk we assume is the risk that annuitants as a group will live for a longer time than our actuarial tables predict. If that happens, we would be paying more in annuity income than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each contract, will differ from actual mortality experience. Lastly, we assume a mortality risk to the extent that at the time of death, the guaranteed minimum death benefit exceeds the cash value of the contract. The expense risk we assume is the risk that it will cost us more to issue and administer the contracts than we expect. ADMINISTRATIVE CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for administrative expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. We reserve the right under the contracts to increase this charge to an annual rate of 0.35%. DISTRIBUTION CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for a portion of our sales expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. BASEBUILDER BENEFITS CHARGE If you elect the baseBUILDER combined guaranteed minimum income benefit and guaranteed minimum death benefit, we deduct a charge annually from your account value on each contract date anniversary. The charge is equal to 0.30% of the benefit base in effect on the contract date anniversary. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. - -------------------------------------------------------------------------------- Charges and expenses 37 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. Generally, we deduct the charge from the amount applied to provide an annuity payout. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands ). ANNUITY ADMINISTRATIVE FEE We generally deduct a fee of up to $350 from the amount to be applied to purchase a life annuity payout option. CHARGES THAT THE TRUSTS DEDUCT The Hudson River Trust and EQ Advisors Trust each deducts charges for the following types of fees and expenses: o Investment advisory fees ranging from 0.25% to 1.15%. o 12b-1 fees of 0.25%. o Operating expenses, such as trustees' fees, independent auditors' fees, legal counsel fees, administrative service fees, custodian fees, and liability insurance. o Investment-related expenses, such as brokerage commissions. These charges are reflected in the daily share price of each Portfolio. Since shares of each trust are purchased at their net asset value, these fees and expenses are, in effect, passed on to the variable investment options and are reflected in their unit values. For more information about these charges, please refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust following this prospectus. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the mortality and expense risks charge or change the minimum initial contribution requirements. We also may change the guaranteed minimum income benefit and the guaranteed minimum death benefit, or offer variable investment options that invest in shares of The Hudson River Trust or EQ Advisors Trust that are not subject to the 12b-1 fee. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. Group arrangements are not available for Rollover IRA and Roth Conversion IRA contracts. Sponsored arrangements include those in which an employer allows us to sell contracts 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 or sponsoring organization, 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, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We also may establish different rates to maturity for the fixed maturity options under different classes of contracts for group or sponsored arrangements. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variations will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, ERISA, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. - -------------------------------------------------------------------------------- 38 Payment of death benefit - -------------------------------------------------------------------------------- Payment of death benefit - -------------------------------------------------------------------------------- YOUR BENEFICIARY AND PAYMENT OF BENEFIT You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for the change is signed. Under jointly owned contracts, the surviving owner is considered the beneficiary, and will take the place of any other beneficiary. You may be limited as to the beneficiary you can designate in a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee. The death benefit is equal to your account value, or, if greater, the guaranteed minimum death benefit. The guaranteed minimum death benefit is part of your contract, whether you select the combined baseBUILDER benefit or not. We determine the amount of the death benefit as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. Under Rollover TSA contracts we will deduct the amount of any outstanding loan plus accrued interest from the amount of the death benefit. EFFECT OF THE ANNUITANT'S DEATH If the annuitant dies before the annuity payments begin, we will pay the death benefit to your beneficiary. Generally, the death of the annuitant terminates the contract. However, a beneficiary who is the surviving spouse of the owner/annuitant can choose to be treated as the successor owner/annuitant and continue the contract. Only a spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you cannot have a successor owner/annuitant. For Rollover IRA contracts, a beneficiary who is not a surviving spouse may be able to have limited ownership. WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT Under certain conditions the owner can change after the original owner's death. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the successor owner. If you do not want the person named to receive the death benefit upon the annuitant's death to be the successor owner, you should name a successor owner. You may name a different person that will become the successor owner at any time by sending satisfactory notice to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the "beneficiary" for purposes of the distribution rules described in this section. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the owner who has died (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the successor owner for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value of the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The successor owner may instead elect to receive the cash value as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy). Payments must begin no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the successor owner or joint owner, the spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and annuitant are living. HOW DEATH BENEFIT PAYMENT IS MADE We will pay the death benefit to the beneficiary in the form of the annuity payout option you have chosen. If you have not chosen an annuity payout option as of the time of the - -------------------------------------------------------------------------------- Payment of death benefit 39 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- annuitant's death, the beneficiary will receive the death benefit in a single sum. However, subject to any exceptions in the contract, our rules and any applicable requirements under federal income tax rules, the beneficiary may elect to apply the death benefit to one or more annuity payout options we offer at the time. See "Choosing your annuity payout options" earlier in this prospectus. Please note that if you are both the contract owner and the annuitant, you may elect only a life annuity or an annuity that does not extend beyond the life expectancy of the beneficiary. SUCCESSOR OWNER AND ANNUITANT If you are both the contract owner and the annuitant, and your spouse is the sole beneficiary or the joint owner, then your spouse may elect to receive the death benefit or continue the contract as successor owner/annuitant. If your surviving spouse decides to continue the contract, then on the contract date anniversary following your death, we will increase the account value to equal your current guaranteed minimum death benefit, if it is higher than the account value. In determining whether the guaranteed minimum death benefit will continue to grow, we will use your surviving spouse's age (as of the contract date anniversary). BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA CONTRACTS Upon your death under a Rollover IRA contract, a non-spouse beneficiary may generally elect to keep the contract in your name and receive distributions under the contract instead of the death benefit being paid in a single sum. If you die AFTER the "required beginning date" (see "Tax information") for required minimum distributions, the contract will continue if: (a) you were receiving minimum distribution withdrawals from this contract; and (b) the pattern of minimum distribution withdrawals you chose was based in part on the life of the designated beneficiary. The withdrawals will then continue to be paid to the beneficiary on the same basis as you chose before your death. We will be able to tell your beneficiary whether this option is available to them. You should contact our Processing Office for further information. If you die BEFORE the "required beginning date" (and therefore you were not taking minimum distribution withdrawals under the contract), the beneficiary may begin taking minimum distribution withdrawals under the contract. We will increase the account value to equal the death benefit if the death benefit is greater than the account value. That amount will be used to provide the withdrawals. These withdrawals will begin by December 31st of the calendar year following your death and will be based on the beneficiary's life expectancy. If there is more than one beneficiary, the shortest life expectancy is used. The designated beneficiary must be a natural person and of legal age at the time of election. The beneficiary must elect this option within 30 days following the date we receive proof of your death. While the contract continues in your name, the beneficiary may make transfers among the investment options. However, additional contributions will not be permitted and the guaranteed minimum income benefit and the death benefit (including the guaranteed minimum death benefit) provisions will no longer be in effect. Although the only withdrawals that will be permitted are minimum distribution withdrawals, the beneficiary may choose at any time to withdraw all of the account value. - -------------------------------------------------------------------------------- 40 Tax information - -------------------------------------------------------------------------------- Tax information - -------------------------------------------------------------------------------- OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Equitable Accumulator Select contracts owned by United States taxpayers. The tax rules can differ, depending on the type of contract, whether NQ, Rollover IRA, Roth Conversion IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, AND TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TRANSFERS AMONG INVESTMENT OPTIONS You can make transfers among investment options inside the contract without triggering taxable income. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal or as an annuity payment. However, earnings are taxable, even without a distribution: o if a contract fails investment diversification requirements as specified in federal income tax rules (these rules are based on or are similar to those specified for mutual funds under the securities laws); o if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse); o if you use a contract as security for a loan (in this case, the amount pledged will be treated as a distribution); and o if the owner is other than an individual (such as a corporation, partnership, trust, or other non-natural person). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract for calculating the taxable amount of any distribution from any of those contracts. ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get back the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. For fixed annuity payments, the tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount - -------------------------------------------------------------------------------- Tax information 41 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- of the payment. For variable annuity payments, your investment in the contract divided by the number of expected payments is your tax-free portion of each payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Equitable Accumulator Select NQ contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Equitable Accumulator Select NQ contract. SURRENDERS If you surrender or cancel the contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. DEATH BENEFIT PAYMENTS MADE TO A BENEFICIARY AFTER YOUR DEATH For the rules applicable to death benefits, see "Payment of Death Benefit" and "When an NQ contract owner dies before the annuitant" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and a beneficiary. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The calculation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your - -------------------------------------------------------------------------------- 42 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "Traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis; and o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with employer-sponsored retirement plans. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (http:// www.irs.ustreas.gov). The Equitable Accumulator Select IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. You may purchase the contract as a traditional IRA ("Rollover IRA") or Roth IRA ("Roth Conversion IRA"). This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are not discussed in this prospectus because they are not available in individual retirement annuity form. The Equitable Accumulator Select IRA contract has been approved by the IRS as to form for use as a traditional IRA. We expect to submit the Roth IRA version for formal IRS approval in 1999. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Equitable Accumulator Select IRA contract. CANCELLATION You can cancel an Equitable Accumulator Select IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. You can cancel an Equitable Accumulator Select Roth Conversion IRA contract issued as a result of a full conversion of an Equitable Accumulator Select Rollover IRA contract by following the instructions in the request for full conversion form. The form is available from our Processing Office or your registered representative. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a traditional IRA: - -------------------------------------------------------------------------------- Tax information 43 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other traditional IRAs ("direct transfers"); or o regular contributions out of earned income or compensation. We require that all of your contributions to the Equitable Accumulator Select Rollover IRA contract must be either a rollover or a direct custodian-to-custodian transfer. See "Rollovers and transfers" below. Since we do not permit regular contributions under the Equitable Accumulator Select Rollover IRA contract, we do not discuss them in great detail in this prospectus. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o regular contributions of more than $2,000; or o regular contributions of more than earned income for the year, if that amount is under $2,000; or o regular contributions to a traditional IRA made after you reach age 70 1/2; or o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or regular) before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess regular traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions, discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. ROLLOVERS AND TRANSFERS Rollover contributions may be made to a traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other traditional IRAs. You may also change your mind about amounts contributed as Roth IRA funds to traditional IRA funds, in accordance with special federal income tax rules, if you use the forms we prescribe. This is referred to as having "recharacterized" your contribution. Any amount contributed to a traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. - -------------------------------------------------------------------------------- 44 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions, unless the distribution is: o only after-tax contributions you made to the plan; or o "required minimum distributions" after age 70 1/2 or separation from service; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; or o a hardship withdrawal; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one traditional IRA to one or more of your other traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited traditional IRA to one or more other traditional IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a traditional IRA at any time. You do not need to wait for a special event like retirement. Taxation of payments Earnings in traditional IRAs are not subject to federal income tax until you or your beneficiary receives them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any traditional IRA (it does not have to be to this particular traditional IRA contract), those contributions are recovered tax free when you get distributions from any traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to traditional IRAs. At the end of any year in which you have received a distribution from any traditional IRA, you calculate the ratio of your total nondeductible traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all traditional IRAs you own at the end of the year plus all traditional IRA distributions made during the year. Multiply this by all distributions from the traditional IRA during the year to determine the nontaxable portion of each distribution. In addition, a distribution is not taxable if: - -------------------------------------------------------------------------------- Tax information 45 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; or o the entire amount received is rolled over to another traditional IRA (see "Rollovers and transfers" above); or o in certain limited circumstances, where the traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" traditional IRA treatment: o the source of funds you used to establish the traditional IRA must have been a rollover contribution from a qualified plan, and o the entire amount received from the traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. The Rollover IRA contract can be used as a conduit IRA if amounts are not commingled. Distributions from a traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1-April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year -- the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions - "account-based" or "annuity-based." Account-based method. If you choose an "account-based" method, you divide the value of your traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you have to use the "term certain" method of calculating that person's - -------------------------------------------------------------------------------- 46 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). For example, if you anticipate exercising your guaranteed minimum income benefit or selecting any other form of life annuity payout after you are age 70 1/2, you must have elected to recalculate life expectancies. Annuity-based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your traditional IRA based on the method you choose? No, unless you affirmatively select an annuity payout option or an account-based withdrawal option such as our minimum distribution withdrawal option. Because the options we offer do not cover every option permitted under federal income tax rules, you may prefer to do your own required minimum distribution calculations for one or more of your traditional IRAs. What if you take more than you need to for any year? The required minimum distribution amount for your traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you take from your qualified plans to the amounts you have to take from your traditional IRAs and vice-versa. However, the IRS will let you calculate the required minimum distribution for each traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall traditional IRA required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal income tax rules require complete distribution of your entire value in the contract within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy - -------------------------------------------------------------------------------- Tax information 47 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your traditional IRA into his or her own traditional IRA. Successor annuitant and owner If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a traditional IRA. You cannot use a traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o used to pay certain extraordinary medical expenses (special federal income tax definition); or o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); or o used to pay certain first-time home buyer expenses (special federal income tax definition); or o used to pay certain higher education expenses (special federal income tax definition); or o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. To meet this last exception, you could elect to apply your contract value to an Income Manager (Life Annuity with a Period Certain) payout annuity contract (level payments version). You could also elect the substantially equal withdrawals option. We will calculate the substantially equal annual payments under a method we select based on guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question and Answer 12). Although substantially equal withdrawals and Income Manager payments are not subject to the 10% penalty tax, they are taxable as discussed in "Withdrawals, payments and transfers of funds out of traditional IRAs" above. Once substantially equal withdrawals or Income Manager annuity payments begin, the distributions should not be stopped or changed until the later of your reaching age 59 1/2 or five years after the date of the first distribution, or the penalty tax, including an interest charge for the prior penalty avoidance, may apply to all prior distributions under this option. Also, it is possible that the IRS could view any additional withdrawal or payment you take from your contract as changing your pattern of substantially equal withdrawals or Income Manager payments for purposes of determining whether the penalty applies. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS) This section of the prospectus covers some of the special tax rules that apply to Roth IRAs. If the rules are the same as those that apply to the traditional IRA, we will refer you to the same topic under "traditional IRAs." The Equitable Accumulator Select Roth Conversion IRA contract is designed to qualify as a Roth individual retirement annuity under Sections 408A and 408(b) of the Internal Revenue Code. - -------------------------------------------------------------------------------- 48 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CONTRIBUTIONS TO ROTH IRAS Individuals may make four different types of contributions to a Roth IRA: o taxable "rollover" contributions from traditional IRAs ("conversion" contributions); or o tax-free rollover contributions from other Roth IRAs; or o tax-free direct custodian-to-custodian transfers from other Roth IRAs ("direct transfers"); or o regular after-tax contributions out of earnings. Since we only permit direct transfer and rollover contributions under the Equitable Accumulator Select Roth Conversion IRA contract, we do not discuss regular after-tax contributions here. If you use the forms we require, we will also accept traditional IRA funds which are subsequently recharacterized as Roth IRA funds following special federal income tax rules ROLLOVERS AND DIRECT TRANSFERS What is the difference between rollover and direct transfer transactions? You may make rollover contributions to a Roth IRA from only two sources: o another Roth IRA ("tax-free rollover contribution"); or o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable "conversion" rollover ("conversion contribution"). You may not make contributions to a Roth IRA from a qualified plan under Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the Internal Revenue Code. You may make direct transfer contributions to a Roth IRA only from another Roth IRA. The difference between a rollover transaction and a direct transfer transaction is the following: in a rollover transaction you actually take possession of the funds rolled over, or are considered to have received them under tax law in the case of a change from one type of plan to another. In a direct transfer transaction, you never take possession of the funds, but direct the first Roth IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly to Equitable Life, as the Roth IRA issuer. You can make direct transfer transactions only between identical plan types (for example, Roth IRA to Roth IRA). You can also make rollover transactions between identical plan types. However, you can only use rollover transactions between different plan types (for example, traditional IRA to Roth IRA). You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to Roth IRA direct transfer transactions. This can be accomplished on a completely tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions only once in any 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers can be made more frequently than once a year. Also, if you send us the rollover contribution to apply it to a Roth IRA, you must do so within 60 days after you receive the proceeds from the original IRA to get rollover treatment. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some cases, Roth IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. Conversion contributions to Roth IRAs In a conversion rollover transaction, you withdraw (or are considered to have withdrawn) all or a portion of funds from a traditional IRA you maintain and convert it to a Roth IRA within 60 days after you receive (or are considered to have received) the traditional IRA proceeds. Unlike a rollover from a traditional IRA to another traditional IRA, the conversion rollover transaction is not tax exempt. Instead, the distribution from the traditional IRA is generally fully taxable. For this reason, we are required to withhold 10% federal income tax from the amount converted unless you elect out of such withholding. (If you have ever made nondeductible regular contributions to any traditional IRA -- whether or not it is the traditional IRA you are converting - -- a pro rata portion of the distribution is tax-free.) - -------------------------------------------------------------------------------- Tax information 49 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- There is, however, no early distribution penalty tax on the traditional IRA withdrawal that you are converting to a Roth IRA, even if you are under age 59 1/2. You cannot make conversion contributions to a Roth IRA for any taxable year in which your adjusted gross income exceeds $100,000. (For this purpose, your adjusted gross income is calculated without the gross income stemming from the traditional IRA conversion.) You also cannot make conversion contributions to a Roth IRA for any taxable year in which your federal income tax filing status is "married filing separately." Finally, you cannot make conversion contributions to a Roth IRA to the extent that the funds in your traditional IRA are subject to the annual required minimum distribution rule applicable to traditional IRAs beginning at age 70 1/2. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Roth IRA at any time; you do not need to wait for a special event like retirement. DISTRIBUTIONS FROM ROTH IRAS Distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also distributions. The following distributions from Roth IRAs are free of income tax: o Rollovers from a Roth IRA to another Roth IRA; o Direct transfers from a Roth IRA to another Roth IRA; o "Qualified Distributions" from Roth IRAs; and o Return of excess contributions or amounts recharacterized to a traditional IRA. Qualified distributions from Roth IRAs Qualified distributions from Roth IRAs made because of one of the following four qualifying events or reasons are not includable in income: o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o your distribution is a "qualified first-time homebuyer distribution" (special federal income tax definition; $10,000 lifetime total limit for these distributions from all of your traditional and Roth IRAs). You also have to meet a five-year aging period. A qualified distribution is any distribution made after the five-taxable year period beginning with the first taxable year for which you made any contribution to any Roth IRA (whether or not the one from which the distribution is being made). It is not possible to have a tax-free qualified distribution before the year 2003 because of the five-year aging requirement. Nonqualified distributions from Roth IRAs Nonqualified distributions from Roth IRAs are distributions that do not meet the qualifying event and five-year aging period tests described above. Such distributions are potentially taxable as ordinary income. Nonqualified distributions receive return-of-investment-first treatment. Only the difference between the amount of the distribution and the amount of contributions to all of your Roth IRAs is taxable. You have to reduce the amount of contributions to all of your Roth IRAs to reflect any previous tax-free recoveries. You must keep your own records of regular and conversion contributions to all Roth IRAs to assure appropriate taxation. You may have to file information on your contributions to and distributions from any Roth IRA on your tax return. You may have to retain all income tax returns and records pertaining to such contributions and distributions until your interests in all Roth IRAs are distributed. - -------------------------------------------------------------------------------- 50 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Like traditional IRAs, taxable distributions from a Roth IRA are not entitled to the special favorable five-year averaging method (or, in certain cases, favorable ten-year averaging and long-term capital gain treatment) available in certain cases to distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS AT DEATH Same as traditional IRA under "What are the required minimum distribution payments after you die?" Lifetime required minimum distributions do not apply. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Distributions to a beneficiary generally receive the same tax treatment as if the distribution had been made to you. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS Same as traditional IRA. EXCESS CONTRIBUTIONS Same as traditional IRA, except that regular contributions made after age 70 1/2 are not "excess contributions." Excess rollover contributions to Roth IRAs are contributions not eligible to be rolled over (for example, conversion contributions from a traditional IRA if your adjusted gross income is in excess of $100,000 in the conversion year). You can withdraw or recharacterize any contribution to a Roth IRA before the due date (including extensions) for filing your federal income tax return for the tax year. If you do this, you must also withdraw or recharacterize any earnings attributable to the contribution. EARLY DISTRIBUTION PENALTY TAX Same as traditional IRA. For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable to 1998 conversion rollovers. SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS Under QP contracts your plan administrator or trustee notifies you as to tax consequences. See Appendix II. TAX SHELTERED ANNUITY CONTRACTS (TSAS) GENERAL This section of the prospectus covers some of the special tax rules that apply to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If the rules are the same as those that apply to another kind of contract, for example, traditional IRAs, we will refer you to the same topic under "traditional IRAs." CONTRIBUTIONS TO TSAS There are two ways you can make contributions to this Equitable Accumulator Select Rollover TSA contract: o a rollover from another TSA contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code, or o a full or partial direct transfer of assets ("direct transfer") from another contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24. With appropriate written documentation satisfactory to us, we will accept rollover contributions from "conduit IRAs" for TSA funds. If you make a direct transfer, you must fill out our transfer form. Employer-remitted contributions The Equitable Accumulator Select Rollover TSA contract does not accept employer-remitted contributions. However, we provide the following discussion as part of our description of restrictions on the distribution of funds directly transferred, which include employer-remitted contributions to other TSAs. - -------------------------------------------------------------------------------- Tax information 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Employer-remitted contributions to TSAs made through the employer's payroll are subject to annual limits. (Tax-free transfer or tax-deferred rollover contributions from another 403(b) arrangement are not subject to these annual contribution limits.) Commonly, some or all of the contributions made to a TSA are made under a salary reduction agreement between the employee and the employer. These contributions are called "salary reduction" or "elective deferral" contributions. However, a TSA can also be wholly or partially funded through nonelective employer contributions or after-tax employee contributions. Amounts attributable to salary reduction contributions to TSAs are generally subject to withdrawal restrictions. Also, all amounts attributable to investments in a 403(b)(7) custodial account are subject to withdrawal restrictions discussed below. Rollover or direct transfer contributions You may make rollover contributions to your Equitable Accumulator Select Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally, you may make a rollover contribution to a TSA when you have a distributable event from an existing TSA as a result of your: o termination of employment with the employer who provided the TSA funds; or o reaching age 59 1/2 even if you are still employed; or o disability (special federal income tax definition). A transfer occurs when changing the funding vehicle, even if there is no distributable event. Under a direct transfer, you do not receive a distribution. We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if: o you give us acceptable written documentation as to the source of the funds, and o the Equitable Accumulator Select contract receiving the funds has provisions at least as restrictive as the source contract. Before you transfer funds to an Equitable Accumulator Select Rollover TSA contract, you may have to obtain your employer's authorization or demonstrate that you do not need employer authorization. For example, the transferring TSA may be subject to Title I of ERISA, if the employer makes matching contributions to salary reduction contributions made by employees. In that case, the employer must continue to approve distributions from the plan or contract. Your contribution to the Equitable Accumulator Select TSA must be net of the required minimum distribution for the tax year in which we issue the contract if: o you are or will be at least age 70 1/2 in the current calendar year, and o you have separated from service with the employer who provided the funds to purchase the TSA you are transferring or rolling over to the Equitable Accumulator Select Rollover TSA. This rule applies regardless of whether the source of funds is a: o rollover by check of the proceeds from another TSA; or o direct rollover from another TSA; or o direct transfer under Revenue Ruling 90-24 from another TSA. Further, you must use the same elections regarding recalculation of your life expectancy (and if applicable, your spouse's life expectancy), if you have already begun to receive required minimum distributions from or with respect to the TSA from which you are making your contribution to the Equitable Accumulator Select Rollover TSA. You must also elect or have elected a minimum distribution calculation method requiring recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you elect an annuity payout for the funds in this contract subsequent to this year. DISTRIBUTIONS FROM TSAS General Depending on the terms of the employer plan and your employment status, you may have to get your employer's - -------------------------------------------------------------------------------- 52 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- consent to take a loan or withdrawal. Your employer will tell us this when you establish the TSA through a direct transfer. Withdrawal restrictions If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts transferred to this contract and any future earnings on the amount transferred as not eligible for withdrawal until one of the following events happens: o you are separated from service with the employer who provided the funds to purchase the TSA you are transferring to the Equitable Accumulator Select Rollover TSA; o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o you take a "hardship" withdrawal (special federal income tax definition). If any portion of the funds directly transferred to your TSA contract is attributable to amounts that you invested in a 403(b)(7) custodial account, such amounts, including earnings, are subject to withdrawal restrictions. With respect to the portion of the funds that were never invested in a 403(b)(7) custodial account, these restrictions apply to the salary reduction (elective deferral) contributions to a TSA annuity contract you made and any earnings on them. These restrictions do not apply to the amount directly transferred to your TSA contract that represents your December 31, 1988 account balance attributable to salary reduction contributions to a TSA annuity contract and earnings. To take advantage of this grandfathering you must properly notify us in writing at our Processing Office of your December 31, 1988 account balance if you have qualifying amounts transferred to your TSA contract. This paragraph applies only to participants in a Texas Optional Retirement Program. Texas Law permits withdrawals only after one of the following distributable events occur: (1) the requirements for minimum distribution (discussed under "Required minimum distributions" below) are met; or (2) death; or (3) retirement; or (4) termination of employment in all Texas public institutions of higher education. For you to make a withdrawal, we must receive a properly completed written acknowledgement from the employer. If a distributable event occurs before you are vested, we will refund to the employer any amounts provided by an employer's first-year matching contribution. We reserve the right to change these provisions without your consent, but only to the extent necessary to maintain compliance with applicable law. Loans are not permitted under Texas Optional Retirement Programs. Tax treatment of distributions Amounts held under TSAs are generally not subject to federal income tax until benefits are distributed. Distributions include withdrawals from your TSA contract and annuity payments from your TSA contract. Death benefits paid to a beneficiary are also taxable distributions. Unless an exception applies, amounts distributed from TSAs are includable in gross income as ordinary income. Distributions from TSAs may be subject to 20% federal income tax withholding. See "Federal and state income tax withholding and information reporting" below. In addition, TSA distributions may be subject to additional tax penalties. If you have made after-tax contributions, you will have a tax basis in your TSA contract, which will be recovered tax-free. Since we do not track your investment in the contract, if any, it is your responsibility to determine how much of the distribution is taxable. Distributions before annuity payments begin. On a total surrender, the amount received in excess of the investment in the contract is taxable. We will report the total amount of the distribution. The amount of any partial distribution from a TSA prior to the annuity starting date is generally taxable, - -------------------------------------------------------------------------------- Tax information 53 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- except to the extent that the distribution is treated as a withdrawal of after-tax contributions. Distributions are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. Annuity payments. If you elect an annuity payout option, you will recover any investment in the contract as each payment is received by dividing the investment in the contract by an expected return determined under an IRS table prescribed for qualified annuities. The amount of each payment not excluded from income under this exclusion ratio is fully taxable. The full amount of the payments received after your investment in the contract is recovered is fully taxable. If you (and your beneficiary under a joint and survivor annuity) die before recovering the full investment in the contract, a deduction is allowed on your (or your beneficiary's) final tax return. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Death benefit distributions from a TSA generally receive the same tax treatment as distributions during your lifetime. In some instances, distributions from a TSA made to your surviving spouse may be rolled over to a traditional IRA. LOANS FROM TSAS You may take loans from a TSA unless restricted by the employer (for example, under an employer plan subject to ERISA). If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the TSA funds told us when you purchased your contract. Loans are generally not treated as a taxable distribution. If the amount of the loan exceeds permissible limits under federal income tax rules when made, the amount of the excess is treated (solely for tax purposes) as a taxable distribution. Additionally, if the loan is not repaid at least quarterly, amortizing (paying down) interest and principal, the amount not repaid when due will be treated as a taxable distribution. Under Proposed Treasury Regulations the entire unpaid balance of the loan is includable in income in the year of the default. TSA loans are subject to federal income tax limits and may also be subject to the limits of the plan from which the funds came. Federal income tax rule requirements apply even if the plan is not subject to ERISA. For example, loans offered by TSAs are subject to the following conditions: o The amount of a loan to a participant, when combined with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding loan balance of plan loans on the date the loan was made. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. Equitable Accumulator Select Rollover TSA contracts have a term limit of 10 years for loans used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. The amount borrowed and not repaid may be treated as a distribution if: o the loan does not qualify under the conditions above, o the participant fails to repay the interest or principal when due, or o in some instances, the participant separates from service with the employer who provided the funds or the plan is terminated. In this case, the participant may have to include the unpaid amount due as ordinary income. In addition, the 10% early distribution penalty tax may apply. The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a distribution. - -------------------------------------------------------------------------------- 54 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS You may roll over any "eligible rollover distribution" from a TSA into another eligible retirement plan, either directly or within 60 days of your receiving the distribution. To the extent rolled over, a distribution remains tax-deferred. You may roll over a distribution from a TSA to another TSA or to a traditional IRA. A spousal beneficiary may roll over death benefits only to a traditional IRA. The taxable portion of most distributions will be eligible for rollover, except as specifically excluded under federal income tax rules. Distributions that you cannot roll over generally include periodic payments for life or for a period of 10 years or more, hardship withdrawals, and required minimum distributions under federal income tax rules. Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24 are not distributions. REQUIRED MINIMUM DISTRIBUTIONS Same as traditional IRA with these differences: When you have to take the first required minimum distribution The minimum distribution rules force TSA participants to start calculating and taking annual distributions from their TSAs by a required date. Generally, you must take the first required minimum distribution for the calendar year in which you turn age 70 1/2. You may be able to delay the start of required minimum distributions for all or part of your account balance until after age 70 1/2, as follows: o For TSA participants who have not retired from service with the employer who provided the funds for the TSA by the calendar year the participant turns age 70 1/2, the required beginning date for minimum distributions is extended to April 1 following the calendar year of retirement. o TSA plan participants may also delay the start of required minimum distributions to age 75 of the portion of their account value attributable to their December 31, 1986 TSA account balance, even if retired at age 70 1/2. We will know whether or not you qualify for this exception because it will only apply to people who establish their Equitable Accumulator Select Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give us the amount of your December 31, 1986 account balance that is being transferred to the Equitable Accumulator Select Rollover TSA on the form used to establish the TSA, you do not qualify. SPOUSAL CONSENT RULES This will only apply to you if you establish your Equitable Accumulator Select Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the form used to establish the TSA whether or not you need to get spousal consent for loans, withdrawals, or other distributions. If you do, you will need such consent if you are married when you request a withdrawal under the TSA contract. In addition, unless you elect otherwise with the written consent of your spouse, the retirement benefits payable under the plan must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is payable for the life of the annuitant with a survivor annuity for the life of the spouse in an amount not less than one-half of the amount payable to the annuitant during his or her lifetime. In addition, if you are married, the beneficiary must be your spouse, unless your spouse consents in writing to the designation of another beneficiary. If you are married and you die before annuity payments have begun, payments will be made to your surviving spouse in the form of a life annuity unless at the time of your death a contrary election was in effect. However, your surviving spouse may elect, before payments begin, to receive payments in any form permitted under the terms of the TSA contract and the plan of the employer who provided the funds for the TSA. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a TSA before you reach age 59 1/2. This is in addition to any income tax. There are exceptions to the extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made: - -------------------------------------------------------------------------------- Tax information 55 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o on or after your death; or o because you are disabled (special federal income tax definition); or o to pay for certain extraordinary medical expenses (special federal income tax definition); or o if you are separated from service, any form of payout after you are age 55; or o only if you are separated from service, a payout in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. You should note the following special situations: o We might have to withhold on amounts we pay under a free look or cancellation. o We are generally required to withhold on conversion rollovers of traditional IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA and is taxable. o We are required to withhold on the gross amount of a distribution from a Roth IRA unless you elect out of withholding. This may result in tax being withheld even though the Roth IRA distribution is not taxable in whole or in part. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at the toll-free number. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999, your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS) For a non-periodic distribution (total surrender or partial withdrawal), we generally withhold at a flat 10% rate. We - -------------------------------------------------------------------------------- 56 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs and Roth IRAs. You cannot elect out of withholding if the payment is an "eligible rollover distribution" from a qualified plan or TSA. If a non-periodic distribution from a qualified plan or TSA is not an "eligible rollover distribution" then the 10% withholding rate applies. MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS Unless you have the distribution go directly to the new plan, eligible rollover distributions from qualified plans and TSAs are subject to mandatory 20% withholding. An eligible rollover distribution from a TSA can be rolled over to another TSA or a traditional IRA. An eligible rollover distribution from a qualified plan can be rolled over to another qualified plan or traditional IRA. All distributions from a TSA or qualified plan are eligible rollover distributions unless they are on the following list of exceptions: o any after-tax contributions you made to the plan; or o any distributions which are "required minimum distributions" after age 70 1/2 or separation from service; or o hardship withdrawals; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and your designated beneficiary; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. A death benefit payment to your surviving spouse, or a qualified domestic relations order distribution to your current or former spouse, may be a distribution subject to mandatory 20% withholding. IMPACT OF TAXES TO EQUITABLE LIFE The contracts provide that we may charge Separate Account No. 49 for taxes. We do not now, but may in the future set up reserves for such taxes. - -------------------------------------------------------------------------------- More information 57 - -------------------------------------------------------------------------------- More information - -------------------------------------------------------------------------------- ABOUT OUR SEPARATE ACCOUNT NO. 49 Each variable investment option is a subaccount of our Separate Account No. 49. We established Separate Account No. 49 in 1996 under special provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our variable investment options for owners of our variable annuity contracts, including these contracts. We are the legal owner of all of the assets in Separate Account No. 49 and may withdraw any amounts that exceed our reserves and other liabilities with respect to variable investment options under our contracts. The results of Separate Account No. 49's operations are accounted for without regard to Equitable Life's other operations. Separate Account No. 49 is registered under the Investment Company Act of 1940 and is classified by that act as a "unit investment trust." The SEC, however, does not manage or supervise Equitable Life or Separate Account No. 49. Each subaccount (variable investment option) within Separate Account No. 49 invests solely in class IB shares issued by the corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust. We reserve the right subject to compliance with laws that apply: (1) to add variable investment options to, or to remove variable investment options from, Separate Account No. 49, or to add other separate accounts; (2) to combine any two or more variable investment options; (3) to transfer the assets we determine to be the shares of the class of contracts to which the contracts belong from any variable investment option to another variable investment option; (4) to operate Separate Account No. 49 or any variable investment option as a management investment company under the Investment Company Act of 1940 (in which case, charges and expenses that otherwise would be assessed against an underlying mutual fund would be assessed against Separate Account No. 49 or a variable investment option directly); (5) to deregister Separate Account No. 49 under the Investment Company Act of 1940; (6) to restrict or eliminate any voting rights as to Separate Account No. 49; and (7) to cause one or more variable investment options to invest some or all of their assets in one or more other trusts or investment companies. ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST The Hudson River Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each trust issues different shares relating to each Portfolio. The Hudson River Trust and EQ Advisors Trust do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on a trust's shares are reinvested in full. The Board of Trustees of The Hudson River Trust and EQ Advisors Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about The Hudson River Trust and EQ Advisors Trust, their investment objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans relating to their Class IB shares, and other aspects of their operations, appears in their prospectuses, or in their SAIs which are available upon request. ABOUT OUR FIXED MATURITY OPTIONS RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE We can determine the amount required to be allocated to one or more fixed maturity options in order to produce specified maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. - -------------------------------------------------------------------------------- 58 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows: - -------------------------------------------------------------------------------- FIXED MATURITY OPTIONS WITH FEBRUARY 15TH RATE TO MATURITY PRICE MATURITY DATE OF AS OF PER $100 OF MATURITY YEAR APRIL 1, 1999 MATURITY VALUE - -------------------------------------------------------------------------------- 2000 3.00% $ 97.44 2001 3.79% $ 93.25 2002 4.08% $ 89.12 2003 4.21% $ 85.22 2004 4.27% $ 81.54 2005 4.42% $ 77.54 2006 4.52% $ 73.77 2007 4.54% $ 70.47 2008 4.62% $ 66.95 2009 4.72% $ 63.39 - -------------------------------------------------------------------------------- HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw ll of your value from a fixed maturity option before its maturity date. (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. - -------------------------------------------------------------------------------- Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation. - -------------------------------------------------------------------------------- If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. See Appendix III for an example. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) above would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. INVESTMENTS UNDER THE FIXED MATURITY OPTIONS Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides - -------------------------------------------------------------------------------- More information 59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- an additional measure of assurance that we will make full payment of amounts due under the fixed maturity options. Under New York Insurance Law, the portion of the separate account's assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your value in the fixed maturity options, regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the fixed maturity options under the contracts, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options, as well as our general obligations. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account (other than market value adjustment interests). The disclosure with regard to the general account, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ABOUT OTHER METHODS OF PAYMENT WIRE TRANSMITTALS We accept initial contributions sent by wire to our Processing Office by agreement with certain broker-dealers. The transmittals must be accompanied by information we require to allocate your contribution. Wire orders not accompanied by complete information may be retained as described under "How you can make your contributions." Even if we accept the wire order and essential information, a contract generally will not be issued until we receive and accept a properly completed application. In certain cases we may issue a contract based on information forwarded electronically. In these cases, you must sign our Acknowledgement of Receipt form. Where we require a signed application, no financial transactions will be permitted until we receive the signed application and have issued the contract. Where we require an Acknowledgement of Receipt form, financial transactions are only permitted if you request them in writing, sign the request and have it signature guaranteed, until we receive the signed Acknowledgement of Receipt form. After your contract has been issued, additional contributions may be transmitted by wire. - -------------------------------------------------------------------------------- 60 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENT PROGRAM -- FOR NQ CONTRACTS ONLY You may use our automatic investment program, or "AIP," to have a specified amount automatically deducted from a checking account, money market account, or credit union checking account and contributed as an additional contribution into an NQ contract on a monthly or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts. The minimum amounts we will deduct are $100 monthly and $300 quarterly. AIP additional contributions may be allocated to any of the variable investment options and available fixed maturity options. You choose the day of the month you wish to have your account debited as long as it is not later than the 28th day of the month. You may cancel AIP at any time by notifying our Processing Office. We are not responsible for any debits made to your account before the time written notice of cancellation is received at our Processing Office. DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR We describe below the general rules for when, and at what prices, events under your contract will occur. Other portions of this prospectus describe circumstances that may cause exceptions. We generally do not repeat those exceptions below. BUSINESS DAY Our business day is any day the New York Stock Exchange is open for trading. Each business day ends at the time trading on the exchange closes (or is suspended) for the day. We calculate unit values for our variable investment options as of the end of each business day. This is usually 4:00 p.m., Eastern Time. Contributions will be applied and any other transaction requests will be processed when they are received along with all the required information. o If your contribution, transfer or any other transaction request, containing all the required information, reaches us on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. o A loan request under your Rollover TSA contract will be processed on the first business day of the month following the date on which the properly completed loan request form is received. o If your transaction is set to occur on the same day of the month as the contract date and that date is the 29th, 30th or 31st of the month, then the transaction will occur on either the 28th day of the month or the 1st day of the next month, whichever is the closest business day. o When a charge is to be deducted on a contract date anniversary that is a non-business day, we will deduct the charge on the next business day. CONTRIBUTIONS AND TRANSFERS o Contributions allocated to the variable investment options are invested at the value next determined after the close of the business day. o Contributions allocated to a fixed maturity option will receive the rate to maturity in effect for that fixed maturity option on that business day. o Transfers to or from variable investment options will be made at the value next determined after the close of the business day. o Transfers to a fixed maturity option will be based on the rate to maturity in effect for that fixed maturity option on the business day of the transfer. ABOUT YOUR VOTING RIGHTS As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we have the right to vote on certain matters involving the Portfolios, such as: o The election of trustees. o The formal approval of independent auditors selected for each trust. o Any other matters described in the prospectuses for the - -------------------------------------------------------------------------------- More Information 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- trusts or requiring a shareholders' vote under the Investment Company Act of 1940. We will give contract owners the opportunity to instruct us how to vote the number of shares attributable to their contracts if a shareholder vote is taken. If we do not receive instructions in time from all contract owners, we will vote the shares of a Portfolio for which no instructions have been received in the same proportion as we vote shares of that Portfolio for which we have received instructions. We will also vote any shares that we are entitled to vote directly because of amounts we have in a Portfolio in the same proportions that contract owners vote. VOTING RIGHTS OF OTHERS Currently, we control each trust. EQ Advisors Trust shares are sold only to our separate accounts and an affiliated qualified plan trust. The Hudson River Trust shares are held by other separate accounts of ours and by separate accounts of insurance companies unaffiliated with us. Shares held by these separate accounts will probably be voted according to the instructions of the owners of insurance policies and contracts issued by those insurance companies. While this will dilute the effect of the voting instructions of the contract owners, we currently do not foresee any disadvantages because of this. The Hudson River Trust Board of Trustees intends to monitor events in order to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a response to any of those events insufficiently protects our contract owners, we will see to it that appropriate action is taken. SEPARATE ACCOUNT NO. 49 VOTING RIGHTS If actions relating to Separate Account No. 49 require contract owner approval, contract owners will be entitled to one vote for each unit they have in the variable investment options. Each contract owner who has elected a variable annuity payout option may cast the number of votes equal to the dollar amount of reserves we are holding for that annuity in a variable investment option divided by the annuity unit value for that option. We will cast votes attributable to any amounts we have in the variable investment options in the same proportion as votes cast by contract owners. CHANGES IN APPLICABLE LAW The voting rights we describe in this prospectus are created under applicable federal securities laws. To the extent that those laws or the regulations published under those laws eliminate the necessity to submit matters for approval by persons having voting rights in separate accounts of insurance companies, we reserve the right to proceed in accordance with those laws or regulations. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting to address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission- critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system that is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing - -------------------------------------------------------------------------------- 62 More Information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon Separate Account No. 49, our ability to meet our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The financial statements of Equitable Life incorporated in this prospectus by reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and for the three years ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING You can transfer ownership of an NQ contract at any time before annuity payments begin. We will continue to treat you as the owner until we receive written notification of any change at our Processing Office. You cannot assign your NQ contract as collateral or security for a loan. Loans are also not available under your NQ contract. In some cases, an assignment or change of ownership may have adverse tax consequences. See "Tax information." You cannot assign or transfer ownership of Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contract except by surrender to us. Loans are not available and you cannot assign Rollover IRA, Roth Conversion IRA and QP contracts as security for a loan or other obligation. If the employer that provided the funds does not restrict them, loans are available under a Rollover TSA contract. For limited transfers of ownership after the owner's death see "Payment of death benefit" and "Beneficiary continuation option for Rollover IRA contracts." You may direct the transfer of the values under your Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contract to another similar arrangement. DISTRIBUTION OF THE CONTRACTS Equitable Distributors, Inc. ("EDI"), an indirect, wholly owned subsidiary of Equitable Life, is the distributor of the contracts and has responsibility for sales and marketing functions for Separate Account No. 49. EDI serves as the principal underwriter of Separate Account No. 49. EDI also acts as distributor for other Equitable Life annuity products with different features, expenses, and fees. EDI is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. EDI's principal business address is 1290 Avenue of the Americas, New York, New York 10104. Under a distribution agreement between EDI, Equitable Life, and certain of Equitable Life's separate accounts, including Separate Account No. 49, Equitable Life paid EDI distribution fees of $35,452,793 for 1998, $9,566,343 for 1997, and $87,157 for 1996, as the distributor of certain contracts, including these contracts, and as the principal underwriter of several Equitable Life separate accounts, including Separate Account No. 49. - -------------------------------------------------------------------------------- More information 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The contracts will be sold by registered representatives of EDI, as well as by affiliated and unaffiliated broker-dealers with which EDI has entered into selling agreements. Broker-dealer sales compensation will not exceed 1% annually of the account value on a contract date anniversary. EDI may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. Broker-dealers receiving sales compensation will generally pay a portion of it to their registered representatives as commissions related to sales of the contracts. The offering of the contracts is intended to be continuous. - -------------------------------------------------------------------------------- 64 Investment performance - -------------------------------------------------------------------------------- Investment performance - -------------------------------------------------------------------------------- We provide the following tables to show five different measurements of the investment performance of the variable investment options and/or the Portfolios in which they invest. We include these tables because they may be of general interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR RESULTS WILL DIFFER. Table 1 shows the average annual total return of the variable investment options. Average annual total return is the annual rate of growth that would be necessary to achieve the ending value of a contribution invested in the variable investment options for the periods shown. Table 2 shows the growth of a hypothetical $1,000 investment in the variable investment options over the periods shown. Both Tables 1 and 2 take into account all fees and charges under the contract, including the optional baseBUILDER benefits charge, but do not take the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee, into account. Tables 3, 4, and 5 show the rates of return of the variable investment options on an annualized, cumulative, and year-by-year basis. These tables take into account all fees and charges under the contract, but do not reflect the optional baseBUILDER benefits charge or the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee. If the charges were reflected they would effectively reduce the rates of return shown. In all cases the results shown are based on the actual historical investment experience of the Portfolios in which the variable investment options invest. In some cases, the results shown relate to periods when the variable investment options and/or the contracts were not available. In those cases, we adjusted the results of the Portfolios to reflect the charges under the contracts that would have applied had the investment options and/or contracts been available. The contracts were first offered on October 1, 1997. In addition, we have adjusted the results prior to October 1996, when The Hudson River Trust Class IB shares were not available, to reflect the 12b-1 fees currently imposed. Finally, the results shown for the Alliance Money Market and Alliance Common Stock options for periods before March 22, 1985 reflect the results of the variable investment options that preceded them. The "Since inception" figures for these options are based on the date of inception of the preceding variable investment options. We have adjusted these results to reflect the maximum investment advisory fee payable for the Portfolios, as well as an assumed charge of 0.06% for direct operating expenses. EQ Advisors Trust commenced operations on May 1, 1997. All rates of return presented are time-weighted and include reinvestment of investment income, including interest and dividends. BENCHMARKS Tables 3 and 4 compare the performance of variable investment options to market indices that serve as benchmarks. Market indices are not subject to any charges for investment advisory fees, brokerage commission or other operating expenses typically associated with a managed portfolio. Also, they do not reflect other contract charges such as the mortality and expense risks charge, administrative charge, distribution charge or optional benefit charge. Comparisons with these benchmarks, therefore, may be of limited use. We include them because they are widely known and may help you to understand the universe of securities from which each Portfolio is likely to select its holdings. Benchmark data reflect the reinvestment of dividend income. The benchmarks include: - -------------------------------------------------------------------------------- Investment performance 65 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index. ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index. ALLIANCE COMMON STOCK: Standard & Poor's 500 Index. ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard & Poor's Mid-Cap Total Return Index. ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index. EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index. CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index. CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index. CAPITAL GUARDIAN INTERNATIONAL: Morgan Stanley Capital International Europe, Australia, Far East Index. BT EQUITY 500 INDEX: Standard & Poor's 500 Index. BT SMALL COMPANY INDEX: Russell 2000 Index. BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe, Australia, Far East Index. JPM CORE BOND: Salomon Brothers Broad Investment Grade Bond. LAZARD LARGE CAP VALUE: Standard & Poor's 500 Index. LAZARD SMALL CAP VALUE: Russell 200 Index. MFS GROWTH WITH INCOME: Standard & Poor's 500 Index. MFS RESEARCH: Standard & Poor's 500 Index. MFS EMERGING GROWTH COMPANIES: Russell 2000 Index. MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International Emerging Markets Free Price Return Index. EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index. EQ/PUTNAM INVESTORS GROWTH: Standard & Poor's 500 Index. EQ/PUTNAM INTERNATIONAL EQUITY: Morgan Stanley Capital International Europe, Australia, Far East Index. - -------------------------------------------------------------------------------- LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis Survey (Lipper Survey) records the performance of a large group of variable annuity products, including managed separate accounts of insurance companies. According to Lipper Analytical Services, Inc., the data are presented net of investment management fees, direct operating expenses and asset-based charges applicable under annuity contracts. Lipper data provide a more accurate picture than market benchmarks of the Equitable Accumulator Select performance relative to other variable annuity products. - -------------------------------------------------------------------------------- 66 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 1 AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD -------------------------------------------------------------------------------- SINCE SINCE PORTFOLIO 1 3 5 10 OPTION PORTFOLIO INCEPTION VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* INCEPTION DATE - ---------------------------------------------------------------------------------------------------------------------------- Alliance Money Market 3.40% 3.20% 2.97% 3.34% -- -- 7/13/81 - ---------------------------------------------------------------------------------------------------------------------------- Alliance High Yield (6.90)% 9.11% 7.72% 8.85% -- -- 1/2/87 - ---------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock 27.00% 25.05% 19.42% 16.22% -- -- 1/13/76 - ---------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock (1.55)% 8.51% 9.16% 16.54% -- -- 1/27/86 - ---------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth (5.97)% -- -- -- 8.35% 8.35% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index 23.13% -- -- -- 23.13% 23.13% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- BT Small Company Index (3.87)% -- -- -- (3.87)% (3.87)% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- BT International Equity Index 18.17% -- -- -- 18.17% 18.17% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- JPM Core Bond 7.28% -- -- -- 7.28% 7.28% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value 18.14% -- -- -- 18.14% 18.14% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value (8.56)% -- -- -- (8.56)% (8.56)% 12/31/97 - ---------------------------------------------------------------------------------------------------------------------------- MFS Research 22.12% -- -- -- 18.24% 18.24% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies 32.37% -- -- -- 26.45% 26.45% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity (28.19)% -- -- -- (28.19)% (24.67)% 8/20/97 - ---------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value 11.02% -- -- -- 12.82% 12.82% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth 34.11% -- -- -- 28.44% 28.44% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity 17.56% -- -- -- 12.72% 12.72% 5/1/97 - ----------------------------------------------------------------------------------------------------------------------------
- ---------- * The since inception dates for the variable investment options are as follows: Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance Aggressive Stock, Alliance Small Cap Growth, MFS Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, and EQ/Putnam International Equity (October 1, 1997); BT Equity 500 Index, BT Small Company Index, BT International Equity Index, JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, and Morgan Stanley Emerging Markets Equity (December 31, 1997). The inception dates for the Portfolios that became available on or after December 31, 1998 and are therefore not shown in the tables are: MFS Growth with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian U.S. Equity, Capital Guardian Research, and Capital Guardian International (May 1, 1999). - -------------------------------------------------------------------------------- Investment performance 67 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 2 GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD ---------------------------------------------------------------------- SINCE 1 3 5 10 PORTFOLIO VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* - ----------------------------------------------------------------------------------------------------------------- Alliance Money Market $ 1,034.00 $ 1,099.25 $ 1,157.42 $ 1,388.83 -- - ----------------------------------------------------------------------------------------------------------------- Alliance High Yield $ 931.00 $ 1,299.09 $ 1,450.09 $ 2,335.95 -- - ----------------------------------------------------------------------------------------------------------------- Alliance Common Stock $ 1,270.00 $ 1,955.50 $ 2,428.99 $ 4,494.80 -- - ----------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 984.50 $ 1,277.63 $ 1,549.85 $ 4,619.71 -- - ----------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth $ 940.30 -- -- -- $ 1,173.92 - ----------------------------------------------------------------------------------------------------------------- BT Equity 500 Index $ 1,231.30 -- -- -- $ 1,231.30 - ----------------------------------------------------------------------------------------------------------------- BT Small Company Index $ 961.30 -- -- -- $ 961.30 - ----------------------------------------------------------------------------------------------------------------- BT International Equity Index $ 1,181.70 -- -- -- $ 1,181.70 - ----------------------------------------------------------------------------------------------------------------- JPM Core Bond $ 1,072.80 -- -- -- $ 1,072.80 - ----------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value $ 1,181.40 -- -- -- $ 1,181.40 - ----------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value $ 914.40 -- -- -- $ 914.40 - ----------------------------------------------------------------------------------------------------------------- MFS Research $ 1,221.20 -- -- -- $ 1,398.09 - ----------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies $ 1,323.70 -- -- -- $ 1,598.96 - ----------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 718.10 -- -- -- $ 567.48 - ----------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value $ 1,110.20 -- -- -- $ 1,272.79 - ----------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth $ 1,341.10 -- -- -- $ 1,649.62 - ----------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity $ 1,175.60 -- -- -- $ 1,270.65 - -----------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- 68 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 3 ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ---------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.40% 3.42% 3.23% 3.63% -- 5.11% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.90)% 9.30% 7.96% 9.11% -- 8.45% - ---------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.00% 25.24% 19.66% 16.44% 16.42% 14.24% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.55)% 8.69% 9.39% 16.69% -- 15.59% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78% - ---------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.97)% -- -- -- -- 10.25% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 16.72% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 16.58% - ---------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.13% -- -- -- -- 23.13% - ---------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.87)% -- -- -- -- (3.87)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17% - ---------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.17% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - ---------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.28% -- -- -- -- 7.28% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - ---------------------------------------------------------------------------------------------------------------------------- BT LAZARD LARGE CAP VALUE 18.14% -- -- -- -- 18.14% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.16% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ---------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.56)% -- -- -- -- (8.56)% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ---------------------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.12% -- -- -- -- 22.44% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ---------------------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.37% -- -- -- -- 32.69% - ---------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 22.72% - ---------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 14.53% - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Investment performance 69 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------ SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY (28.19)% -- -- -- -- (33.79)% - ------------------------------------------------------------------------------------------------------------ Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)% - ------------------------------------------------------------------------------------------------------------ Benchmark (25.34)% -- -- -- -- (28.92)% - ------------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE 11.02% -- -- -- -- 15.74% - ------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------------ EQ/PUTNAM INVESTORS GROWTH 34.11% -- -- -- -- 35.19% - ------------------------------------------------------------------------------------------------------------ Lipper Growth 25.82% -- -- -- -- 28.73% - ------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------------ EQ/PUTNAM INTERNATIONAL EQUITY 17.56% -- -- -- -- 15.64% - ------------------------------------------------------------------------------------------------------------ Lipper International 12.17% -- -- -- -- 9.06% - ------------------------------------------------------------------------------------------------------------ Benchmark 20.00% -- -- -- -- 13.43% - ------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- 70 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 4 CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- --------------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.40% 10.60% 17.22% 42.89% -- 138.78% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45% - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.90)% 30.56% 46.65% 139.11% -- 164.68% - --------------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62 -- 182.21% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69% - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.00% 96.46% 145.35% 358.29% 1,991.24% 2,026.84% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92% - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.55)% 28.42% 56.67% 368.05% -- 550.62% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67% - --------------------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.97)% -- -- -- -- 17.69% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 28.98% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 29.23% - --------------------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.13% -- -- -- -- 23.13% - --------------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.87)% -- -- -- -- (3.87)% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.49% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - --------------------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17% - --------------------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.23% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - --------------------------------------------------------------------------------------------------------------------------------- JPM CORE BOND 7.28% -- -- -- -- 7.28% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Investment Grade Debt 7.23% -- -- -- -- 7.23% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 8.72% -- -- -- -- 8.72% - --------------------------------------------------------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE 18.14% -- -- -- -- 18.14% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Capital Appreciation 24.16% -- -- -- -- 24.09% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - --------------------------------------------------------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE (8.56)% -- -- -- -- (8.56)% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - --------------------------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.12% -- -- -- -- 40.19% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - --------------------------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.37% -- -- -- -- 60.31% - --------------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 42.16% - --------------------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 25.40% - ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Investment performance 71 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.19)% -- -- -- -- (43.02)% - ------------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)% - ------------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (36.71)% - ------------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.02% -- -- -- -- 27.62% - ------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 38.49% - ------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH 34.11% -- -- -- -- 65.38% - ------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY 17.56% -- -- -- -- 27.44% - ------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 15.88% - ------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 23.42% - -------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- 72 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 5 YEAR-BY-YEAR RATES OF RETURN
- ------------------------------------------------------------------------------------------------------------------------------- 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------- Alliance Money Market 7.18% 6.23% 4.23% 1.65% 1.06% 2.10% 3.80% 3.37% 3.48% 3.40% - ------------------------------------------------------------------------------------------------------------------------------- Alliance High Yield 3.20% (2.95)% 22.17% 10.23% 20.88% (4.58)% 17.71% 20.60% 16.28% (6.90)% - ------------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock 23.28% (9.82)% 35.34% 1.31% 22.52% (3.94)% 30.01% 21.97% 26.84% 27.00% - ------------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock 40.86% 6.16% 83.43% (4.95)% 14.59% (5.59)% 29.21% 19.93% 8.77% (1.55)% - ------------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.16%+ (5.97)% - ------------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.13% - ------------------------------------------------------------------------------------------------------------------------------- BT Small Company Index -- -- -- -- -- -- -- -- -- (3.87)% - ------------------------------------------------------------------------------------------------------------------------------- BT International Equity Index -- -- -- -- -- -- -- -- -- 18.17% - ------------------------------------------------------------------------------------------------------------------------------- JPM Core Bond -- -- -- -- -- -- -- -- -- 7.28% - ------------------------------------------------------------------------------------------------------------------------------- Lazard Large Cap Value -- -- -- -- -- -- -- -- -- 18.14% - ------------------------------------------------------------------------------------------------------------------------------- Lazard Small Cap Value -- -- -- -- -- -- -- -- -- (8.56)% - ------------------------------------------------------------------------------------------------------------------------------- MFS Research -- -- -- -- -- -- -- -- 14.80%+ 22.12% - ------------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.11%+ 32.37% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.66)%+ (28.19)% - ------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 14.96%+ 11.02% - ------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Investors Growth -- -- -- -- -- -- -- -- 23.32%+ 34.11% - ------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam International Equity -- -- -- -- -- -- -- -- 8.40%+ 17.56% - -------------------------------------------------------------------------------------------------------------------------------
- ---------- + Returns for these options represent less than 12 months of performance. The returns are as of each Portfolio inception date as shown in Table 1. - -------------------------------------------------------------------------------- 73 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMMUNICATING PERFORMANCE DATA In reports or other communications to contract owners or in advertising material, we may describe general economic and market conditions affecting our variable investment options, and the Portfolios and may compare the performance or ranking of those options and the Portfolios with: o those of other insurance company separate accounts or mutual funds included in the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS, or similar investment services that monitor the performance of insurance company separate accounts or mutual funds; o other appropriate indices of investment securities and averages for peer universes of mutual funds which are shown under "Benchmarks" above; or o data developed by us derived from such indices or averages. We also may furnish to present or prospective contract owners advertisements or other communications that include evaluations of a variable investment option or Portfolio by nationally recognized financial publications. Examples of such publications are: - -------------------------------------------------------------------------------- Barron's Money Management Letter - -------------------------------------------------------------------------------- Morningstar's Variable Annuity Sourcebook Investment Dealers Digest - -------------------------------------------------------------------------------- Business Week National Underwriter - -------------------------------------------------------------------------------- Forbes Pension & Investments - -------------------------------------------------------------------------------- Fortune USA Today - -------------------------------------------------------------------------------- Institutional Investor Investor's Business Daily - -------------------------------------------------------------------------------- Money The New York Times - -------------------------------------------------------------------------------- Kiplinger's Personal Finance The Wall Street Journal - -------------------------------------------------------------------------------- Financial Planning The Los Angeles Times - -------------------------------------------------------------------------------- Investment Adviser The Chicago Tribune - -------------------------------------------------------------------------------- Investment Management Weekly - -------------------------------------------------------------------------------- Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer universes of funds with similar investment objectives in its Lipper Survey. Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life Report (Morningstar Report). The Lipper Survey records performance data as reported to it by over 800 mutual funds underlying variable annuity and life insurance products. It divides these actively managed portfolios into 25 categories by portfolio objectives. The Lipper Survey contains two different universes, which reflect different types of fees in performance data: o The "separate account" universe reports performance data net of investment management fees, direct operating expenses and asset-based charges applicable under variable insurance and annuity contracts, and o The "mutual fund" universe reports performance net only of investment management fees and direct operating expenses, and therefore reflects only charges that relate to the underlying mutual fund. The Morningstar Variable Annuity/Life Report consists of nearly 700 variable life and annuity funds, all of which report their data net of investment management fees, direct operating expenses and separate account level charges. VARDS is a monthly reporting service that monitors approximately 2,500 variable life and variable annuity funds on performance and account information. YIELD INFORMATION Current yield for the Alliance Money Market option will be based on net changes in a hypothetical investment over a given seven-day period, exclusive of capital changes, and then "annualized" (assuming that the same seven-day result would occur each week for 52 weeks). Current yield for the Alliance High Yield option will be based on net changes in a hypothetical investment over a given 30-day period, exclusive of capital changes, and then "annualized" (assuming that the same 30-day result would occur each month for 12 months). "Effective yield" is calculated in a similar manner, but when annualized, any income earned by the investment is assumed to be reinvested. The "effective yield" will be slightly higher than the "current yield" because any earnings are compounded weekly for the Alliance Money Market option and monthly for the Alliance High Yield option. The yields and effective yields assume the deduction of all contract charges and expenses other than the optional baseBUILDER benefits charge, and any charge for taxes such as premium tax. The yields and effective yields for the Alliance Money - -------------------------------------------------------------------------------- 74 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Market option, when used for the special dollar cost averaging program, assume that no contract charges are deducted. For more information, see "Yield Information for the Alliance Money Market Option and Alliance High Yield Option" in the SAI. - -------------------------------------------------------------------------------- Incorporation of Certain Documents by Reference 75 - -------------------------------------------------------------------------------- Incorporation of Certain Documents by Reference - -------------------------------------------------------------------------------- Equitable Life's annual report on Form 10-K for the year ended December 31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to be a part of this prospectus because they are incorporated by reference. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered, a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). - -------------------------------------------------------------------------------- Appendix I: Condensed financial information A-1 - -------------------------------------------------------------------------------- Appendix I: Condensed financial information - -------------------------------------------------------------------------------- UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE INVESTMENT OPTION - -------------------------------------------------------------------------------- FOR THE YEARS ENDING ---------------------------------- DEC. 31, 1997 DEC. 31, 1998 - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK - -------------------------------------------------------------------------------- Unit value $ 68.19 $ 67.13 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 16 - -------------------------------------------------------------------------------- ALLIANCE COMMON STOCK - -------------------------------------------------------------------------------- Unit value $ 176.22 $ 223.79 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1 35 - -------------------------------------------------------------------------------- ALLIANCE HIGH YIELD - -------------------------------------------------------------------------------- Unit value $ 29.13 $ 27.12 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2 170 - -------------------------------------------------------------------------------- ALLIANCE MONEY MARKET - -------------------------------------------------------------------------------- Unit value $ 23.98 $ 24.80 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 349 - -------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH - -------------------------------------------------------------------------------- Unit value $ 12.52 $ 11.77 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 211 - -------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - -------------------------------------------------------------------------------- BT EQUITY 500 INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 12.31 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 951 - -------------------------------------------------------------------------------- BT SMALL COMPANY INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 9.61 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 211 - -------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 11.82 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 248 - -------------------------------------------------------------------------------- JPM CORE BOND - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 10.73 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 379 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-2 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For the years ending ----------------------------------- Dec. 31, 1997 Dec. 31, 1998 - -------------------------------------------------------------------------------- LAZARD LARGE CAP VALUE - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 11.81 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 315 - -------------------------------------------------------------------------------- LAZARD SMALL CAP VALUE - -------------------------------------------------------------------------------- Unit value $ 10.00 $ 9.14 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 344 - -------------------------------------------------------------------------------- MFS RESEARCH - -------------------------------------------------------------------------------- Unit value $ 11.48 $ 14.02 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 1 410 - -------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES - -------------------------------------------------------------------------------- Unit value $ 12.11 $ 16.03 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 2 200 - -------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY - -------------------------------------------------------------------------------- Unit value $ 7.93 $ 5.70 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 203 - -------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE - -------------------------------------------------------------------------------- Unit value $ 11.50 $ 12.76 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 17 714 - -------------------------------------------------------------------------------- EQ/PUTNAM INVESTORS GROWTH - -------------------------------------------------------------------------------- Unit value $ 12.33 $ 16.54 - -------------------------------------------------------------------------------- Number of units outstanding (000s) -- 282 - -------------------------------------------------------------------------------- EQ/PUTNAM INTERNATIONAL EQUITY - -------------------------------------------------------------------------------- Unit value $ 10.84 $ 12.75 - -------------------------------------------------------------------------------- Number of units outstanding (000s) 4 422 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts B-1 - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts - -------------------------------------------------------------------------------- Trustees who are considering the purchase of an Equitable Accumulator Select QP contract should discuss with their tax advisers whether this is an appropriate investment vehicle for the employer's plan. Trustees should consider whether the plan provisions permit the investment of plan assets in the QP contract, the distribution of such an annuity, the purchase of the guaranteed minimum income benefit, and the payment of death benefits in accordance with the requirements of the federal income tax rules. The QP contract and this prospectus should be reviewed in full, and the following factors, among others, should be noted. Assuming continued plan qualification and operation, earnings on qualified plan assets will accumulate value on a tax-deferred basis even if the plan is not funded by the Equitable Accumulator Select QP contract or another annuity. Therefore, you should purchase an Equitable Accumulator QP contract to fund a plan for the contract's features and benefits other than tax deferral. This QP contract accepts transfer contributions only and not regular, ongoing payroll contributions. For 401(k) plans under defined contribution plans, no employee after-tax contributions are accepted. Under defined benefit plans, we will not accept rollovers from a defined contribution plan to a defined benefit plan. We will only accept transfers from a defined benefit plan or a change of investment vehicles in the plan. For defined benefit plans, the maximum percentage of actuarial value of the plan participant/employee's "normal retirement benefit" that can be funded by a QP contract is 80%. The account value under a QP contract may at any time be more or less than the lump sum actuarial equivalent of the "accrued benefit" for a defined benefit plan participant/employee. Equitable Life does not guarantee that the account value under a QP contract will at any time equal the actuarial value of 80% of a participant/employee's accrued benefit. If overfunding of a plan occurs, withdrawals from the QP contract may be required. A market value adjustment may apply. Further, Equitable Life will not perform or provide any plan recordkeeping services with respect to the QP contracts. The plan's administrator will be solely responsible for performing or providing for all such services. There is no loan feature offered under the QP contracts, so if the plan provides for loans and a participant/employee takes a loan from the plan, other plan assets must be used as the source of the loan and any loan repayments must be credited to other investment vehicles and/or accounts available under the plan. Given that required minimum distributions must commence from the plan for annuitants after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan funds) trustees should consider whether the QP contract is an appropriate purchase for annuitants approaching or over age 70 1/2. Finally, because the method of purchasing the QP contract and the features of the QP contract may appeal more to plan participants/employees who are older and tend to be highly paid, and because certain features of the QP contract are available only to plan participants/employees who meet certain minimum and/or maximum age requirements, plan trustees should discuss with their advisers whether the purchase of the QP contract would cause the plan to engage in prohibited discrimination in contributions, benefits or otherwise. - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example C-1 - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example - -------------------------------------------------------------------------------- The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a maturity value at the maturity date of $183,846. We further assume that a withdrawal of $50,000 is made four years later on February 15, 2004.
- ---------------------------------------------------------------------------------------------- ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004 ----------------------------- 5.00% 9.00% - ---------------------------------------------------------------------------------------------- AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL) - ---------------------------------------------------------------------------------------------- (1) Market adjusted amount $144,048 $ 119,487 - ---------------------------------------------------------------------------------------------- (2) Fixed maturity amount 131,080 131,080 - ---------------------------------------------------------------------------------------------- (3) Market value adjustment: (1)-(2) 12,968 (11,593) - ---------------------------------------------------------------------------------------------- On February 15, 2004 (after withdrawal) - ---------------------------------------------------------------------------------------------- (4) Portion of market value adjustment associated with withdrawal: (3) x [$50,000/(1)] $ 4,501 $ (4,851) - ---------------------------------------------------------------------------------------------- (5) Reduction in fixed maturity amount: 54,851 [$50,000-(4)] 45,499 - ---------------------------------------------------------------------------------------------- (6) Fixed maturity amount: (2) - (5) 85,581 76,229 - ---------------------------------------------------------------------------------------------- (7) Maturity value 120,032 106,915 - ---------------------------------------------------------------------------------------------- (8) Market adjusted amount of (7) 94,048 69,487 - ----------------------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example D-1 - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- The death benefit under the contracts is equal to the account value or, if greater, the guaranteed minimum death benefit. The following illustrates the guaranteed minimum death benefit calculation. Assuming $100,000 is allocated to the variable investment options (with no allocation to the Alliance Money Market option or the fixed maturity options), no additional contributions, no transfers and no withdrawals, and no loans under a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant age 45 would be calculated as follows: - -------------------------------------------------------------------------------- 5% ROLL UP TO ANNUAL RATCHET TO END OF AGE 80 AGE 80 GUARANTEED CONTRACT GUARANTEED MINIMUM MINIMUM YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT - -------------------------------------------------------------------------------- 1 $105,000 $105,000(1) $105,000(3) - -------------------------------------------------------------------------------- 2 $115,500 $110,250(2) $115,500(3) - -------------------------------------------------------------------------------- 3 $129,360 $115,763(2) $129,360(3) - -------------------------------------------------------------------------------- 4 $103,488 $121,551(1) $129,360(4) - -------------------------------------------------------------------------------- 5 $113,837 $127,628(1) $129,360(4) - -------------------------------------------------------------------------------- 6 $127,497 $134,010(1) $129,360(4) - -------------------------------------------------------------------------------- 7 $127,497 $140,710(1) $129,360(4) - -------------------------------------------------------------------------------- The account values for contract years 1 through 7 are based on hypothetical rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We are using these rates solely to illustrate how the benefit is determined. The return rates bear no relationship to past or future investment results. 5% ROLL UP TO AGE 80 (1) At the end of contract year 1, and again at the end of contract years 4 through 7, the death benefit will be equal to the guaranteed minimum death benefit. (2) At the end of contract years 2 and 3, the death benefit will be equal to the current account value since it is higher than the current guaranteed minimum death benefit. ANNUAL RATCHET TO AGE 80 (3) At the end of contract years 1 through 3, the guaranteed minimum death benefit is equal to the current account value. (4) At the end of contract years 4 through 7, the guaranteed minimum death benefit is equal to the guaranteed minimum death benefit at the end of the prior year since it is equal to or higher than the current account value. Statement of additional information - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page Unit Values 2 Annuity Unit Values 2 Custodian and Independent Accountants 3 Yield Information for the Alliance Money Market Option and Alliance High Yield Option 3 Long-Term Market Trends 4 Key Factors in Retirement Planning 6 Financial Statements 9 HOW TO OBTAIN AN EQUITABLE ACCUMULATOR SELECT STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT NO. 49 Send this request form to: Equitable Accumulator Select P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- Please send me an Equitable Accumulator Select SAI for Separate Account No. 49 dated May 1, 1999: ________________________________________________________________________________ Name ________________________________________________________________________________ Address ________________________________________________________________________________ City State Zip (EDISELSAI) Equitable Accumulator(SM) A combination variable and fixed deferred annuity contract Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing, or taking any other action under your contract. Also, at the end of this prospectus you will find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain important information about their Portfolios. PROSPECTUS DATED MAY 1, 1999 - -------------------------------------------------------------------------------- WHAT IS THE EQUITABLE ACCUMULATOR? Equitable Accumulator is a deferred annuity contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation of retirement savings and for income. The contract offers income and death benefit protection. It also offers a number of payout and distribution options. The distribution options available under the contract are the Assured Payment Option and APO Plus. You invest to accumulate value on a tax-deferred basis in one or more of our variable investment options, fixed maturity options or the account for special dollar cost averaging ("investment options"). - -------------------------------------------------------------------------------- FIXED INCOME OPTIONS EQUITY OPTIONS - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME INTERNATIONAL EQUITY ------------------------------------- ------------------------------------- o Alliance Money Market o Alliance Global o Alliance Intermediate o Alliance International Government Securities o T. Rowe Price International ------------------------------------- Stock Aggressive Fixed Income o Morgan Stanley Emerging ------------------------------------- Markets Equity o Alliance High Yield o BT International Equity Index ------------------------------------- ------------------------------------ Domestic Equity Aggressive Equity ------------------------------------- ------------------------------------ o T. Rowe Price Equity Income o BT Small Company Index o EQ/Putnam Growth & Income o Alliance Aggressive Stock Value o Warburg Pincus Small Company o Alliance Growth & Income Value o MFS Growth with Income o Alliance Small Cap Growth o EQ/Evergreen o MFS Emerging Growth o BT Equity 500 Index Companies o Merrill Lynch Basic Value Equity ------------------------------------ o Alliance Common Stock Asset Allocation Options o MFS Research ------------------------------------ o EQ/Alliance Premier Growth o Alliance Conservative Investors o Capital Guardian Research o EQ/Putnam Balanced o Capital Guardian U.S. Equity o EQ/Evergreen Foundation o Alliance Growth Investors o Merrill Lynch World Strategy - ------------------------------------------------------------------------------- Alliance Equity Index (Available only under APO Plus) - ------------------------------------------------------------------------------- You may allocate amounts to any of the variable investment options. They, in turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson River Trust or EQ Advisors Trust. Your investment results in a variable investment option will depend on the investment performance of the related Portfolio. Each variable investment option is a subaccount of our Separate Account No. 45. FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity options. These amounts will receive a fixed rate of interest for a specified period. Interest is earned at a guaranteed rate we set. We make a market value adjustment (up or down) if you make transfers or withdrawals from a fixed maturity option before its maturity date. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING. This account also pays fixed interest at guaranteed rates. It may be used for dollar cost averaging during your contract's first year only. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An individual retirement annuity ("IRA"), either traditional IRA or Roth IRA. We offer two versions of the traditional IRA: "Rollover IRA" and "Flexible Premium IRA." The Assured Payment Option and APO Plus are available under Rollover IRA and Flexible Premium IRA Contracts. We also offer two versions of the Roth IRA: "Roth Conversion IRA" and "Roth Flexible Premium IRA." o An annuity which is an investment vehicle for a qualified defined contribution or defined benefit plan ("QP"). o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA") -- ("Rollover TSA"). A contribution of at least $5,000 is required to purchase an NQ, Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contract. For Flexible Premium IRA or Roth Flexible Premium IRA contracts, we require a contribution of $2,000 to purchase a contract. Under Rollover IRA or Flexible Premium IRA contracts you may elect the Assured Payment Option or APO Plus with a minimum initial contribution of $10,000. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The statement of additional information ("SAI") dated May 1, 1999, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our Processing Office or calling 1-800-789-7771. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. The SEC has not approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The contracts are not insured by the FDIC or any other agency. They are not deposits or other obligations of any bank and are not bank guaranteed. They are subject to investment risks and possible loss of principal. - -------------------------------------------------------------------------------- 2 Contents of this prospectus - -------------------------------------------------------------------------------- Contents of this prospectus - -------------------------------------------------------------------------------- - ------------------------------------------------------------------ EQUITABLE ACCUMULATOR(SM) Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 Equitable Accumulator at a glance -- key features 8 - ------------------------------------------------------------------ FEE TABLE 11 - ------------------------------------------------------------------ Examples 14 Condensed financial information 15 - ------------------------------------------------------------------ - ------------------------------------------------------------------ 1 CONTRACT FEATURES AND BENEFITS 16 - ------------------------------------------------------------------ How you can purchase and contribute to your contract 16 Owner and annuitant requirements 20 How you can make your contributions 20 What are your investment options under the contract? 20 Portfolios of The Hudson River Trust 21 Portfolios of EQ Advisors Trust 21 Allocating your contributions 26 Our baseBUILDER option 27 Guaranteed minimum death benefit 30 Your right to cancel within a certain number of days 31 - ------------------------------------------------------------------ 2 DETERMINING YOUR CONTRACT'S VALUE 32 - ------------------------------------------------------------------ Your account value 32 Your contract's value in the variable investment options 32 Your contract's value in the fixed maturity options 32 Your contract's value in the account for special dollar cost averaging 32 - -------------------------------------------------------------------------------- "We," "our" and "us" refer to Equitable Life. When we address the reader of this prospectus with words that are issued under group contracts in some states. such as "you" and "your," we mean the person who has the right or responsibility that the prospectus is discussing at that point. This is usually the contract owner. When we use the word "contract" it also includes certificates that are issued under group contracts in some states. - -------------------------------------------------------------------------------- Contents of this prospectus 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ------------------------------------------------------------------ 3 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 33 - ------------------------------------------------------------------ Transferring your account value 33 Rebalancing your account value 33 - ------------------------------------------------------------------ 4 ACCESSING YOUR MONEY 34 - ------------------------------------------------------------------ Assured Payment Option and APO Plus 34 Withdrawing your account value 39 How withdrawals are taken from your account value 40 How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit 41 Loans under Rollover TSA contracts 41 Surrendering your contract to receive its cash value 42 When to expect payments 42 Choosing your annuity payout options 43 - ------------------------------------------------------------------ 5 CHARGES AND EXPENSES 46 - ------------------------------------------------------------------ Charges that Equitable Life deducts 46 Charges that the trusts deduct 48 Group or sponsored arrangements 48 Other distribution arrangements 49 - ------------------------------------------------------------------ 6 PAYMENT OF DEATH BENEFIT 50 - ------------------------------------------------------------------ Your beneficiary and payment of benefit 50 How death benefit payment is made 51 Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts 51 - ------------------------------------------------------------------ 7 TAX INFORMATION 53 - ------------------------------------------------------------------ Overview 53 Transfers among investment options 53 Taxation of nonqualified annuities 53 Special rules for NQ contracts issued in Puerto Rico 54 Individual retirement arrangements ("IRAs") 55 Special rules for nonqualified contracts in qualified plans 66 Tax Sheltered Annuity contracts (TSAs) 66 Federal and state income tax withholding and information reporting 71 Impact of taxes to Equitable Life 72 - ------------------------------------------------------------------ 8 MORE INFORMATION 73 - ------------------------------------------------------------------ About our Separate Account No. 45 73 About The Hudson River Trust and EQ Advisors Trust 73 About our fixed maturity options 73 About the general account 75 About other methods of payment 75 Dates and prices at which contract events occur 75 About your voting rights 76 About our year 2000 progress 77 About legal proceedings 77 About our independent accountants 77 Transfers of ownership, collateral assignments, loans, and borrowing 78 Distribution of the contracts 78 - ------------------------------------------------------------------ 9 INVESTMENT PERFORMANCE 79 - ------------------------------------------------------------------ Benchmarks 79 Communicating performance data 90 - ------------------------------------------------------------------ 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 92 - ------------------------------------------------------------------ Appendices I - Condensed financial information A-1 II - Purchase considerations for QP contracts B-1 III - Market value adjustment example C-1 IV - Guaranteed minimum death benefit example D-1 V - Example of payments under the Assured Payment Option APO Plus E-1 - ------------------------------------------------------------------ STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - ------------------------------------------------------------------ - -------------------------------------------------------------------------------- 4 Index of key words and phrases - -------------------------------------------------------------------------------- Index of key words and phrases - -------------------------------------------------------------------------------- This index should help you locate more information on the terms used in this prospectus.
Page Page account for special dollar cost guaranteed minimum death benefit 30 averaging 25 guaranteed minimum income benefit 28 account value 32 IRA 55 annuitant 16 IRS 53 Assured Payment Option 34 investment options 20 APO Plus 37 loan reserve account 42 baseBUILDER 27 market adjusted amount 23 beneficiary 50 market value adjustment 24 benefit base 28 maturity value 23 business day 75 NQ 53 cash value 32 participant 20 conduit IRA 59 payout option 43 contract date 9 Portfolio cover contract date anniversary 9 Processing Office 6 contract year 9 QP 66 contributions to Roth IRAs 63 rate to maturity 23 regular contributions 63 required beginning date 60 rollover contributions 64 Rollover IRA cover conversion contributions 64 Rollover TSA cover direct custodian-to-custodian Roth Conversion IRA cover transfers 64 Roth Flexible Premium IRA cover contributions to traditional IRAs 55 Roth IRA 63 regular contributions 56 SAI cover rollover contributions 58 SEC cover direct custodian-to-custodian TOPS 6 transfers 58 TSA 66 ERISA 41 traditional IRA 55 fixed maturity amount 23 unit 32 fixed maturity options 23 variable investment options 20 Flexible Premium IRA cover
To make this prospectus easier to read, we sometimes use different words than in the contract or supplemental materials. This is illustrated below. Although we use different words, they have the same meaning in this prospectus as in the contract or supplemental materials. Your Equitable associate can provide further explanation about your contract.
- ------------------------------------------------------------------------------------- Prospectus Contract or Supplemental Materials - ------------------------------------------------------------------------------------- fixed maturity options Guarantee Periods (GIROs in Supplemental Materials) variable investment options Investment Funds account value Annuity Account Value rate to maturity Guaranteed Rates - -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Who is Equitable Life? 5 - -------------------------------------------------------------------------------- Who is Equitable Life? - -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies Incorporated ("Equitable Companies"), whose majority shareholder is AXA, a French holding company for an international group of insurance and related financial services companies. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contract. During 1999, Equitable Companies plans to change its name to AXA Financial, Inc. Equitable Companies and its consolidated subsidiaries managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. - -------------------------------------------------------------------------------- 6 Who is Equitable Life? - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REACH US You may communicate with our Processing Office as listed below for any of the following purposes: - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 13014 Newark, NJ 07188-0014 - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator c/o First Chicago National Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator 200 Plaza Drive, 4th Floor Secaucus, NJ 07094 - -------------------------------------------------------------------------------- REPORTS WE PROVIDE: - -------------------------------------------------------------------------------- o written confirmation of financial transactions; o statement of your contract values at the close of each calendar quarter (four per year); o annual statement of your contract values as of the close of the contract year. - -------------------------------------------------------------------------------- TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM: - -------------------------------------------------------------------------------- TOPS is designed to provide you with up-to-date information via touch-tone telephone. You can obtain information on: o your current account value; o your current allocation percentages; o the number of units you have in the variable investment options; o rates to maturity for the fixed maturity options; and o the daily unit values for the variable investment options. You can also: o change your allocation percentages and/or transfer among the investment options; and o change your personal identification number (PIN). TOPS is normally available seven days a week, 24 hours a day, by calling toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service may sometimes be unavailable. We have established procedures to reasonably confirm that the instructions communicated by telephone are genuine. For example, we will require certain personal identification information before we will act on telephone instructions and we will provide written confirmation of your transfers. We will not be liable for following telephone instructions we reasonably believe to be genuine. - -------------------------------------------------------------------------------- BY INTERNET: - -------------------------------------------------------------------------------- You can also access information about your contract on the Internet. Please visit our website at http://www.equitable.com, and click on EQAccess. - -------------------------------------------------------------------------------- Who is Equitable Life? 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER SERVICE REPRESENTATIVE: - -------------------------------------------------------------------------------- You may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. You should send all contributions, notices, and requests to our Processing Office at the address above. WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE: (1) conversion of a traditional IRA to a Roth Conversion IRA or Roth Flexible Premium IRA contract; (2) cancellation of your Roth Conversion IRA or Roth Flexible Premium IRA contract and return to a Rollover IRA or Flexible Premium IRA contract; (3) election of the Assured Payment Option or APO Plus; (4) election of the automatic investment program; (5) election of the rebalancing program; (6) to obtain a PIN required for TOPS; (7) requests for loans under Rollover TSA contracts; (8) spousal consent for loans under Rollover TSA contracts; (9) tax withholding election; and (10) beneficiary continuation option election. WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: (1) address changes; (2) beneficiary changes; (3) transfers between investment options; (4) withdrawal requests; (5) contract surrender; and (6) requests to exercise your guaranteed minimum income benefit. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION: (1) automatic investment program; (2) general dollar cost averaging; (3) rebalancing; (4) special dollar cost averaging; (5) Assured Payment Option or APO Plus; (6) substantially equal withdrawals; (7) systematic withdrawals; and (8) the date annuity payments are to begin. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. - -------------------------------------------------------------------------------- 8 Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- Equitable Accumulator at a glance -- key features - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Professional Equitable Accumulator's variable investment options invest in 31 different Portfolios managed by investment professional investment advisers. management - ----------------------------------------------------------------------------------------------------------------------------- Fixed maturity o 10 fixed maturity options with maturities ranging from approximately 1 to 10 years. Under the options Assured Payment Option and APO Plus, 5 additional fixed maturity options with maturities ranging from 11 to 15 years. o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. -- If you make withdrawals or transfers from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value that you have left in that fixed maturity option. - ----------------------------------------------------------------------------------------------------------------------------- Account for special dollar Available for dollar cost averaging of your initial contribution. cost averaging - ----------------------------------------------------------------------------------------------------------------------------- Tax advantages o On earnings inside the No tax on any dividends, interest or capital gains until you make contract withdrawals from your contract or receive annuity payments. ------------------------------------------------------------------------------------------------ o On transfers inside the No tax on transfers among investment options. contract ------------------------------------------------------------------------------------------------ If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. - ----------------------------------------------------------------------------------------------------------------------------- baseBUILDER(R) baseBUILDER combines a guaranteed minimum income benefit with a guaranteed minimum protection death benefit. This optional feature provides income protection for you while the annuitant lives, as well as a death benefit for the beneficiary should the annuitant die. - ----------------------------------------------------------------------------------------------------------------------------- Contribution amounts o NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts o Initial minimum: $ 5,000 o Additional minimum: $ 1,000 $100 monthly, and $300 quarterly under our automatic investment program (NQ contracts) ------------------------------------------------------------------------------------------------ o Flexible Premium IRA and Roth Flexible Premium IRA contracts o Initial minimum: $ 2,000 o Additional minimum: $50 ($50 under our automatic investment program) ------------------------------------------------------------------------------------------------ o Assured Payment Option and APO Plus under Rollover IRA and Flexible Premium IRA contracts o Initial minimum: $10,000 o Additional minimum: $ 1,000 ------------------------------------------------------------------------------------------------ Maximum investment limitations may apply.
- -------------------------------------------------------------------------------- Equitable Accumulator at a glance - key features 9 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Access to your money o Assured Payment Option o APO Plus o Lump sum withdrawals o Several withdrawal options on a periodic basis o Loans under Rollover TSA contracts o Contract surrender You may incur a withdrawal charge for certain withdrawals. You may also incur income tax and a tax penalty. - ----------------------------------------------------------------------------------------------------------------------------- Payout alternatives o Annuity payout options o Income Manager(Reg. TM) payout annuity options - ----------------------------------------------------------------------------------------------------------------------------- Additional features o Dollar cost averaging o Automatic investment program o Account value rebalancing (quarterly, semiannually and annually) o Unlimited free transfers o Waiver of withdrawal charge for disability, terminal illness or confinement to a nursing home - ----------------------------------------------------------------------------------------------------------------------------- Fees and charges o Daily charges on amounts invested in variable investment options for mortality and expense risks and administrative charges at an annual rate of 1.35%. o Annual 0.30% benefit base charge for the optional baseBUILDER benefit. The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." No additional charge if you want a guaranteed minimum death benefit only. o Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, if your account value at the end of the contract year is less than $25,000, we deduct an annual administrative charge equal to $30 or during the first two contract years 2% of your account value, if less. If your account value is $25,000 or more, we will not deduct the charge. o No sales charge deducted at the time you make contributions. o During the first seven contract years following a contribution, a charge will be deducted from amounts that you withdraw that exceed 15% of your account value. We use the account value on the most recent contract date anniversary to calculate the 15% amount available. The charge begins at 7% in the first contract year following a contribution. It declines each year to 1% in the seventh contract year. There is no withdrawal charge in the eighth and later contract years following a contribution. ------------------------------------------------------------------------------------------------------ The 12-month period beginning on your contract date and each 12-month period after that date is a "contract year." The end of each 12-month period is your "contract date anniversary." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution. Your contract date will be shown in your contract. ------------------------------------------------------------------------------------------------------ - -----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 10 Equitable Accumulator at a glance - key features - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- Fees and o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. This charges (continued) charge is generally deducted from the amount applied to an annuity payout option. o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life annuity payout options. o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a percentage of the average daily net assets invested in each Portfolio. These expenses include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other expenses. - ----------------------------------------------------------------------------------------------------------------------------- Annuitant issue ages NQ: 0-83 Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA: 20-83 Flexible Premium IRA: 20-70 Assured Payment Option and APO Plus: 53 1/2 QP: 20-75 - -----------------------------------------------------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your Equitable associate, or call us, if you have any questions. - -------------------------------------------------------------------------------- Fee table 11 - -------------------------------------------------------------------------------- Fee table - -------------------------------------------------------------------------------- The fee table below will help you understand the various charges and expenses that apply to your contract. The table reflects charges you will directly incur under the contract, as well as charges and expenses of the Portfolios that you will bear indirectly. Charges for taxes, such as premium taxes, may also apply. Also, an administrative fee may apply when your annuity payments are to begin. Each of the charges and expenses is more fully described under "Charges and expenses" later in this prospectus. For a complete description of Portfolio charges and expenses, please see the attached prospectuses for The Hudson River Trust and EQ Advisors Trust. The fixed maturity options and the account for special dollar cost averaging are not covered by the fee table and examples. Generally, the only charges shown in the table that are applicable to the fixed maturity options and the account for special dollar cost averaging are the annual administrative charge and the withdrawal charge. A market value adjustment (up or down) may apply as a result of a withdrawal, transfer or surrender of amounts from a fixed maturity option. - ------------------------------------------------------------------------------------------------------------------ Charges we deduct from your variable investment options expressed as an annual percentage of daily net assets - ------------------------------------------------------------------------------------------------------------------ Mortality and expense risks (1) 1.10% Administrative (2) 0.25% ----- Total annual expenses 1.35% - ------------------------------------------------------------------------------------------------------------------ Flexible Premium IRA and Roth Flexible Premium IRA contracts only: Charges we deduct from your account value on each contract date anniversary - ------------------------------------------------------------------------------------------------------------------ Maximum annual administrative charge If your account value is less than $25,000 $ 30(3) If you account value is $25,000 or more $ 0 - ------------------------------------------------------------------------------------------------------------------ Charges we deduct from your account value at the time you request certain transactions - ------------------------------------------------------------------------------------------------------------------ Withdrawal charge as a percentage of contributions (deducted if you surrender Contract your contract or make certain withdrawals. The withdrawal charge year percentage we use is determined by the contract year in which you make the 1..............7.00% withdrawal or surrender your contract. For each contribution, we 2..............6.00 consider the contract year in which we receive that contribution to be 3..............5.00 "contract year 1")(4) 4..............4.00 5..............3.00 6..............2.00 7..............1.00 8+.............0.00 - ------------------------------------------------------------------------------------------------------------------ Charges we deduct from your account value each year if you elect the optional benefit - ------------------------------------------------------------------------------------------------------------------ baseBUILDER benefits charge (calculated as a percentage of the benefit base. Deducted annually on each contract date anniversary)(5) 0.30% - ------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 12 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
Total Annual Expenses(6) Investment (After Management Other expense Advisory Fees 12b-1 Fees(6) Expenses limitation) ------------- ------------- --------- ------------ - ---------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock (7) 0.54% 0.25% 0.03% 0.82% Alliance Common Stock(7) 0.36% 0.25% 0.03% 0.64% Alliance Conservative Investors(7) 0.48% 0.25% 0.05% 0.78% Alliance Equity Index(7) 0.31% 0.25% 0.03% 0.59% Alliance Global(7) 0.64% 0.25% 0.07% 0.96% Alliance Growth & Income(7) 0.55% 0.25% 0.03% 0.83% Alliance Growth Investors(7) 0.51% 0.25% 0.04% 0.80% Alliance High Yield(7) 0.60% 0.25% 0.03% 0.88% Alliance Intermediate Government Securities(7) 0.50% 0.25% 0.05% 0.80% Alliance International(7) 0.90% 0.25% 0.16% 1.31% Alliance Money Market(7) 0.35% 0.25% 0.02% 0.62% Alliance Small Cap Growth(7) 0.90% 0.24% 0.06% 1.20% - ---------------------------------------------------------------------------------------------------------------------------- EQ Advisors Trust Annual Expenses (As a Percentage of Average Daily Net Assets In Each Portfolio) - ---------------------------------------------------------------------------------------------------------------------------- Total Other Annual Expenses(8) Expenses(8) Investment (After (After Management expense expense Advisory Fees 12b-1 Fees(6) limitation) limitation) ------------- ------------- ----------- ------------- EQ/Alliance Premier Growth(8) 0.90% 0.25% 0.00% 1.15% BT Equity 500 Index(8) 0.25% 0.25% 0.05% 0.55% BT International Equity Index(8) 0.35% 0.25% 0.40% 1.00% BT Small Company Index(8) 0.25% 0.25% 0.25% 0.75% Capital Guardian Research(8) 0.65% 0.25% 0.05% 0.95% Capital Guardian U.S. Equity(8) 0.65% 0.25% 0.05% 0.95% EQ/Evergreen(8) 0.75% 0.25% 0.05% 1.05% EQ/Evergreen Foundation(8) 0.63% 0.25% 0.07% 0.95% MFS Emerging Growth Companies(8) 0.55% 0.25% 0.05% 0.85% MFS Growth with Income(8) 0.55% 0.25% 0.05% 0.85% MFS Research(8) 0.55% 0.25% 0.05% 0.85% Merrill Lynch Basic Value Equity(8) 0.55% 0.25% 0.05% 0.85% Merrill Lynch World Strategy(8) 0.70% 0.25% 0.25% 1.20% Morgan Stanley Emerging Markets Equity(8) 1.15% 0.25% 0.35% 1.75% EQ/Putnam Balanced(7) 0.55% 0.25% 0.10% 0.90% EQ/Putnam Growth & Income Value(8) 0.55% 0.25% 0.05% 0.85% T. Rowe Price Equity Income(8) 0.55% 0.25% 0.05% 0.85% T. Rowe Price International Stock(8) 0.75% 0.25% 0.20% 1.20% Warburg Pincus Small Company Value(8) 0.65% 0.25% 0.10% 1.00% - ----------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Fee table 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ---------- Notes: (1) A portion of this charge is for providing the guaranteed minimum death benefit. (2) We reserve the right to increase this charge to a maximum annual rate of 0.35%. (3) For Flexible Premium IRA and Roth Flexible Premium IRA contracts, during the first two contract years this charge is equal to the lesser of $30 or 2% of your account value. Thereafter, the charge is $30 for each contract year. (4) Deducted upon a withdrawal of amounts in excess of the 15% free withdrawal amount, and upon surrender of a contract. (5) The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." (6) Portfolio shares are all subject to fees imposed under distribution plans (the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee will not be increased for the life of the contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio attributable to Class IB shares and (b) an amount that, when added to certain other expenses of the Class IB shares, would result in the ratio of expenses to average daily net assets attributable to Class IB shares equaling 1.20%. Absent the expense limitation, the total annual expenses for 1998 for the Alliance Small Cap Growth Portfolio would have been 1.21%. (7) The fees and expenses shown for all Portfolios are for the year ended December 31, 1998. The investment management and advisory fees for each Portfolio of The Hudson River Trust may vary from year to year depending upon the average daily net assets of the respective Portfolio. The maximum investment management and advisory fees, however, cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for The Hudson River Trust. The other direct operating expenses will also fluctuate from year to year depending on actual expenses. (8) The maximum investment management and advisory fees for each Portfolio of EQ Advisors Trust cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for EQ Advisors Trust. The amounts shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an expense limitation agreement with respect to each Portfolio. Under this agreement EQF has agreed to waive or limit its fees and assume other expenses. Under the expense limitation agreement, total annual operating expenses of each Portfolio (other than interest, taxes, brokerage commissions, capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited for the average daily net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500 Index; 0.75% for BT International Equity Index; 0.50% for BT Small Company Index; 0.70% for Capital Guardian Research and Capital Guardian U.S. Equity; 0.80% for EQ/Evergreen; 0.70% for EQ/Evergreen Foundation; 0.60% for MFS Emerging Growth Companies, MFS Growth with Income, MFS Research, and Merrill Lynch Basic Value Equity; 0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging Markets Equity; 0.65% for EQ/Putnam Balanced; 0.60% for EQ/Putnam Growth & Income Value and T. Rowe Price Equity Income; 0.95% for T. Rowe Price International Stock; and 0.75% for Warburg Pincus Small Company Value. The expenses shown for the BT International Equity Index and BT Small Company Index Portfolios reflect an increase effective on May 1, 1999. Absent the expense limitation, the "Other Expenses" for 1998 on an annualized basis for each of the Portfolios would have been as follows: 0.33% for BT Equity 500 Index; 0.89% for BT International Equity Index; 1.31% for BT Small Company Index;0.24% for MFS Emerging Growth Companies; 0.25% for MFS Research; 0.26% for Merrill Lynch Basic Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan Stanley Emerging Markets Equity; 0.45% for EQ/Putnam Balanced; 0.24% for EQ/Putnam Growth & Income Value and T. Rowe Price Equity Income; 0.40% for T. Rowe Price International Stock; and 0.27% for Warburg Pincus Small Company Value. For the following Portfolios, the "Other Expenses" for 1999, absent the expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; and 0.59% for MFS Growth with Income. Initial seed capital was invested on December 31, 1998 for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income Portfolios. The EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity Portfolios commenced operations on May 1, 1999. Each Portfolio may at a later date make a reimbursement to EQF for any of the management fees waived or limited and other expenses assumed and paid by EQF pursuant to the expense limitation agreement provided that, among other things, such Portfolio has reached sufficient size to permit such reimbursement to be made and provided that the Portfolio's current annual operating expenses do not exceed the operating expense limit determined for such Portfolio. - -------------------------------------------------------------------------------- 14 Fee table - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES The examples below show the expenses that a hypothetical contract owner who has purchased a Flexible Premium IRA or Flexible Premium Roth IRA contract would pay in the two situations (surrender and nonsurrender) illustrated. The examples show the expenses if (1) baseBUILDER is elected and (2) APO Plus is elected. We assume that a $1,000 contribution is invested in one of the variable investment options listed and a 5% annual return is earned on the assets in that option.(1) The annual administrative charge is based on an estimated $10,000 average account value at the end of the contract year and the maximum charge of $30, so that the administrative charge per $1,000 is $3. Since the annual administrative charge only applies under Flexible Premium IRA and Flexible Premium Roth IRA contracts, the charges shown in the examples would be lower for the NQ, Rollover IRA, Roth Conversion IRA, QP, and Rollover TSA contracts. These examples should not be considered a representation of past or future expenses for each option. Actual expenses may be greater or less than those shown. Similarly, the annual rate of return assumed in the examples is not an estimate or guarantee of future investment performance. (1) EXPENSES REFLECTING BASEBUILDER ELECTION
- ----------------------------------------------------------------------------------------------- If you surrender your contract at the end of each period shown, the expenses would be: ------------------------------------------------- 1 year 3 years 5 years 10 years - ----------------------------------------------------------------------------------------------- The Hudson River Trust Options - ----------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 94.98 $ 132.84 $ 173.34 $ 307.10 Alliance Common Stock $ 93.19 $ 127.47 $ 164.38 $ 289.23 Alliance Conservative Investors $ 94.59 $ 131.65 $ 171.35 $ 303.16 Alliance Global $ 96.37 $ 137.00 $ 180.25 $ 320.78 Alliance Growth & Income $ 95.08 $ 133.14 $ 173.83 $ 308.07 Alliance Growth Investors $ 94.78 $ 132.24 $ 172.34 $ 305.12 Alliance High Yield $ 95.58 $ 134.62 $ 176.30 $ 312.98 Alliance Intermediate Government Securities $ 94.78 $ 132.24 $ 172.34 $ 305.12 Alliance International $ 99.85 $ 147.36 $ 197.38 $ 354.17 Alliance Money Market $ 93.00 $ 126.88 $ 163.38 $ 287.23 Alliance Small Cap Growth $ 98.76 $ 144.12 $ 192.03 $ 343.81 - ----------------------------------------------------------------------------------------------- EQ Advisors Trust Options - ----------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 98.26 $ 142.63 - - BT Equity 500 Index $ 92.30 $ 124.78 $ 159.88 $ 280.19 BT International Equity Index $ 96.77 $ 138.19 $ 182.22 $ 324.65 BT Small Company Index $ 94.29 $ 130.75 $ 169.85 $ 300.17 Capital Guardian Research $ 96.27 $ 136.71 - - Capital Guardian U.S. Equity $ 96.27 $ 136.71 - - EQ/Evergreen $ 97.27 $ 139.68 - - - ----------------------------------------------------------------------------------------------- If you do not surrender your contract at the end of each period shown, the expenses would be: ------------------------------------------------ 1 year 3 years 5 years 10 years - ----------------------------------------------------------------------------------------------- The Hudson River Trust Options - ----------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 28.13 $ 86.31 $ 147.16 $ 311.98 Alliance Common Stock $ 26.34 $ 80.94 $ 138.21 $ 294.12 Alliance Conservative Investors $ 27.74 $ 85.13 $ 145.19 $ 308.05 Alliance Global $ 29.52 $ 90.47 $ 154.07 $ 325.65 Alliance Growth & Income $ 95.08 $ 133.14 $ 173.83 $ 308.07 Alliance Growth Investors $ 27.93 $ 85.72 $ 146.17 $ 310.01 Alliance High Yield $ 28.73 $ 88.10 $ 150.14 $ 317.87 Alliance Intermediate Government Securities $ 27.93 $ 85.72 $ 146.17 $ 310.01 Alliance International $ 33.00 $ 100.84 $ 171.21 $ 359.07 Alliance Money Market $ 26.15 $ 80.35 $ 137.22 $ 292.13 Alliance Small Cap Growth $ 31.91 $ 97.59 $ 165.86 $ 348.69 - ----------------------------------------------------------------------------------------------- EQ Advisors Trust Options - ----------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth $ 31.41 $ 96.11 - - BT Equity 500 Index $ 25.45 $ 78.25 $ 133.71 $ 285.07 BT International Equity Index $ 29.92 $ 91.66 $ 156.05 $ 329.53 BT Small Company Index $ 27.44 $ 84.23 $ 143.69 $ 305.09 Capital Guardian Research $ 29.42 $ 90.17 - - Capital Guardian U.S. Equity $ 29.42 $ 90.17 - - EQ/Evergreen $ 30.42 $ 93.15 - - - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Fee table 15 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------- If you surrender your contract at the end of each period shown, the expenses would be: ------------------------------------------------------ 1 year 3 years 5 years 10 years - ----------------------------------------------------------------------------------------------- EQ/Evergreen Foundation $ 96.27 $ 136.71 - - MFS Emerging Growth Companies $ 95.28 $ 133.74 $ 174.83 $ 310.05 MFS Growth with Income $ 95.28 $ 133.74 - - MFS Research $ 95.28 $ 133.74 $ 174.83 $ 310.05 Merrill Lynch Basic Value Equity $ 95.28 $ 133.74 $ 174.83 $ 310.05 Merrill Lynch World Strategy $ 98.76 $ 144.12 $ 192.03 $ 343.81 Morgan Stanley Emerging Markets Equity $ 104.22 $ 160.29 $ 218.58 $ 394.59 EQ/Putnam Balanced $ 95.78 $ 135.22 $ 177.29 $ 314.94 EQ/Putnam Growth & Income Value $ 95.28 $ 133.74 $ 174.83 $ 310.05 T. Rowe Price Equity Income $ 95.28 $ 133.74 $ 174.83 $ 310.05 T. Rowe Price International Stock $ 98.76 $ 144.12 $ 192.03 $ 343.81 Warburg Pincus Small Company Value $ 96.77 $ 138.19 $ 182.22 $ 324.65 - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- If you do not surrender your contract at the end of each period shown, the expenses would be: ------------------------------------------------------ 1 year 3 years 5 years 10 years - ----------------------------------------------------------------------------------------------- EQ/Evergreen Foundation $ 29.42 $ 90.17 - - MFS Emerging Growth Companies $ 28.43 $ 87.20 $ 148.64 $ 314.93 MFS Growth with Income $ 28.43 $ 87.20 - - MFS Research $ 28.43 $ 87.20 $ 148.64 $ 314.93 Merrill Lynch Basic Value Equity $ 28.43 $ 87.20 $ 148.64 $ 314.93 Merrill Lynch World Strategy $ 31.91 $ 97.59 $ 165.86 $ 348.69 Morgan Stanley Emerging Markets Equity $ 37.37 $ 113.76 $ 192.41 $ 399.49 EQ/Putnam Balanced $ 28.93 $ 88.70 $ 151.13 $ 319.83 EQ/Putnam Growth & Income Value $ 28.43 $ 87.20 $ 148.64 $ 314.93 T. Rowe Price Equity Income $ 28.43 $ 87.20 $ 148.64 $ 314.93 T. Rowe Price International Stock $ 31.91 $ 97.59 $ 165.86 $ 348.69 Warburg Pincus Small Company Value $ 29.92 $ 91.66 $ 156.05 $ 329.53 - -----------------------------------------------------------------------------------------------
(2) EXPENSES REFLECTING APO PLUS ELECTION
- ----------------------------------------------------------------------------------------------------------------------------- If you surrender your contract at the end If you do not surrender your contract at of each period shown, the expenses the end of each period shown, the would be: expenses would be: ------------------------------------------------- ------------------------------------------------ 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years - ----------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock $ 93.19 $ 121.20 $ 151.48 $ 258.02 $ 23.19 $ 71.20 $ 121.48 $ 258.02 Alliance Equity Index $ 92.70 $ 119.71 $ 148.97 $ 252.93 $ 22.70 $ 69.71 $ 118.97 $ 252.93 - -----------------------------------------------------------------------------------------------------------------------------
- ---------- (1) The amount accumulated from the $1,000 contribution could not be paid in the form of an annuity payout option at the end of any of the periods shown in the examples. This is because if the amount applied to purchase an annuity payout option is less than $2,000, or the initial payment is less than $20, we may pay the amount to you in a single sum instead of as payments under an annuity payout option. See "Accessing your money." IF YOU ELECT AN ANNUITY PAYOUT OPTION: Assuming an annuity payout option could be issued (see note (1) above), and you elect a life annuity payout option, the expenses shown in the above example for "if you do not surrender your contract" would, in each case, be increased by $4.43 based on the average amount applied to annuity payout options in 1998. See "Annuity administrative fee" under "Charges and expenses." CONDENSED FINANCIAL INFORMATION Please see Appendix I, at the end of this prospectus for the unit values and the number of units outstanding as of the end of the periods shown for each of the variable investment options. - -------------------------------------------------------------------------------- 16 Contract features and benefits - -------------------------------------------------------------------------------- 1 Contract features and benefits - -------------------------------------------------------------------------------- HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase a contract by making payments to us we call "contributions." We require a minimum contribution amount for each type of contract. The following table summarizes our rules regarding contributions to your contract. All ages in the table refer to the age of the annuitant named in the contract. - -------------------------------------------------------------------------------- The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner. - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Available Contract for annuitant Minimum Limitations on type issue ages contributions Source of contributions contributions - ------------------------------------------------------------------------------------------------------------------------ NQ 0 through 83 $5,000 (initial) o After-tax money. o No additional $1,000 (additional) o Paid to us by check or contributions after transfer of contract age 84. value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. - ------------------------------------------------------------------------------------------------------------------------------------ Flexible 20 through 70 o $2,000 (initial) o "Regular" IRA o No additional regular Premium IRA contributions. IRA contributions in the o $50 (additional after calendar year you turn the first contract year) o Rollovers from a age 70 1/2 and qualified plan. thereafter. o Total regular o Rollovers from a TSA. contributions may not exceed $2,000 o Rollovers from another each year. traditional individual retirement o No additional rollover arrangement. or direct transfer contributions after o Direct custodian- age 71. to-custodian transfers from another o Rollover and direct traditional individual transfer contributions retirement after age 70 1/2 must arrangement. be net of required minimum distributions. Although we accept rollover and direct transfer contributions under the Flexible Premium IRA contract, we intend that this contract be used for ongoing regular contributions. - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 17 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Available Contract for annuitant Minimum Limitations on type issue ages contributions Source of contributions contributions - ------------------------------------------------------------------------------------------------------------------------------------ Rollover IRA 20 through 83 o $5,000 (initial) o Rollovers from a o No additional rollover o $1,000 (additional) qualified plan. or direct transfer contributions after o Rollovers from a TSA. age 84. o Rollovers from another traditional individual o Contributions after retirement age 70 1/2 must be net arrangement. of required minimum distributions. o Direct custodian-to-custodian o Regular IRA transfers from another contributions are not traditional individual permitted. retirement arrangement. Only rollover and direct transfer contributions are permitted under the Rollover IRA contract. - ------------------------------------------------------------------------------------------------------------------------ Roth Flexible 20 through 83 $2,000 (initial) o "Regular" after-tax o No additional regular Premium IRA contributions. after-tax contributions o $50 (additional after after age 84. the first contract year) o Rollovers from another Roth IRA. o No additional rollover or direct transfer o Conversion rollovers contributions after from a traditional IRA. age 84. o Direct transfers from another Roth IRA. o Contributions are subject to income limits. See "Tax information -- Contributions to Roth IRAs." Although we accept rollover and direct transfer contributions under the Flexible Premium Roth IRA contract, we intend that this contract be used for ongoing regular contributions. - ------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 18 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ Available Contract for annuitant Minimum Limitations on type issue ages contributions Source of contributions contributions - ------------------------------------------------------------------------------------------------------------------------ Roth 20 through 83 o $5,000 (initial) o Rollovers from another o No additional rollover Conversion IRA Roth IRA. or direct transfer o $1,000 (additional) contributions after age 84. o Conversion rollovers from a traditional IRA. o Conversion rollovers o Direct transfers from after age 70 1/2 must be another Roth IRA. net of required minimum distributions for the traditional IRA you are rolling over. o You cannot roll over funds from a traditional IRA if your adjusted gross income is $100,000 or more. o Regular after-tax contributions are not permitted. Only rollover and direct transfer contributions are permitted under the Roth Conversion IRA contract. - ------------------------------------------------------------------------------------------------------------------------ QP 20 through 75 o $5,000 (initial) o Only transfer o Regular ongoing contributions from an payroll contributions o $1,000 (additional) existing qualified plan are not permitted. trust as a change of investment vehicle o No additional transfer under the plan. contributions after age 76. o The plan must be o For defined benefit qualified under Section plans, employee 401(a) of the Internal contributions are not Revenue Code. permitted. o For 401(k) plans, o Contributions after transferred age 70 1/2 must be net contributions may only of any required include employee minimum distributions. pre-tax contributions. - ------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 19 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ Available Contract for annuitant Minimum Limitations on type issue ages contributions Source of contributions contributions - ------------------------------------------------------------------------------------------------------------------------------------ Rollover TSA 20 through 83 o $ 5,000 (initial) o Rollovers from another o No additional rollover TSA contract or or direct transfer o $ 1,000 (additional) arrangement. contributions after age 84. o Rollovers from a traditional IRA which o Contributions after age was a "conduit" for 70 1/2 must be net of TSA funds previously required minimum rolled over. distributions. o Direct transfers from another contract or arrangement under Section 403(b) of the Internal Revenue Code, complying with IRS Revenue Ruling 90-24. - ------------------------------------------------------------------------------------------------------------------------------------ Rollover 53 1/2 through 83 o $10,000 (initial) o Rollovers from a o Additional rollover or IRA or qualified plan. direct transfer Flexible o $1,000 (additional) contributions may be Premium o Rollovers from a TSA. made until the earlier IRA with of age 84 or within Assured o Rollovers from another seven years from the Payment traditional individual end of the fixed period. Option or retirement APO Plus arrangement. o Contributions after age o Direct 70 1/2 must be net of custodian-to-custodian required minimum transfers from another distributions. traditional individual retirement arrangement. - ------------------------------------------------------------------------------------------------------------------------------------
See "Tax information" for a more detailed discussion of sources of contributions and certain contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Equitable Accumulator contracts with the same annuitant would then total more than $1,500,000. We reserve the right to limit aggregate contributions made after the first contract year to 150% of first-year contributions. We may also refuse to accept any contribution if the sum of all contributions under all Equitable Life annuity accumulation contracts that you own would then total more than $2,500,000. For information on when contributions are credited under your contract see "Dates and prices at which contract events occur" later in this prospectus. - -------------------------------------------------------------------------------- 20 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER AND ANNUITANT REQUIREMENTS Under NQ contracts, the annuitant can be different than the owner. A joint owner may also be named. Only natural persons can be joint owners. This means that an entity such as a corporation cannot be a joint owner. Under all IRA and Rollover TSA contracts, the owner and annuitant must be the same person. Under QP contracts, the owner must be the trustee of the qualified plan and the annuitant must be the plan participant/employee. See Appendix II for more information on QP contracts. - -------------------------------------------------------------------------------- A participant is an individual who is currently, or was formerly participating in an eligible employer's QP or TSA plan. - -------------------------------------------------------------------------------- HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. Additional contributions may also be made under our automatic investment program. This method of payment is discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days after we receive an incomplete application or form, we will inform the Equitable associate submitting the application on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. - -------------------------------------------------------------------------------- Our "business day" is any day the New York Stock Exchange is open for trading. - -------------------------------------------------------------------------------- SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Equitable Accumulator NQ contract in a tax-free exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT? Your investment options are the variable investment options, the fixed maturity options, and the account for special dollar cost averaging. VARIABLE INVESTMENT OPTIONS Your investment results in any one of the 30 variable investment options will depend on the investment performance of the underlying Portfolios. Listed below are the currently available Portfolios, their investment objectives, and their advisers. - -------------------------------------------------------------------------------- You can choose among 30 variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contract features and benefits 21 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF THE HUDSON RIVER TRUST - ---------------------------------------------------------------------------------------------------------------------- Portfolio Name Objective Adviser - ---------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P. - ---------------------------------------------------------------------------------------------------------------------- Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P. income - ---------------------------------------------------------------------------------------------------------------------- Alliance Conservative Investors High total return without, in the adviser's Alliance Capital Management L.P. opinion, undue risk to principal - ---------------------------------------------------------------------------------------------------------------------- Alliance Equity Index Total return (before deduction of Portfolio Alliance Capital Management L.P. (available only under APO Plus) expenses) that approximates the total return performance of the Standard & Poor's 500 Composite Index - ---------------------------------------------------------------------------------------------------------------------- Alliance Global Long-term growth of capital Alliance Capital Management L.P. - ---------------------------------------------------------------------------------------------------------------------- Alliance Growth & Income High total return through a combination of Alliance Capital Management L.P. current income and capital appreciation - ---------------------------------------------------------------------------------------------------------------------- Alliance Growth Investors High total return consistent with the adviser's Alliance Capital Management L.P. determination of reasonable risk - ---------------------------------------------------------------------------------------------------------------------- Alliance High Yield High return by maximizing current income and, Alliance Capital Management L.P. to the extent consistent with that objective, capital appreciation - ---------------------------------------------------------------------------------------------------------------------- Alliance Intermediate High current income consistent with relative Alliance Capital Management L.P. Government Securities stability of principal - ---------------------------------------------------------------------------------------------------------------------- Alliance International Long-term growth of capital Alliance Capital Management L.P. - ---------------------------------------------------------------------------------------------------------------------- Alliance Money Market High level of current income while preserving Alliance Capital Management L.P. assets and maintaining liquidity - ---------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P. - ----------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - ---------------------------------------------------------------------------------------------------------------------- Portfolio Name Objective Adviser - ---------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P. - ---------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Standard & Poor's 500 Composite Stock Price Index - ----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 22 Contract features and benefits - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------- PORTFOLIOS OF EQ ADVISORS TRUST - -------------------------------------------------------------------------------------------------------------------------------- Portfolio Name Objective Adviser - -------------------------------------------------------------------------------------------------------------------------------- BT International Equity Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Morgan Stanley Capital International Europe, Australia, Far East Index - -------------------------------------------------------------------------------------------------------------------------------- BT Small Company Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Russell 2000 Index - -------------------------------------------------------------------------------------------------------------------------------- Capital Guardian Research Long-term growth of capital and income Capital Guardian Trust Company - -------------------------------------------------------------------------------------------------------------------------------- Capital Guardian U.S. Equity Long-term growth of capital and income Capital Guardian Trust Company - -------------------------------------------------------------------------------------------------------------------------------- EQ/Evergreen Capital appreciation Evergreen Asset Management Corp. - -------------------------------------------------------------------------------------------------------------------------------- EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp. conservation of capital, and capital appreciation - -------------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company Companies - -------------------------------------------------------------------------------------------------------------------------------- MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company growth of capital and income - -------------------------------------------------------------------------------------------------------------------------------- MFS Research Long-term growth of capital and future income Massachusetts Financial Services Company - -------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management, L.P. - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Management Markets Equity - -------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Balanced Balanced investment Putnam Investment Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc. Value objective - -------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P. - -------------------------------------------------------------------------------------------------------------------------------- T. Rowe Price Equity Income Substantial dividend income and also capital T. Rowe Price Associates, Inc. appreciation - -------------------------------------------------------------------------------------------------------------------------------- T. Rowe Price International Long-term growth of capital Rowe Price-Fleming International, Inc. Stock - -------------------------------------------------------------------------------------------------------------------------------- Warburg Pincus Small Company Long-term capital appreciation Warburg Pincus Asset Management, Inc. Value - --------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Other important information about the Portfolios is included in the separate prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the end of this prospectus. FIXED MATURITY OPTIONS We offer fixed maturity options with maturity dates ranging from one to ten years. You can allocate your contributions to one or more of these fixed maturity options. Under the Assured Payment Option and APO Plus, we offer additional fixed maturity options with maturity dates ranging from eleven to fifteen years. We provide distributions during the fixed period under the Assured Payment Option and APO Plus by allocating your contributions to fixed maturity options that mature in consecutive order. These amounts become part of our general account assets. They will accumulate interest at the "rate to maturity" for each fixed maturity option. The total amount you allocate to and accumulate in each fixed maturity option is called the "fixed maturity amount." The fixed maturity options are generally not available in contracts issued in Maryland. In Maryland the fixed maturity options are only available under the Assured Payment Option and APO Plus which are issued as separate contracts rather than as a part of a Rollover IRA or Flexible Premium IRA contract. See Appendix VI for more information on the Assured Payment Option and APO Plus contracts available in Maryland. - ----------------------------------------------------------------------------- Fixed maturity options ranging from one to ten years to maturity. Assured Payment Option and APO Plus offer additional fixed maturity options for years eleven to fifteen. - ----------------------------------------------------------------------------- The rate to maturity you will receive for each fixed maturity option is the rate to maturity in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals or transfers from a fixed maturity option before the maturity date, we will make a "market value adjustment" that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We will discuss the market value adjustment below and in greater detail later in this prospectus under "More information." On the maturity date of a fixed maturity option your fixed maturity amount, assuming you have not made any withdrawals or transfers, will equal your contribution to that fixed maturity option plus interest, at the rate to maturity for that contribution, to the date of the calculation. This is the fixed maturity option's "maturity value." Before maturity, the current value we will report for your fixed maturity amounts will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amounts on the date of the report. We call this your "market adjusted amount." FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity options ending on February 15th for each of the maturity years 2000 through 2009. Not all of these fixed maturity options will be available for annuitant ages 76 and older. See "Allocating your contributions" below. As fixed maturity options expire, we expect to add maturity years so that generally 10 are available at any time. Under the Assured Payment Option and APO Plus, we offer additional fixed maturity options ending on February 15th for each of the maturity years 2010 through 2014. We will not accept allocations to a fixed maturity option if on the date the contribution is to be applied: o the fixed maturity option's maturity date is within the current calendar year; or o the rate to maturity is 3%; or o for annuitants ages 76 or older, the fixed maturity option's maturity date is later than the February 15th immediately following the date annuity payments are to begin. OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the year before each of your fixed maturity options is scheduled to mature. At that time, you - -------------------------------------------------------------------------------- 24 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- may choose to have one of the following options take place on the maturity date, as long as none of the conditions listed above or in "Allocating your contributions," below would apply: (a) transfer the maturity value into another available fixed maturity option, or into any of the variable investment options; or (b) withdraw the maturity value (there may be a withdrawal charge). If we do not receive your choice on or before the fixed maturity option's maturity date, we will automatically transfer your maturity value into the fixed maturity option that will mature next. RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE We can determine the amount required to be allocated to one or more fixed maturity options in order to produce specified maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. The rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows:
- ----------------------------------------------------------------- Fixed maturity options with February 15th Rate to maturity Price maturity date of as of per $100 of maturity year April 1, 1999 maturity value - ----------------------------------------------------------------- 2000 3.25% $ 97.23 2001 4.04% $ 92.83 2002 4.33% $ 88.51 2003 4.46% $ 84.43 2004 4.52% $ 80.60 2005 4.67% $ 76.45 2006 4.77% $ 72.56 2007 4.79% $ 69.16 2008 4.87% $ 65.55 2009 4.97% $ 61.91 - -----------------------------------------------------------------
Available under the Assured Payment Option and APO Plus
- ----------------------------------------------------------------- Fixed maturity options with February 15th Rate to maturity Price maturity date of as of per $100 of maturity year April 1, 1999 maturity value - ----------------------------------------------------------------- 2010 4.90% $ 59.41 2011 4.90% $ 56.63 2012 4.90% $ 53.99 2013 4.90% $ 51.46 2014 4.90% $ 49.05 - -----------------------------------------------------------------
MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers, surrender of your contract or when we make deductions for charges) from a fixed maturity option before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that you originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. Therefore, it is possible that the market value adjustment could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an explanation of how we calculate the market value adjustment and information concerning our general account and investments purchased with amounts allocated to the fixed maturity options, under "More information" - -------------------------------------------------------------------------------- Contract features and benefits 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- later in this prospectus. Appendix III of this prospectus provides an example of how the market value adjustment is calculated. SEPARATE ACCOUNT FOR THE FIXED MATURITY OPTIONS. Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the fixed maturity options. We provide additional information about this separate account later in this prospectus under "More information." OFF MATURITY DATE PAYMENTS. Under Assured Payment Option and APO Plus, you may choose to receive payments monthly, quarterly or annually. If you choose annual payments, generally your payments will be made on February 15th as each fixed maturity option matures. You may instead choose to have your annual payments made in a month other than February. We refer to payments we make on an annual basis in any month other than February and monthly or quarterly payments, as payments made "off maturity dates." If you choose to have your payments made off maturity dates, we will be required to begin making your payments before the maturity date of a fixed maturity option. In planning for these payments we will allocate a portion of your initial contribution or account value to the separate account for the fixed maturity options, but not to the fixed maturity options contained in the separate account. We will credit these amounts with interest at rates that will not be less than 3%. After that, as each fixed maturity option expires we will transfer your maturity value from the expired fixed maturity option and hold the maturity value in the separate account. We will credit interest to these amounts at the same rate as the rate to maturity that was credited in the expired fixed maturity option. These amounts will then be used to provide for payments off maturity dates during the fixed period. - -------------------------------------------------------------------------------- Whether you choose monthly, quarterly, or annual payments, your payments will be made on the 15th day of the month. - -------------------------------------------------------------------------------- We will not make a market value adjustment to the amounts held in the separate account to provide for payments off maturity dates. ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING The account for special dollar cost averaging is part of our general account. We pay interest at guaranteed rates in this account. We will credit interest to the amounts that you have in the account for special dollar cost averaging every day. We set the interest rates periodically, according to procedures that we have. We reserve the right to change these procedures. The account for special dollar cost averaging is available for allocation of your initial contribution only under the special dollar cost averaging program. It is available only for the first year of your contract. We will guarantee to pay our current interest rate that is in effect on the date that your contribution is allocated to this account. Your guaranteed interest rate will be shown in your contract. The rate will never be less than 3%. See "Allocating your contributions," below for the rules and restrictions that apply to the special dollar cost averaging program. - -------------------------------------------------------------------------------- 26 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE CONTRACT FEATURES AND BENEFITS DESCRIBED BELOW DO NOT APPLY WHEN THE ASSURED PAYMENT OPTION OR APO PLUS IS IN EFFECT UNDER A ROLLOVER IRA OR FLEXIBLE PREMIUM IRA CONTRACT. FOR INFORMATION REGARDING YOUR CONTRACT BENEFITS UNDER THE ASSURED PAYMENT OPTION OR APO PLUS, SEE "ACCESSING YOUR MONEY -- ASSURED PAYMENT OPTION AND APO PLUS." ALLOCATING YOUR CONTRIBUTIONS You may choose from among three ways to allocate your contributions under your contract: self-directed, principal assurance or dollar cost averaging. SELF-DIRECTED ALLOCATION You may allocate your contributions to one or more, or all, of the variable investment options and fixed maturity options. Allocations must be in whole percentages and you may change your allocations at any time. However, the total of your allocations must equal 100%. If the annuitant is age 76 or older, you may allocate contributions to fixed maturity options if their maturities are five years or less. Also, you may not allocate amounts to fixed maturity options with maturity dates that are later than the February 15th immediately following the date annuity payments are to begin. PRINCIPAL ASSURANCE ALLOCATION Under this allocation program you select a fixed maturity option. We specify the portion of your initial contribution to be allocated to that fixed maturity option in an amount that will cause the maturity value to equal the amount of your entire initial contribution on the fixed maturity option's maturity date. The maturity date you select generally may not be later than 10 years, or earlier than seven years from your contract date. You allocate the rest of your contribution to the variable investment options however you choose. For example, if your initial contribution is $10,000, and on April 1, 1999 you chose the fixed maturity option with a maturity date of February 15, 2009, since the rate to maturity was 4.97% on April 1, 1999, we would have allocated $6,191.16 to that fixed maturity option and the balance to your choice of variable investment options. On the maturity date your value in the fixed maturity option would be $10,000. The principal assurance allocation is only available for annuitant ages 75 or younger when the contract is issued. If you are purchasing a Rollover IRA, Flexible Premium IRA, QP or Rollover TSA contract, before you select a maturity year that would extend beyond the year in which you will reach age 70 1/2, you should consider whether your value in the variable investment options, or your other traditional IRA or TSA funds are sufficient to meet your required minimum distributions. See "Tax information." DOLLAR COST AVERAGING We offer two dollar cost averaging programs. Each program allows you to gradually allocate amounts to the variable investment options by periodically transferring approximately the same dollar amount to the variable investment options you select. This will cause you to purchase more units if the unit's value is low and fewer units if the unit's value is high. Therefore, you may get a lower average cost per unit over the long term. These plans of investing, however, do not guarantee that you will earn a profit or be protected against losses. - ----------------------------------------------------------------------------- Units measure your value in each variable investment option. - ----------------------------------------------------------------------------- SPECIAL DOLLAR COST AVERAGING PROGRAMS. You may dollar cost average from the account for special dollar cost averaging into any of the variable investment options. You must allocate your entire initial contribution into the account. We will transfer your value in the account for special dollar cost averaging into the variable investment options that you select over the next 12 months. The transfer date will be the same day of the month as the contract date, but not later than the 28th. All amounts will - -------------------------------------------------------------------------------- Contract features and benefits 27 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- be transferred out by the end of the first contract year. You may not allocate additional contributions to the account for special dollar cost averaging. - ----------------------------------------------------------------------------- The account for special dollar cost averaging provides guaranteed interest. - ----------------------------------------------------------------------------- The only amounts that should be transferred from the account for special dollar cost averaging are your regularly scheduled monthly transfers to the variable investment options. If you request to transfer or withdraw any other amounts, we will transfer all of the value that you have remaining in the account for special dollar cost averaging to the investment options according to the allocation percentages we have on file for you. As a result, you will no longer be able to participate in the special dollar cost averaging program. You may also ask us to cancel your participation at any time. If the account for special dollar cost averaging is not available in your state, we offer a special dollar cost averaging program in the Alliance Money Market option. Under this program we will not deduct the mortality and expense risks and administrative charges from assets in the Alliance Money Market option. You may not allocate amounts other than your initial contribution to this program, which is in effect only for your first contract year. We reserve the right to discontinue offering the Alliance Money Market special dollar cost averaging program for new contracts once the account for special dollar cost averaging becomes available in a state. Your Equitable associate can provide information about state availability. You may also contact us directly. GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money Market option is at least $5,000, you may choose, at any time, to have a specified dollar amount or percentage of your value transferred from that option to the other variable investment options. You can select to have transfers made on a monthly, quarterly or annual basis. The transfer date will be the same calendar day of the month as the contract date, but not later than the 28th day of the month. The minimum amount that we will transfer each time is $250. The maximum amount we will transfer is equal to your value in the Alliance Money Market option at the time the program is elected, divided by the number of transfers scheduled. If, on any transfer date, your value in the Alliance Money Market option is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred. The general dollar cost averaging program will then end. You may change the transfer amount once each contract year, or cancel this program at any time. ---------------------------------------- You may not elect dollar cost averaging if you are participating in the rebalancing program. See "Transferring your money among investment options" below. OUR BASEBUILDER OPTION The baseBUILDER option offers you a combined guaranteed minimum income benefit and guaranteed minimum death benefit. The combined benefit is available if the annuitant is between the ages of 20 and 75. There is an additional charge for this benefit. See "baseBUILDER benefits charge" under "Charges and expenses." - -------------------------------------------------------------------------------- baseBUILDER provides income protection if you elect an income payout while the annuitant is alive and a death benefit if the annuitant dies. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit component of baseBUILDER is described below under "Your guaranteed minimum income benefit under baseBUILDER." As part of baseBUILDER you have a choice of two guaranteed minimum death benefit options: either a "5% roll up to age 80" or an "annual ratchet to age 80." Under Rollover IRA, Flexible Premium IRA, and Rollover TSA contracts, we offer an additional option, a "5% roll up to age 70" for ages 20 through 60. The options are described under "Guaranteed minimum death benefit." The 5% roll up to age 80 and annual ratchet to age 80 guaranteed minimum death benefits are provided under the contract even if you do not elect baseBUILDER, and for a broader range of annuitant - -------------------------------------------------------------------------------- 28 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ages at contract issue than those available under baseBUILDER. The 5% roll up to age 70 guaranteed minimum death benefit is only available if baseBUILDER is elected. baseBUILDER is not currently available in New York. YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER The guaranteed minimum income benefit guarantees you a minimum amount of lifetime income under our Income Manager (Life Annuity with a Period Certain) payout annuity contract. The Income Manager (Life Annuity with a Period Certain) payout annuity contract provides payments during a specified period of time (called a period certain) that will continue for the rest of the annuitant's life thereafter. If the annuitant dies before the period certain has ended, payments will continue to the beneficiary for the time remaining in the period certain. - -------------------------------------------------------------------------------- We also refer to the guaranteed minimum income benefit as the "Living Benefit." - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE. On the contract date, your guaranteed minimum income benefit's benefit base ("benefit base") is equal to the initial contribution. Thereafter, the benefit base will be credited with interest each day through the annuitant's age 80 (age 70 if the 5% roll up to age 70 is elected). The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option and Alliance Intermediate Government Securities option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, Alliance Intermediate Government Securities option, fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after age 80 (age 70 if the 5% roll up to age 70 is elected). If you make an additional contribution to your contract, we will increase your current benefit base by the dollar amount of the additional contribution on the date that the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your benefit base for the withdrawal on the date that you make the withdrawal. See "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing Your Money" for more detailed information. The benefit base will be reduced by any withdrawal charge remaining when you exercise your guaranteed minimum income benefit. Under Rollover TSA contracts, we will also reduce your benefit base by the amount of any outstanding loan plus accrued interest on the date that you exercise your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- Your benefit base is not an account value or a cash value and is used solely for purposes of calculating your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE. If you exercise the guaranteed minimum income benefit, the annual lifetime income that you will receive under the Income Manager (Life Annuity with a Period Certain) payout annuity contract, will be the greater of (i) your guaranteed minimum income benefit, and (ii) the income provided by applying your actual account value at our then current annuity purchase factors. The guaranteed minimum income benefit is based on conservative actuarial factors. Therefore, even if your account value is less than your benefit base, you may generate more income by applying your account value to current annuity purchase factors. We will make this comparison for you when the need arises. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit should be regarded as a safety net only. - -------------------------------------------------------------------------------- ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT. The table below illustrates the guaranteed minimum income benefit amounts per $100,000 of initial contribution, for a male annuitant age 60 (at issue) on the contract date anniversaries indicated, assuming no additional contributions, withdrawals, or loans under Rollover TSA contracts, and assuming there were no allocations to the Alliance Money Market option or the fixed maturity options. - -------------------------------------------------------------------------------- Contract features and benefits 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Guaranteed minimum income benefit -- annual income Contract date payable for life with anniversary at exercise 10 year period certain - -------------------------------------------------------------------------------- 7 $ 8,315 10 10,341 15 14,924 - -------------------------------------------------------------------------------- Under NQ, and all IRA contracts, you may exercise the guaranteed minimum income benefit only within 30 days following the seventh or later contract date anniversary under your contract. However, you may not exercise the benefit before the annuitant is age 60, or after the annuitant is age 83. There is an exception if the annuitant is between ages 20 and 44 when your contract is issued. In this case you may exercise the benefit following the 15th or later contract date anniversary, but not after the annuitant is age 83. See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA contracts" below regarding exercising the benefit under QP and Rollover TSA contracts. Your contract will terminate when you exercise your guaranteed minimum income benefit. You will then receive an Income Manager (Life Annuity with a Period Certain) payout annuity contract. Your period certain will be based on the annuitant's age at the time the benefit is exercised, as follows: Level payments* - ---------------------------------------- Period certain years -------------------- Annuitant's age at exercise IRAs NQ - ----------------- ---------- ------- 60 to 75 10 10 76 9 10 77 8 10 78 7 10 79 7 10 80 7 10 81 7 9 82 7 8 83 7 7 - ---------------------------------------- * Other forms and periods certain may also be available. For Rollover IRA and Flexible Premium IRA contracts, please see "Minimum distributions" under "Tax information," as to how this option may be affected if exercised after age 70 1/2. You will begin receiving payments one payment period after the payout annuity contract is issued. For example, if you select monthly annuity payments, we will send your first payment to you approximately one month from the date your contract is issued. Each year on your contract date anniversary, if you are eligible to exercise the guaranteed minimum income benefit, we will send you an eligibility notice illustrating how much income could be provided as of the contract date anniversary. You may then notify us within 30 days following the contract date anniversary if you want to exercise the guaranteed minimum income benefit. You must return your contract to us in order to exercise this benefit. The amount of income you actually receive will be determined when we receive your request to exercise the benefit. You may also apply your cash value at any time to an Income Manager (Life Annuity with a Period Certain) payout annuity contract, and you may always apply your account value to any of our annuity payout options. The traditional annuity payout options are discussed under "Accessing your money." These options differ from the Income Manager payout annuity contracts. They may provide higher or lower income levels, but do not have all the features of the Income Manager payout annuity contract. You may request an illustration of the Income Manager payout annuity contract from your Equitable associate. The Income Manager (Life Annuity with a Period Certain) payout annuity contracts are offered through our prospectus for the Income Manager payout annuities. You may obtain a copy of the most current version from your Equitable associate. You should read it carefully before you decide to exercise your guaranteed minimum income benefit. SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner (discussed under "More information" later in this prospectus) elects to continue the contract after your death, the guaranteed minimum income benefit will continue to be available on the contract date anniversaries specified above based on the contract date. - -------------------------------------------------------------------------------- 30 Contract features and benefits - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- However, the guaranteed minimum income benefit must be exercised based on the age of the successor annuitant/contract owner. EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be exercised in the same manner as described above only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. Similarly, under Rollover TSA contracts the contract owner must convert the Rollover TSA contract in a direct rollover to a Rollover IRA contract according to our rules. The rollover to a Rollover IRA contract may only occur when you are eligible for a rollover distribution from a TSA. This may generally occur when you are age 59 1/2, or you are separated from service from the employer who provided the Rollover TSA funds. See "Rollover or direct transfer contributions" under "Tax information" later in this prospectus. GUARANTEED MINIMUM DEATH BENEFIT Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through 79 at issue of Rollover IRA, Roth Conversion IRA, Roth Flexible Premium IRA, and Rollover TSA contracts; 20 through 70 at issue of Flexible Premium IRA contracts; and 20 through 75 at issue of QP contracts. You may elect either the "5% roll up to age 80" or the "annual ratchet to age 80" guaranteed minimum death benefit when you apply for a contract. Once you have made your election, you may not change it. 5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit equals your initial contribution. Thereafter, the guaranteed minimum death benefit will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option and Alliance Intermediate Government Securities option) and in the special dollar cost averaging programs. Amounts in the Alliance Money Market option, Alliance Intermediate Government Securities option, fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after the annuitant is age 80. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the additional contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit for the withdrawal on the date you take the withdrawal. The 5% roll up to age 80 guaranteed minimum death benefit is not available in New York. ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Then, on each contract date anniversary, we will determine your guaranteed minimum death benefit by comparing your current guaranteed minimum death benefit to your account value on that contract date anniversary. If your account value is higher than your guaranteed minimum death benefit, we will increase your guaranteed minimum death benefit to equal your account value. On the other hand, if your account value on the contract date anniversary is less than your guaranteed minimum death benefit, we will not adjust your guaranteed minimum death benefit either up or down. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit on the date you take the withdrawal. - -------------------------------------------------------------------------------- Contract features and benefits 31 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Optional guaranteed minimum death benefit available for ages 20 through 60 at issue of Rollover IRA, Flexible Premium IRA, and TSA contracts if baseBUILDER is also elected. 5% ROLL UP TO AGE 70. Your guaranteed minimum death benefit will be calculated as described above under "5% roll up to age 80" except that interest will be credited only through age 70. Additional contributions or withdrawals will also be adjusted as described above under "5% roll up to age 80." Applicable for annuitant ages 80 through 83 when the contract is issued. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Thereafter, it will be increased by the dollar amount of any additional contributions. We will adjust your guaranteed minimum death benefit if you take any withdrawals. ---------------------------------------- Please see "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for information on how withdrawals affect your guaranteed minimum death benefit. For contracts issued in New York, the guaranteed minimum death benefit at the annuitant's death will never be less than your value in the variable investment options, plus the sum of the fixed maturity amounts in each fixed maturity option. See Appendix IV for an example of how we calculate the guaranteed minimum death benefit. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract and will reflect (i) any investment gain or loss in the variable investment options, (ii) any positive or negative market value adjustments in the fixed maturity options, and (iii) any guaranteed interest in the account for special dollar cost averaging, through the date we receive your contract. However, some states require that we refund the full amount of your contribution (not reflecting (i), (ii) or (iii) above). For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. We may require that you wait six months before you may apply for a contract with us again if: o you cancel your contract during the free look period; or o you change your mind before you receive your contract whether we have received your contribution or not. Please see "Tax information" for possible consequences of cancelling your contract. If you fully convert an existing traditional IRA contract to a Roth Conversion IRA or Roth Flexible Premium IRA contract, you may cancel your Roth Conversion IRA contract and return to a Rollover IRA or Flexible Premium IRA contract, whichever applies. Our Processing Office, or your Equitable associate, can provide you with the cancellation instructions. - -------------------------------------------------------------------------------- 32 Determining your contract's value - -------------------------------------------------------------------------------- 2 Determining your contract's value - -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE Your "account value" is the total of the values you have allocated to the (i) variable investment options, (ii) fixed maturity options, and (iii) account for special dollar cost averaging. These amounts are subject to certain fees and charges discussed under "Charges and expenses." Under Rollover TSA contracts, if you have any outstanding loan your account value will include any amount in the loan reserve account. Your contract also has a "cash value." At any time before annuity payments begin, your contract's cash value is equal to the account value, less the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, and less any withdrawal charge that may apply if you surrender your contract. If you have a Rollover TSA contract with an outstanding loan, your cash value also is reduced by the amount of any outstanding loan plus accrued interest. Please see "Surrendering your contract to receive its cash value" below. YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS Each variable investment option invests in shares of a corresponding Portfolio. Your value in each variable investment option is measured by "units." The value of your units will increase or decrease as though you had invested it in the corresponding Portfolio's shares directly. Your value, however, will be reduced by the amount of the fees and charges that we deduct under the contract. Your value will also be reduced by the dollar amount of any withdrawals that you make. The unit value for each variable investment option depends on the investment performance of that option, minus daily charges for mortality and expense risks and administrative expenses. On any day, your value in any variable investment option equals the number of units credited to your contract under that option, multiplied by that day's value for one unit. The number of your contract units in any variable investment option does not change unless you make additional contributions, make a withdrawal, or transfer amounts among investment options, or we transfer your loan amount to the loan reserve account under a TSA contract. In addition, when we deduct the baseBUILDER benefits charge and any withdrawal charge the number of units credited to your contract will be reduced. Your units are also reduced under Flexible Premium IRA and Roth Flexible Premium IRA contracts when we deduct the annual administrative charge. A description of how unit values are calculated is found in the SAI. YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS Your value in each fixed maturity option at any time before the maturity date is the market adjusted amount in each option. This is equivalent to your fixed maturity amount increased or decreased by the market value adjustment. Your value, therefore, may be higher or lower than your contributions (less withdrawals) accumulated at the rate to maturity. At the maturity date, your value in the fixed maturity option will equal its maturity value. Your value will also include any amounts held in the separate account to provide for payments off maturity dates under the Assured Payment Option and APO Plus. YOUR CONTRACT'S VALUE IN THE ACCOUNT FOR SPECIAL DOLLAR COST AVERAGING Your value in the account for special dollar cost averaging at any time will equal your initial contribution allocated to that option, plus interest, less the sum of all amounts that have been transferred to the variable investment options you have selected. - -------------------------------------------------------------------------------- Transferring your money among investment options 33 - -------------------------------------------------------------------------------- 3 Transferring your money among investment options - -------------------------------------------------------------------------------- TRANSFERRING YOUR ACCOUNT VALUE At any time before the date annuity payments are to begin, you can transfer some or all of your account value among the investment options, subject to the following: o You may not transfer any amount to the account for special dollar cost averaging. o You may not transfer to a fixed maturity option that matures in the current calendar year, or if its rate to maturity is 3%. o If the annuitant is 76 or older, you must limit your transfers to fixed maturity options to those with maturities of five years or less. Also, the maturity dates may be no later than the February 15th immediately following the date annuity payments are to begin. o If you make transfers out of a fixed maturity option other than at its maturity date the transfer may cause a market value adjustment. o A transfer request while the Assured Payment Option or APO Plus is in effect will terminate the option. You may request a transfer in writing or by telephone using TOPS. You must send in all written transfer requests directly to our Processing Office. Transfer requests should specify: (1) the contract number, (2) the dollar amounts or percentages of your current account value to be transferred, and (3) the investment options to and from which you are transferring. We may, at any time, restrict the use of market timers and other agents acting under a power of attorney who are acting on behalf of more than one contract owner. Any agreements to use market timing services to make transfers are subject to our rules in effect at that time. We will confirm all transfers in writing. REBALANCING YOUR ACCOUNT VALUE We currently offer a rebalancing program that you can use to automatically reallocate your account value among the variable investment options. You must tell us: (a) the percentage you want invested in each variable investment option (whole percentages only), and (b) how often you want the rebalancing to occur (quarterly, semiannually, or annually on a contract year basis. However, it will occur on the same day of the month as the contract date). While your rebalancing program is in effect, we will transfer amounts among each variable investment option so that the percentage of your account value that you specify is invested in each option at the end of each rebalancing date. - -------------------------------------------------------------------------------- Rebalancing does not assure a profit or protect against loss. You should periodically review your allocation percentages as your needs change. You may want to discuss the rebalancing program with your Equitable associate or other financial adviser before electing the program. - -------------------------------------------------------------------------------- You may elect the rebalancing program at any time. You may also change your allocation instructions or cancel the program at any time. If you request a transfer while the rebalancing program is in effect, we will process the transfer as requested and then cancel the rebalancing program. You may not elect the rebalancing program if you are participating in a dollar cost averaging program or if the Assured Payment Option or APO Plus are in effect. Rebalancing is not available for amounts you have allocated in the fixed maturity options. - -------------------------------------------------------------------------------- 34 Accessing your money - -------------------------------------------------------------------------------- 4 Accessing your money - -------------------------------------------------------------------------------- ASSURED PAYMENT OPTION AND APO PLUS (Rollover IRA and Flexible Premium IRA contracts only) We offer two options, the Assured Payment Option and APO Plus, under which you may receive distributions from your Rollover IRA or Flexible Premium IRA contract. If you choose one of these two distribution options you will receive guaranteed payments for a specified period of time we call the "fixed period." When the fixed period ends you will continue to receive payments for as long as you are living. Payments based solely on your life are made on a "single life" basis. You may also elect to receive "joint and survivor" payments that are based on the joint lifetimes of you and a joint annuitant. You can elect the Assured Payment Option or APO Plus in the application or at a later date, provided that your account value is at least $10,000 at the time of election. Assured Payment Option and APO Plus benefits will differ for contracts issued in Maryland. See Appendix VI at the end of this prospectus for more information. ASSURED PAYMENT OPTION HOW WE ALLOCATE YOUR CONTRIBUTIONS. In order to provide for the payments you receive during the fixed period, we allocate a portion of your initial contribution or account value to fixed maturity options that mature in consecutive date order. The remaining portion is allocated to the "life contingent annuity" to provide for the payments you will receive after the fixed period. The payments are intended to pay out your entire account value by the end of the fixed period. If you are age 70 1/2 or older, the payments are also designed to satisfy minimum distribution requirements. See "Tax Information." - -------------------------------------------------------------------------------- The life contingent annuity provides for the payments after the fixed period ends. - -------------------------------------------------------------------------------- We determine the allocation of your contributions based on a number of factors. They are: o the amount of your contribution; o the form of payments; o your age and sex (and the age and sex of the joint annuitant, if joint and survivor payments are elected); o the frequency of the payments; and o the fixed period. We then allocate your initial contribution among: (1) the fixed maturity options; (2) the separate account that holds amounts allocated to the fixed maturity options if we need to make payments to you off maturity dates; and (3) the life contingent annuity. We will allocate your additional contributions in the same manner. Additional contributions will increase the level of your future payments. You may not change this allocation. While the Assured Payment Option is in effect, no amounts may be allocated to the variable investment options and the account for special dollar cost averaging. If you are using funds from multiple sources to purchase the Rollover IRA or Flexible Premium IRA contract with the Assured Payment Option in effect, we will allocate your contributions to the Alliance Money Market option until we receive all amounts under the contract. Once all amounts are received we will then apply them under the Assured Payment Option. PAYMENTS. The payments you receive will increase by 10% every three years during the fixed period on each third anniversary of the payment start date. After the end of the fixed period, your first payment under the life contingent annuity will be 10% greater than the final payment made under the fixed period. Whether you choose monthly, quarterly or annual payments, you will usually begin receiving payments one payment period from the contract date, unless you elect otherwise, as described under "Off maturity date payments" earlier in this prospectus. Your payments will always be made on the 15th day of the month. However, if you are age 53 1/2 or older, you must defer the date your payments will start until you - -------------------------------------------------------------------------------- Accessing your money 35 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- are age 59 1/2. If you are at least age 59 1/2 at the time the Assured Payment Option is elected you may choose to defer the date your payments will start. Generally, you may defer payments for a period of up to 72 months. This is called the deferral period. Deferral of the payment start date permits you to lock in rates at a time when you may consider current rates to be high, while permitting you to delay receiving payments if you have no immediate need to receive income under your contract. - -------------------------------------------------------------------------------- The deferral period together with the fixed period may be referred to as a "liquidity period." You will be able to make withdrawals before the end of the fixed period. You may also choose to surrender your contract for its cash value while keeping the life contingent annuity in effect. - -------------------------------------------------------------------------------- Before you decide to defer payments, you should consider the fact that the amount of income you purchase is based on the rates to maturity in effect on the date we allocate your contribution. Therefore, if rates rise during the deferral period, your payments may be less than they would have been if you had elected the Assured Payment Option at a later date. Deferral of the payment start date is not available if you are older than age 80. If your deferred payment start date is after you reach age 70 1/2, you should consider the effect that deferral may have on your required minimum distributions. See Appendix V for an example of how payments are made under the Assured Payment Option. If you are age 70 1/2 or older, your payments during the fixed period are designed to meet required minimum distributions under your contract. We determine the amount of the payments based on the value in each fixed maturity option and the assigned value of the life contingent annuity for tax purposes. If at any time your payment under the Assured Payment Option would be less than the minimum amount required to be distributed under minimum distribution rules, we will notify you of the difference. You may then choose to have an additional amount withdrawn under your contract. We will treat such withdrawal as a lump sum withdrawal. However, no withdrawal charge will apply. We will then adjust your future scheduled payments so that the minimum distribution rules are met. You also have the option to take the amount from other traditional IRA funds you may have. FIXED PERIOD. The fixed period based on your age at the time the contract is issued (or your age at the time the Assured Payment Option is elected) will be as follows: - -------------------------------------------------------------------------------- Age* Fixed period - -------------------------------------------------------------------------------- 59 1/2 through 70 15 years 71 through 75 12 years 76 through 80 9 years 81 through 83 6 years - -------------------------------------------------------------------------------- If you defer the date payments will start, your fixed period will be as follows: - -------------------------------------------------------------------------------- Fixed period based on deferral period --------------------------------- 1-36 37-60 61-72 Age* months months months - -------------------------------------------------------------------------------- 53 1/2 through 70 12 years 9 years 9 years 71 through 75 9 years 9 years N/A 76 through 80 6 years 6 years N/A 81 through 83 N/A N/A N/A - -------------------------------------------------------------------------------- * For joint and survivor payments, the fixed period is based on the age of the younger annuitant. PURCHASE RESTRICTIONS FOR JOINT AND SURVIVOR PAYMENTS If you elect payments on a joint and survivor basis; o the joint annuitant must be your spouse; and o neither you nor the joint annuitant can be over age 83. PAYMENTS AFTER THE FIXED PERIOD. After the end of the fixed period, we will continue your payments under the life contingent annuity if either you or the joint annuitant is living. Payments continue throughout your lifetime (or the lifetime of the joint annuitant, if joint and survivor payments are elected) on the same payment schedule (either monthly, quarterly or annually) as the payments you received during the fixed period. - -------------------------------------------------------------------------------- 36 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The portion of your contribution allocated to the life contingent annuity does not have a cash value or an account value and, therefore, does not provide for withdrawals. - -------------------------------------------------------------------------------- There is no death benefit provided under the life contingent annuity and payments are made to you only if you (or the joint annuitant) are living when the payments are scheduled to begin. These payments are only made during your lifetime and, if applicable, the lifetime of the joint annuitant. Therefore, you should consider the possibility that no payments will be made under the life contingent annuity if you (or the joint annuitant) do not survive to the date payments are to begin. Under the life contingent annuity you may elect single life or joint and survivor payments. Joint and survivor payments are available on a 100%, one-half or two-thirds to survivor basis. Your first payment under the life contingent annuity will be 10% greater than the final payment under the fixed period. After the fixed period we will increase your payments annually on each anniversary of the payment start date under the life contingent annuity. We will base this increase on the annual increase in the Consumer Price Index, but it will never be greater than 3% per year. ALLOCATION OF WITHDRAWALS. Only lump sum withdrawals are permitted under the Assured Payment Option. We will subtract your withdrawal from all remaining fixed maturity options to which your account value is allocated as well as from amounts held in the separate account to provide for payments off maturity dates. As a result we will reduce the amount of your payments and the length of your fixed period. We will also begin making payments to you under the life contingent annuity at an earlier date. In order to achieve this result we will withdraw additional amounts over the amount of the withdrawal you requested. These amounts will be taken from the fixed maturity options and from amounts held in the separate account to provide for payments off maturity dates. The amounts are then allocated to the life contingent annuity. The exact additional amount we withdraw will depend on how much is necessary to assure that the same pattern of payments will continue in reduced amounts for your life and the life of the joint annuitant. The first increase in your payments will take place no later than the date of the next planned increase. Withdrawals are subject to a withdrawal charge and will have a 10% free withdrawal amount available. No withdrawal charges will apply to the payments made during the fixed period or a withdrawal made to meet the minimum distribution requirement under the contract. DEATH BENEFIT. If a death benefit becomes payable during the fixed period we will pay the death benefit amount to the designated beneficiary. The death benefit amount is the greater of: (1) your account value; and (2) the sum of the fixed maturity amounts in each fixed maturity option plus any amounts held in the separate account to provide for payments off maturity dates. We will not make any payments under the life contingent annuity after your death unless you have elected payments on a joint and survivor basis. If you elect joint and one-half or joint and two-thirds to survivor payments, at your death or the joint annuitant's death, we will reduce the payments by one-half or one-third, whichever applies. - -------------------------------------------------------------------------------- A death benefit is never payable under the life contingent annuity. The death benefit applies only during the fixed period. - -------------------------------------------------------------------------------- TERMINATION. The Assured Payment Option will be terminated if you: (1) cancel the option at any time by sending a written request satisfactory to us; or (2) submit an additional contribution and you do not want it allocated under the Assured Payment Option; or (3) request a transfer of your account value; or (4) request a change in the date the payments are to start under the life contingent annuity. - -------------------------------------------------------------------------------- Accessing your money 37 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Once the Assured Payment Option has ended, the life contingent annuity will remain in effect and payments will be made if you or the joint annuitant, are living on the date payments are to start. No additional amounts will be allocated under the life contingent annuity. You may elect to restart the Assured Payment Option by submitting a written request satisfactory to us, but no sooner than three years after the option was terminated. If you own an Equitable Accumulator Rollover IRA or Flexible Premium IRA contract and you elected the Assured Payment Option at age 70 1/2 or older and subsequently terminate this option, required minimum distributions must continue to be made under your contract. Before terminating the Assured Payment Option, you should consider the implications this may have under the minimum distribution requirements. See "Tax Information." ANNUITY PAYOUT OPTIONS AND SURRENDERING THE CONTRACT. Once your contract is surrendered or an annuity payout option is chosen, we will return the contract to you with a notation that the life contingent annuity is still in effect. You may not surrender the life contingent annuity. APO PLUS APO Plus is a variation of the Assured Payment Option. Except as indicated below, APO Plus operates under the same guidelines as the Assured Payment Option. Under APO Plus you will be able to keep a portion of your value in the Alliance Common Stock option or the Alliance Equity Index option, whichever one you choose. Once you have selected a variable investment option it may not be changed. You may not elect APO Plus if the Assured Payment Option is already in effect. APO Plus allows you to remain invested in the variable investment option for longer than would be possible if you had applied your entire account value all at once to the Assured Payment Option or to an annuity payout option. HOW WE ALLOCATE YOUR CONTRIBUTIONS. We allocate a portion of your initial contribution or account value to the Assured Payment Option. Under the Assured Payment Option amounts are allocated to the fixed maturity options, the separate account for payments off maturity dates, and the life contingent annuity to provide you with a minimum level amount of lifetime payments. Your remaining account value is allocated to the variable investment option you select. Periodically during the fixed period we transfer a portion of your value in the variable investment option to the fixed maturity options to increase your guaranteed level payments under the Assured Payment Option. The amount allocated under the Assured Payment Option will provide for level payments. The amount of the level payments are equal to the amount of the initial payment that would have been provided if you had allocated your entire initial contribution or account value under the Assured Payment Option. The difference between the amount required for level payments and the amount required for increasing payments provided under the Assured Payment Option, is allocated to the variable investment option you selected. If you have any value in the fixed maturity options at the time this option is elected, a market value adjustment may apply as a result of such amounts being transferred to activate the Assured Payment Option. FIXED PERIOD. The fixed period and deferral period schedule shown for the Assured Payment Option will also apply under APO Plus. On the third February 15th following the date your first payment is made during the fixed period, a portion of your value in the variable investment option is transferred to the Assured Payment Option in order to increase your level payments. If you elect a deferral period of three years or more, a portion of your value in the variable investment option will be allocated to the Assured Payment Option on the February 15th before the date your first payment is made. If your payments are to be made on February 15th, the date of the first payment will be counted as the first February 15th for the purpose of this transfer to the Assured Payment Option. The transfer of amounts to the Assured Payment Option is repeated each third year during the fixed period. The first increase in payments will be reflected in the payment made to you after three full years of payments and then every three years after that. Immediately following your last payment - -------------------------------------------------------------------------------- 38 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- during the fixed period, your remaining value in the variable investment option is first allocated to the life contingent annuity to change the level payments previously purchased to increasing payments. If you have any value remaining after the increasing payments are purchased, this amount is allocated to the life contingent annuity to further increase your lifetime payments. If your value in the variable investment option is insufficient to purchase the increasing payments, then the level payments previously purchased will be increased as much as possible. While APO Plus provides you with a minimum amount of level guaranteed lifetime payments under the Assured Payment Option, the total amount of income that you will receive over time will depend on the investment performance of the variable investment option which you selected. It will also depend on the current rates to maturity and the cost of the life contingent annuity, which also varies. As a result, the combined amount of guaranteed lifetime income you receive under APO Plus may be more or less than the amount that could have been purchased if your entire initial contribution or account value had been allocated to the Assured Payment Option. See Appendix V for an example of the payments purchased under APO Plus. ALLOCATION OF ADDITIONAL CONTRIBUTIONS. Any additional contributions you make may only be allocated to the variable investment option. We do not permit additional contributions after the end of the fixed period. WITHDRAWALS. If you take a lump sum withdrawal or if a lump sum withdrawal is made to satisfy minimum distribution requirements such withdrawal will be taken from your value in the variable investment option unless you specify otherwise. If there is insufficient value in the variable investment option any additional amount will be taken from the fixed maturity options and from amounts held in the separate account to provide for payments off maturity dates, in the same manner as described above for the Assured Payment Option. DEATH BENEFIT. If a death benefit becomes payable during the fixed period we will pay the death benefit amount to the designated beneficiary. The death benefit amount is equal to the greater of: (1) your value in the fixed maturity options; and (2) the sum of the fixed maturity amounts in each fixed maturity option plus any amounts held in the separate account to provide for payments off maturity dates. When the greater of (1) and (2) above is determined, the value in the variable investment option is added. A death benefit is never payable under the life contingent annuity. TERMINATION OF APO PLUS. You may terminate APO Plus at any time by submitting a written request satisfactory to us. You may choose one of the following two options if you terminate APO Plus: (1) your contract will operate under the Equitable Accumulator Rollover IRA or Flexible Premium IRA rules; or (2) you may elect the Assured Payment Option. If you elect the Assured Payment Option, your remaining value in the variable investment option will be allocated to the fixed maturity options, the separate account to provide for payments off maturity dates, and the life contingent annuity. A market value adjustment may apply for any amounts allocated from a fixed maturity option. At least 45 days prior to the end of each three-year period, we will send you a quote indicating how much future income could be provided under the Assured Payment Option. The quote would be based on your current account value, current rates to maturity for the fixed maturity options, and current purchase rates under the life contingent annuity as of the date of the quote. The actual amount of future income you would receive depends on the rates in effect on the day you switch to the Assured Payment Option. WITHDRAWING YOUR ACCOUNT VALUE You have several ways to withdraw your account value before annuity payments begin. The table below shows the - -------------------------------------------------------------------------------- Accessing your money 39 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- methods available under each type of contract. More information follows the table. For the tax consequences of withdrawals, see "Tax information."
- -------------------------------------------------------------------------------------- Method of withdrawal - -------------------------------------------------------------------------------------- Substantially Minimum Contract Lump sum Systematic equal distribution - -------------------------------------------------------------------------------------- NQ Yes Yes No No - -------------------------------------------------------------------------------------- Rollover IRA* Yes Yes Yes Yes - -------------------------------------------------------------------------------------- Flexible Premium IRA* Yes Yes Yes Yes - -------------------------------------------------------------------------------------- Roth Conversion IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------------- Roth Flexible Premium IRA Yes Yes Yes No - -------------------------------------------------------------------------------------- QP Yes No No Yes - -------------------------------------------------------------------------------------- Rollover TSA Yes** No No Yes - --------------------------------------------------------------------------------------
* If Assured Payment Option or APO Plus is elected, only lump sum withdrawals are available. ** For some Rollover TSA contracts, your ability to take withdrawals, loans or surrender your contract may be limited. You must provide withdrawal restriction information when you apply for a contract. See "Tax information - Tax Sheltered Annuity contracts (TSAs)" below. LUMP SUM WITHDRAWALS (All contracts) You may take lump sum withdrawals from your account value at any time. (Rollover TSA contracts may have restrictions.) The minimum amount you may withdraw is $1,000. If you request to withdraw more than 90% of a contract's current cash value we will treat it as a request to surrender the contract for its cash value. See "Surrendering your contract to receive its cash value" below. Lump sum withdrawals in excess of the 15% (10% under Assured Payment Option or APO Plus) free withdrawal amount may be subject to a withdrawal charge. Under Rollover TSA contracts, if a loan is outstanding, you may only take lump sum withdrawals as long as the cash value remaining after any withdrawal equals at least 10% of the outstanding loan plus accrued interest. SYSTEMATIC WITHDRAWALS (NQ and all IRA contracts) You may take systematic withdrawals of a particular dollar amount or a particular percentage of your account value. You may take systematic withdrawals on a monthly, quarterly or annual basis as long as the withdrawals do not exceed the following percentages of your account value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you may take in each systematic withdrawal is $250. If the amount withdrawn would be less than $250 on the date a withdrawal is to be taken, we will not make a payment and we will terminate your systematic withdrawal election. We will make the withdrawals on any day of the month that you select as long as it is not later than the 28th day of the month. If you do not select a date, we will make the withdrawals on the same calendar day of the month as the contract date. You must wait at least 28 days after your contract is issued before your systematic withdrawals can begin. You may elect to take systematic withdrawals at any time. If you own an IRA contract, you may elect this withdrawal method only if you are between ages 59 1/2 and 70 1/2. You may not elect the systematic withdrawal method if you have balances in the account for special dollar cost averaging. You may change the payment frequency, or the amount or percentage of your systematic withdrawals, once each contract year. However, you may not change the amount or percentage in any contract year in which you have already taken a lump sum withdrawal. You can cancel the systematic withdrawal option at any time. Systematic withdrawals are not subject to a withdrawal charge, except to the extent that, when added to a lump sum withdrawal previously taken in the same contract year, the systematic withdrawal exceeds the 15% free withdrawal amount. - -------------------------------------------------------------------------------- 40 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBSTANTIALLY EQUAL WITHDRAWALS (All IRA contracts) The substantially equal withdrawals option allows you to receive distributions from your account value without triggering the 10% additional federal tax penalty, which normally applies to distributions made before age 59 1/2. See "Tax information." Once you begin to take substantially equal withdrawals, you should not stop them or change the pattern of your withdrawals until the later of age 59 1/2 or five full years after the first withdrawal. If you stop or change the withdrawals or take a lump sum withdrawal, you may be liable for the 10% federal tax penalty that would have otherwise been due on prior withdrawals made under this option and for any interest on those withdrawals. You may elect to take substantially equal withdrawals at any time before age 59 1/2. We will make the withdrawal on any day of the month that you select as long as it is not later than the 28th day of the month. You may not elect to receive the first payment in the same contract year in which you took a lump sum withdrawal. We will calculate the amount of your substantially equal withdrawals based on the method you choose from the choices we offer. The payments will be made monthly, quarterly or annually as you select. These payments will continue until we receive written notice from you to cancel this option or you take a lump sum withdrawal. You may elect to start receiving substantially equal withdrawals again, but the payments may not restart in the same contract year in which you took a lump sum withdrawal. We will calculate the new withdrawal amount. You may not elect substantially equal withdrawals if you have balances in the account for special dollar cost averaging. Substantially equal withdrawals are not subject to a withdrawal charge. MINIMUM DISTRIBUTION WITHDRAWALS (Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts only - See "Tax information") We offer the minimum distribution withdrawal option to help you meet required minimum distributions under federal income tax rules. You may elect this option in the year in which you reach age 70 1/2. The minimum amount we will pay out is $250. You may elect the method you want us to use to calculate your minimum distribution withdrawals from the choices we offer. Currently, minimum distribution withdrawal payments will be made annually. We do not impose a withdrawal charge on minimum distribution withdrawals except if when added to a lump sum withdrawal previously taken in the same contract year, the minimum distribution withdrawal exceeds the 15% free withdrawal amount. We will calculate your annual payment based on your account value at the end of the prior calendar year based on the method you choose. Under Rollover TSA contracts, you may not elect minimum distribution withdrawals if a loan is outstanding. - -------------------------------------------------------------------------------- For Rollover IRA, Flexible Premium IRA, QP, and Rollover TSA contracts, we will send a form outlining the distribution options available before you reach age 70 1/2 (if you have not begun your annuity payments before that time). - -------------------------------------------------------------------------------- HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE Unless you specify otherwise, we will subtract your withdrawals on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the withdrawal required or the total amount of the withdrawal will be withdrawn from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar basis or on a pro rata basis as explained below: - -------------------------------------------------------------------------------- Accessing your money 41 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INCOME BENEFIT Benefit base - Your current benefit base will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current benefit base on a pro rata basis. DEATH BENEFIT 5% roll up to age 80 or age 70 - If you elect the 5% roll up to age 80 or 5% roll up to age 70 guaranteed minimum death benefit, your current guaranteed minimum death benefit will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current guaranteed minimum death benefit on a pro rata basis. Annual ratchet to age 80 - If you elect the annual ratchet to age 80 guaranteed minimum death benefit, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. Annuitant issue ages 80 through 83 - If your contract was issued when the annuitant was between ages 80 and 83, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. ---------------------------------------- Reduction on a dollar-for-dollar basis means that your current benefit will be reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis means that we calculate the percentage of your current account value that is being withdrawn and we reduce your current benefit by that same percentage. For example, if your account value is $30,000 and you withdraw $12,000, you have withdrawn 40% of your account value. If your guaranteed minimum death benefit was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x.40) and your new guaranteed minimum death benefit after the withdrawal would be $24,000 ($40,000 - $16,000). The timing of your withdrawals and whether they exceed the 5% threshold described above can have a significant impact on your guaranteed minimum income benefit or guaranteed minimum death benefit. LOANS UNDER ROLLOVER TSA CONTRACTS You may take loans from a Rollover TSA unless restricted by the employer who provided the Rollover TSA funds. If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the funds told us when you purchased your contract. The employer must also tell us whether special employer plan rules of the Employee Retirement Income Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan while you are taking minimum distribution withdrawals. You should read the terms and conditions on our loan request form carefully before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may only take a loan with the written consent of your spouse. Your contract contains further details of the loan provision. Also, see "Tax information" for general rules applicable to loans. - -------------------------------------------------------------------------------- 42 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We will permit you to have only one loan outstanding at a time. The minimum loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account value, subject to any limits under the federal income tax rules. The term of a loan is five years. However, if you use the loan to acquire your primary residence, the term is 10 years. The term may not extend beyond the earliest of: (1) the date annuity payments begin, (2) the date the contract terminates, and (3) the date a death benefit is paid (the outstanding loan will be deducted from the death benefit amount). Interest will accrue daily on your outstanding loan at a rate we set. The loan interest rate will be equal to the Moody's Corporate Bond Yield Averages for the calendar month ending two months before the day of the calendar quarter in which the rate is determined. LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the amount of your loan to the loan reserve account. Unless you specify otherwise, we will subtract your loan on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the loan will be subtracted from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. We will credit interest to the amount in the loan reserve account at a rate of 2% lower than the loan interest rate that applies for the time your loan is outstanding. On each contract date anniversary after the date the loan is processed, we will transfer the amount of interest earned in the loan reserve account to the variable investment options on a pro rata basis. When you make a loan repayment, unless you specify otherwise, we will transfer the dollar amount of the loan repaid from the loan reserve account to the investment options according to the allocation percentages we have on our records. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time while the annuitant is living and before you begin to receive annuity payments. (Rollover TSA contracts may have restrictions.) For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under the contract will terminate as of that date. You may receive your cash value in a single sum payment or apply it to one or more of the annuity payout options. See "Choosing your annuity payout options" below. We will usually pay the cash value within seven calendar days, but we may delay payment as described in "When to expect payments," below. For the tax consequences of surrenders, see "Tax information." WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments out of the variable investment options within seven calendar days after the date of the transaction to which the request relates. These transactions may include applying proceeds to a variable annuity, payment of a death benefit, payment of any amount you withdraw (less any withdrawal charge) and, upon surrender, payment of the cash value. We may postpone such payments or applying proceeds for any period during which: (1) the New York Stock Exchange is closed or restricts trading, (2) sales of securities or determination of the fair value of a variable investment option's assets is not reasonably practicable because of an emergency, or (3) the SEC, by order, permits us to defer payment to protect people remaining in the variable investment options. We can defer payment of any portion of your value in the fixed maturity options and the account for special dollar cost - -------------------------------------------------------------------------------- Accessing your money 43 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- averaging (other than for death benefits) for up to six months while you are living. We also may defer payments for a reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. All payments are made by check and are mailed to you (or the payee named in a tax-free exchange) by U.S. mail, unless you request that we use an express delivery service at your expense. CHOOSING YOUR ANNUITY PAYOUT OPTIONS The Equitable Accumulator offers you several choices for receiving retirement income. Each choice enables you to receive fixed or, in some cases, variable annuity payments. You can choose from among the six different annuity payout options listed below. Restrictions apply, depending on the type of contract you own. - ---------------------------------------------------------------------- Annuity payout options Life annuity Life annuity - period certain Life annuity - refund certain Period certain annuity - ---------------------------------------------------------------------- Income Manager payout Life annuity with a period options certain Period certain annuity - ---------------------------------------------------------------------- ANNUITY PAYOUT OPTIONS You can choose from among the following annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the ------------- annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because there is no continuation of benefits following the annuitant's death with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. o Life annuity - period certain: An annuity that guarantees payments for the ------------------------------ rest of the annuitant's life. If the annuitant dies before the end of a selected period of time ("period certain"), payments continue to the beneficiary for the balance of the period certain. A life annuity with a period certain of 10 years is the normal form of annuity under the contracts. The period certain cannot extend beyond the annuitant's life expectancy. o Life annuity - refund certain: An annuity that guarantees payments for the ------------------------------ rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments to the beneficiary will continue until that amount has been recovered. This payout option is available only as a fixed annuity. o Period certain annuity: An annuity that guarantees payments for a specific ----------------------- period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. Currently, this payout option is available only as a fixed annuity. All of the above payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for you. The life annuity, life annuity - period certain, and life annuity - refund certain payout options are available on a single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, payments continue to the survivor. The following annuity payout options are available as variable annuities: o Life annuity (except in New York). o Life annuity - period certain. o Joint and survivor life annuity (100% to survivor). - -------------------------------------------------------------------------------- 44 Accessing your money - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o Joint and survivor life period certain annuity (100% to survivor). Variable annuities may be funded through your choice of variable investment options investing in Portfolios of The Hudson River Trust. The amount of each variable annuity payment will fluctuate, depending upon the performance of the variable investment options, and whether the actual rate of investment return is higher or lower than an assumed base rate. Please see "Annuity Unit Values" in the SAI. We may offer other payout options not outlined here. Your Equitable associate can provide details. SELECTING AN ANNUITY PAYOUT OPTION When you select a payout option, we will issue you a separate written agreement confirming your right to receive annuity payments. We require you to return your contract before annuity payments begin. For NQ and IRA contracts, unless you choose a different payout option, we will pay annuity payments under a life annuity with a certain period of 10 years. The only payout options available under QP contracts and Rollover TSA contracts are the life annuity 10 year period certain and the joint and survivor life annuity 10 year period certain. You can choose the date annuity payments begin but it may not be earlier than one year from the contract date. You can change the date your annuity payments are to begin anytime before that date as long as you do not choose a date later than the 28th day of any month. Also, that date may not be later than the contract date anniversary that follows the annuitant's 90th birthday. This may be different in some states. Before your annuity payments are to begin, we will notify you by letter that the annuity payout options are available. Once you have selected a payout option and payments have begun, no change can be made other than transfers (if permitted in the future) among the variable investment options if a variable annuity is selected. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and whether it is fixed or variable, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). The amount we apply to provide annuity payments will depend on the type of payout option you select. If you select a payout option that provides for payments for the rest of the annuitant's life, then we will apply your account value. If you select a payout option that provides for payments for a period certain, then we will apply your cash value. However, if the period certain is more than five years, we will apply not less than 95% of the account value. Amounts in the fixed maturity options that are applied to a payout option before a maturity date will result in a market value adjustment. If, at the time you elect a payout option, the amount to be applied is less than $2,000 or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. INCOME MANAGER PAYOUT OPTIONS For NQ and IRA contracts, two Income Manager payout options are also available. These are the Income Manager (Life Annuity with a Period Certain) and the Income Manager (Period Certain). For QP contracts, the Income Manager payout options are available only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and the change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. For Rollover TSA contracts, the Income Manager payout annuity options are available only after the Rollover TSA contract is rolled over to a Rollover IRA contract. This may generally occur when you are age 59 1/2, or you have separated from service with the employer who provided the Rollover TSA funds. - -------------------------------------------------------------------------------- Accessing your money 45 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Income Manager (Life Annuity with a Period Certain) provides guaranteed payments for the annuitant's life or for the annuitant's life and the life of a joint annuitant. The Income Manager (Period Certain) provides payments for a specified period. The contract owner and annuitant must meet the issue age and payment requirements. Both Income Manager annuities provide guaranteed level payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also provides guaranteed increasing payments (NQ contracts only). If you apply only part of the account value of your contract to either of the Income Manager payout annuities we will consider it a withdrawal and may deduct a withdrawal charge. We will not deduct a withdrawal charge if you apply all of your account value at a time when the dollar amount of the withdrawal charge is greater than 2% of remaining contributions (after withdrawals). However, a new withdrawal charge schedule will apply under the Income Manager annuity. For purposes of the withdrawal charge schedule, the year in which your account value is applied under the Income Manager annuity will be "contract year 1." In addition, we will not deduct a withdrawal charge if you apply all of your account value from your Equitable Accumulator contract when the dollar amount of the withdrawal charge under such contract is 2% or less. This means that no withdrawal charge schedule will apply under the Income Manager payout annuity contract. You should consider the timing of your purchase as it relates to the potential for withdrawal charges under the Income Manager annuity. No additional contributions will be permitted under an Income Manager (Life Annuity with a Period Certain). You also may apply your account value to an Income Manager (Period Certain) annuity once withdrawal charges are no longer in effect under your contract. No withdrawal charges will apply under that Income Manager annuity. The Income Manager annuities are described in a separate prospectus. Copies of the most current version are available from your Equitable associate. To purchase an Income Manager annuity we also require the return of your contract. We will issue an Income Manager annuity to put one of the payout annuities into effect. Depending upon your circumstances, this may be done on a tax-free basis. Please consult your tax adviser. - -------------------------------------------------------------------------------- 46 Charges and expenses - -------------------------------------------------------------------------------- 5 Charges and expenses - -------------------------------------------------------------------------------- CHARGES THAT EQUITABLE LIFE DEDUCTS We deduct the following charges each day from the net assets of each variable investment option. These charges are reflected in the unit values of each variable investment option: o A mortality and expense risks charge. o An administrative charge. We deduct the following charges from your account value. When we deduct these charges from your variable investment options, we reduce the number of units credited to your contract: o On each contract date anniversary -- an annual administrative charge (Flexible Premium IRA and Roth Flexible Premium IRA contracts only) o At the time you make certain withdrawals or surrender your contract -- a withdrawal charge. o If you elect the optional benefit -- a charge for the optional baseBUILDER benefit. o At the time annuity payments are to begin -- charges for state premium and other taxes. More information about these charges appears below. We will not increase these charges for the life of your contract, except as noted. We may reduce certain charges under group or sponsored arrangements. See "Group or sponsored arrangements" below. MORTALITY AND EXPENSE RISKS CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality and expense risks, including the guaranteed minimum death benefit. The daily charge is equivalent to an annual rate of 1.10% of the net assets in each variable investment option. The mortality risk we assume is the risk that annuitants as a group will live for a longer time than our actuarial tables predict. If that happens, we would be paying more in annuity income than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each contract, will differ from actual mortality experience. Lastly, we assume a mortality risk to the extent that at the time of death, the guaranteed minimum death benefit exceeds the cash value of the contract. The expense risk we assume is the risk that it will cost us more to issue and administer the contracts than we expect. ADMINISTRATIVE CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for administrative expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. We reserve the right under the contracts to increase this charge to an annual rate of 0.35%. ANNUAL ADMINISTRATIVE CHARGE (FLEXIBLE PREMIUM IRA AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY) Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, we deduct an administrative charge from your account value on each contract date anniversary. We deduct the charge if your account value on the last business day of the contract year, before the deduction of any other charges, is less than $25,000. If your account value on such date is $25,000 or more, this charge will equal zero. During the first two contract years, the charge is equal to $30 or, if less, 2% of your account value. The charge is $30 for contract years three and later. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. If you surrender your contract during the contract year we will deduct a pro rata portion of the charge. WITHDRAWAL CHARGE A withdrawal charge applies in two circumstances: (1) if you make one or more withdrawals during a contract - -------------------------------------------------------------------------------- Charges and expenses 47 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- year that, in total, exceed the 15% free withdrawal amount, described below, or (2) if you surrender your contract to receive its cash value. The withdrawal charge equals a percentage of the contributions withdrawn. The percentage that applies depends on how long each contribution has been invested in the contract. We determine the withdrawal charge separately for each contribution according to the following table:
- ------------------------------------------------------------------------------------- Contract year - ------------------------------------------------------------------------------------- 1 2 3 4 5 6 7 8+ - ------------------------------------------------------------------------------------- Percentage of contribution 7% 6% 5% 4% 3% 2% 1% 0% - -------------------------------------------------------------------------------------
If the Assured Payment Option or APO Plus is in effect, the withdrawal charge is equal to a percentage of the contributions withdrawn minus any amounts allocated to the life contingent annuity. For purposes of calculating the withdrawal charge, we treat the contract year in which we receive a contribution as "contract year 1." Amounts withdrawn up to the free withdrawal amount are not considered withdrawal of any contribution. We also treat contributions that have been invested the longest as being withdrawn first. We treat contributions as withdrawn before earnings for purposes of calculating the withdrawal charge. However, federal income tax rules treat earnings under your contract as withdrawn first. See "Tax information." In order to give you the exact dollar amount of the withdrawal you request, we deduct the amount of the withdrawal and the withdrawal charge from your account value. Any amount deducted to pay a withdrawal charge is also subject to a withdrawal charge. We deduct the charge in proportion to the amount of the withdrawal subtracted from each investment option. The withdrawal charge helps cover our sales expenses. The withdrawal charge does not apply in the circumstances described below. 15% FREE WITHDRAWAL AMOUNT. Each contract year you can withdraw up to 15% of your account value without paying a withdrawal charge. The 15% free withdrawal amount is determined using your account value on the most recent contract date anniversary, minus any other withdrawals made during the contract year. The 15% free withdrawal amount does not apply if you surrender your contract. The free withdrawal amount is 10% of your account value under the Assured Payment Option and APO Plus. Note the following special rule for NQ contracts issued to a charitable remainder trust, the free withdrawal amount will equal the greater of: (1) the current account value, less contributions that have not been withdrawn (earnings in the contract), and (2) the 15% free withdrawal amount defined above. MINIMUM DISTRIBUTIONS. The withdrawal charge does not apply to withdrawals taken under our minimum distribution withdrawal option. However, those withdrawals are counted towards the 15% free withdrawal amount if you also make a lump sum withdrawal in any contract year. DISABILITY, TERMINAL ILLNESS OR CONFINEMENT TO NURSING HOME. The withdrawal charge also does not apply if: o The annuitant has qualified to receive Social Security disability benefits as certified by the Social Security Administration; or o We receive proof satisfactory to us (including certification by a licensed physician) that the annuitant's life expectancy is six months or less; or o The annuitant has been confined to a nursing home for more than 90 days (or such other period, as required in your state) as verified by a licensed physician. A nursing home for this purpose means one that is (a) approved by Medicare as a provider of skilled nursing care service, or (b) licensed as a skilled nursing home by the state or territory in which it is located (it must be within the United States, Puerto Rico, or U.S. Virgin Islands) and meets all of the following: - -------------------------------------------------------------------------------- 48 Charges and expenses - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - - its main function is to provide skilled, intermediate, or custodial nursing care; - - it provides continuous room and board to three or more persons; - - it is supervised by a registered nurse or licensed practical nurse; - - it keeps daily medical records of each patient; - - it controls and records all medications dispensed; and - - its primary service is other than to provide housing for residents. We reserve the right to impose a withdrawal charge, in accordance with your contract and applicable state law, if the disability is caused by a preexisting condition or a condition that began within 12 months of the contract date. Some states may not permit us to waive the withdrawal charge in the above circumstances, or may limit the circumstances for which the withdrawal charge may be waived. Your Equitable associate can provide more information or you may contact our Processing Office. BASEBUILDER BENEFITS CHARGE If you elect the baseBUILDER combined guaranteed minimum income benefit and guaranteed minimum death benefit, we deduct a charge annually from your account value on each contract date anniversary. The charge is equal to 0.30% of the benefit base in effect on the contract date anniversary. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. Generally, we deduct the charge from the amount applied to provide an annuity payout. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands). ANNUITY ADMINISTRATIVE FEE We generally deduct a fee of up to $350 from the amount to be applied to purchase a life annuity payout option. CHARGES THAT THE TRUSTS DEDUCT The Hudson River Trust and EQ Advisors Trust each deducts charges for the following types of fees and expenses: o Investment advisory fees ranging from 0.25% to 1.15%. o 12b-1 fees of 0.25%. o Operating expenses, such as trustees' fees, independent auditors' fees, legal counsel fees, administrative service fees, custodian fees, and liability insurance. o Investment-related expenses, such as brokerage commissions. These charges are reflected in the daily share price of each Portfolio. Since shares of each trust are purchased at their net asset value, these fees and expenses are, in effect, passed on to the variable investment options and are reflected in their unit values. For more information about these charges, please refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust following this prospectus. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the withdrawal charge or the mortality and expense risks charge, or change the minimum initial contribution requirements. We also may change the guaranteed minimum income benefit and the guaranteed minimum death benefit, or offer variable investment options that invest in shares of The Hudson River Trust or EQ Advisors Trust that are not subject to the 12b-1 fee. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. - -------------------------------------------------------------------------------- Charges and expenses 49 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Group arrangements are not available for IRA contracts. Sponsored arrangements include those in which an employer allows us to sell contracts 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 or sponsoring organization, 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, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We also may establish different rates to maturity for the fixed maturity options under different classes of contracts for group or sponsored arrangements. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variation in the withdrawal charge will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, ERISA, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. OTHER DISTRIBUTION ARRANGEMENTS We may reduce or eliminate charges when sales are made in a manner that result in savings of sales and administrative expenses, such as sales through persons who are compensated by clients for recommending investments and who receive no commission or reduced commissions in connection with the sale of the contracts. We will not permit a reduction or elimination of charges where it would be unfairly discriminatory. - -------------------------------------------------------------------------------- 50 Payment of death benefit - -------------------------------------------------------------------------------- 6 Payment of death benefit - -------------------------------------------------------------------------------- YOUR BENEFICIARY AND PAYMENT OF BENEFIT You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for the change is signed. Under jointly owned contracts, the surviving owner is considered the beneficiary, and will take the place of any other beneficiary. You may be limited as to the beneficiary you can designate in a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee. The death benefit is equal to your account value, or, if greater, the guaranteed minimum death benefit. The guaranteed minimum death benefit is part of your contract, whether you select the combined baseBUILDER benefit or not. We determine the amount of the death benefit as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. Under Rollover TSA contracts we will deduct the amount of any outstanding loan plus accrued interest from the amount of the death benefit. The death benefit payable under the Assured Payment Option or APO Plus is described earlier in this prospectus. See "Assured Payment Option and APO Plus." EFFECT OF THE ANNUITANT'S DEATH If the annuitant dies before the annuity payments begin, we will pay the death benefit to your beneficiary. Generally, the death of the annuitant terminates the contract. However, a beneficiary who is the surviving spouse of the owner/annuitant can choose to be treated as the successor owner/annuitant and continue the contract. Only a spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you cannot have a successor owner/annuitant. For Rollover IRA and Flexible Premium IRA contracts, a beneficiary who is not a surviving spouse may be able to have limited ownership. WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT Under certain conditions the owner can change after the original owner's death. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the successor owner. If you do not want the person named to receive the death benefit upon the annuitant's death to be the successor owner, you should name a successor owner. You may name a different person that will become the successor owner at any time by sending satisfactory notice to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the "beneficiary" for purposes of the distribution rules described in this section. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the owner who has died (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the successor owner for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value of the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The successor owner may instead elect to receive the cash value as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy). Payments must begin no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). - -------------------------------------------------------------------------------- Payment of death benefit 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o If the surviving spouse is the successor owner or joint owner, the spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and annuitant are living. HOW DEATH BENEFIT PAYMENT IS MADE We will pay the death benefit to the beneficiary in the form of the annuity payout option you have chosen. If you have not chosen an annuity payout option as of the time of the annuitant's death, the beneficiary will receive the death benefit in a single sum. However, subject to any exceptions in the contract, our rules and any applicable requirements under federal income tax rules, the beneficiary may elect to apply the death benefit to one or more annuity payout options we offer at the time. See "Choosing your annuity payout options" earlier in this prospectus. Please note that if you are both the contract owner and the annuitant, you may elect only a life annuity or an annuity that does not extend beyond the life expectancy of the beneficiary. SUCCESSOR OWNER AND ANNUITANT If you are both the contract owner and the annuitant, and your spouse is the sole beneficiary or the joint owner, then your spouse may elect to receive the death benefit or continue the contract as successor owner/annuitant. If your surviving spouse decides to continue the contract, then on the contract date anniversary following your death, we will increase the account value to equal your current guaranteed minimum death benefit, if it is higher than the account value. In determining whether the guaranteed minimum death benefit will continue to grow, we will use your surviving spouse's age (as of the contract date anniversary). BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA AND FLEXIBLE PREMIUM IRA CONTRACTS Upon your death under a Rollover IRA or Flexible Premium IRA contract, a non-spouse beneficiary may generally elect to keep the contract in your name and receive distributions under the contract instead of the death benefit being paid in a single sum. If you die after the "required beginning date" (see "Tax information") for required minimum distributions, the contract will continue if: (a) you were receiving minimum distribution withdrawals from this contract; and (b) the pattern of minimum distribution withdrawals you chose was based in part on the life of the designated beneficiary. The withdrawals will then continue to be paid to the beneficiary on the same basis as you chose before your death. We will be able to tell your beneficiary whether this option is available to them. You should contact our Processing Office for further information. If you die before the "required beginning date" (and therefore you were not taking minimum distribution withdrawals under the contract), the beneficiary may begin taking minimum distribution withdrawals under the contract. We will increase the account value to equal the death benefit if the death benefit is greater than the account value. That amount will be used to provide the withdrawals. These withdrawals will begin by December 31st of the calendar year following your death and will be based on the beneficiary's life expectancy. If there is more than one beneficiary, the shortest life expectancy is used. The designated beneficiary must be a natural person and of legal age at the time of election. The beneficiary must elect this option within 30 days following the date we receive proof of your death. This option may not be elected if the Assured Payment Option or APO Plus were in effect at the time of your death. While the contract continues in your name, the beneficiary may make transfers among the investment options. However, additional contributions will not be permitted and the guaranteed minimum income benefit and the death benefit (including the guaranteed minimum death benefit) - -------------------------------------------------------------------------------- 52 Payment of death benefit - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- provisions will no longer be in effect. Although the only withdrawals that will be permitted are minimum distribution withdrawals, the beneficiary may choose at any time to withdraw all of the account value and no withdrawal charges will apply. - -------------------------------------------------------------------------------- Tax information 53 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Equitable Accumulator contracts owned by United States taxpayers. The tax rules can differ, depending on the type of contract, whether NQ, Rollover IRA, Flexible Premium IRA, Roth Conversion IRA, Roth Flexible Premium IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TRANSFERS AMONG INVESTMENT OPTIONS You can make transfers among investment options inside the contract without triggering taxable income. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal or as an annuity payment. However, earnings are taxable, even without a distribution: o if a contract fails investment diversification requirements as specified in federal income tax rules (these rules are based on or are similar to those specified for mutual funds under the securities laws); o if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse); o if you use a contract as security for a loan (in this case, the amount pledged will be treated as a distribution); and o if the owner is other than an individual (such as a corporation, partnership, trust, or other non-natural person). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract for calculating the taxable amount of any distribution from any of those contracts. ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get back the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. For fixed annuity payments, the tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount of the payment. For variable annuity payments, your - -------------------------------------------------------------------------------- 54 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- investment in the contract divided by the number of expected payments is your tax-free portion of each payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Equitable Accumulator NQ contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Equitable Accumulator NQ contract. Surrenders If you surrender or cancel the contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. Death benefit payments made to a beneficiary after your death For the rules applicable to death benefits, see "Payment of Death Benefit" and "When an NQ contract owner dies before the annuitant" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and a beneficiary. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The calculation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your - -------------------------------------------------------------------------------- Tax information 55 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "Traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis; and o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with employer-sponsored retirement plans. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (http://www.irs.ustreas.gov). The Equitable Accumulator IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. You may purchase the contract as a traditional IRA or Roth IRA. The traditional IRAs we offer are the Rollover IRA and Flexible Premium IRA. The versions of the Roth IRA available are the Roth Conversion IRA and Roth Flexible Premium IRA. This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are not discussed in this prospectus because they are not available in individual retirement annuity form. The Equitable Accumulator IRA contract has been approved by the IRS as to form for use as a traditional IRA. We expect to submit the Roth IRA version for formal IRS approval in 1999. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Equitable Accumulator IRA contract. CANCELLATION You can cancel an Equitable Accumulator IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. You can cancel an Equitable Accumulator Roth Conversion IRA contract issued as a result of a full conversion of an Equitable Accumulator Rollover IRA or Flexible Premium IRA contract by following the instructions in the request for full conversion form. The form is available from our Processing Office or your registered representative. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a traditional IRA: - -------------------------------------------------------------------------------- 56 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o regular contributions out of earned income or compensation; or o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other traditional IRAs ("direct transfers"). Regular traditional IRA, direct transfer, and rollover contributions may be made to a Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under a Rollover IRA contract. See "Rollovers and transfers" below. REGULAR CONTRIBUTIONS TO TRADITIONAL IRAS Limits on contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a traditional IRA. You cannot make regular traditional IRA contributions for the tax year in which you reach age 70 1/2 or any tax year after that. Special rules for spouses If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to traditional IRAs (and Roth IRAs discussed below). Even if one spouse has no compensation or compensation under $2,000, married individuals filing jointly can contribute up to $4,000 for any taxable year to any combination of traditional IRAs and Roth IRAs. (Any contributions to Roth IRAs reduce the ability to contribute to traditional IRAs and vice versa.) The maximum amount may be less if earned income is less and the other spouse has made IRA contributions. No more than a combined total of $2,000 can be contributed annually to either spouse's traditional and Roth IRAs. Each spouse owns his or her traditional IRAs and Roth IRAs even if the other spouse funded the contributions. A working spouse age 70 1/2 or over can contribute up to the lesser of $2,000 or 100% of "earned income" to a traditional IRA for a nonworking spouse until the year in which the nonworking spouse reaches age 70 1/2. Deductibility of contributions The amount of traditional IRA contributions that you can deduct for a tax year depends on whether you are covered by an employer-sponsored tax-favored retirement plan, as defined under special federal income tax rules. Your Form W-2 will indicate whether or not you are covered by such a retirement plan. If you are not covered by a retirement plan during any part of the year, you can make fully deductible contributions to your traditional IRAs for each tax year up to $2,000 or, if less, your earned income. If you are covered by a retirement plan during any part of the year, and your adjusted gross income (AGI) is below the lower dollar figure in a phase-out range, you can make fully deductible contributions to your traditional IRAs. For each tax year, your fully deductible contribution can be up to $2,000 or, if less, your earned income. If you are covered by a retirement plan during any part of the year, and your AGI falls within a phase-out range, you can make partially deductible contributions to your traditional IRAs. If you are covered by a retirement plan during any part of the year, and your AGI falls above the higher figure in the phase-out range, you may not deduct any of your regular contributions to your traditional IRAs. If you are single and covered by a retirement plan during any part of the taxable year, the deduction for IRA contributions phases out with AGI between $31,000 and $41,000 in 1999. This range will increase every year until 2005 when the range is $50,000-$60,000. If you are married and file a joint return, and you are covered by a retirement plan during any part of the taxable year, the - -------------------------------------------------------------------------------- Tax information 57 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- deduction for traditional IRA contributions phases out with AGI between $51,000 and $61,000 in 1999. This range will increase every year until 2007 when the range is $80,000-$100,000. Married individuals filing separately and living apart at all times are not considered married for purposes of this deductible contribution calculation. Generally, the active participation in an employer-sponsored retirement plan of an individual is determined independently for each spouse. Where spouses have "married filing jointly" status, however, the maximum deductible traditional IRA contribution for an individual who is not an active participant (but whose spouse is an active participant) is phased out for taxpayers with AGI of between $150,000 and $160,000. To determine the deductible amount of the contribution in 1999, you determine AGI and subtract $31,000 if you are single, or $51,000 if you are married and file a joint return with your spouse. The resulting amount is your excess AGI. You then determine the limit on the deduction for traditional IRA contributions using the following formula: times $2,000 (or earned Equals the adjusted ($10,000-excess AGI) - ------------------------- x income, if less) = deductible divided by $10,000 - contribution limit Nondeductible regular contributions If you are not eligible to deduct part or all of the traditional IRA contribution, you may still make nondeductible contributions on which earnings will accumulate on a tax-deferred basis. The combined deductible and nondeductible contributions to your traditional IRA (or the nonworking spouse's traditional IRA) may not, however, exceed the maximum $2,000 per person limit. See "Excess contributions" below. You must keep your own records of deductible and nondeductible contributions in order to prevent double taxation on the distribution of previously taxed amounts. See "Withdrawals, payments and transfer of funds out of traditional IRAs" below. If you are making nondeductible contributions in any taxable year, or you have made nondeductible contributions to a traditional IRA in prior years and are receiving distributions from any traditional IRA, you must file the required information with the IRS. Moreover, if you are making nondeductible traditional IRA contributions, you must retain all income tax returns and records pertaining to such contributions until interests in all traditional IRAs are fully distributed. When you can make regular contributions If you file your tax returns on a calendar year basis like most taxpayers, you have until the April 15 return filing deadline (without extensions) of the following calendar year to make your regular traditional IRA contributions for a tax year. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o regular contributions of more than $2,000; or o regular contributions of more than earned income for the year, if that amount is under $2,000; or o regular contributions to a traditional IRA made after you reach age 70 1/2; or o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or regular) before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess regular traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions, discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. - -------------------------------------------------------------------------------- 58 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. ROLLOVERS AND TRANSFERS Rollover contributions may be made to a traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other traditional IRAs. You may also change your mind about amounts contributed as Roth IRA funds to traditional IRA funds, in accordance with special federal income tax rules, if you use the forms we prescribe. This is referred to as having "recharacterized" your contribution. Any amount contributed to a traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions, unless the distribution is: o only after-tax contributions you made to the plan; or o "required minimum distributions" after age 70 1/2 or separation from service; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; or o a hardship withdrawal; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one traditional IRA to one or more of your other traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited traditional IRA to one or more other traditional IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free basis - -------------------------------------------------------------------------------- Tax information 59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a traditional IRA at any time. You do not need to wait for a special event like retirement. Taxation of payments Earnings in traditional IRAs are not subject to federal income tax until you or your beneficiary receives them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any traditional IRA (it does not have to be to this particular traditional IRA contract), those contributions are recovered tax free when you get distributions from any traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to traditional IRAs. At the end of any year in which you have received a distribution from any traditional IRA, you calculate the ratio of your total nondeductible traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all traditional IRAs you own at the end of the year plus all traditional IRA distributions made during the year. Multiply this by all distributions from the traditional IRA during the year to determine the nontaxable portion of each distribution. In addition, a distribution is not taxable if: o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; or o the entire amount received is rolled over to another traditional IRA (see "Rollovers and transfers" above); or o in certain limited circumstances, where the traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" traditional IRA treatment: o the source of funds you used to establish the traditional IRA must have been a rollover contribution from a qualified plan, and o the entire amount received from the traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. The Rollover IRA contract can be used as a conduit IRA if amounts are not commingled. Distributions from a traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the - -------------------------------------------------------------------------------- 60 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1 - April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year - the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions - "account-based" or "annuity-based." Account-based method. If you choose an "account-based" method, you divide the value of your traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you have to use the "term certain" method of calculating that person's life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). For example, if you anticipate exercising your guaranteed minimum income benefit or selecting any other form of life annuity payout after you are age 70 1/2, you must have elected to recalculate life expectancies. Annuity-based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your traditional IRA based on the method you choose? No, unless you affirmatively select an annuity payout option or an account-based withdrawal option such as our minimum distribution withdrawal option. Because the options we offer do not cover every option permitted under federal income tax rules, you may prefer to do your own required minimum distribution calculations for one or more of your traditional IRAs. What if you take more than you need to for any year? The required minimum distribution amount for your traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you - -------------------------------------------------------------------------------- Tax information 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- take from your qualified plans to the amounts you have to take from your traditional IRAs and vice-versa. However, the IRS will let you calculate the required minimum distribution for each traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall traditional IRA required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal income tax rules require complete distribution of your entire value in the contract within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your traditional IRA into his or her own traditional IRA. Successor annuitant and owner If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. REQUIRED MINIMUM DISTRIBUTIONS UNDER THE ASSURED PAYMENT OPTION AND APO PLUS Although the life contingent annuity portion of the Assured Payment Option and APO Plus does not have a cash value, it will be assigned a value for tax purposes. This value will generally be changed each year. When you determine the amount of account-based required minimum distributions from your traditional IRA this value must be included. This must be done even though the life contingent annuity may not be providing a source of funds to satisfy the required minimum distribution. You will generally be required to determine your required minimum distribution by annually recalculating your life expectancy. The Assured Payment Option and APO Plus will not be available if you have previously made a different election. Recalculation is no longer required once the only payments you or your spouse receive are under the life contingent annuity. If you surrender your contract, or withdraw any remaining account value before your payments under the life contingent annuity begin, it may be necessary for you to satisfy your required minimum distribution by moving forward the start date of payments under your life contingent annuity. Or to the extent available, you have to take distributions from other traditional IRA funds you may have. Or, you may convert your traditional IRA life contingent annuity under the contract to a nonqualified life - -------------------------------------------------------------------------------- 62 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- contingent annuity. This would be viewed as a distribution of the value of the life contingent annuity from your traditional IRA, and therefore, would be a taxable event. However, since the life contingent annuity would no longer be part of the traditional IRA, you would not have to include its value when determining future required minimum distributions. If you have elected a joint and survivor form of the life contingent annuity, the joint annuitant must be your spouse. You must determine your required minimum distribution by annually recalculating both your life expectancy and your spouse's life expectancy. The Assured Payment Option and APO Plus will not be available if you have previously made a different election. Once the only payments you or your spouse are receiving are under the life contingent annuity recalculation is no longer required. In the event of your death or the death of your spouse the value of such annuity will change. For this reason, it is important that someone tell us if you or your spouse dies before the life contingent annuity has started payments so that a lower valuation can be made. Otherwise, a higher tax value may result in an overstatement of the amount that would be necessary to satisfy your required minimum distribution amount. Allocation of funds to the life contingent annuity may prevent the contract from later receiving conduit IRA treatment. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a traditional IRA. You cannot use a traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o used to pay certain extraordinary medical expenses (special federal income tax definition); or o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); or o used to pay certain first-time home buyer expenses (special federal income tax definition); or o used to pay certain higher education expenses (special federal income tax definition); or o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. To meet this last exception, you could elect to apply your contract value to an Income Manager (Life Annuity with a Period Certain) payout annuity contract (level payments version). You could also elect the substantially equal withdrawals option. We will calculate the substantially equal annual payments under a method we select based on guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question and Answer 12). Although substantially equal withdrawals and Income Manager payments are not subject to the 10% penalty tax, they are taxable as discussed in "Withdrawals, payments and transfers of funds out of traditional IRAs" above. Once substantially equal withdrawals or Income Manager annuity payments begin, the distributions should not be stopped or changed until the later of your reaching age 59 1/2 or five years after the date of the first distribution, or the penalty tax, including an interest charge for the prior penalty avoidance, may apply to all prior distributions under this option. Also, it is possible that the IRS could view any additional withdrawal or payment you take from your - -------------------------------------------------------------------------------- Tax information 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- contract as changing your pattern of substantially equal withdrawals or Income Manager payments for purposes of determining whether the penalty applies. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS) This section of the prospectus covers some of the special tax rules that apply to Roth IRAs. If the rules are the same as those that apply to the traditional IRA, we will refer you to the same topic under "traditional IRAs." The Equitable Accumulator Roth IRA contract is designed to qualify as a Roth individual retirement annuity under Sections 408A and 408(b) of the Internal Revenue Code. CONTRIBUTIONS TO ROTH IRAS Individuals may make four different types of contributions to a Roth IRA: o regular after-tax contributions out of earnings; or o taxable "rollover" contributions from traditional IRAs ("conversion" contributions); or o tax-free rollover contributions from other Roth IRAs; o tax-free direct custodian-to-custodian transfers from other Roth IRAs ("direct transfers"). Regular after-tax, direct transfer, and rollover contributions may be made to a Roth Flexible Premium IRA contract. We only permit direct transfer and rollover contributions under the Roth Conversion IRA contract. See "Rollovers and direct transfers" below. If you use the forms we require, we will also accept traditional IRA funds which are subsequently recharacterized as Roth IRA funds following special federal income tax rules. REGULAR CONTRIBUTIONS TO ROTH IRAS Limits on regular contributions Generally, $2,000 is the maximum amount that you may contribute to all IRAs (including Roth IRAs) in any taxable year. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a Roth IRA. Any contributions to Roth IRAs reduce your ability to contribute to traditional IRAs and vice versa. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to Roth IRAs and traditional IRAs. See the discussion above under traditional IRAs. With a Roth IRA, you can make regular contributions when you reach 70 1/2, as long as you have sufficient earnings. But, you cannot make contributions for any year that: o your federal income tax filing status is "married filing jointly" and your adjusted gross income is over $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is over $110,000. However, you can make regular Roth IRA contributions in reduced amounts when: o your federal income tax filing status is "married filing jointly" and your adjusted gross income is between $150,000 and $160,000; or o your federal income tax filing status is "single" and your adjusted gross income is between $95,000 and $110,000. If you are married and filing separately and your adjusted gross income is between $0 and $10,000 the amount of regular contribution you are permitted to make is phased out. If your adjusted gross income is more than $10,000 you cannot make a regular Roth IRA contribution. When you can make contributions Same as traditional IRAs. Deductibility of contributions Roth IRA contributions are not tax deductible. - -------------------------------------------------------------------------------- 64 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ROLLOVERS AND DIRECT TRANSFERS What is the difference between rollover and direct transfer transactions? You may make rollover contributions to a Roth IRA from only two sources: o another Roth IRA ("tax-free rollover contribution"); or o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable "conversion" rollover ("conversion contribution"). You may not make contributions to a Roth IRA from a qualified plan under Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the Internal Revenue Code. You may make direct transfer contributions to a Roth IRA only from another Roth IRA. The difference between a rollover transaction and a direct transfer transaction is the following: in a rollover transaction you actually take possession of the funds rolled over, or are considered to have received them under tax law in the case of a change from one type of plan to another. In a direct transfer transaction, you never take possession of the funds, but direct the first Roth IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly to Equitable Life, as the Roth IRA issuer. You can make direct transfer transactions only between identical plan types (for example, Roth IRA to Roth IRA). You can also make rollover transactions between identical plan types. However, you can only use rollover transactions between different plan types (for example, traditional IRA to Roth IRA). You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to Roth IRA direct transfer transactions. This can be accomplished on a completely tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions only once in any 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers can be made more frequently than once a year. Also, if you send us the rollover contribution to apply it to a Roth IRA, you must do so within 60 days after you receive the proceeds from the original IRA to get rollover treatment. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some cases, Roth IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. Conversion contributions to Roth IRAs In a conversion rollover transaction, you withdraw (or are considered to have withdrawn) all or a portion of funds from a traditional IRA you maintain and convert it to a Roth IRA within 60 days after you receive (or are considered to have received) the traditional IRA proceeds. Unlike a rollover from a traditional IRA to another traditional IRA, the conversion rollover transaction is not tax-free. Instead, the distribution from the traditional IRA is generally fully taxable. For this reason, we are required to withhold 10% federal income tax from the amount converted unless you elect out of such withholding. (If you have ever made nondeductible regular contributions to any traditional IRA - whether or not it is the traditional IRA you are converting - a pro rata portion of the distribution is tax-free.) There is, however, no early distribution penalty tax on the traditional IRA withdrawal that you are converting to a Roth IRA, even if you are under age 59 1/2. You cannot make conversion contributions to a Roth IRA for any taxable year in which your adjusted gross income exceeds $100,000. (For this purpose, your adjusted gross income is computed without the gross income stemming from the traditional IRA conversion.) You also cannot make conversion contributions to a Roth IRA for any taxable year in which your federal income tax filing status is "married filing separately." Finally, you cannot make conversion contributions to a Roth IRA to the extent that the funds in your traditional IRA are - -------------------------------------------------------------------------------- Tax information 65 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- subject to the annual required minimum distribution rule applicable to traditional IRAs beginning at age 70 1/2. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Roth IRA at any time; you do not need to wait for a special event like retirement. DISTRIBUTIONS FROM ROTH IRAS Distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also distributions. The following distributions from Roth IRAs are free of income tax: o Rollovers from a Roth IRA to another Roth IRA; o Direct transfers from a Roth IRA to another Roth IRA; o "Qualified Distributions" from Roth IRAs; and o Return of excess contributions or amounts recharacterized to a traditional IRA. Qualified distributions from Roth IRAs Qualified distributions from Roth IRAs made because of one of the following four qualifying events or reasons are not includable in income: o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o your distribution is a "qualified first-time homebuyer distribution" (special federal income tax definition; $10,000 lifetime total limit for these distributions from all of your traditional and Roth IRAs). You also have to meet a five-year aging period. A qualified distribution is any distribution made after the five-taxable year period beginning with the first taxable year for which you made any contribution to any Roth IRA (whether or not the one from which the distribution is being made). It is not possible to have a tax-free qualified distribution before the year 2003 because of the five-year aging requirement. Nonqualified distributions from Roth IRAs Nonqualified distributions from Roth IRAs are distributions that do not meet the qualifying event and five-year aging period tests described above. Such distributions are potentially taxable as ordinary income. Nonqualified distributions receive return-of-investment-first treatment. Only the difference between the amount of the distribution and the amount of contributions to all of your Roth IRAs is taxable. You have to reduce the amount of contributions to all of your Roth IRAs to reflect any previous tax-free recoveries. You must keep your own records of regular and conversion contributions to all Roth IRAs to assure appropriate taxation. You may have to file information on your contributions to and distributions from any Roth IRA on your tax return. You may have to retain all income tax returns and records pertaining to such contributions and distributions until your interests in all Roth IRAs are distributed. Like traditional IRAs, taxable distributions from a Roth IRA are not entitled to the special favorable five-year averaging method (or, in certain cases, favorable ten-year averaging and long-term capital gain treatment) available in certain cases to distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS AT DEATH Same as traditional IRA under "What are the required minimum distribution payments after you die?" Lifetime required minimum distributions do not apply. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Distributions to a beneficiary generally receive the same tax treatment as if the distribution had been made to you. - -------------------------------------------------------------------------------- 66 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS Same as traditional IRA. EXCESS CONTRIBUTIONS Same as traditional IRA, except that regular contributions made after age 70 1/2 are not "excess contributions." Excess rollover contributions to Roth IRAs are contributions not eligible to be rolled over (for example, conversion contributions from a traditional IRA if your adjusted gross income is in excess of $100,000 in the conversion year). You can withdraw or recharacterize any contribution to a Roth IRA before the due date (including extensions) for filing your federal income tax return for the tax year. If you do this, you must also withdraw or recharacterize any earnings attributable to the contribution. EARLY DISTRIBUTION PENALTY TAX Same as traditional IRA. For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable to 1998 conversion rollovers. SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS Under QP contracts your plan administrator or trustee notifies you as to tax consequences. See Appendix II. TAX SHELTERED ANNUITY CONTRACTS (TSAS) GENERAL This section of the prospectus covers some of the special tax rules that apply to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If the rules are the same as those that apply to another kind of contract, for example, traditional IRAs, we will refer you to the same topic under "traditional IRAs." CONTRIBUTIONS TO TSAS There are two ways you can make contributions to this Equitable Accumulator Rollover TSA contract: o a rollover from another TSA contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code, or o a full or partial direct transfer of assets ("direct transfer") from another contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24. With appropriate written documentation satisfactory to us, we will accept rollover contributions from "conduit IRAs" for TSA funds. If you make a direct transfer, you must fill out our transfer form. Employer-remitted contributions The Equitable Accumulator Rollover TSA contract does not accept employer-remitted contributions. However, we provide the following discussion as part of our description of restrictions on the distribution of funds directly transferred, which include employer-remitted contributions to other TSAs. Employer-remitted contributions to TSAs made through the employer's payroll are subject to annual limits. (Tax-free transfer or tax-deferred rollover contributions from another 403(b) arrangement are not subject to these annual contribution limits.) Commonly, some or all of the contributions made to a TSA are made under a salary reduction agreement between the employee and the employer. These contributions are called "salary reduction" or "elective deferral" contributions. However, a TSA can also be wholly or partially funded through nonelective employer contributions or after-tax employee contributions. Amounts attributable to salary reduction contributions to TSAs are generally subject to withdrawal restrictions. Also, all amounts attributable to investments in a 403(b)(7) custodial account are subject to withdrawal restrictions discussed below. - -------------------------------------------------------------------------------- Tax information 67 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Rollover or direct transfer contributions You may make rollover contributions to your Equitable Accumulator Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally, you may make a rollover contribution to a TSA when you have a distributable event from an existing TSA as a result of your: o termination of employment with the employer who provided the TSA funds; or o reaching age 59 1/2 even if you are still employed; or o disability (special federal income tax definition). A transfer occurs when changing the funding vehicle, even if there is no distributable event. Under a direct transfer, you do not receive a distribution. We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if: o you give us acceptable written documentation as to the source of the funds, and o the Equitable Accumulator contract receiving the funds has provisions at least as restrictive as the source contract. Before you transfer funds to an Equitable Accumulator Rollover TSA contract, you may have to obtain your employer's authorization or demonstrate that you do not need employer authorization. For example, the transferring TSA may be subject to Title I of ERISA, if the employer makes matching contributions to salary reduction contributions made by employees. In that case, the employer must continue to approve distributions from the plan or contract. Your contribution to the Equitable Accumulator Rollover TSA must be net of the required minimum distribution for the tax year in which we issue the contract if: o you are or will be at least age 70 1/2 in the current calendar year, and o you have separated from service with the employer who provided the funds to purchase the TSA you are transferring or rolling over to the Equitable Accumulator Rollover TSA. This rule applies regardless of whether the source of funds is a: o rollover by check of the proceeds from another TSA; or o direct rollover from another TSA; or o direct transfer under Revenue Ruling 90-24 from another TSA. Further, you must use the same elections regarding recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you have already begun to receive required minimum distributions from or with respect to the TSA from which you are making your contribution to the Equitable Accumulator Rollover TSA. You must also elect or have elected a minimum distribution calculation method requiring recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you elect an annuity payout for the funds in this contract subsequent to this year. DISTRIBUTIONS FROM TSAS General Depending on the terms of the employer plan and your employment status, you may have to get your employer's consent to take a loan or withdrawal. Your employer will tell us this when you establish the TSA through a direct transfer. Withdrawal restrictions If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts transferred to this contract and any future earnings on the amount transferred as not eligible for withdrawal until one of the following events happens: o you are separated from service with the employer who provided the funds to purchase the TSA you are transferring to the Equitable Accumulator Rollover TSA; o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or - -------------------------------------------------------------------------------- 68 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o you take a "hardship" withdrawal (special federal income tax definition). If any portion of the funds directly transferred to your TSA contract is attributable to amounts that you invested in a 403(b)(7) custodial account, such amounts, including earnings, are subject to withdrawal restrictions. With respect to the portion of the funds that were never invested in a 403(b)(7) custodial account, these restrictions apply to the salary reduction (elective deferral) contributions to a TSA annuity contract you made and any earnings on them. These restrictions do not apply to the amount directly transferred to your TSA contract that represents your December 31, 1988 account balance attributable to salary reduction contributions to a TSA annuity contract and earnings. To take advantage of this grandfathering you must properly notify us in writing at our Processing Office of your December 31, 1988 account balance if you have qualifying amounts transferred to your TSA contract. This paragraph applies only to participants in a Texas Optional Retirement Program. Texas Law permits withdrawals only after one of the following distributable events occur: (1) the requirements for minimum distribution (discussed under "Required minimum distributions" below) are met; or (2) death; or (3) retirement; or (4) termination of employment in all Texas public institutions of higher education. For you to make a withdrawal, we must receive a properly completed written acknowledgement from the employer. If a distributable event occurs before you are vested, we will refund to the employer any amounts provided by an employer's first-year matching contribution. We reserve the right to change these provisions without your consent, but only to the extent necessary to maintain compliance with applicable law. Loans are not permitted under Texas Optional Retirement Programs. Tax treatment of distributions Amounts held under TSAs are generally not subject to federal income tax until benefits are distributed. Distributions include withdrawals from your TSA contract and annuity payments from your TSA contract. Death benefits paid to a beneficiary are also taxable distributions. Unless an exception applies, amounts distributed from TSAs are includable in gross income as ordinary income. Distributions from TSAs may be subject to 20% federal income tax withholding. See "Federal and state income tax withholding and information reporting" below. In addition, TSA distributions may be subject to additional tax penalties. If you have made after-tax contributions, you will have a tax basis in your TSA contract, which will be recovered tax-free. Since we do not track your investment in the contract, if any, it is your responsibility to determine how much of the distribution is taxable. Distributions before annuity payments begin. On a total surrender, the amount received in excess of the investment in the contract is taxable. We will report the total amount of the distribution. The amount of any partial distribution from a TSA prior to the annuity starting date is generally taxable, except to the extent that the distribution is treated as a withdrawal of after-tax contributions. Distributions are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. Annuity payments. If you elect an annuity payout option, you will recover any investment in the contract as each payment is received by dividing the investment in the contract by an expected return determined under an IRS table prescribed for qualified annuities. The amount of each payment not excluded from income under this exclusion ratio is fully taxable. The full amount of the payments received after your investment in the contract is recovered is fully taxable. If you (and your beneficiary under a joint and survivor annuity) die before recovering the full investment in the contract, a deduction is allowed on your (or your beneficiary's) final tax return. - -------------------------------------------------------------------------------- Tax information 69 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Death benefit distributions from a TSA generally receive the same tax treatment as distributions during your lifetime. In some instances, distributions from a TSA made to your surviving spouse may be rolled over to a traditional IRA. LOANS FROM TSAS You may take loans from a TSA unless restricted by the employer (for example, under an employer plan subject to ERISA). If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the TSA funds told us when you purchased your contract. Loans are generally not treated as a taxable distribution. If the amount of the loan exceeds permissible limits under federal income tax rules when made, the amount of the excess is treated (solely for tax purposes) as a taxable distribution. Additionally, if the loan is not repaid at least quarterly, amortizing (paying down) interest and principal, the amount not repaid when due will be treated as a taxable distribution. Under Proposed Treasury Regulations the entire unpaid balance of the loan is includable in income in the year of the default. TSA loans are subject to federal income tax limits and may also be subject to the limits of the plan from which the funds came. Federal income tax rule requirements apply even if the plan is not subject to ERISA. For example, loans offered by TSAs are subject to the following conditions: o The amount of a loan to a participant, when combined with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding loan balance of plan loans on the date the loan was made. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. Equitable Accumulator Rollover TSA contracts have a term limit of 10 years for loans used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. The amount borrowed and not repaid may be treated as a distribution if: o the loan does not qualify under the conditions above, o the participant fails to repay the interest or principal when due, or o in some instances, the participant separates from service with the employer who provided the funds or the plan is terminated. In this case, the participant may have to include the unpaid amount due as ordinary income. In addition, the 10% early distribution penalty tax may apply. The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a distribution. TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS You may roll over any "eligible rollover distribution" from a TSA into another eligible retirement plan, either directly or within 60 days of your receiving the distribution. To the extent rolled over, a distribution remains tax-deferred. You may roll over a distribution from a TSA to another TSA or to a traditional IRA. A spousal beneficiary may roll over death benefits only to a traditional IRA. The taxable portion of most distributions will be eligible for rollover, except as specifically excluded under federal income tax rules. Distributions that you cannot roll over generally include periodic payments for life or for a period of 10 years or more, hardship withdrawals, and required minimum distributions under federal income tax rules. - -------------------------------------------------------------------------------- 70 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24 are not distributions. REQUIRED MINIMUM DISTRIBUTIONS Same as traditional IRA with these differences: When you have to take the first required minimum distribution The minimum distribution rules force TSA participants to start calculating and taking annual distributions from their TSAs by a required date. Generally, you must take the first required minimum distribution for the calendar year in which you turn age 70 1/2. You may be able to delay the start of required minimum distributions for all or part of your account balance until after age 70 1/2, as follows: o For TSA participants who have not retired from service with the employer who provided the funds for the TSA by the calendar year the participant turns age 70 1/2, the required beginning date for minimum distributions is extended to April 1 following the calendar year of retirement. o TSA plan participants may also delay the start of required minimum distributions to age 75 of the portion of their account value attributable to their December 31, 1986 TSA account balance, even if retired at age 70 1/2. We will know whether or not you qualify for this exception because it will only apply to people who establish their Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give us the amount of your December 31, 1986 account balance that is being transferred to the Equitable Accumulator Rollover TSA on the form used to establish the TSA, you do not qualify. SPOUSAL CONSENT RULES This will only apply to you if you establish your Equitable Accumulator Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the form used to establish the TSA whether or not you need to get spousal consent for loans, withdrawals, or other distributions. If you do, you will need such consent if you are married when you request a withdrawal under the TSA contract. In addition, unless you elect otherwise with the written consent of your spouse, the retirement benefits payable under the plan must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is payable for the life of the annuitant with a survivor annuity for the life of the spouse in an amount not less than one-half of the amount payable to the annuitant during his or her lifetime. In addition, if you are married, the beneficiary must be your spouse, unless your spouse consents in writing to the designation of another beneficiary. If you are married and you die before annuity payments have begun, payments will be made to your surviving spouse in the form of a life annuity unless at the time of your death a contrary election was in effect. However, your surviving spouse may elect, before payments begin, to receive payments in any form permitted under the terms of the TSA contract and the plan of the employer who provided the funds for the TSA. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a TSA before you reach age 59 1/2. This is in addition to any income tax. There are exceptions to the extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o to pay for certain extraordinary medical expenses (special federal income tax definition); or o if you are separated from service, any form of payout after you are age 55; or o only if you are separated from service, a payout in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. - -------------------------------------------------------------------------------- Tax information 71 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. You should note the following special situations: o We might have to withhold on amounts we pay under a free look or cancellation. o We are generally required to withhold on conversion rollovers of traditional IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA and is taxable. o We are required to withhold on the gross amount of a distribution from a Roth IRA unless you elect out of withholding. This may result in tax being withheld even though the Roth IRA distribution is not taxable in whole or in part. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at the toll-free number. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999, your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS) For a non-periodic distribution (total surrender or partial withdrawal), we generally withhold at a flat 10% rate. We apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs and Roth IRAs. You cannot elect out of withholding if the payment is an "eligible rollover distribution" from a qualified plan or TSA. If a non-periodic distribution from a qualified plan or TSA is not an "eligible rollover distribution" then the 10% withholding rate applies. MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS Unless you have the distribution go directly to the new plan, eligible rollover distributions from qualified plans and TSAs are subject to mandatory 20% withholding. An eligible - -------------------------------------------------------------------------------- 72 Tax information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- rollover distribution from a TSA can be rolled over to another TSA or a traditional IRA. An eligible rollover distribution from a qualified plan can be rolled over to another qualified plan or traditional IRA. All distributions from a TSA or qualified plan are eligible rollover distributions unless they are on the following list of exceptions: o any after-tax contributions you made to the plan; or o any distributions which are "required minimum distributions" after age 70 1/2 or separation from service; or o hardship withdrawals; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and your designated beneficiary; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. A death benefit payment to your surviving spouse, or a qualified domestic relations order distribution to your current or former spouse, may be a distribution subject to mandatory 20% withholding. IMPACT OF TAXES TO EQUITABLE LIFE The contracts provide that we may charge Separate Account No. 45 for taxes. We do not now, but may in the future set up reserves for such taxes. - -------------------------------------------------------------------------------- More information 73 - -------------------------------------------------------------------------------- 8 More information - -------------------------------------------------------------------------------- ABOUT OUR SEPARATE ACCOUNT NO. 45 Each variable investment option is a subaccount of our Separate Account No. 45. We established Separate Account No. 45 in 1994 under special provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our variable investment options for owners of our variable annuity contracts, including these contracts. We are the legal owner of all of the assets in Separate Account No. 45 and may withdraw any amounts that exceed our reserves and other liabilities with respect to variable investment options under our contracts. The results of Separate Account No. 45's operations are accounted for without regard to Equitable Life's other operations. Separate Account No. 45 is registered under the Investment Company Act of 1940 and is classified by that act as a "unit investment trust." The SEC, however, does not manage or supervise Equitable Life or Separate Account No. 45. Each subaccount (variable investment option) within Separate Account No. 45 invests solely in class IB shares issued by the corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust. We reserve the right subject to compliance with laws that apply: (1) to add variable investment options to, or to remove variable investment options from, Separate Account No. 45, or to add other separate accounts; (2) to combine any two or more variable investment options; (3) to transfer the assets we determine to be the shares of the class of contracts to which the contracts belong from any variable investment option to another variable investment option; (4) to operate Separate Account No. 45 or any variable investment option as a management investment company under the Investment Company Act of 1940 (in which case, charges and expenses that otherwise would be assessed against an underlying mutual fund would be assessed against Separate Account No. 45 or a variable investment option directly); (5) to deregister Separate Account No. 45 under the Investment Company Act of 1940; (6) to restrict or eliminate any voting rights as to Separate Account No. 45; and (7) to cause one or more variable investment options to invest some or all of their assets in one or more other trusts or investment companies. ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST The Hudson River Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each trust issues different shares relating to each Portfolio. The Hudson River Trust and EQ Advisors Trust do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on a trust's shares are reinvested in full. The Board of Trustees of The Hudson River Trust and EQ Advisors Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about The Hudson River Trust and EQ Advisors Trust, their investment objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans relating to their Class IB shares, and other aspects of their operations, appears in their prospectuses, or in their SAIs which are available upon request. ABOUT OUR FIXED MATURITY OPTIONS HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw all of your value from a fixed maturity option before its maturity date. - -------------------------------------------------------------------------------- 74 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. - -------------------------------------------------------------------------------- Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation. - -------------------------------------------------------------------------------- If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. Any withdrawal charges that are deducted from a fixed maturity option will result in a market value adjustment calculated in the same way. See Appendix III for an example. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. INVESTMENTS UNDER THE FIXED MATURITY OPTIONS Under New York Insurance Law, the portion of the separate account's assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your value in the fixed maturity options, regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the - -------------------------------------------------------------------------------- More information 75 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- fixed maturity options under the contracts, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options and the account for special dollar cost averaging, as well as our general obligations. Amounts applied to the life contingent annuity become part of our general account. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account (other than market value adjustment interests) and the life contingent annuity. The disclosure with regard to the general account, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ABOUT OTHER METHODS OF PAYMENT AUTOMATIC INVESTMENT PROGRAM - FOR NQ, FLEXIBLE PREMIUM IRA, AND ROTH FLEXIBLE PREMIUM IRA CONTRACTS ONLY You may use our automatic investment program, or "AIP," to have a specified amount automatically deducted from a checking account, money market account, or credit union checking account and contributed as an additional contribution into an NQ, Flexible Premium IRA or Roth Flexible Premium IRA contract on a monthly or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts. It is also not available under the Assured Payment Option or APO Plus. For NQ contracts, the minimum amounts we will deduct are $100 monthly and $300 quarterly. Under Flexible Premium IRA and Roth Flexible Premium IRA contracts, the minimum amount is $50. AIP additional contributions may be allocated to any of the variable investment options and available fixed maturity options, but not the account for special dollar cost averaging. You choose the day of the month you wish to have your account debited as long as it is not later than the 28th day of the month. You may cancel AIP at any time by notifying our Processing Office. We are not responsible for any debits made to your account before the time written notice of cancellation is received at our Processing Office. DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR We describe below the general rules for when, and at what prices, events under your contract will occur. Other portions of this prospectus describe circumstances that may cause exceptions. We generally do not repeat those exceptions below. BUSINESS DAY Our business day is any day the New York Stock Exchange is open for trading. Each business day ends at the time trading on the exchange closes (or is suspended) for the day. We calculate unit values for our variable investment options as of the end of each business day. This usually is 4:00 p.m., Eastern Time. Contributions will be applied and any other transaction requests will be processed when they are received along with all the required information. o If your contribution, transfer or any other transaction request, containing all the required information, reaches us - -------------------------------------------------------------------------------- 76 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. o A loan request under your Rollover TSA contract will be processed on the first business day of the month following the date on which the properly completed loan request form is received. o If your transaction is set to occur on the same day of the month as the contract date and that date is the 29th, 30th or 31st of the month, then the transaction will occur on either the 28th day of the month or the 1st day of the next month, whichever is the closest business day. o When a charge is to be deducted on a contract date anniversary that is a non-business day, we will deduct the charge on the next business day. CONTRIBUTIONS AND TRANSFERS o Contributions allocated to the variable investment options are invested at the value next determined after the close of the business day. o Contributions allocated to a fixed maturity option will receive the rate to maturity in effect for that fixed maturity option on that business day. o Initial contributions allocated to the account for special dollar cost averaging receive the interest rate in effect on that business day. At certain times, we may offer the opportunity to lock in the interest rate for an initial contribution to be received under Section 1035 exchanges and trustee to trustee transfers. Your registered representative can provide information or you can call our Processing Office. o Transfers to or from variable investment options will be made at the value next determined after the close of the business day. o Transfers to a fixed maturity option will be based on the rate to maturity in effect for that fixed maturity option on the business day of the transfer. ABOUT YOUR VOTING RIGHTS As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we have the right to vote on certain matters involving the Portfolios, such as: o The election of trustees. o The formal approval of independent auditors selected for each trust. o Any other matters described in the prospectuses for the trusts or requiring a shareholders' vote under the Investment Company Act of 1940. We will give contract owners the opportunity to instruct us how to vote the number of shares attributable to their contracts if a shareholder vote is taken. If we do not receive instructions in time from all contract owners, we will vote the shares of a Portfolio for which no instructions have been received in the same proportion as we vote shares of that Portfolio for which we have received instructions. We will also vote any shares that we are entitled to vote directly because of amounts we have in a Portfolio in the same proportions that contract owners vote. VOTING RIGHTS OF OTHERS Currently, we control each trust. EQ Advisors Trust shares are sold only to our separate accounts and an affiliated qualified plan trust. The Hudson River Trust shares are held by other separate accounts of ours and by separate accounts of insurance companies unaffiliated with us. Shares held by these separate accounts will probably be voted according to the instructions of the owners of insurance policies and contracts issued by those insurance companies. While this will dilute the effect of the voting instructions of the contract owners, we currently do not foresee any disadvantages because of this. The Hudson River Trust Board of Trustees intends to monitor events in order to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a response to any of those events insufficiently protects our contract owners, we will see to it that appropriate action is taken. - -------------------------------------------------------------------------------- More information 77 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEPARATE ACCOUNT NO. 45 VOTING RIGHTS If actions relating to Separate Account No. 45 require contract owner approval, contract owners will be entitled to one vote for each unit they have in the variable investment options. Each contract owner who has elected a variable annuity payout option may cast the number of votes equal to the dollar amount of reserves we are holding for that annuity in a variable investment option divided by the annuity unit value for that option. We will cast votes attributable to any amounts we have in the variable investment options in the same proportion as votes cast by contract owners. CHANGES IN APPLICABLE LAW The voting rights we describe in this prospectus are created under applicable federal securities laws. To the extent that those laws or the regulations published under those laws eliminate the necessity to submit matters for approval by persons having voting rights in separate accounts of insurance companies, we reserve the right to proceed in accordance with those laws or regulations. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting to address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission-critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system that is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon Separate Account No. 45, our ability to meet our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The financial statements of Equitable Life incorporated in this prospectus by reference to the Annual Report on Form - -------------------------------------------------------------------------------- 78 More information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 10-K at December 31, 1998 and 1997, and for the three years ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING You can transfer ownership of an NQ contract at any time before annuity payments begin. We will continue to treat you as the owner until we receive notification of any change at our Processing Office. You cannot assign your NQ contract as collateral or security for a loan. Loans are also not available under your NQ contract. In some cases, an assignment or change of ownership may have adverse tax consequences. See "Tax information." You cannot assign or transfer ownership of an IRA, QP or Rollover TSA contract except by surrender to us. Loans are not available and you cannot assign IRA and QP contracts as security for a loan or other obligation. If the employer that provided the funds does not restrict them, loans are available under a Rollover TSA contract. For limited transfers of ownership after the owner's death see "Payment of death benefit" and "Beneficiary continuation option for Rollover IRA and Flexible Premium IRA contracts." You may direct the transfer of the values under your IRA, QP or Rollover TSA contract to another similar arrangement. Under federal income tax rules, in the case of such a transfer, we will impose a withdrawal charge, if one applies. DISTRIBUTION OF THE CONTRACTS EQ Financial Consultants, Inc ("EQF"), an indirect, wholly owned subsidiary of Equitable Life, is the distributor of the contracts and has responsibility for sales and marketing functions for Separate Account No. 45. During 1999, EQF plans to change its name to AXA Advisors, Inc. EQF serves as the principal underwriter of Separate Account No. 45. EQF is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. EQF's principal business address is 1290 Avenue of the Americas, New York, New York 10104. Pursuant to a Distribution and Servicing Agreement between EQF, Equitable Life, and certain of Equitable Life's separate accounts, including Separate Account No. 45, Equitable Life paid EQF distribution fees of $325,380 for 1998, as the distributor of certain contracts and as the principal underwriter of certain separate accounts including Separate Account No. 45. Before May 1, 1998, Equitable Distributors, Inc. ("EDI"), also an indirect, wholly owned subsidiary of Equitable Life, served as the distributor of the contracts and the principal underwriter of Separate Account No. 45. Pursuant to a Distribution Agreement between Equitable Life, certain of Equitable Life's separate accounts, including Separate Account No. 45, and EDI, Equitable Life paid EDI distribution fees of $9,444,621 for 1997 and $888,486 for 1996 as the distributor of certain contracts and as the principal underwriter of certain separate accounts including Separate Account No. 45. The contracts will be sold by registered representatives of EQF and its affiliates, who are also our licensed insurance agents. EQF may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. The offering of the contracts is intended to be continuous. - -------------------------------------------------------------------------------- Investment performance 79 - -------------------------------------------------------------------------------- 9 Investment performance - -------------------------------------------------------------------------------- We provide the following tables to show five different measurements of the investment performance of the variable investment options and/or the Portfolios in which they invest. We include these tables because they may be of general interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR RESULTS WILL DIFFER. Table 1 shows the average annual total return of the variable investment options. Average annual total return is the annual rate of growth that would be necessary to achieve the ending value of a contribution invested in the variable investment options for the periods shown. Table 2 shows the growth of a hypothetical $1,000 investment in the variable investment options over the periods shown. Both Tables 1 and 2 take into account all fees and charges under the contract, including the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge under Flexible Premium IRA and Roth Flexible Premium IRA contracts, but do not take the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee, into account. Tables 3, 4, and 5 show the rates of return of the variable investment options on an annualized, cumulative, and year-by-year basis. These tables take into account all fees and charges under the contract, but do not reflect the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge or the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee. If the charges were reflected they would effectively reduce the rates of return shown. In all cases the results shown are based on the actual historical investment experience of the Portfolios in which the variable investment options invest. In some cases, the results shown relate to periods when the variable investment options and/or the contracts were not available. In those cases, we adjusted the results of the Portfolios to reflect the charges under the contracts that would have applied had the investment options and/or contracts been available. The contracts were first offered on May 1, 1998. In addition, we have adjusted the results prior to October 1996, when The Hudson River Trust Class IB shares were not available, to reflect the 12b-1 fees currently imposed. Finally, the results shown for the Alliance Money Market and Alliance Common Stock options for periods before March 22, 1985 reflect the results of the variable investment options that preceded them. The "Since inception" figures for these options are based on the date of inception of the preceding variable investment options. We have adjusted these results to reflect the maximum investment advisory fee payable for the Portfolios, as well as an assumed charge of 0.06% for direct operating expenses. EQ Advisors Trust commenced operations on May 1, 1997. All rates of return presented are time-weighted and include reinvestment of investment income, including interest and dividends. BENCHMARKS Tables 3 and 4 compare the performance of variable investment options to market indices that serve as benchmarks. Market indices are not subject to any charges for investment advisory fees, brokerage commission or other operating expenses typically associated with a managed portfolio. Also, they do not reflect other contract charges such as the mortality and expense risks charge, administrative charges, or any withdrawal or optional benefit charge. Comparisons with these benchmarks, therefore, may be of limited use. We include them because they are widely known and may help you to understand the universe of securities from which each Portfolio is likely to select its holdings. Benchmark data reflect the reinvestment of dividend income. The benchmarks include: - -------------------------------------------------------------------------------- 80 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard & Poor's Mid-Cap Total Return Index. ALLIANCE COMMON STOCK: Standard & Poor's 500 Index. ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond Composite Index and 30% Standard & Poor's 500 Index. ALLIANCE EQUITY INDEX: Standard & Poor's 500 Index ALLIANCE GLOBAL: Morgan Stanley Capital International World Index. ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index and 25% Value Line Convertibles Index. ALLIANCE GROWTH INVESTORS: 70% Standard & Poor's 500 Index and 30% Lehman Government/Corporate Bond Index. ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index. ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman Intermediate Government Bond Index. ALLIANCE INTERNATIONAL: Morgan Stanley Capital International Europe, Australia, Far East Index. ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index. ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index. EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index. BT EQUITY 500 INDEX: Standard & Poor's 500 Index. BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe, Australia, Far East Index. BT SMALL COMPANY INDEX: Russell 2000 Index. CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index. CAPITAL GUARDIAN U.S. EQUITY: Standard & Poor's 500 Index. EQ/EVERGREEN: Russell 2000 Index. EQ/EVERGREEN FOUNDATION: 60% Standard & Poor's 500 Index/40% Lehman Brothers Aggregate Bond Index. MFS EMERGING GROWTH COMPANIES: Russell 2000 Index. MFS GROWTH WITH INCOME: Standard & Poor's 500 Index. MFS RESEARCH: Standard & Poor's 500 Index. MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index. MERRILL LYNCH WORLD STRATEGY: 36% Standard & Poor's 500 Index/24% Morgan Stanley Capital International Europe, Australia, Far East Index/21% Salomon Brothers U.S. Treasury Bond 1 Year+ 14% Salomon Brothers World Government Bond (excluding U.S.)/and 5% Three-Month U.S. Treasury Bill. MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International Emerging Markets Free Price Return Index. EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40% Lehman Government/ Corporate Bond Index. EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index. T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital International Europe, Australia, Far East Index. WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index. - -------------------------------------------------------------------------------- LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis Survey (Lipper Survey) records the performance of a large group of variable annuity products, including managed separate accounts of insurance companies. According to Lipper Analytical Services, Inc., the data are presented net of investment management fees, direct operating expenses and asset-based charges applicable under annuity contracts. Lipper data provide a more accurate picture than market benchmarks of the Equitable Accumulator performance relative to other variable annuity products. - -------------------------------------------------------------------------------- Investment performance 81 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 1 AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- -------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD --------------------------- 1 3 5 VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS - -------------------------------------------------------------------------------- Alliance Aggressive Stock (8.60)% 7.09% 8.76% - -------------------------------------------------------------------------------- Alliance Common Stock 20.02% 24.05% 19.18% - -------------------------------------------------------------------------------- Alliance Conservative Investors 4.77% 7.00% 6.64% - -------------------------------------------------------------------------------- Alliance Equity Index 18.73% 24.05% -- - -------------------------------------------------------------------------------- Alliance Global 12.56% 12.27% 11.55% - -------------------------------------------------------------------------------- Alliance Growth & Income 11.64% 18.96% 15.09% - -------------------------------------------------------------------------------- Alliance Growth Investors 9.93% 12.51% 11.18% - -------------------------------------------------------------------------------- Alliance High Yield (13.96)% 7.72% 7.28% - -------------------------------------------------------------------------------- Alliance Intermediate Government Securities (1.27)% 2.49% 2.60% - -------------------------------------------------------------------------------- Alliance International 1.51% 1.81% -- - -------------------------------------------------------------------------------- Alliance Money Market (3.64)% 1.59% 2.40% - -------------------------------------------------------------------------------- Alliance Small Cap Growth (13.03)% -- -- - -------------------------------------------------------------------------------- BT Equity 500 Index 16.14% -- -- - -------------------------------------------------------------------------------- BT International Equity Index 11.17% -- -- - -------------------------------------------------------------------------------- BT Small Company Index (10.93)% -- -- - -------------------------------------------------------------------------------- MFS Emerging Growth Companies 25.40% -- -- - -------------------------------------------------------------------------------- MFS Research 15.13% -- -- - -------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity 2.78% -- -- - -------------------------------------------------------------------------------- Merrill Lynch World Strategy (1.92)% -- -- - -------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity (35.31)% -- -- - -------------------------------------------------------------------------------- EQ/Putnam Balanced 3.00% -- -- - -------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value 4.00% -- -- - -------------------------------------------------------------------------------- T. Rowe Price Equity Income 0.30% -- -- - -------------------------------------------------------------------------------- T. Rowe Price International Stock 4.86% -- -- - -------------------------------------------------------------------------------- Warburg Pincus Small Company Value (18.52)% -- -- - -------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- LENGTH OF INVESTMENT PERIOD ----------------------------------------------- SINCE SINCE PORTFOLIO 10 OPTION PORTFOLIO INCEPTION VARIABLE INVESTMENT OPTIONS YEARS INCEPTION* INCEPTION DATE - ----------------------------------------------------------------------------------------------- Alliance Aggressive Stock 6.79% -- -- 1/27/86 - ----------------------------------------------------------------------------------------------- Alliance Common Stock 6.35% -- -- 1/13/76 - ----------------------------------------------------------------------------------------------- Alliance Conservative Investors -- 8.58% 7.08% 10/2/89 - ----------------------------------------------------------------------------------------------- Alliance Equity Index -- 23.15% 20.82% 3/1/94 - ----------------------------------------------------------------------------------------------- Alliance Global 2.58% 12.90% 9.65% 8/27/97 - ----------------------------------------------------------------------------------------------- Alliance Growth & Income -- 18.15% 12.26% 10/1/93 - ----------------------------------------------------------------------------------------------- Alliance Growth Investors -- 13.87% 12.68% 10/2/89 - ----------------------------------------------------------------------------------------------- Alliance High Yield 8.93% -- -- 1/2/87 - ----------------------------------------------------------------------------------------------- Alliance Intermediate Government Securities -- 3.78% 4.71% 4/1/91 - ----------------------------------------------------------------------------------------------- Alliance International -- 3.67% 4.00% 4/3/95 - ----------------------------------------------------------------------------------------------- Alliance Money Market 3.35% -- -- 7/13/81 - ----------------------------------------------------------------------------------------------- Alliance Small Cap Growth -- 5.51% 5.51% 5/1/97 - ----------------------------------------------------------------------------------------------- BT Equity 500 Index -- 16.14% 16.14% 12/31/97 - ----------------------------------------------------------------------------------------------- BT International Equity Index -- 11.17% 11.17% 12/31/97 - ----------------------------------------------------------------------------------------------- BT Small Company Index -- (10.93)% (10.93)% 12/31/97 - ----------------------------------------------------------------------------------------------- MFS Emerging Growth Companies -- 24.05% 24.05% 5/1/97 - ----------------------------------------------------------------------------------------------- MFS Research -- 15.64% 15.64% 5/1/97 - ----------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity -- 9.86% 9.86% 5/1/97 - ----------------------------------------------------------------------------------------------- Merrill Lynch World Strategy -- 1.19% 1.19% 5/1/97 - ----------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity -- (35.31)% (28.99)% 8/20/97 - ----------------------------------------------------------------------------------------------- EQ/Putnam Balanced -- 8.69% 8.69% 5/1/97 - ----------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value -- 10.08% 10.08% 5/1/97 - ----------------------------------------------------------------------------------------------- T. Rowe Price Equity Income -- 11.02% 11.02% 5/1/97 - ----------------------------------------------------------------------------------------------- T. Rowe Price International Stock -- 1.23% 1.23% 5/1/97 - ----------------------------------------------------------------------------------------------- Warburg Pincus Small Company Value -- (1.03)% (1.03)% 5/1/97 - -----------------------------------------------------------------------------------------------
- ---------- * The since inception dates for the variable investment options are as follows: Alliance Aggressive Stock, Alliance Common Stock, Alliance Conservative Investors, Alliance Equity Index, Alliance Global, Alliance Growth & Income, Alliance Growth Investors, Alliance High Yield, Alliance Intermediate Government Securities, Alliance International, Alliance Money Market, Alliance Small Cap Growth, BT Equity 500 Index, BT International Equity Index, BT Small Company Index, EQ/Putnam Balanced, EQ/Putnam Growth & Income Value, MFS Emerging Growth Companies, MFS Research, Merrill Lynch Basic Value Equity, Merrill Lynch World Strategy, Morgan Stanley Emerging Markets Equity, T. Rowe Price Equity Income, T. Rowe Price International Stock, and Warburg Pincus Small Company Value (May 1, 1998). The inception dates for the Portfolios that became available on or after December 31, 1998 and are therefore not shown in the tables are: EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity (May 1, 1999). - -------------------------------------------------------------------------------- 82 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 2 GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------- Length of investment period ---------------------------------------------------------------------- Since 1 3 5 10 portfolio Variable investment options year years years years inception* - ------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock $ 914.00 $1,228.21 $1,521.63 $4,719.54 -- - ------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock $1,200.20 $1,908.73 $2,404.59 $4,547.90 -- - ------------------------------------------------------------------------------------------------------------------------- Alliance Conservative Investors $1,047.70 $1,225.00 $1,379.44 -- $1,982.04 - ------------------------------------------------------------------------------------------------------------------------- Alliance Equity Index $1,187.30 $1,908.72 -- -- $2,574.27 - ------------------------------------------------------------------------------------------------------------------------- Alliance Global $1,125.60 $1,414.94 $1,726.85 $3,269.70 $3,019.33 - ------------------------------------------------------------------------------------------------------------------------- Alliance Growth & Income $1,116.40 $1,683.32 $2,019.39 -- $2,001.59 - ------------------------------------------------------------------------------------------------------------------------- Alliance Growth Investors $1,099.30 $1,424.03 $1,698.74 -- $3,300.32 - ------------------------------------------------------------------------------------------------------------------------- Alliance High Yield $ 860.40 $1,250.11 $1,421.32 $2,352.06 -- - ------------------------------------------------------------------------------------------------------------------------- Alliance Intermediate Government Securities $ 987.30 $1,076.51 $1,137.21 -- $1,444.69 - ------------------------------------------------------------------------------------------------------------------------- Alliance International $1,015.10 $1,055.26 -- -- $1,169.83 - ------------------------------------------------------------------------------------------------------------------------- Alliance Money Market $ 963.60 $1,048.36 $1,126.12 $1,390.07 -- - ------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth $ 869.70 -- -- -- $1,113.16 - ------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index $1,161.40 -- -- -- $1,161.40 - ------------------------------------------------------------------------------------------------------------------------- BT International Equity Index $1,111.70 -- -- -- $1,111.70 - ------------------------------------------------------------------------------------------------------------------------- BT Small Company Index $ 890.70 -- -- -- $ 890.70 - ------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies $1,254.00 -- -- -- $1,538.76 - ------------------------------------------------------------------------------------------------------------------------- MFS Research $1,151.30 -- -- -- $1,337.29 - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity $1,027.80 -- -- -- $1,206.83 - ------------------------------------------------------------------------------------------------------------------------- Merrill Lynch World Strategy $ 980.80 -- -- -- $1,023.94 - ------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity $ 646.90 -- -- -- $ 504.25 - ------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Balanced $1,030.00 -- -- -- $1,181.35 - ------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value $1,040.00 -- -- -- $1,211.78 - ------------------------------------------------------------------------------------------------------------------------- T. Rowe Price Equity Income $1,003.00 -- -- -- $1,232.45 - ------------------------------------------------------------------------------------------------------------------------- T. Rowe Price International Stock $1,048.60 -- -- -- $1,024.67 - ------------------------------------------------------------------------------------------------------------------------- Warburg Pincus Small Company Value $ 814.80 -- -- -- $ 979.50 - -------------------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 83 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 3 ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- ------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 8.97% 9.67% 16.99% -- 15.88% - ------------------------------------------------------------------------------------------------------------------- Lipper Mid--Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.69% - ------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 17.77% 15.56% 16.49% -- 14.78% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 25.56% 19.97% 16.74% 16.71% 14.53% - ------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE CONSERVATIVE INVESTORS 12.07% 8.93% 7.65% -- -- 8.24% - ------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55% - ------------------------------------------------------------------------------------------------------------------- Benchmark 15.59% 14.45% 13.37% -- -- 12.08% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE EQUITY INDEX 26.03% 25.56% -- -- -- 22.35% - ------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 28.05% 27.67% -- -- -- 24.31% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 28.23% -- -- -- 24.79% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE GLOBAL 19.86% 14.05% 12.43% 12.97% -- 10.76% - ------------------------------------------------------------------------------------------------------------------- Lipper Global 14.34% 14.67% 11.98% 11.21% -- 9.64% - ------------------------------------------------------------------------------------------------------------------- Benchmark 24.34% 17.77% 15.68% 10.66% -- 9.55% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE GROWTH & INCOME 18.94% 20.57% 15.93% -- -- 14.97% - ------------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.61% 21.25% 18.35% -- -- 17.89% - ------------------------------------------------------------------------------------------------------------------- Benchmark 20.10% 23.99% 21.07% -- -- 20.48% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE GROWTH INVESTORS 17.23% 14.28% 12.08% -- -- 14.21% - ------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55% - ------------------------------------------------------------------------------------------------------------------- Benchmark 22.85% 22.69% 19.96% -- -- 15.55% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 9.57% 8.23% 9.39% -- 8.73% - ------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97% - ------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 6.03% 4.56% 3.71% -- -- 5.41% - ------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Government 7.68% 6.21% 5.91% -- -- 7.25% - ------------------------------------------------------------------------------------------------------------------- Benchmark 8.49% 6.74% 6.45% -- -- 7.60% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE INTERNATIONAL 8.81% 3.90% -- -- -- 5.76% - ------------------------------------------------------------------------------------------------------------------- Lipper International 13.02% 9.94% -- -- -- 10.74% - ------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% 9.00% -- -- -- 9.68% - ------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 3.68% 3.49% 3.90% -- 5.38% - ------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77% - ------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76% - -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 84 Investment performance - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ----------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 10.53% - ----------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 16.72% - ----------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 16.58% - ----------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - ----------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ----------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - ----------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.17% - ----------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - ----------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - ----------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.53% - ----------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ----------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 33.03% - ----------------------------------------------------------------------------------------------------------------- Lipper Mid--Cap 15.97% -- -- -- -- 22.72% - ----------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 14.53% - ----------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 22.75% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 28.73% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ----------------------------------------------------------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY 10.08% -- -- -- -- 15.76% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ----------------------------------------------------------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY 5.38% -- -- -- -- 5.50% - ----------------------------------------------------------------------------------------------------------------- Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15% - ----------------------------------------------------------------------------------------------------------------- Benchmark 19.55% -- -- -- -- 20.00% - ----------------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY (28.01)% -- -- -- -- (33.62)% - ----------------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)% - ----------------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (28.92)% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM BALANCED 10.30% -- -- -- -- 14.38% - ----------------------------------------------------------------------------------------------------------------- Lipper Balanced 14.61% -- -- -- -- 17.83% - ----------------------------------------------------------------------------------------------------------------- Benchmark 21.36% -- -- -- -- 23.48% - ----------------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME VALUE 11.30% -- -- -- -- 16.03% - ----------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - ----------------------------------------------------------------------------------------------------------------- T. ROWE PRICE EQUITY INCOME 7.60% -- -- -- -- 17.14% - ----------------------------------------------------------------------------------------------------------------- Lipper Equity Income 10.76% -- -- -- -- 19.07% - ----------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 31.63% - -----------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Investment performance 85 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------- T. ROWE PRICE INTERNATIONAL STOCK 12.16% -- -- -- -- 5.57% - ------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 9.06% - ------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 13.43% - ------------------------------------------------------------------------------------------------------------------- WARBURG PINCUS SMALL COMPANY VALUE (11.22)% -- -- -- -- 2.84% - ------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 16.77% - ------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 14.53% - -------------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- 86 Investment performance - -------------------------------------------------------------------------------- TABLE 4 CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998:
- -------------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK (1.30)% 29.40% 58.67% 380.08% -- 572.32% - -------------------------------------------------------------------------------------------------------------------------- Lipper Mid--Cap Growth 12.16% 58.64% 102.73% 334.88% -- 448.32% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE COMMON STOCK 27.32% 97.96% 148.48% 370.07% 2,099.77% 2,154.10% - -------------------------------------------------------------------------------------------------------------------------- Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE CONSERVATIVE INVESTORS 12.07% 29.27% 44.55% -- -- 107.87% - -------------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio 14.20% 55.28% 97.15% -- -- 202.48% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 15.59% 49.92% 87.28% -- -- 187.40% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE EQUITY INDEX 26.03% 97.97% -- -- -- 165.205% - -------------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 28.05% 108.12% -- -- -- 186.34% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% 110.85% -- -- -- 192.17% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE GLOBAL 19.86% 48.36% 79.63% 238.62% -- 218.67% - -------------------------------------------------------------------------------------------------------------------------- Lipper Global 14.34% 51.58% 77.94% 194.96% -- 188.08% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 24.34% 63.34% 107.19% 175.31% -- 181.57% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE GROWTH & INCOME 18.94% 75.29% 109.41% -- -- 108.03% - -------------------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.61% 79.05% 133.95% -- -- 139.10% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 20.10% 90.62% 160.09% -- -- 166.00% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE GROWTH INVESTORS 17.23% 49.26% 76.90% -- -- 241.78% - -------------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio 14.20% 55.28% 97.15% -- -- 202.48% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 22.85% 84.68% 148.41% -- -- 280.88% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE HIGH YIELD (6.66)% 31.56% 48.53% 145.25% -- 172.86% - -------------------------------------------------------------------------------------------------------------------------- Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 6.03% 14.30% 19.96% -- -- 50.39% - -------------------------------------------------------------------------------------------------------------------------- Lipper Intermediate Government 7.68% 19.84% 33.36% -- -- 72.35% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 8.49% 21.61% 36.71% -- -- 76.55% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE INTERNATIONAL 8.81% 12.15% -- -- -- 23.33% - -------------------------------------------------------------------------------------------------------------------------- Lipper International 13.02% 33.62% -- -- -- 47.74% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% 29.52% -- -- -- 41.40% - -------------------------------------------------------------------------------------------------------------------------- ALLIANCE MONEY MARKET 3.66% 11.45% 18.71% 46.56% -- 149.59% - -------------------------------------------------------------------------------------------------------------------------- Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68% - -------------------------------------------------------------------------------------------------------------------------- Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45% - --------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 87 Investment performance - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH (5.73)% -- -- -- -- 18.19% - ------------------------------------------------------------------------------------------------------------------- Lipper Small Company Growth (0.33)% -- -- -- -- 28.98% - ------------------------------------------------------------------------------------------------------------------- Benchmark 1.23% -- -- -- -- 29.23% - ------------------------------------------------------------------------------------------------------------------- BT EQUITY 500 INDEX 23.44% -- -- -- -- 23.44% - ------------------------------------------------------------------------------------------------------------------- Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 28.58% - ------------------------------------------------------------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX 18.47% -- -- -- -- 18.47% - ------------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 12.23% - ------------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 20.00% - ------------------------------------------------------------------------------------------------------------------- BT SMALL COMPANY INDEX (3.63)% -- -- -- -- (3.63)% - ------------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 1.49% - ------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- (2.54)% - ------------------------------------------------------------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES 32.70% -- -- -- -- 60.99% - ------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap 15.97% -- -- -- -- 42.16% - ------------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 25.40% - ------------------------------------------------------------------------------------------------------------------- MFS RESEARCH 22.43% -- -- -- -- 40.79% - ------------------------------------------------------------------------------------------------------------------- Lipper Growth 25.82% -- -- -- -- 52.86% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY 10.08% -- -- -- -- 27.65% - ------------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 15.59% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY 5.38% -- -- -- -- 9.34% - ------------------------------------------------------------------------------------------------------------------- Lipper Global Flexible Portfolio 9.34% -- -- -- -- 19.41% - ------------------------------------------------------------------------------------------------------------------- Benchmark 19.55% -- -- -- -- 33.33% - ------------------------------------------------------------------------------------------------------------------- MORGAN STANLEY EMERGING - ------------------------------------------------------------------------------------------------------------------- MARKETS EQUITY (28.01)% -- -- -- -- (42.83)% - ------------------------------------------------------------------------------------------------------------------- Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)% - ------------------------------------------------------------------------------------------------------------------- Benchmark (25.34)% -- -- -- -- (36.71)% - ------------------------------------------------------------------------------------------------------------------- EQ/PUTNAM BALANCED 10.30% -- -- -- -- 25.12% - ------------------------------------------------------------------------------------------------------------------- Lipper Balanced 14.61% -- -- -- -- 31.59% - ------------------------------------------------------------------------------------------------------------------- Benchmark 21.36% -- -- -- -- 42.22% - ------------------------------------------------------------------------------------------------------------------- EQ/PUTNAM GROWTH & INCOME - ------------------------------------------------------------------------------------------------------------------- VALUE 11.30% -- -- -- -- 28.16% - ------------------------------------------------------------------------------------------------------------------- Lipper Growth & Income 15.54% -- -- -- -- 38.49% - ------------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------------- T. ROWE PRICE EQUITY INCOME 7.60% -- -- -- -- 30.21% - ------------------------------------------------------------------------------------------------------------------- Lipper Equity Income 10.76% -- -- -- -- 33.92% - -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 88 Investment performance - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------- SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - -------------------------------------------------------------------------------------------------------------- Benchmark 28.58% -- -- -- -- 57.60% - -------------------------------------------------------------------------------------------------------------- T. ROWE PRICE INTERNATIONAL STOCK 12.16% -- -- -- -- 9.46% - -------------------------------------------------------------------------------------------------------------- Lipper International 12.17% -- -- -- -- 15.88% - -------------------------------------------------------------------------------------------------------------- Benchmark 20.00% -- -- -- -- 23.42% - -------------------------------------------------------------------------------------------------------------- WARBURG PINCUS SMALL COMPANY VALUE (11.22)% -- -- -- -- 4.79% - -------------------------------------------------------------------------------------------------------------- Lipper Small Cap 1.53% -- -- -- -- 29.95% - -------------------------------------------------------------------------------------------------------------- Benchmark (2.54)% -- -- -- -- 25.40% - --------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- 89 Investment performance - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 5 YEAR-BY-YEAR RATES OF RETURN
- ------------------------------------------------------------------------------------------------------------------------------------ 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Aggressive Stock 41.22% 6.43% 83.89% (4.71)% 14.89% (5.35)% 29.54% 20.24% 9.04% (1.30)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Common Stock 23.60% (9.59)% 35.69% 1.57% 22.83% (3.70)% 30.34% 22.28% 27.16% 27.32% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Conservative Investors 2.67% 4.66% 17.97% 4.03% 9.04% (5.63)% 18.49% 3.52% 11.43% 12.07% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Equity Index -- -- -- -- -- (0.26)% 34.31% 20.42% 30.45% 26.03% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Global 24.72% (7.58)% 28.47% (2.10)% 30.01% 3.56% 16.92% 12.76% 9.77% 19.86% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Growth & Income -- -- -- -- (0.66)% (2.16)% 22.10% 18.16% 24.73% 18.94% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Growth Investors 3.42% 8.89% 46.53% 3.22% 13.43% (4.70)% 24.36% 10.80% 14.92% 17.23% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance High Yield 3.46% (2.70)% 22.48% 10.51% 21.19% (4.33)% 18.01% 20.91% 16.58% (6.66)% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Intermediate Government Securities -- -- 10.92% 3.90% 8.78% (5.90)% 11.52% 2.11% 5.58% 6.03% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance International -- -- -- -- -- -- 9.97% 8.04% (4.60)% 8.81% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Money Market 7.45% 6.50% 4.49% 1.91% 1.32% 2.36% 4.06% 3.64% 3.74% 3.66% - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Small Cap Growth -- -- -- -- -- -- -- -- 25.38%+ (5.73)% - ------------------------------------------------------------------------------------------------------------------------------------ BT Equity 500 Index -- -- -- -- -- -- -- -- -- 23.44% - ------------------------------------------------------------------------------------------------------------------------------------ BT International Equity Index -- -- -- -- -- -- -- -- -- 18.47% - ------------------------------------------------------------------------------------------------------------------------------------ BT Small Company Index -- -- -- -- -- -- -- -- -- (3.63)% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Companies -- -- -- -- -- -- -- -- 21.32%+ 32.70% - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research -- -- -- -- -- -- -- -- 14.99%+ 22.43% - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Basic Value Equity -- -- -- -- -- -- -- -- 15.97%+ 10.08% - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch World Strategy -- -- -- -- -- -- -- -- 3.76%+ 5.38% - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Emerging Markets Equity -- -- -- -- -- -- -- -- (20.59)%+ (28.01)% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Balanced -- -- -- -- -- -- -- -- 13.43%+ 10.30% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Growth & Income Value -- -- -- -- -- -- -- -- 15.15%+ 11.30% - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Income -- -- -- -- -- -- -- -- 21.01%+ 7.60% - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price International Stock -- -- -- -- -- -- -- -- (2.41)%+ 12.16% - ------------------------------------------------------------------------------------------------------------------------------------ Warburg Pincus Small Company Value -- -- -- -- -- -- -- -- 18.04%+ (11.22)% - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- + Returns for these options represent less than 12 months of performance. The returns are as of each portfolio inception date as shown in table 1. - -------------------------------------------------------------------------------- 90 Investment performance - -------------------------------------------------------------------------------- COMMUNICATING PERFORMANCE DATA In reports or other communications to contract owners or in advertising material, we may describe general economic and market conditions affecting our variable investment options, and the Portfolios and may compare the performance or ranking of those options and the Portfolios with: o those of other insurance company separate accounts or mutual funds included in the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS, or similar investment services that monitor the performance of insurance company separate accounts or mutual funds; o other appropriate indices of investment securities and averages for peer universes of mutual funds which are shown under "Benchmarks" above; or o data developed by us derived from such indices or averages. We also may furnish to present or prospective contract owners advertisements or other communications that include evaluations of a variable investment option or Portfolio by nationally recognized financial publications. Examples of such publications are: - ------------------------------------------------------------------------- Barron's Money Management Letter - ------------------------------------------------------------------------- Morningstar's Variable Annuity Sourcebook Investment Dealers Digest - ------------------------------------------------------------------------- Business Week National Underwriter - ------------------------------------------------------------------------- Forbes Pension & Investments - ------------------------------------------------------------------------- Fortune USA Today - ------------------------------------------------------------------------- Institutional Investor Investor's Business Daily - ------------------------------------------------------------------------- Money The New York Times - ------------------------------------------------------------------------- Kiplinger's Personal Finance The Wall Street Journal - ------------------------------------------------------------------------- Financial Planning The Los Angeles Times - ------------------------------------------------------------------------- Investment Adviser The Chicago Tribune - ------------------------------------------------------------------------- Investment Management Weekly - ------------------------------------------------------------------------- Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer universes of funds with similar investment objectives in its Lipper Survey. Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life Report (Morningstar Report). The Lipper Survey records performance data as reported to it by over 800 mutual funds underlying variable annuity and life insurance products. It divides these actively managed portfolios into 25 categories by portfolio objectives. The Lipper Survey contains two different universes, which reflect different types of fees in performance data: o The "separate account" universe reports performance data net of investment management fees, direct operating expenses and asset-based charges applicable under variable insurance and annuity contracts; and o The "mutual fund" universe reports performance net only of investment management fees and direct operating expenses, and therefore reflects only charges that relate to the underlying mutual fund. The Morningstar Variable Annuity/Life Report consists of nearly 700 variable life and annuity funds, all of which report their data net of investment management fees, direct operating expenses and separate account level charges. VARDS is a monthly reporting service that monitors approximately 2,500 variable life and variable annuity funds on performance and account information. YIELD INFORMATION Current yield for the Alliance Money Market option will be based on net changes in a hypothetical investment over a given seven-day period, exclusive of capital changes, and then "annualized" (assuming that the same seven-day result would occur each week for 52 weeks). Current yield for the Alliance High Yield option and Alliance Intermediate Government Securities option will be based on net changes in a hypothetical investment over a given 30-day period, exclusive of capital changes, and then "annualized" (assuming that the same 30-day result would occur each month for 12 months). "Effective yield" is calculated in a similar manner, but when annualized, any income earned by the investment is assumed to be reinvested. The "effective yield" will be slightly higher than the "current yield" because any earnings are compounded weekly for the Alliance Money Market option and monthly for the Alliance High Yield option and Alliance Intermediate Government Securities option. The yields and effective yields assume the deduction of all contract charges - -------------------------------------------------------------------------------- 91 Investment performance - -------------------------------------------------------------------------------- and expenses other than the withdrawal charge, the optional baseBUILDER benefits charge, the annual administrative charge, and any charge for taxes such as premium tax. The yields and effective yields for the Alliance Money Market option, when used for the special dollar cost averaging program, assume that no contract charges are deducted. For more information, see "Yield Information for the Alliance Money Market Option, Alliance High Yield Option Yield, and Alliance Intermediate Government Securities Option" in the SAI. - -------------------------------------------------------------------------------- 92 Incorporation of certain documents by reference - -------------------------------------------------------------------------------- 10 Incorporation of certain documents by reference - -------------------------------------------------------------------------------- Equitable Life's annual report on Form 10-K for the year ended December 31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to be a part of this prospectus because they are incorporated by reference. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered, a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). - -------------------------------------------------------------------------------- A-1 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- Appendix I: Condensed financial information - -------------------------------------------------------------------------------- UNIT VALUES AND NUMBER OF UNITS OUTSTANDING AT YEAR END FOR EACH VARIABLE INVESTMENT OPTION For the year ending Dec. 31, 1998 ------------------- THE HUDSON RIVER TRUST OPTIONS - --------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK - --------------------------------------------------------------------- Unit value $ 69.37 - --------------------------------------------------------------------- Number of units outstanding (000s) 293 - --------------------------------------------------------------------- ALLIANCE COMMON STOCK - --------------------------------------------------------------------- Unit value $ 237.18 - --------------------------------------------------------------------- Number of units outstanding (000s) 550 - --------------------------------------------------------------------- ALLIANCE CONSERVATIVE INVESTORS - --------------------------------------------------------------------- Unit value $ 21.20 - --------------------------------------------------------------------- Number of units outstanding (000s) 659 - --------------------------------------------------------------------- ALLIANCE EQUITY INDEX - --------------------------------------------------------------------- Unit value $ 26.73 - --------------------------------------------------------------------- Number of units outstanding (000s) 2 - --------------------------------------------------------------------- ALLIANCE GLOBAL - --------------------------------------------------------------------- Unit value $ 32.58 - --------------------------------------------------------------------- Number of units outstanding (000s) 354 - --------------------------------------------------------------------- ALLIANCE GROWTH & INCOME - --------------------------------------------------------------------- Unit value $ 20.99 - --------------------------------------------------------------------- Number of units outstanding (000s) 1,853 - --------------------------------------------------------------------- ALLIANCE GROWTH INVESTORS - --------------------------------------------------------------------- Unit value $ 34.84 - --------------------------------------------------------------------- Number of units outstanding (000s) 694 - --------------------------------------------------------------------- ALLIANCE HIGH YIELD - --------------------------------------------------------------------- Unit value $ 27.96 - --------------------------------------------------------------------- Number of units outstanding (000s) 801 - --------------------------------------------------------------------- ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES - --------------------------------------------------------------------- Unit value $ 15.25 - --------------------------------------------------------------------- Number of units outstanding (000s) 929 - --------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-2 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- - ----------------------------------------------------------------- FOR THE YEAR ENDING DEC. 31, 1998 --------------------- - ----------------------------------------------------------------- ALLIANCE INTERNATIONAL - ----------------------------------------------------------------- Unit value $ 12.40 - ----------------------------------------------------------------- Number of units outstanding (000s) 166 - ----------------------------------------------------------------- ALLIANCE MONEY MARKET - ----------------------------------------------------------------- Unit value $ 25.92 - ----------------------------------------------------------------- Number of units outstanding (000s) 1,566 - ----------------------------------------------------------------- ALLIANCE SMALL CAP GROWTH - ----------------------------------------------------------------- Unit value $ 11.82 - ----------------------------------------------------------------- Number of units outstanding (000s) 775 - ----------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - ----------------------------------------------------------------- BT EQUITY 500 INDEX - ----------------------------------------------------------------- Unit value $ 12.34 - ----------------------------------------------------------------- Number of units outstanding (000s) 2,426 - ----------------------------------------------------------------- BT INTERNATIONAL EQUITY INDEX - ----------------------------------------------------------------- Unit value $ 11.85 - ----------------------------------------------------------------- Number of units outstanding (000s) 242 - ----------------------------------------------------------------- BT SMALL COMPANY INDEX - ----------------------------------------------------------------- Unit value $ 9.64 - ----------------------------------------------------------------- Number of units outstanding (000s) 284 - ----------------------------------------------------------------- MFS EMERGING GROWTH COMPANIES - ----------------------------------------------------------------- Unit value $ 16.10 - ----------------------------------------------------------------- Number of units outstanding (000s) 1,942 - ----------------------------------------------------------------- MFS RESEARCH - ----------------------------------------------------------------- Unit value $ 14.08 - ----------------------------------------------------------------- Number of units outstanding (000s) 1,479 - ----------------------------------------------------------------- MERRILL LYNCH BASIC VALUE EQUITY - ----------------------------------------------------------------- Unit value $ 12.76 - ----------------------------------------------------------------- Number of units outstanding (000s) 1,009 - ----------------------------------------------------------------- MERRILL LYNCH WORLD STRATEGY - ----------------------------------------------------------------- Unit value $ 10.94 - ----------------------------------------------------------------- Number of units outstanding (000s) 140 - ----------------------------------------------------------------- MORGAN STANLEY EMERGING MARKETS EQUITY - ----------------------------------------------------------------- Unit value $ 5.72 - ----------------------------------------------------------------- Number of units outstanding (000s) 177 - ----------------------------------------------------------------- - -------------------------------------------------------------------------------- A-3 Appendix I: Condensed financial information - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For the year ending Dec. 31, 1998 --------------------- - ---------------------------------------------------------------- EQ/Putnam Balanced - ---------------------------------------------------------------- Unit value $ 12.51 - ---------------------------------------------------------------- Number of units outstanding (000s) 1,136 - ---------------------------------------------------------------- EQ/Putnam Growth & Income Value - ---------------------------------------------------------------- Unit value $ 12.82 - ---------------------------------------------------------------- Number of units outstanding (000s) 867 - ---------------------------------------------------------------- T. Rowe Price Equity Income - ---------------------------------------------------------------- Unit value $ 13.02 - ---------------------------------------------------------------- Number of units outstanding (000s) 1,059 - ---------------------------------------------------------------- T. Rowe Price International Stock - ---------------------------------------------------------------- Unit value $ 10.95 - ---------------------------------------------------------------- Number of units outstanding (000s) 705 - ---------------------------------------------------------------- Warburg Pincus Small Company Value - ---------------------------------------------------------------- Unit value $ 10.48 - ---------------------------------------------------------------- Number of units outstanding (000s) 560 - ---------------------------------------------------------------- - -------------------------------------------------------------------------------- B-1 Appendix II: Purchase considerations for QP contracts - -------------------------------------------------------------------------------- Appendix II: Purchase considerations for QP contracts - -------------------------------------------------------------------------------- Trustees who are considering the purchase of an Equitable Accumulator QP contract should discuss with their tax advisers whether this is an appropriate investment vehicle for the employer's plan. Trustees should consider whether the plan provisions permit the investment of plan assets in the QP contract, the distribution of such an annuity, the purchase of the guaranteed minimum income benefit, and the payment of death benefits in accordance with the requirements of the federal income tax rules. The QP contract and this prospectus should be reviewed in full, and the following factors, among others, should be noted. Assuming continued plan qualification and operation, earnings on qualified plan assets will accumulate value on a tax-deferred basis even if the plan is not funded by the Equitable Accumulator QP contract or another annuity. Therefore, you should purchase an Equitable Accumulator QP Contract to fund a plan for the contract's features and benefits other than tax deferral. This QP contract accepts transfer contributions only and not regular, ongoing payroll contributions. For 401(k) plans under defined contribution plans, no employee after-tax contributions are accepted. Under defined benefit plans, we will not accept rollovers from a defined contribution plan to a defined benefit plan. We will only accept transfers from a defined benefit plan or a change of investment vehicles in the plan. For defined benefit plans, the maximum percentage of actuarial value of the plan participant/employee's "normal retirement benefit" that can be funded by a QP contract is 80%. The account value under a QP contract may at any time be more or less than the lump sum actuarial equivalent of the "accrued benefit" for a defined benefit plan participant/employee. Equitable Life does not guarantee that the account value under a QP contract will at any time equal the actuarial value of 80% of a participant/employee's accrued benefit. If overfunding of a plan occurs, withdrawals from the QP contract may be required. A withdrawal charge and/or market value adjustment may apply. Further, Equitable Life will not perform or provide any plan recordkeeping services with respect to the QP contracts. The plan's administrator will be solely responsible for performing or providing for all such services. There is no loan feature offered under the QP contracts, so if the plan provides for loans and a participant/employee takes a loan from the plan, other plan assets must be used as the source of the loan and any loan repayments must be credited to other investment vehicles and/or accounts available under the plan. Given that required minimum distributions must commence from the plan for annuitants after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan funds) trustees should consider whether the QP contract is an appropriate purchase for annuitants approaching or over age 70 1/2. Finally, because the method of purchasing the QP contract and the features of the QP contract may appeal more to plan participants/employees who are older and tend to be highly paid, and because certain features of the QP contract are available only to plan participants/employees who meet certain minimum and/or maximum age requirements, plan trustees should discuss with their advisers whether the purchase of the QP contract would cause the plan to engage in prohibited discrimination in contributions, benefits or otherwise. - -------------------------------------------------------------------------------- C-1 Appendix III: Market value adjustment example - -------------------------------------------------------------------------------- Appendix III: Market value adjustment example - -------------------------------------------------------------------------------- The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a maturity value at the maturity date of $183,846. We further assume that a withdrawal of $50,000 is made four years later on February 15, 2004.
- ------------------------------------------------------------------------------------------------------------ Assumed rate to maturity on February 15, 2004 ----------------------------------------------- 5.00% 9.00% - ------------------------------------------------------------------------------------------------------------ AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------ (1) Market adjusted amount $ 144,048 $ 119,487 - ------------------------------------------------------------------------------------------------------------ (2) Fixed maturity amount 131,080 131,080 - ------------------------------------------------------------------------------------------------------------ (3) Market value adjustment: (1) - (2) 12,968 (11,593) - ------------------------------------------------------------------------------------------------------------ ON FEBRUARY 15, 2004 (AFTER WITHDRAWAL) - ------------------------------------------------------------------------------------------------------------ (4) Portion of market value adjustment associated with withdraw al: (3) x [$50,000/(1)] $ 4,501 $ (4,851) - ------------------------------------------------------------------------------------------------------------ (5) Reduction in fixed maturity amount: [$50,000 - (4)] 45,499 54,851 - ------------------------------------------------------------------------------------------------------------ (6) Fixed maturity amount: (2) - (5) 85,581 76,229 - ------------------------------------------------------------------------------------------------------------ (7) Maturity value 120,032 106,915 - ------------------------------------------------------------------------------------------------------------ (8) Market adjusted amount of (7) 94,048 69,487 - ------------------------------------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. - -------------------------------------------------------------------------------- D-1 Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- Appendix IV: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- The death benefit under the contracts is equal to the account value or, if greater, the guaranteed minimum death benefit. The following illustrates the guaranteed minimum death benefit calculation. Assuming $100,000 is allocated to the variable investment options (with no allocation to the Alliance Money Market option or the fixed maturity options), no additional contributions, no transfers and no withdrawals, and no loans under a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant age 45 would be calculated as follows:
- ----------------------------------------------------------------------------------------- 5% ROLL UP TO END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED CONTRACT GUARANTEED MINIMUM MINIMUM YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT 1 $105,000 $ 105,000(1) $ 105,000(3) - ----------------------------------------------------------------------------------------- 2 $115,500 $ 110,250(2) $ 115,500(3) - ----------------------------------------------------------------------------------------- 3 $129,360 $ 115,763(2) $ 129,360(3) - ----------------------------------------------------------------------------------------- 4 $103,488 $ 121,551(1) $ 129,360(4) - ----------------------------------------------------------------------------------------- 5 $113,837 $ 127,628(1) $ 129,360(4) - ----------------------------------------------------------------------------------------- 6 $127,497 $ 134,010(1) $ 129,360(4) - ----------------------------------------------------------------------------------------- 7 $127,497 $ 140,710(1) $ 129,360(4) - -----------------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We are using these rates solely to illustrate how the benefit is determined. The return rates bear no relationship to past or future investment results. 5% ROLL UP TO AGE 80 (1) At the end of contract year 1, and again at the end of contract years 4 through 7, the death benefit will be equal to the guaranteed minimum death benefit. (2) At the end of contract years 2 and 3, the death benefit will be equal to the current account value since it is higher than the current guaranteed minimum death benefit. ANNUAL RATCHET TO AGE 80 (3) At the end of contract years 1 through 3, the guaranteed minimum death benefit is equal to the current account value. (4) At the end of contract years 4 through 7, the guaranteed minimum death benefit is equal to the guaranteed minimum death benefit at the end of the prior year since it is equal to or higher than the current account value. - -------------------------------------------------------------------------------- E-1 Appendix V: Example of payments under the Assured Payment Option and APO Plus - -------------------------------------------------------------------------------- Appendix V: Example of payments under the Assured Payment Option and APO Plus - -------------------------------------------------------------------------------- The second column in the chart below illustrates the payments for a male age 70 who purchased the Assured Payment Option on February 14, 1997 with a single contribution of $100,000, with increasing annual payments. The payments are to commence on February 15, 1998. It assumes that the fixed period is 15 years and that the life contingent annuity will provide payments on a single life basis. Based on the rates to maturity for the fixed maturity options and the current purchase rate for the life contingent annuity, on February 14, 1997, the initial payment would be $6,730.77 and would increase in each three-year period to a final payment of $9,854.53. The first payment under the life contingent annuity would be $10,839.98. The the rates to maturity as of February 14, 1997 for fixed maturity options maturing on February 15, 1998 through 2012 are: 4.40%, 4.69%, 4.86%, 5.00%, 5.11%, 5.22%, 5.32%, 5.41%, 5.50%, 5.57%, 5.56%, 5.56%, 5.56%, 5.56% and 5.56%, respectively. Alternatively as shown in the third and fourth columns, this individual could purchase APO Plus with the same $100,000 contribution, with the same fixed period and the life contingent annuity on a single life basis. Assuming election of the Alliance Common Stock Option based on the rates to maturity for the fixed maturity options and the current purchase rate for the life contingent annuity, on February 14, 1997, the same initial payment of $6,730.77 would be purchased under APO Plus. However, unlike the payment under the Assured Payment Option that will increase every three years, this initial payment under APO Plus is not guaranteed to increase. Therefore, only $78,949.12 is needed to purchase the initial payment stream, and the remaining $21,050.87 is invested in the variable investment options. Any future increase in payments under APO Plus will depend on the investment performance in the Alliance Common Stock option. Assuming hypothetical average annual rates of return of 0% and 8% (after deduction of charges) for the variable investment option, the value in the variable investment option would grow to $21,050.87 and $26,518.03 respectively after three years. A portion of this amount is used to purchase the increase in the payments at the beginning of the fourth year. The remainder will stay in the variable investment option to be drawn upon for the purchase of increases in payments at the end of each third year thereafter during the fixed period and at the end of the fixed period under the life contingent annuity. Based on the rates to maturity for the fixed maturity options and purchase rates for the life contingent annuity as of February 14, 1997, the third and fourth columns illustrate the increasing payments that would be purchased under APO Plus assuming 0% and 8% rates of return respectively. Under both options, while you are living payments increase annually after the 16th year under the life contingent annuity based on the increase, if any, in the Consumer Price Index, but in no event greater than 3% per year. ANNUAL PAYMENTS
GUARANTEED INCREASING ILLUSTRATIVE ILLUSTRATIVE PAYMENTS PAYMENTS PAYMENTS UNDER THE UNDER UNDER YEARS ASSURED PAYMENT OPTION APO PLUS AT 0% APO PLUS AT 8% 1-3 $ 6,730.77 $ 6,730.77 $ 6,730.77 - -------------------------------------------------------------------------- 4-6 7,403.85 7,100.57 7,520.00 - -------------------------------------------------------------------------- 7-9 8,144.23 7,483.79 8,345.92 - -------------------------------------------------------------------------- 10-12 8,958.66 7,868.31 9,191.42 - -------------------------------------------------------------------------- 13-15 9,854.53 8,217.67 10,010.94 - -------------------------------------------------------------------------- 16 10,839.98 8,475.41 10,731.67 - --------------------------------------------------------------------------
- -------------------------------------------------------------------------------- E-2 Appendix V: Example of payments under the Assured Payment Option and APO Plus - -------------------------------------------------------------------------------- As described above, a portion of the illustrated contribution is applied to the life contingent annuity. This amount will generally be larger under the Assured Payment Option than under APO Plus. Also, a larger portion of the contribution will be allocated to fixed maturity options under the former than the latter. In this illustration, $80,458.33 is allocated under the Assured Payment Option to the fixed maturity options and under APO Plus, $68,020.34 is allocated to the fixed maturity options. In addition, under APO Plus $21,050.87 is allocated to the variable investment option. The balance of the $100,000 ($19,541.67 and $10,928.78, respectively) is applied to the life contingent annuity. The rates of return of 0% and 8% are for illustrative purposes only and are not intended to represent an expected or guaranteed rate of return. Your investment results will vary. Payments will also depend on the the rates to maturity and life contingent annuity purchase rates in effect on the day the contribution is applied. It is assumed that no lump sum withdrawals are taken. Statement of Additional Information - -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE Unit Values 2 Annuity Unit Values 2 Custodian and Independent Accountants 3 Yield Information for the Alliance Money Market Option, Alliance High Yield Option and Alliance Intermediate Government Securities Option 3 Long-Term Market Trends 4 Key Factors in Retirement Planning 6 Financial Statements 9 HOW TO OBTAIN AN EQUITABLE ACCUMULATOR STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT NO. 45 Send this request form to: Equitable Accumulator P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- Please send me an Equitable Accumulator SAI for Separate Account No. 49 dated May 1, 1999. ________________________________________________________________________________ Name: ________________________________________________________________________________ Address: ________________________________________________________________________________ City State Zip (AGENTSAI) - -------------------------------------------------------------------------------- What is the Equitable Accumulator Select? 1 - -------------------------------------------------------------------------------- Equitable Accumulator(SM) Select A combination variable and fixed deferred annuity contract Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing, or taking any other action under your contract. Also, at the end of this prospectus you will find attached the prospectuses for The Hudson River Trust and EQ Advisors Trust, which contain important information about their Portfolios. MAY 1, 1999 - -------------------------------------------------------------------------------- WHAT IS THE EQUITABLE ACCUMULATOR SELECT? Equitable Accumulator Select is a deferred annuity contract issued by The EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. It provides for the accumulation of retirement savings and for income. The contract offers income and death benefit protection. It also offers a number of payout options. You invest to accumulate value on a tax-deferred basis in one or more of our variable investment options or fixed maturity options ("investment options"). There is no withdrawal charge under the contract. However, we deduct a distribution charge calculated as a percentage of the amounts in the variable investment options. We deduct this charge for the life of the contract. This contract is not available in New York. - -------------------------------------------------------------------------------- VARIABLE INVESTMENT OPTIONS - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME INTERNATIONAL EQUITY - ------------------------------------- ------------------------------------- o Alliance Money Market o Alliance Global o Alliance Intermediate o Alliance International Government Securities - ------------------------------------- o T. Rowe Price International AGGRESSIVE FIXED INCOME Stock - ------------------------------------- o Alliance High Yield o Morgan Stanley Emerging - ------------------------------------- Markets Equity DOMESTIC EQUITY - ------------------------------------- o BT International Equity o T. Rowe Price Equity Income ------------------------------------- AGRESSIVE EQUITY o EQ/Putnam Growth & Income ------------------------------------- Value o BT Small Company Index o Alliance Growth & Income o Alliance Aggressive Stock o MFS Growth with Income o Warburg Pincus Small Company Value o EQ/Evergreen o Alliance Small Cap Growth o BT Equity 500 Index o MFS Emerging Growth o Merrill Lynch Basic Value Equity Companies o Alliance Common Stock o Alliance Conservative Investors o MFS Research o EQ/Putnam Balanced o EQ/Alliance Premier Growth o EQ/Evergreen Foundation o Capital Guardian Research o Alliance Growth Investors o Capital Guardian U.S. Equity o Merrill Lynch World Strategy - -------------------------------------------------------------------------------- You may allocate amounts to any of the variable investment options. They, in turn, invest in a corresponding securities portfolio ("Portfolio") of The Hudson River Trust or EQ Advisors Trust. Your investment results in a variable investment option will depend on the investment performance of the related Portfolio. Each variable investment option is a subaccount of our Separate Account No. 45. PROS 4AGTACS (5/99) FIXED MATURITY OPTIONS. You may allocate amounts to one or more fixed maturity options. These amounts will receive a fixed rate of interest for a specified period. Interest is earned at a guaranteed rate we set. We make a market value adjustment (up or down) if you make transfers or withdrawals from a fixed maturity option before its maturity date. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An annuity which is an investment vehicle for a qualified defined contribution or defined benefit plan ("QP"). o An individual retirement annuity ("IRA"), either traditional IRA ("Rollover IRA") or Roth IRA ("Roth Conversion IRA"). o An Internal Revenue Code Section 403(b) Tax Sheltered Annuity ("TSA")--("Rollover TSA"). A contribution of at least $25,000 is required to purchase a contract. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The statement of additional information ("SAI") dated May 1, 1999, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our Processing Office or calling 1-800-789-7771. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL. - -------------------------------------------------------------------------------- Contents of this prospectus 2 - -------------------------------------------------------------------------------- Contents of this prospectus - -------------------------------------------------------------------------------- EQUITABLE ACCUMULATOR(SM) SELECT - --------------------------------------------------------------- Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 Equitable Accumulator Select at a glance -- key features 8 - --------------------------------------------------------------- FEE TABLE 10 - --------------------------------------------------------------- Examples 13 - --------------------------------------------------------------- 1 CONTRACT FEATURES AND BENEFITS 15 - --------------------------------------------------------------- How you can purchase and contribute to your contract 15 Owner and annuitant requirements 17 How you can make your contributions 17 What are your investment options under the contract? 17 Portfolios of The Hudson River Trust 18 Portfolios of EQ Advisors Trust 18 Allocating your contributions 21 Our baseBUILDER option 22 Guaranteed minimum death benefit 25 Your right to cancel within a certain number of days 26 - --------------------------------------------------------------- 2 DETERMINING YOUR CONTRACT'S VALUE 27 - --------------------------------------------------------------- Your account value 27 Your contract's value in the variable investment options 27 Your contract's value in the fixed maturity options 27 - -------------------------------------------------------------------------------- "We," "our" and "us" refer to Equitable Life. When we address the reader of this prospectus with words such as "you" and "your," we mean the person who has the right or responsibility that the prospectus is discussing at that point. This is usually the contract owner. When we use the word "contract" it also includes certificates that are issued under group contracts in some states. - -------------------------------------------------------------------------------- Contents of this prospectus 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 TRANSFERRING YOUR MONEY AMONG INVESTMENT OPTIONS 28 - -------------------------------------------------------------------- Transferring your account value 28 Rebalancing your account value 28 - -------------------------------------------------------------------- 4 ACCESSING YOUR MONEY 29 - -------------------------------------------------------------------- Withdrawing your account value 29 How withdrawals are taken from your account value 30 How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit 30 Loans under Rollover TSA contracts 31 Surrendering your contract to receive its cash value 32 When to expect payments 32 Choosing your annuity payout options 32 - -------------------------------------------------------------------- 5 CHARGES AND EXPENSES 35 - -------------------------------------------------------------------- Charges that Equitable Life deducts 35 Charges that trusts deduct 36 Group or sponsored arrangements 36 - -------------------------------------------------------------------- 6 PAYMENT OF DEATH BENEFIT 37 - -------------------------------------------------------------------- Your beneficiary and payment of benefit 37 How death benefit payment is made 37 Beneficiary continuation option for Rollover IRA contracts 38 - -------------------------------------------------------------------- 7 TAX INFORMATION 39 - ------------------------------------------------------------------- Overview 39 Transfers among investment options 39 Taxation of nonqualified annuities 39 Special rules for NQ contracts issued in Puerto Rico 40 Individual retirement arrangements ("IRAs") 41 Special rules for nonqualified contracts in qualified plans 49 Tax Sheltered Annuity contracts (TSAs) 49 Federal and state income tax withholding and information reporting 54 Impact of taxes to Equitable Life 55 - -------------------------------------------------------------------- 8 MORE INFORMATION 56 - -------------------------------------------------------------------- About our Separate Account No. 45 56 About The Hudson River Trust and EQ Advisors Trust 56 About our fixed maturity options 56 About the general account 58 About other methods of payment 58 Date and prices at which contract events occur 59 About your voting rights 59 About our year 2000 progress 60 About legal proceedings 61 About our independent accountants 61 Transfers of ownership, collateral assignments, loans, and borrowing 61 Distribution of the contracts - -------------------------------------------------------------------- 9 INVESTMENT PERFORMANCE 62 - -------------------------------------------------------------------- Benchmarks 62 Communicating performance data 71 - -------------------------------------------------------------------- 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 73 - ------------------------------------------------------------------- Appendix I: Purchase considerations for QP contracts A-1 Appendix II: Market value adjustment example B-1 Appendix III: Guaranteed minimum death benefit example C-1 - ------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - ------------------------------------------------------------------- - -------------------------------------------------------------------------------- Index of key words and phrases 4 - -------------------------------------------------------------------------------- Index of key words and phrases - -------------------------------------------------------------------------------- This index should help you locate more information on the terms used in this prospectus. PAGE IN TERM PROSPECTUS account value 27 annuitant 15 baseBUILDER 22 beneficiary 37 benefit base 23 business day 59 cash value 27 conduit IRA 44 contract date 16 contract date anniversary 16 contract year 16 contributions to Roth IRAs 47 rollover contributions 47 conversion contributions 47 direct custodian-to-custodian transfers 47 contributions to traditional IRAs 41 rollover contributions 42 direct custodian-to-custodian transfers 42 ERISA 31 fixed maturity amount 20 fixed maturity options 20 guaranteed minimum death benefit 25 guaranteed minimum income benefit 23 IRA 41 PAGE IN TERM PROSPECTUS IRS 39 investment options 17 loan reserve account 31 market adjusted amount 20 market value adjustment 20 maturity value 20 NQ 39 participant 17 payout option 32 Portfolio cover Processing Office 6 QP 49 rate to maturity 20 recharacterized 42 required beginning date 44 Rollover IRA cover Rollover TSA cover Roth IRA 46 Roth Conversion IRA cover SAI cover SEC cover TOPS 6 TSA 49 traditional IRA 41 unit 27 variable investment options 17 To make this prospectus easier to read, we sometimes use different words than in the contract or supplemental materials. This is illustrated below. Although we use different words, they have the same meaning in this prospectus as in the contract. Your Equitable associate can provide further explanation about your contract or supplemental materials. ---------------------------------------------------------------------- PROSPECTUS CONTRACT OR SUPPLEMENTAL MATERIALS ---------------------------------------------------------------------- fixed maturity options Guarantee Periods (GIROs in supplemental materials) variable investment options Investment Funds account value Annuity Account Value rate to maturity Guaranteed Rates ----------------------------------------------------------------------- - ------------------------------------------------------------------------------- Who is Equitable Life? 5 - -------------------------------------------------------------------------------- Who is Equitable Life? - -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies Incorporated ("Equitable Companies"), whose majority shareholder is AXA, a French holding company for an international group of insurance and related financial services companies. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contracts. During 1999, Equitable Companies plans to change its name to AXA Financial, Inc. Equitable Companies and its consolidated subsidiaries managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. - -------------------------------------------------------------------------------- Who is Equitable Life? 6 - ------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REACH US You may communicate with our Processing Office as listed below for any of the following purposes: - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator Select P.O. Box 13014 Newark, NJ 07188-0014 - -------------------------------------------------------------------------------- FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator Select c/o First Chicago National Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR MAIL: - -------------------------------------------------------------------------------- Equitable Accumulator Select P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR TRANSFERS, WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS DELIVERY: - -------------------------------------------------------------------------------- Equitable Accumulator Select 200 Plaza Drive, 4th Floor Secaucus, NJ 07094 - -------------------------------------------------------------------------------- REPORTS WE PROVIDE: - -------------------------------------------------------------------------------- o written confirmation of financial transactions; o statement of your contract values at the close of each calendar quarter (four per year); o annual statement of your contract values as of the close of the contract year. - -------------------------------------------------------------------------------- TELEPHONE OPERATED PROGRAM SUPPORT ("TOPS") SYSTEM - -------------------------------------------------------------------------------- TOPS is designed to provide you with up-to-date information via touch-tone telephone. You can obtain information on: o your current account value; o your current allocation percentages; o the number of units you have in the variable investment options; o rates to maturity for the fixed maturity options; and o the daily unit values for the variable investment options. You can also: o change your allocation percentages and/or transfer among the investment options; and o change your personal identification number (PIN). TOPS is normally available seven days a week, 24 hours a day, by calling toll-free 1-888-909-7770. Of course, for reasons beyond our control, the service may sometimes be unavailable. We have established procedures to reasonably confirm that the instructions communicated by telephone are genuine. For example, we will require certain personal identification information before we will act on telephone instructions and we will provide written confirmation of your transfers. We will not be liable for following telephone instructions we reasonably believe to be genuine. - -------------------------------------------------------------------------------- BY INTERNET: - -------------------------------------------------------------------------------- You can also access information about your contract on the Internet. Please visit our website at http://www.equitable.com, and click on EQAccess. - -------------------------------------------------------------------------------- Who is Equitable Life? 7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER SERVICE REPRESENTATIVE: - -------------------------------------------------------------------------------- You may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. You should send all contributions, notices, and requests to our Processing Office at the address above. WE REQUIRE THAT THE FOLLOWING TYPES OF COMMUNICATIONS BE ON SPECIFIC FORMS WE PROVIDE FOR THAT PURPOSE: (1) conversion of a traditional IRA to a Roth Conversion IRA contract; (2) cancellation of your Roth Conversion IRA contract and return to a Rollover IRA contract; (3) election of the automatic investment program; (4) election of the rebalancing program; (5) to obtain a PIN required for TOPS; (6) requests for loans under Rollover TSA contracts; (7) spousal consent for loans under Rollover TSA contracts; (8) tax withholding election; and (9) beneficiary continuation option election. WE ALSO HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: (1) address changes; (2) beneficiary changes; (3) transfers between investment options; (4) withdrawal requests; (5) contract surrender; and (6) requests to exercise your guaranteed minimum income benefit. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. TO CANCEL OR CHANGE ANY OF THE FOLLOWING WE REQUIRE WRITTEN NOTIFICATION GENERALLY AT LEAST SEVEN CALENDAR DAYS BEFORE THE NEXT SCHEDULED TRANSACTION: (1) automatic investment program; (2) general dollar cost averaging; (3) rebalancing; (4) special dollar cost averaging (5) substantially equal withdrawals; (6) systematic withdrawals; and (7) the date annuity payments are to begin. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. - -------------------------------------------------------------------------------- Equitable Accumulator Select at a glance - key features 8 - -------------------------------------------------------------------------------- Equitable Accumulator Select at a glance -- key features - -------------------------------------------------------------------------------- PROFESSIONAL Equitable Accumulator Select's variable investment INVESTMENT options invest in 30 different Portfolios MANAGEMENT managed by professional investment advisers. - -------------------------------------------------------------------------------- FIXED MATURITY o 10 fixed maturity options with maturities ranging from OPTIONS approximately 1 to 10 years. o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. -- If you make withdrawals or transfers from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value that you have left in that fixed maturity option. - -------------------------------------------------------------------------------- TAX ADVANTAGES o On earnings inside the contract No tax on any dividends, interest or capital gains until you contract make withdrawals from your contract or receive annuity payments. --------------------------------------------------------- o On transfers inside the contract No tax on transfers among investment options. --------------------------------------------------------- If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP, and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. - -------------------------------------------------------------------------------- BASEBUILDER(TM) baseBUILDER combines a guaranteed minimum income benefit PROTECTION with a guaranteed minimum death benefit. This optional feature provides income protection for you while the annuitant lives, as well as a death benefit for the beneficiary should the annuitant die. - -------------------------------------------------------------------------------- CONTRIBUTION AMOUNTs o Initial minimum: $25,000 o Additional minimum: $ 1,000 $100 monthly, and $300 quarterly under our automatic investment program ( NQ contracts) --------------------------------------------------------- Maximum investment limitations may apply. - -------------------------------------------------------------------------------- ACCESS TO YOUR MONEY o Lump sum withdrawals o Several withdrawal options on a periodic basis o Loans under Rollover TSA contracts o Contract surrender You may incur income tax and a tax penalty. - -------------------------------------------------------------------------------- PAYOUT ALTERNATIVES o Annuity payout options o Income Manager(TM) payout annuity options - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Equitable Accumulator Select at a glance -- key features 9 - -------------------------------------------------------------------------------- ADDITIONAL FEATURES o Dollar cost averaging o Automatic investment program o Account value rebalancing (quarterly, semiannually and annually) o Unlimited free transfers - -------------------------------------------------------------------------------- FEES AND CHARGES o Daily charges on amounts invested in variable investment options for mortality and expense risks, administrative, and distribution charges at an annual rate of 1.60%. o Annual 0.30% benefit base charge for the optional baseBUILDER benefit. The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." No additional charge if you want a guaranteed minimum death benefit only. o No sales charge deducted at the time you make contributions, no withdrawal charge, and no annual contract fee. o We also deduct a charge for taxes such as premium taxes that may be imposed in your state. This charge is generally deducted from the amount applied to an annuity payout option. o We generally deduct a $350 annuity administrative fee from amounts applied to purchase certain life annuity payment options. o Annual expenses of The Hudson River Trust and EQ Advisors Trust Portfolios are calculated as a percentage of the average daily net assets invested in each Portfolio. These expenses include management and advisory fees ranging from 0.25% to 1.15% annually, 12b-1 fees of 0.25% and other expenses. - -------------------------------------------------------------------------------- ANNUITANT ISSUE AGES NQ: 0-85 Rollover IRA, Roth Conversion IRA, and TSA: 20-85 QP: 20-75 - -------------------------------------------------------------------------------- THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your Equitable associate, or call us, if you have any questions. - -------------------------------------------------------------------------------- Fee table 10 - -------------------------------------------------------------------------------- Fee table - -------------------------------------------------------------------------------- The fee table below will help you understand the various charges and expenses that apply to your contract. The table reflects charges you will directly incur under the contract, as well as charges and expenses of the Portfolios that you will bear indirectly. Charges for taxes, such as premium taxes, may also apply. Also, an administrative fee may apply when your annuity payments are to begin. Each of the charges and expenses is more fully described under "Charges and expenses" later in this prospectus. For a complete description of Portfolio charges and expenses, please see the attached prospectuses for The Hudson River Trust and EQ Advisors Trust. The fixed maturity options are not covered by the fee table and examples. A market value adjustment (up or down) may apply as a result of a withdrawal, transfer or surrender of amounts from a fixed maturity option.
- ----------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS EXPRESSED AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS - ---------------------------------------------------------------------------------------- Mortality and expense risks(1) .............................................. 1.10% Administrative(2) .......................................................... 0.25% Distribution ............................................................... 0.25% ---- Total annual expenses ...................................................... 1.60% ---- - ---------------------------------------------------------------------------------------- CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE EACH YEAR IF YOU ELECT THE OPTIONAL BENEFIT - ---------------------------------------------------------------------------------------- BASEBUILDER BENEFITS CHARGE (calculated as a percentage of the benefit base. 0.30% Deducted annually on each contract date anniversary)(3) - ----------------------------------------------------------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
- -------------------------------------------------------------------------------------------------------------------------------- TOTAL ANNUAL EXPENSES(4) INVESTMENT (AFTER MANAGEMENT & OTHER EXPENSE ADVISORY FEES 12B-1 FEES(4) EXPENSES LIMITATION) - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Alliance Aggressive Stock(5) ....................... 0.54% 0.25% 0.03% 0.82% Alliance Common Stock(5) ........................... 0.36% 0.25% 0.03% 0.64% Alliance Conservative Investors(5) ................. 0.48% 0.25% 0.05% 0.78% Alliance Global(5) ................................. 0.64% 0.25% 0.07% 0.96% Alliance Growth & Income(5) ........................ 0.55% 0.25% 0.03% 0.83% Alliance Growth Investors(5) ....................... 0.51% 0.25% 0.04% 0.80% Alliance High Yield(5) ............................. 0.60% 0.25% 0.03% 0.88% Alliance Intermediate Government 0.50% 0.25% 0.05% 0.80% Securities(5) .................................... Alliance International(5) .......................... 0.90% 0.25% 0.16% 1.31% Alliance Money Market(5) ........................... 0.35% 0.25% 0.02% 0.62% Alliance Small Cap Growth(5) ....................... 0.90% 0.24% 0.06% 1.20% - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------- TOTAL OTHER ANNUAL EXPENSES EXPENSES(6) EQ ADVISORS TRUST ANNUAL EXPENSES (AS INVESTMENT (AFTER (AFTER A PERCENTAGE OF AVERAGE DAILY NET ASSETS MANAGEMENT & EXPENSE EXPENSE IN EACH PORTFOLIO) ADVISORY FEES 12B-1 FEES(4) LIMITATION) LIMITATION) - --------------------------------------------------------------------------------------------------------------------------------- EQ ADVISORS TRUST PORTFOLIOS - ------------------------------------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth(6) ....................... 0.90% 0.25% 0.00% 1.15% BT Equity 500 Index(6) .............................. 0.25% 0.25% 0.05% 0.55% BT International Equity Index(6) .................... 0.35% 0.25% 0.40% 1.00% BT Small Company Index(6) ........................... 0.25% 0.25% 0.25% 0.75% Capital Guardian Research(6) ........................ 0.65% 0.25% 0.05% 0.95% Capital Guardian U.S. Equity(6) ..................... 0.65% 0.25% 0.05% 0.95% EQ/Evergreen(6) ..................................... 0.75% 0.25% 0.05% 1.05% EQ/Evergreen Foundation(6) .......................... 0.63% 0.25% 0.07% 0.95% MFS Emerging Growth Companies(6) .................... 0.55% 0.25% 0.05% 0.85% MFS Growth with Income(6) ........................... 0.55% 0.25% 0.05% 0.85% MFS Research(6) ..................................... 0.55% 0.25% 0.05% 0.85% Merrill Lynch Basic Value Equity(6) ................. 0.55% 0.25% 0.05% 0.85% Merrill Lynch World Strategy(6) ..................... 0.70% 0.25% 0.25% 1.20% Morgan Stanley Emerging Markets 1.15% 0.25% 0.35% 1.75% Equity(6) ......................................... EQ/Putnam Balanced(6) ............................... 0.55% 0.25% 0.10% 0.90% EQ/Putnam Growth & Income 0.55% 0.25% 0.05% 0.85% Value(6) .......................................... T. Rowe Price Equity Income(6) ...................... 0.55% 0.25% 0.05% 0.85% T. Rowe Price International Stock(6) ................ 0.75% 0.25% 0.20% 1.20% Warburg Pincus Small Company 0.65% 0.25% 0.10% 1.00% Value(6) .......................................... - -------------------------------------------------------------------------------------------------------------------------------
- ---------- Notes: (1) A portion of this charge is for providing the guaranteed minimum death benefit. (2) We reserve the right to increase this charge to a maximum annual rate of 0.35%. (3) The benefit base is described under "Your guaranteed minimum income benefit under baseBUILDER." (4) Portfolio shares are all subject to fees imposed under distribution plans (the "Rule 12b-1 Plans") adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee will not be increased for the life of the contracts. The Rule 12b-1 Plan for the Alliance Small Cap Growth Portfolio provides that Equitable Distributors, Inc. ("EDI") will receive an annual fee not to exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio attributable to Class 1B shares and (b) an amount that, when added to certain other expenses of the Class 1B shares, would result in the ratio of expenses to average daily net assets attributable to Class 1B shares equaling 1.20%. Absent the expense limitation, the total annual expenses for 1998 for the Alliance Small Cap Growth Portfolio would have been 1.21%. (5) The fees and expenses shown for all Portfolios are for the year ended December 31, 1998. The investment management and advisory fees for each Portfolio of The Hudson River Trust may vary from year to year depending upon the average daily net assets of the respective Portfolio. The maximum investment management and advisory fees, however, cannot be - -------------------------------------------------------------------------------- Fee table 12 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- increased without a vote of that Portfolio's shareholders. See the prospectus for The Hudson River Trust. The other direct operating expenses will also fluctuate from year to year depending on actual expenses. (6) The maximum investment management and advisory fees for each Portfolio of EQ Advisors Trust cannot be increased without a vote of that Portfolio's shareholders. See the prospectus for EQ Advisors Trust. The amounts shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors Trust's manager, has entered into an expense limitation agreement with respect to each Portfolio. Under this agreement EQF has agreed to waive or limit its fees and assume other expenses. Under the expense limitation agreement, total annual operating expenses of each Portfolio (other than interest, taxes, brokerage commissions, capitalized expenditures, extraordinary expenses, and 12b-1 fees) are limited for the average daily net assets of each Portfolio as follows: 0.90% for EQ/Alliance Premier Growth; 0.30% for BT Equity 500 Index; 0.75% for BT International Equity Index; 0.50% for BT Small Company Index; 0.70% for Capital Guardian Research and Capital Guardian U.S. Equity; 0.80% for EQ/Evergreen; 0.70% for EQ/Evergreen Foundation; 0.60% for MFS Emerging Growth Companies, MFS Growth with Income, MFS Research, and Merrill Lynch Basic Value Equity; 0.95% for Merrill Lynch World Strategy; 1.50% for Morgan Stanley Emerging Markets Equity; 0.65% for EQ/Putnam Balanced; 0.60% for EQ/Putnam Growth & Income Value and T. Rowe Price Equity Income; 0.95% for T. Rowe Price International Stock; and 0.75% for Warburg Pincus Small Company Value. The expenses shown for the BT International Equity Index and BT Small Company Index Portfolios reflect an increase effective on May 1, 1999. Absent the expense limitation, the "Other Expenses" for 1998 on an annualized basis for each of the Portfolios would have been as follows: 0.33% for BT Equity 500 Index; 0.89% for BT International Equity Index; 1.31% for BT Small Company Index; 0.24% for MFS Emerging Growth Companies; 0.25% for MFS Research; 0.26% for Merrill Lynch Basic Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan Stanley Emerging Markets Equity; 0.45% for EQ/Putnam Balanced; 0.24% for EQ/Putnam Growth & Income Value; 0.24% for T. Rowe Price Equity Income; 0.40% for T. Rowe Price International Stock; and 0.27% for Warburg Pincus Small Company Value. For the following Portfolios, the "Other Expenses" for 1999, absent the expense limitation, are estimated to be as follows: 0.74% for EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity; 0.76% for EQ/Evergreen; 0.86% for EQ/Evergreen Foundation; 0.59% for MFS Growth with Income. Initial seed capital was invested on December 31, 1998 for the EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income Portfolios. The EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity Portfolios commenced operations on May 1, 1999. Each Portfolio may at a later date make a reimbursement to EQF for any of the management fees waived or limited and other expenses assumed and paid by EQF pursuant to the expense limitation agreement provided that, among other things, such Portfolio has reached sufficient size to permit such reimbursement to be made and provided that the Portfolio's current annual operating expenses do not exceed the operating expense limit determined for such Portfolio. - -------------------------------------------------------------------------------- Fee table 13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES The examples below show the expenses that a hypothetical contract owner (who has elected baseBUILDER) would pay in the situation illustrated. We assume that a $1,000 contribution is invested in one of the variable investment options listed and a 5% annual return is earned on the assets in that option.(1) The examples should not be considered a representation of past or future expenses for each option. Actual expenses may be greater or less than those shown. Similarly, the annual rate of return assumed in the examples is not an estimate or guarantee of future investment performance.
- -------------------------------------------------------------------------------------------------- AT THE END OF EACH PERIOD SHOWN, THE EXPENSES WOULD BE: -------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS ---------- ----------- ----------- --------- - -------------------------------------------------------------------------------------------------- THE HUDSON RIVER TRUST OPTIONS - -------------------------------------------------------------------------------------------------- Alliance Aggressive Stock $27.68 $85.16 $145.57 $310.42 Alliance Common Stock $25.90 $79.81 $136.67 $292.77 Alliance Conservative Investors $27.29 $83.98 $143.61 $306.53 Alliance Global $29.07 $89.31 $152.45 $323.92 Alliance Growth & Income $24.63 $81.98 $142.23 $306.49 Alliance Growth Investors $27.49 $84.57 $144.58 $308.45 Alliance High Yield $28.28 $86.95 $148.53 $316.23 Alliance Intermediate Government Securities $27.49 $84.57 $144.58 $308.45 Alliance International $32.55 $99.64 $169.49 $356.91 Alliance Money Market $25.70 $79.22 $135.68 $290.79 Alliance Small Cap Growth $31.45 $96.40 $164.16 $346.68 BT Equity 500 Index $25.01 $77.13 $132.19 $283.84 BT International Equity Index $29.47 $90.50 $154.42 $327.76 BT Small Company Index $26.99 $83.08 $142.11 $303.58 Capital Guardian Research $28.97 $89.02 $151.96 $322.95 Capital Guardian U.S. Equity $28.97 $89.02 $151.96 $322.95 - --------------------------------------------------------------------------------------------------- EQ ADVISORS TRUST OPTIONS - --------------------------------------------------------------------------------------------------- EQ/Alliance Premier Growth $30.96 $ 94.93 $161.73 $341.97 EQ/Evergreen $29.97 $ 91.97 $156.85 $332.51 EQ/Evergreen Foundation $28.97 $ 89.02 $151.96 $322.95 EQ/Putnam Balanced $28.48 $ 87.53 $149.50 $318.14 EQ/Putnam Growth & Income Value $27.98 $ 86.05 $147.04 $313.31 MFS Emerging Growth Companies $27.98 $ 86.05 $147.04 $313.31 MFS Growth with Income $27.98 $ 86.05 $147.04 $313.31 MFS Research $27.98 $ 86.05 $147.04 $313.31 Merrill Lynch Basic Value Equity $27.98 $ 86.05 $147.04 $313.31 Merrill Lynch World Strategy $31.45 $ 96.40 $164.16 $346.68 Morgan Stanley Emerging Markets Equity $36.91 $112.51 $190.55 $396.85 T. Rowe Price Equity Income $27.98 $ 86.05 $147.04 $313.31 T. Rowe Price International Stock $31.45 $ 96.40 $164.16 $346.68 Warburg Pincus Small Company Value $29.47 $ 90.50 $154.42 $327.76 - ---------------------------------------------------------------------------------------------------
- --------------------------------------------- ---------------------------------- Fee table 14 - --------------------------------------------- ---------------------------------- - --------------------------------------------- ---------------------------------- - ---------- (1) The amount accumulated from the $1,000 contribution could not be paid in the form of an annuity payout option at the end of any of the periods shown in the examples. This is because if the amount applied to purchase an annuity payout option is less than $2,000, or the initial payment is less than $20, we may pay the amount to you in a single sum instead of as payments under an annuity payout option. See "Accessing your money." IF YOU ELECT AN ANNUITY PAYOUT OPTION: Assuming an annuity payout option could be issued (see note (1) above), and you elect a life annuity payout option, the expenses shown in the example would, in each case, be increased by $4.43 based on the average amount applied to annuity payout options in 1998. See "Annuity administrative fee" under "Charges and expenses." - -------------------------------------------------------------------------------- Contract features and benefits 15 - -------------------------------------------------------------------------------- 1 Contract features and benefits - -------------------------------------------------------------------------------- HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase a contract by making payments to us we call "contributions." We require a minimum initial contribution of $25,000 for you to purchase a contract. You may make additional contributions of at least $1,000 each, subject to limitations noted below. The following table summarizes our rules regarding contributions to your contract. All ages in the table refer to the age of the annuitant named in the contract. - -------------------------------------------------------------------------------- The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner. - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ AVAILABLE CONTRACT FOR ANNUITANT LIMITATIONS ON TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------------------ NQ 0 through 85 o After-tax money. o No additional contributions after age 86. o Paid to us by check or transfer of contract value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. - ------------------------------------------------------------------------------------------------------------------------------------ Rollover IRA 20 through 85 o Rollovers from a qualified plan. o No additional rollover or direct transfer contributions after o Rollovers from a TSA. age 86. o Rollovers from another o Contributions after age 70 1/2 traditional individual retirement must be net of required arrangement. minimum distributions. o Direct custodian-to-custodian o Regular IRA contributions are transfers from another not permitted. traditional individual retirement arrangement. - ------------------------------------------------------------------------------------------------------------------------------------ Roth 20 through 85 o Rollovers from another Roth o No additional rollover or direct Conversion IRA. transfer contributions after IRA age 86. o Conversion rollovers from a traditional IRA. o Conversion rollovers after age 70 1/2 must be net of o Direct transfers from another required minimum distributions Roth IRA. for the traditional IRA you are rolling over. o You cannot roll over funds from a traditional IRA if your adjusted gross income is $100,000 or more. o Regular after-tax contributions are not permitted. - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 16 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ AVAILABLE CONTRACT FOR ANNUITANT LIMITATIONS ON TYPE ISSUE AGES SOURCE OF CONTRIBUTIONS CONTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------------------ QP 20 through 75 o Only transfer contributions from o Regular ongoing payroll an existing qualified plan trust contributions are not permitted. as a change of investment vehicle under the plan. o Only one additional contribution may be made during a contract o The plan must be qualified year. under Section 401(a) of the Internal Revenue Code. o No additional transfer contributions after age 76. o For 401(k) plans, transferred contributions may only include o For defined benefit plans, employee pre-tax contributions. employee contributions are not permitted. o Contributions after age 70 1/2 must be net of any required minimum distributions. - ----------------------------------------------------------------------------------------------------------------------------------- Rollover TSA 20 through 85 o Rollovers from another TSA o No additional rollover or direct contract or arrangement. transfer contributions after age 86. o Rollovers from a traditional IRA that was a "conduit" for TSA o Contributions after age 70 1/2 funds previously rolled over. must be net of required minimum distributions. o Direct transfers from another contract or arrangement under Section 403(b) of the Internal Revenue Code, complying with IRS Revenue Ruling 90-24. - ------------------------------------------------------------------------------------------------------------------------------------
See "Tax information" for a more detailed discussion of sources of contributions and certain contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Equitable Accumulator contracts with the same annuitant would then total more than $1,500,000. We reserve the right to limit aggregate contributions made after the first contract year to 150% of first-year contributions. We may also refuse to accept any contribution if the sum of all contributions under all Equitable Life annuity accumulation contracts that you own would then total more than $2,500,000. - -------------------------------------------------------------------------------- The 12-month period beginning on your contract date and each 12-month period after that date is a "contract year." The end of each 12-month period is your "contract date anniversary." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution. Your contract date will be shown in your contract. - -------------------------------------------------------------------------------- For information on when contributions are credited under your contract see "Dates and prices at which contract events occur" later in this prospectus. - -------------------------------------------------------------------------------- Contract features and benefits 17 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER AND ANNUITANT REQUIREMENTS Under NQ contracts, the annuitant can be different than the owner. A joint owner may also be named. Only natural persons can be joint owners. This means that an entity such as a corporation cannot be a joint owner. Under Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts, the owner and annuitant must be the same person. Under QP contracts, the owner must be the trustee of the qualified plan and the annuitant must be the plan participant/employee. See Appendix I for more information on QP contracts. - -------------------------------------------------------------------------------- A participant is an individual who is currently, or was formerly participating in an eligible employer's QP or TSA plan. - -------------------------------------------------------------------------------- HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third-party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. Additional contributions may also be made under our automatic investment program. This method of payment is discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days after we receive an incomplete application or form, we will inform the Equitable associate submitting the application on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. - -------------------------------------------------------------------------------- Our "business day" is any day the New York Stock Exchange is open for trading. - -------------------------------------------------------------------------------- SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Equitable Accumulator Select NQ contract in a tax-free exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. WHAT ARE YOUR INVESTMENT OPTIONS UNDER THE CONTRACT? Your investment options are the variable investment options and the fixed maturity options. VARIABLE INVESTMENT OPTIONS Your investment results in any one of the 30 variable investment options will depend on the investment performance of the underlying Portfolios. Listed below are the currently available Portfolios, their investment objectives, and their advisers. - -------------------------------------------------------------------------------- You can choose among 30 variable investment options. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Contract features and benefits 18 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIOS OF THE HUDSON RIVER TRUST - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO NAME OBJECTIVE ADVISER - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Aggressive Stock Long-term growth of capital Alliance Capital Management L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Common Stock Long-term growth of capital and increasing Alliance Capital Management L.P. income - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Conservative Investors High total return without, in the adviser's Alliance Capital Management L.P. opinion, undue risk to principal - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Global Long-term growth of capital Alliance Capital Management L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Growth & Income High total return through a combination of Alliance Capital Management L.P. current income and capital appreciation - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Growth Investors High total return consistent with the adviser's Alliance Capital Management L.P. determination of reasonable risk - ------------------------------------------------------------------------------------------------------------------------------------ Alliance High Yield High return by maximizing current income Alliance Capital Management L.P. and, to the extent consistent with that objective, capital appreciation - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Intermediate High current income consistent with relative Alliance Capital Management L.P. Government Securities stability of principal - ------------------------------------------------------------------------------------------------------------------------------------ Alliance International Long-term growth of capital Alliance Capital Management L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Money Market High level of current income while preserving Alliance Capital Management L.P. assets and maintaining liquidity - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Small Cap Growth Long-term growth of capital Alliance Capital Management L.P. - ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIOS OF EQ ADVISORS TRUST - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO NAME OBJECTIVE ADVISER - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Alliance Premier Growth Long-term growth of capital Alliance Capital Management L.P. - ------------------------------------------------------------------------------------------------------------------------------------ BT Equity 500 Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Standard & Poor's 500 Composite Stock Price Index - ------------------------------------------------------------------------------------------------------------------------------------ BT International Equity Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Morgan Stanley Capital International Europe, Australia, Far East Index - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 19 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIOS OF EQ ADVISORS TRUST - ------------------------------------------------------------------------------------------------------------------------------------ PORTFOLIO NAME OBJECTIVE ADVISER - ----------------------------------- -------------------------------------------------- ----------------------------------------- BT Small Company Index Replicate as closely as possible (before Bankers Trust Company deduction of Portfolio expenses) the total return of the Russell 2000 Index - ------------------------------------------------------------------------------------------------------------------------------------ Capital Guardian Research Long-term growth of capital and income Capital Guardian Trust Company - ------------------------------------------------------------------------------------------------------------------------------------ Capital Guardian U.S. Equity Long-term growth of capital and income Capital Guardian Trust Company - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Evergreen Capital appreciation Evergreen Asset Management Corp. - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Evergreen Foundation In order of priority, reasonable income, Evergreen Asset Management Corp. conservation of capital, and capital appreciation - ------------------------------------------------------------------------------------------------------------------------------------ MFS Emerging Growth Long-term capital growth Massachusetts Financial Services Company Companies - ------------------------------------------------------------------------------------------------------------------------------------ MFS Growth with Income Reasonable current income and long-term Massachusetts Financial Services Company growth of capital and income - ------------------------------------------------------------------------------------------------------------------------------------ MFS Research Long-term growth of capital and Massachusetts Financial Services Company future income - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch Basic Value Equity Capital appreciation and secondarily, income Merrill Lynch Asset Management, L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Merrill Lynch World Strategy High total investment return Merrill Lynch Asset Management, L.P. - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Emerging Long-term capital appreciation Morgan Stanley Asset Markets Equity Management - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Balanced Balanced investment Putnam Investment Management, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ EQ/Putnam Growth & Income Capital growth, current income is a secondary Putnam Investment Management, Inc. Value objective - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price Equity Income Substantial dividend income and also capital T. Rowe Price Associates, Inc. appreciation - ------------------------------------------------------------------------------------------------------------------------------------ T. Rowe Price International Stock Long-term growth of capital Rowe Price-Fleming International, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ Warburg Pincus Small Company Long-term capital appreciation Warburg Pincus Asset Management, Inc. Value - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Contract features and benefits 20 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Other important information about the Portfolios is included in the separate prospectuses for The Hudson River Trust and EQ Advisors Trust attached at the end of this prospectus. FIXED MATURITY OPTIONS We offer fixed maturity options with maturity dates ranging from one to ten years. You can allocate your contributions to one or more of these fixed maturity options. These amounts become part of our general account assets. They will accumulate interest at the "rate to maturity" for each fixed maturity option. The total amount you allocate to and accumulate in each fixed maturity option is called the "fixed maturity amount." The fixed maturity options are not available in contracts issued in Maryland. - -------------------------------------------------------------------------------- Fixed maturity options ranging from one to ten years to maturity. - -------------------------------------------------------------------------------- The rate to maturity you will receive for each fixed maturity option is the rate to maturity in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals or transfers from a fixed maturity option before the maturity date, we will make a "market value adjustment" that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We discuss the market value adjustment below and in greater detail later in this prospectus under "More information." On the maturity date of a fixed maturity option your fixed maturity amount, assuming you have not made any withdrawals or transfers, will equal your contribution to that fixed maturity option plus interest, at the rate to maturity for that contribution, to the date of the calculation. This is the fixed maturity option's "maturity value." Before maturity, the current value we will report for your fixed maturity amounts will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amounts on the date of the report. We call this your "market adjusted amount." FIXED MATURITY OPTIONS AND MATURITY DATES. We currently offer fixed maturity options ending on February 15th for each of the maturity years 2000 through 2009. Not all of these fixed maturity options will be available for annuitant ages 76 and older. See "Allocating your contributions" below. As fixed maturity options expire, we expect to add maturity years so that generally 10 are available at any time. We will not accept allocations to a fixed maturity option if on the date the contribution is to be applied: o the fixed maturity option's maturity date is within the current calendar year; or o the rate to maturity is 3%; or o for annuitants ages 76 or older, the fixed maturity option's maturity date is later than the February 15th immediately following the date annuity payments are to begin. OPTIONS AT MATURITY DATE. We will notify you on or before December 31st of the year before each of your fixed maturity options is scheduled to mature. At that time, you may choose to have one of the following options take place on the maturity date, as long as none of the conditions listed above or in "Allocating your contributions," below would apply: (a) transfer the maturity value into another available fixed maturity option, or into any of the variable investment options; or (b) withdraw the maturity value. If we do not receive your choice on or before the fixed maturity option's maturity date, we will automatically transfer your maturity value into the fixed maturity option that will mature next. MARKET VALUE ADJUSTMENT. If you make any withdrawals (including transfers, surrender of your contract or when we make deductions for charges) from a fixed maturity option - -------------------------------------------------------------------------------- Contract features and benefits 21 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that you originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. Therefore, it is possible that the market value adjustment could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an illustration of the market adjusted amount of specified maturity values, an explanation of how we calculate the market value adjustment, and information concerning our general account and investments purchased with amounts allocated to the fixed maturity options, under "More information" later in this prospectus. Appendix II of this prospectus provides an example of how the market value adjustment is calculated. ALLOCATING YOUR CONTRIBUTIONS You may choose from among three ways to allocate your contributions under your contract: self-directed, principal assurance or dollar cost averaging. SELF-DIRECTED ALLOCATION You may allocate your contributions to one or more, or all, of the variable investment options and fixed maturity options. Allocations must be in whole percentages and you may change your allocations at any time. However, the total of your allocations must equal 100%. If the annuitant is age 76 or older, you may allocate contributions to fixed maturity options if their maturities are five years or less. Also, you may not allocate amounts to fixed maturity options with maturity dates that are later than the February 15th immediately following the date annuity payments are to begin. PRINCIPAL ASSURANCE ALLOCATION Under this allocation program you select a fixed maturity option. We specify the portion of your initial contribution to be allocated to that fixed maturity option in an amount that will cause the maturity value to equal the amount of your entire initial contribution on the fixed maturity option's maturity date. The maturity date you select generally may not be later than 10 years, or earlier than seven years from your contract date. You allocate the rest of your contribution to the variable investment options however you choose. For example, if your initial contribution is $10,000, and on April 1, 1999 you chose the fixed maturity option with a maturity date of February 15, 2009, since the rate to maturity was 4.72% on April 1, 1999, we would have allocated $6,338.82 to that fixed maturity option and the balance to your choice of variable investment options. On the maturity date your value in the fixed maturity option would be $10,000. The principal assurance allocation is only available for annuitant ages 75 or younger when the contract is issued. If you are purchasing a Rollover IRA, QP or Rollover TSA contract, before you select a maturity year that would extend beyond the year in which you will reach age 70 1/2, you should consider whether your value in the variable investment options, or your other traditional IRA or TSA funds are sufficient to meet your required minimum distributions. See "Tax information." DOLLAR COST AVERAGING We offer two dollar cost averaging programs. Each program allows you to gradually transfer amounts from the Alliance Money Market option to the other variable investment options by periodically transferring approximately the same - -------------------------------------------------------------------------------- Contract features and benefits 22 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- dollar amount to the other variable investment options you select. This will cause you to purchase more units if the unit's value is low and fewer units if the unit's value is high. Therefore, you may get a lower average cost per unit over the long term. These plans of investing, however, do not guarantee that you will earn a profit or be protected against losses. - -------------------------------------------------------------------------------- Units measure your value in each variable investment option. - -------------------------------------------------------------------------------- SPECIAL DOLLAR COST AVERAGING PROGRAM. You may dollar cost average from the Alliance Money Market option into any of the other variable investment options. You must allocate your entire initial contribution into the Alliance Money Market option. We will transfer your value in the Alliance Money Market option into the other variable investment options that you select over the next 12 months. The transfer date will be the same day of the month as the contract date, but not later than the 28th. All amounts will be transferred out by the end of the first contract year. Under this program we will not deduct the mortality and expense risks, administrative, and distribution charges from assets in the Alliance Money Market option. You may not allocate additional contributions to the Alliance Money Market option under this program. The only amounts that should be transferred from the Alliance Money Market option are your regularly scheduled monthly transfers to the other variable investment options. If you request to transfer or withdraw any other amounts, we will transfer all of the value that you have remaining in the Alliance Money Market option to the other investment options according to the allocation percentages we have on file for you. As a result, you will no longer be able to participate in the special dollar cost averaging program. You may also ask us to cancel your participation at any time. GENERAL DOLLAR COST AVERAGING PROGRAM. If your value in the Alliance Money Market option is at least $5,000, you may choose, at any time, to have a specified dollar amount or percentage of your value transferred from that option to the other variable investment options. You can select to have transfers made on a monthly, quarterly or annual basis. The transfer date will be the same calendar day of the month as the contract date, but not later than the 28th day of the month. The minimum amount that we will transfer each time is $250. The maximum amount we will transfer is equal to your value in the Alliance Money Market option at the time the program is elected, divided by the number of transfers scheduled. If, on any transfer date, your value in the Alliance Money Market option is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred. The general dollar cost averaging program will then end. You may change the transfer amount once each contract year, or cancel this program at any time. ---------------------------------------- You may not elect dollar cost averaging if you are participating in the rebalancing program. See "Transferring your money among investment options" below. OUR BASEBUILDER OPTION The baseBUILDER option offers you a combined guaranteed minimum income benefit and guaranteed minimum death benefit. The combined benefit is available if the annuitant is between the ages of 20 and 75. There is an additional charge for this benefit. See "baseBUILDER benefits charge" under "Charges and expenses." - -------------------------------------------------------------------------------- baseBUILDER provides income protection if you elect an income payout while the annuitant is alive and a death benefit if the annuitant dies. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit component of baseBUILDER is described below under "Your guaranteed minimum income benefit under baseBUILDER." As part of baseBUILDER you have a choice of two guaranteed minimum death benefit options: either a "5% roll up to age 80" or an "annual ratchet to age 80." The two options are described under "Guaranteed minimum death benefit." The guaranteed minimum death benefit is provided under the - -------------------------------------------------------------------------------- Contract features and benefits 23 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- contract even if you do not elect baseBUILDER, and for a broader range of annuitant ages at contract issue than those available under baseBUILDER. YOUR GUARANTEED MINIMUM INCOME BENEFIT UNDER BASEBUILDER The guaranteed minimum income benefit guarantees you a minimum amount of lifetime income under our Income Manager (Life Annuity with a Period Certain) payout annuity contract. The Income Manager (Life Annuity with a Period Certain) payout annuity contract provides payments during a specified period of time (called a period certain) that will continue for the rest of the annuitant's life thereafter. If the annuitant dies before the period certain has ended, payments will continue to the beneficiary for the time remaining in the period certain. - -------------------------------------------------------------------------------- We also refer to the guaranteed minimum income benefit as the "Living Benefit." - -------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT'S BENEFIT BASE. On the contract date, your guaranteed minimum income benefit's benefit base ("benefit base") is equal to the initial contribution. Thereafter, your benefit base will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option and Alliance Intermediate Government Securities option) and in the special dollar cost averaging program. Amounts in the Alliance Money Market option, Alliance Intermediate Government Securities option, fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after age 80. If you make an additional contribution to your contract, we will increase your current benefit base by the dollar amount of the additional contribution on the date that the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your benefit base for the withdrawal on the date that you make the withdrawal. See "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for more detailed information. Under Rollover TSA contracts, we will reduce your benefit base by the amount of any outstanding loan plus accrued interest on the date that you exercise your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- Your benefit base is not an account value or a cash value and is used solely for purposes of calculating your guaranteed minimum income benefit. - -------------------------------------------------------------------------------- EXERCISING YOUR BENEFIT AND INCOME YOU WILL RECEIVE. If you exercise the guaranteed minimum income benefit, the annual lifetime income that you will receive under the Income Manager (Life Annuity with a Period Certain) payout annuity contract, will be the greater of (i) your guaranteed minimum income benefit, and (ii) the income provided by applying your actual account value at our then current annuity purchase factors. The guaranteed minimum income benefit is based on conservative actuarial factors. Therefore, even if your account value is less than your benefit base, you may generate more income by applying your account value to current annuity purchase factors. We will make this comparison for you when the need arises. - -------------------------------------------------------------------------------- The guaranteed minimum income benefit should be regarded as a safety net only. - -------------------------------------------------------------------------------- ILLUSTRATIONS OF GUARANTEED MINIMUM INCOME BENEFIT. The table below illustrates the guaranteed minimum income benefit amounts per $100,000 of initial contribution, for a male annuitant age 60 (at issue) on the contract date anniversaries indicated, assuming no additional contributions, withdrawals, or loans under Rollover TSA contracts, and assuming there were no allocations to the Alliance Money Market option or the fixed maturity options. - -------------------------------------------------------------------------------- Contract features and benefits 24 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GUARANTEED MINIMUM NCOME BENEFIT -- ANNUAL INCOME CONTRACT DATE PAYABLE FOR LIFE WITH ANNIVERSARY AT EXERCISE 10 YEAR PERIOD CERTAIN - -------------------------------------------------------------------------------- 7 $ 8,315 10 10,341 15 14,924 - -------------------------------------------------------------------------------- Under NQ, Rollover IRA, and Roth Conversion IRA contracts, you may exercise the guaranteed minimum income benefit only within 30 days following the seventh or later contract date anniversary under your contract. However, you may not exercise the benefit before the annuitant is age 60, or after the annuitant is age 83. There is an exception if the annuitant is between ages 20 and 44 when your contract is issued. In this case you may exercise the benefit following the 15th or later contract date anniversary, but not after the annuitant is age 83. See "Exercise of guaranteed minimum income benefit under QP and Rollover TSA contracts" below regarding exercising the benefit under QP and Rollover TSA contracts. Your contract will terminate when you exercise your guaranteed minimum income benefit. You will then receive an Income Manager (Life Annuity with a Period Certain) payout annuity contract. Your period certain will be based on the annuitant's age at the time the benefit is exercised, as follows: - -------------------------------------------------------------------------------- LEVEL PAYMENTS* - -------------------------------------------------------------------------------- PERIOD CERTAIN YEARS -------------------- ROLLOVER IRA AND ROTH ANNUITANT'S CONVERSION AGE AT EXERCISE IRA NQ - ------------------------------------------------------------------------------- 60 to 75 10 10 76 9 10 77 8 10 78 7 10 79 7 10 80 7 10 81 7 9 82 7 8 83 7 7 - -------------------------------------------------------------------------------- * Other forms and periods certain may also be available. For Rollover IRA contracts, please see "Minimum distributions" under "Tax information," as to how this option may be affected if exercised after age 70 1/2. You will begin receiving payments one payment period after the payout annuity contract is issued. For example, if you select monthly annuity payments, we will send your first payment to you approximately one month from the date your contract is issued. Each year on your contract date anniversary, if you are eligible to exercise the guaranteed minimum income benefit, we will send you an eligibility notice illustrating how much income could be provided as of the contract date anniversary. You may then notify us within 30 days following the contract date anniversary if you want to exercise the guaranteed minimum income benefit. You must return your contract to us in order to exercise this benefit. The amount of income you actually receive will be determined when we receive your request to exercise the benefit. You may also apply your cash value at any time to an Income Manager (Life Annuity with a Period Certain) payout annuity contract, and you may always apply your account value to any of our annuity payout options. The annuity payout options are discussed under "Accessing your money." These options differ from the Income Manager payout annuity contracts. They may provide higher or lower income levels, but do not have all the features of the Income Manager payout annuity contract. You may request an illustration of the Income Manager payout annuity contract from your Equitable associate. The Income Manager (Life Annuity with a Period Certain) payout annuity contracts are offered through our prospectus for the Income Manager payout annuities. You may obtain a copy of the most current version from your Equitable associate. You should read it carefully before you decide to exercise your guaranteed minimum income benefit. SUCCESSOR ANNUITANT/CONTRACT OWNER. If the successor annuitant/contract owner (discussed under "More information" later in this prospectus) elects to continue the contract after your death, the guaranteed minimum income benefit will continue to be available on the contract date anniversaries specified above based on the contract date. However, the guaranteed minimum - -------------------------------------------------------------------------------- Contract features and benefits 25 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- income benefit must be exercised based on the age of the successor annuitant/contract owner. EXERCISE OF GUARANTEED MINIMUM INCOME BENEFIT UNDER QP AND ROLLOVER TSA CONTRACTS. Under QP contracts, the guaranteed minimum income benefit may be exercised in the same manner as described above only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. Similarly, under Rollover TSA contracts the contract owner must convert the Rollover TSA contract in a direct rollover to a Rollover IRA contract according to our rules. The rollover to a Rollover IRA contract may only occur when you are eligible for a rollover distribution from a TSA. This may generally occur when you are age 59 1/2, or you are separated from service from the employer who provided the Rollover TSA funds. See "Rollover or direct transfer contributions" under "Tax information" later in this prospectus. GUARANTEED MINIMUM DEATH BENEFIT Applicable for annuitant ages 0 through 79 at issue of NQ contracts; 20 through 79 at issue of Rollover IRA, Roth Conversion IRA, and Rollover TSA contracts; and 20 through 75 at issue of QP contracts. You may elect either the "5% roll up to age 80" or the "annual ratchet to age 80" guaranteed minimum death benefit when you apply for a contract. Once you have made your election, you may not change it. 5% ROLL UP TO AGE 80. On the contract date, the guaranteed minimum death benefit equals your initial contribution. Thereafter, the guaranteed minimum death benefit will be credited with interest each day through the annuitant's age 80. The effective annual interest rate is 5% for amounts in the variable investment options (other than the Alliance Money Market option and Alliance Intermediate Government Securities option) and in the special dollar cost averaging program. Amounts in the Alliance Money Market option, Alliance Intermediate Government Securities option, fixed maturity options, and in a Rollover TSA contract loan reserve account will be credited with interest at a 3% effective annual rate. No interest is credited after the annuitant is age 80. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the additional contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit for the withdrawal on the date you take the withdrawal. ANNUAL RATCHET TO AGE 80. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Then, on each contract date anniversary, we will determine your guaranteed minimum death benefit by comparing your current guaranteed minimum death benefit to your account value on that contract date anniversary. If your account value is higher than your guaranteed minimum death benefit, we will increase your guaranteed minimum death benefit to equal your account value. On the other hand, if your account value on the contract date anniversary is less than your guaranteed minimum death benefit, we will not adjust your guaranteed minimum death benefit either up or down. If you make additional contributions, we will increase your current guaranteed minimum death benefit by the dollar amount of the contribution on the date the contribution is allocated to your investment options. If you take a withdrawal from your contract, we will adjust your guaranteed minimum death benefit on the date you take the withdrawal. Applicable for annuitant ages 80 through 85 when the contract is issued. On the contract date, your guaranteed minimum death benefit equals your initial contribution. Thereafter, it will be increased by the dollar amount of any additional - -------------------------------------------------------------------------------- Contract features and benefits 26 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- contributions. We will adjust your guaranteed minimum death benefit if you take any withdrawals. -------------------------------- Please see "How withdrawals affect your guaranteed minimum income benefit and guaranteed minimum death benefit" under "Accessing your money" for information on how withdrawals affect your guaranteed minimum death benefit. See Appendix III for an example of how we calculate the guaranteed minimum death benefit. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract and will reflect (i) any investment gain or loss in the variable investment options, and (ii) any positive or negative market value adjustments in the fixed maturity options through the date we receive your contract. However, some states require that we refund the full amount of your contribution (not reflecting (i), (ii) or (iii) above). For any IRA contract returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. We may require that you wait six months before you may apply for a contract with us again if: o you cancel your contract during the free look period; or o you change your mind before you receive your contract whether we have received your contribution or not. Please see "Tax information" for possible consequences of cancelling your contract. If you fully convert an existing traditional IRA contract to a Roth Conversion IRA contract, you may cancel your Roth Conversion IRA contract and return to a Rollover IRA contract. Our Processing Office, or your Equitable associate, can provide you with the cancellation instructions. - -------------------------------------------------------------------------------- Contract features and benefits 27 - -------------------------------------------------------------------------------- 2 Determining your contract's value - -------------------------------------------------------------------------------- YOUR ACCOUNT VALUE Your "account value" is the total of the values you have allocated to the (i) variable investment options and (ii) fixed maturity options. These amounts are subject to certain fees and charges discussed under "Charges and expenses." Under Rollover TSA contracts, if you have any outstanding loan your account value will include any amount in the loan reserve account. Your contract also has a "cash value." At any time before annuity payments begin, your contract's cash value is equal to the account value. If you have a Rollover TSA contract with an outstanding loan, your cash value also is reduced by the amount of any outstanding loan plus accrued interest. Please see "Surrendering your contract to receive its cash value" below. YOUR CONTRACT'S VALUE IN THE VARIABLE INVESTMENT OPTIONS Each variable investment option invests in shares of a corresponding Portfolio. Your value in each variable investment option is measured by "units." The value of your units will increase or decrease as though you had invested it in the corresponding Portfolio's shares directly. Your value, however, will be reduced by the amount of the fees and charges that we deduct under the contract. Your value will also be reduced by the dollar amount of any withdrawals that you make. The unit value for each variable investment option depends on the investment performance of that option, minus daily charges for mortality and expense risks, administrative, and distribution expenses. On any day, your value in any variable investment option equals the number of units credited to your contract under that option, multiplied by that day's value for one unit. The number of your contract units in any variable investment option does not change unless you make additional contributions, make a withdrawal, or transfer amounts between investment options. In addition, when we deduct the baseBUILDER benefits charge the number of units credited to your contract will be reduced. A description of how unit values are calculated is found in the SAI. YOUR CONTRACT'S VALUE IN THE FIXED MATURITY OPTIONS Your value in each fixed maturity option at any time before the maturity date is the market adjusted amount in each option. This is equivalent to your fixed maturity amount increased or decreased by the market value adjustment. Your value, therefore, may be higher or lower than your contributions (less withdrawals) accumulated at the rate to maturity. At the maturity date, your value in the fixed maturity option will equal its maturity value. - -------------------------------------------------------------------------------- Transferring your money among investment options 28 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 Transferring your money among investment options - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TRANSFERRING YOUR ACCOUNT VALUE At any time before the date annuity payments are to begin, you can transfer some or all of your account value among the investment options, subject to the following: o You may not transfer to a fixed maturity option that matures in the current calendar year, or if its rate to maturity is 3%. o If the annuitant is 76 or older, you must limit your transfers to fixed maturity options to those with maturities of five years or less. Also, the maturity dates may be no later than the February 15th immediately following the date annuity payments are to begin. o If you make transfers out of a fixed maturity option other than at its maturity date the transfer may cause a market value adjustment. You may request a transfer in writing or by telephone using TOPS. You must send in all written transfer requests directly to our Processing Office. Transfer requests should specify: (1) the contract number, (2) the dollar amounts or percentages of your current account value to be transferred, and (3) the investment options to and from which you are transferring. We may, at any time, restrict the use of market timers and other agents acting under a power of attorney who are acting on behalf of more than one contract owner. Any agreements to use market timing services to make transfers are subject to our rules in effect at that time. We will confirm all transfers in writing. REBALANCING YOUR ACCOUNT VALUE We currently offer a rebalancing program that you can use to automatically reallocate your account value among the variable investment options. You must tell us: (a) the percentage you want invested in each variable investment option (whole percentages only), and (b) how often you want the rebalancing to occur (quarterly, semiannually, or annually on a contract year basis. However, it will occur on the same day of the month as the contract date). While your rebalancing program is in effect, we will transfer amounts among each variable investment option so that the percentage of your account value that you specify is invested in each option at the end of each rebalancing date. - -------------------------------------------------------------------------------- Rebalancing does not assure a profit or protect against loss. You should periodically review your allocation percentages as your needs change. You may want to discuss the rebalancing program with your registered representative or other financial adviser before electing the program. - -------------------------------------------------------------------------------- You may elect the rebalancing program at any time. You may also change your allocation instructions or cancel the program at any time. If you request a transfer while the rebalancing program is in effect, we will process the transfer as requested and then cancel the rebalancing program. You may not elect the rebalancing program if you are participating in a dollar cost averaging program. Rebalancing is not available for amounts you have allocated in the fixed maturity options. - -------------------------------------------------------------------------------- Accessing your money 29 - -------------------------------------------------------------------------------- 4 Accessing your money - -------------------------------------------------------------------------------- WITHDRAWING YOUR ACCOUNT VALUE You have several ways to withdraw your account value before annuity payments begin. The table below shows the methods available under each type of contract. More information follows the table. For the tax consequences of withdrawals, see "Tax information." - ------------------------------------------------------------------------------- METHOD OF WITHDRAWAL - -------------------------------------------------------------------------------- SUBSTANTIALLY MINIMUM CONTRACT LUMP SUM SYSTEMATIC EQUAL DISTRIBUTION - -------------------------------------------------------------------------------- NQ Yes Yes No No - -------------------------------------------------------------------------------- Rollover IRA Yes Yes Yes Yes - -------------------------------------------------------------------------------- Roth Yes Yes Yes No Conversion IRA - -------------------------------------------------------------------------------- QP Yes No No Yes - -------------------------------------------------------------------------------- Rollover Yes* No No Yes TSA - -------------------------------------------------------------------------------- * For some Rollover TSA contracts, your ability to take withdrawals, loans or surrender your contract may be limited. You must provide withdrawal restriction information when you apply for a contract. See "Tax information - Tax Sheltered Annuity contracts (TSAs)" below. LUMP SUM WITHDRAWALS (All contracts) You may take lump sum withdrawals from your account value at any time. (Rollover TSA contracts may have restrictions.) The minimum amount you may withdraw is $1,000. If you request to withdraw more than 90% of a contract's current cash value we will treat it as a request to surrender the contract for its cash value. See "Surrendering your contract to receive its cash value" below. Under Rollover TSA contracts, if a loan is outstanding, you may only take lump sum withdrawals as long as the cash value remaining after any withdrawal equals at least 10% of the outstanding loan plus accrued interest. SYSTEMATIC WITHDRAWALS (NQ, Rollover IRA, and Roth Conversion IRA contracts only) You may take systematic withdrawals of a particular dollar amount or a particular percentage of your account value. You may take systematic withdrawals on a monthly, quarterly or annual basis as long as the withdrawals do not exceed the following percentages of your account value: 1.2% monthly, 3.6% quarterly, and 15.0% annually. The minimum amount you may take in each systematic withdrawal is $250. If the amount withdrawn would be less than $250 on the date a withdrawal is to be taken, we will not make a payment and we will terminate your systematic withdrawal election. We will make the withdrawals on any day of the month that you select as long as it is not later than the 28th day of the month. If you do not select a date, we will make the withdrawals on the same calendar day of the month as the contract date. You must wait at least 28 days after your contract is issued before your systematic withdrawals can begin. You may elect to take systematic withdrawals at any time. If you own a Rollover IRA or Roth Conversion IRA contract, you may elect this withdrawal method only if you are between ages 59 1/2 and 70 1/2. You may change the payment frequency, or the amount or percentage of your systematic withdrawals, once each contract year. However, you may not change the amount or percentage in any contract year in which you have already taken a lump sum withdrawal. You can cancel the systematic withdrawal option at any time. SUBSTANTIALLY EQUAL WITHDRAWALS (Rollover IRA and Roth Conversion IRA contracts only) The substantially equal withdrawals option allows you to receive distributions from your account value without triggering the 10% additional federal tax penalty, which normally applies to distributions made before age 59 1/2. See "Tax information." Once you begin to take substantially equal withdrawals, you should not stop them or change the pattern of your withdrawals until the later of age 59 1/2 or five full years after the first withdrawal. If you stop or change the withdrawals or take a lump sum withdrawal, you may be liable for the 10% federal tax penalty that would have - -------------------------------------------------------------------------------- Accessing your money 30 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- otherwise been due on prior withdrawals made under this option and for any interest on those withdrawals. You may elect to take substantially equal withdrawals at any time before age 59 1/2. We will make the withdrawal on any day of the month that you select as long as it is not later than the 28th day of the month. You may not elect to receive the first payment in the same contract year in which you took a lump sum withdrawal. We will calculate the amount of your substantially equal withdrawals based on the method you choose from the choices we offer. The payments will be made monthly, quarterly or annually as you select. These payments will continue until we receive written notice from you to cancel this option or you take a lump sum withdrawal. You may elect to start receiving substantially equal withdrawals again, but the payments may not restart in the same contract year in which you took a lump sum withdrawal. We will calculate the new withdrawal amount. MINIMUM DISTRIBUTION WITHDRAWALS (Rollover IRA, QP, and Rollover TSA contracts only - See "Tax information") We offer the minimum distribution withdrawal option to help you meet required minimum distributions under federal income tax rules. You may elect this option in the year in which you reach age 70 1/2. The minimum amount we will pay out is $250. You may elect the method you want us to use to calculate your minimum distribution withdrawals from the choices we offer. Currently, minimum distribution withdrawal payments will be made annually. We will calculate your annual payment based on your account value at the end of the prior calendar year based on the method you choose. Under Rollover TSA contracts, you may not elect minimum distribution withdrawals if a loan is outstanding. - -------------------------------------------------------------------------------- For Rollover IRA, QP, and Rollover TSA contracts, we will send a form outlining the distribution options available before you reach age 70 1/2 (if you have not begun your annuity payments before that time). - -------------------------------------------------------------------------------- HOW WITHDRAWALS ARE TAKEN FROM YOUR ACCOUNT VALUE Unless you specify otherwise, we will subtract your withdrawals on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the withdrawal required or the total amount of the withdrawal will be withdrawn from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. HOW WITHDRAWALS AFFECT YOUR GUARANTEED MINIMUM INCOME BENEFIT AND GUARANTEED MINIMUM DEATH BENEFIT Withdrawals will reduce your guaranteed benefits on either a dollar-for-dollar basis or on a pro rata basis as explained below: INCOME BENEFIT Benefit base-- Your current benefit base will be reduced on a - ------------ dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current benefit base on a pro rata basis. DEATH BENEFIT 5% roll up to age 80 -- If you elect the 5% roll up to age 80 guaranteed - -------------------- minimum death benefit, your current guaranteed minimum death benefit will be reduced on a dollar-for-dollar basis as long as the sum of your withdrawals in a contract year is 5% or less of the guaranteed minimum death benefit on the most recent contract date anniversary. Once you take a withdrawal that causes the sum of your withdrawals in a contract year to exceed 5% of the guaranteed minimum death benefit on - -------------------------------------------------------------------------------- Accessing your money 31 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the most recent contract date anniversary, that withdrawal and any subsequent withdrawals in that same contract year will reduce your current guaranteed minimum death benefit on a pro rata basis. Annual ratchet to age 80 -- If you elect the annual ratchet to age 80 - ------------------------ guaranteed minimum death benefit, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. Annuitant issue ages 80 through 85 -- If your contract was issued when the - ---------------------------------- annuitant was between ages 80 and 85, each withdrawal will always reduce your current guaranteed minimum death benefit on a pro rata basis. ---------------------------- Reduction on a dollar-for-dollar basis means that your current benefit will be reduced by the dollar amount of the withdrawal. Reduction on a pro rata basis means that we calculate the percentage of your current account value that is being withdrawn and we reduce your current benefit by that same percentage. For example, if your account value is $30,000 and you withdraw $12,000, you have withdrawn 40% of your account value. If your guaranteed minimum death benefit was $40,000 before the withdrawal, it would be reduced by $16,000 ($40,000 x .40) and your new guaranteed minimum death benefit after the withdrawal would be $24,000 ($40,000 - $16,000). The timing of your withdrawals and whether they exceed the 5% threshold described above can have a significant impact on your guaranteed minimum income benefit or guaranteed minimum death benefit. LOANS UNDER ROLLOVER TSA CONTRACTS You may take loans from a Rollover TSA unless restricted by the employer who provided the Rollover TSA funds. If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the funds told us when you purchased your contract. The employer must also tell us whether special employer plan rules of the Employee Retirement Income Security Act of 1974 ("ERISA") apply. We will not permit you to take a loan while you are taking minimum distribution withdrawals. You should read the terms and conditions on our loan request form carefully before taking out a loan. Under Rollover TSA contracts subject to ERISA, you may only take a loan with the written consent of your spouse. Your contract contains further details of the loan provision. Also, see "Tax iinformation" for general rules applicable to loans. We will permit you to have only one loan outstanding at a time. The minimum loan amount is $1,000. The maximum amount is $50,000 or, if less, 50% of your account value, subject to any limits under the federal income tax rules. The term of a loan is five years. However, if you use the loan to acquire your primary residence, the term is 10 years. The term may not extend beyond the earliest of: (1) the date annuity payments begin, (2) the date the contract terminates, and (3) the date a death benefit is paid (the outstanding loan will be deducted from the death benefit amount). Interest will accrue daily on your outstanding loan at a rate we set. The loan interest rate will be equal to the Moody's Corporate Bond Yield Averages for the calendar month ending two months before the day of the calendar quarter in which the rate is determined. LOAN RESERVE ACCOUNT. On the date your loan is processed, we will transfer the amount of your loan to the loan reserve account. Unless you specify otherwise, we will subtract your loan on a pro rata basis from your value in the variable investment options. If there is insufficient value or no value in the variable investment options, any additional amount of the loan will be subtracted from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. We will credit interest to the amount in the loan reserve account at a rate of 2% lower than the loan interest rate that applies for the time your loan is outstanding. On each contract date anniversary after the date the loan is - -------------------------------------------------------------------------------- Accessing your money 32 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- processed, we will transfer the amount of interest earned in the loan reserve account to the variable investment options on a pro rata basis. When you make a loan repayment, unless you specify otherwise, we will transfer the dollar amount of the loan repaid from the loan reserve account to the investment options according to the allocation percentages we have on our records. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time while the annuitant is living and before you begin to receive annuity payments. (Rollover TSA contracts may have restrictions.) For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under the contract will terminate as of that date. You may receive your cash value in a single sum payment or apply it to one or more of the annuity payout options. See "Choosing your annuity payout options" below. We will usually pay the cash value within seven calendar days, but we may delay payment as described in "When to expect payments," below. For the tax consequences of surrenders, see "Tax information." WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments out of the variable investment options within seven calendar days after the date of the transaction to which the request relates. These transactions may include applying proceeds to a variable annuity, payment of a death benefit, payment of any amount you withdraw and, upon surrender, payment of the cash value. We may postpone such payments or applying proceeds for any period during which: (1) the New York Stock Exchange is closed or restricts trading, (2) sales of securities or determination of the fair value of a variable investment option's assets is not reasonably practicable because of an emergency, or (3) the SEC, by order, permits us to defer payment to protect people remaining in the variable investment options. We can defer payment of any portion of your value in the fixed maturity options (other than for death benefits) for up to six months while you are living. We also may defer payments for a reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. All payments are made by check and are mailed to you (or the payee named in a tax-free exchange) by U.S. mail, unless you request that we use an express delivery service at your expense. CHOOSING YOUR ANNUITY PAYOUT OPTIONS The Equitable Accumulator Select offers you several choices for receiving retirement income. Each choice enables you to receive fixed or, in some cases, variable annuity payments. You can choose from among the six different annuity payout options listed below. Restrictions apply, depending on the type of contract you own. - -------------------------------------------------------------------------------- Annuity payout options Life annuity Life annuity -- period certain Life annuity -- refund certain Period certain annuity - -------------------------------------------------------------------------------- Income Manager payout Life annuity with a period options certain Period certain annuity - -------------------------------------------------------------------------------- ANNUITY PAYOUT OPTIONS You can choose from among the following annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the ------------- annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because - -------------------------------------------------------------------------------- Accessing your money 33 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- there is no continuation of benefits following the annuitant's death with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. o Life annuity -- period certain: An annuity that guarantees payments for the ------------------------------ rest of the annuitant's life. If the annuitant dies before the end of a selected period of time ("period certain"), payments continue to the beneficiary for the balance of the period certain. A life annuity with a period certain of 10 years is the normal form of annuity under the contracts. The period certain cannot extend beyond the annuitant's life expectancy. o Life annuity -- refund certain: An annuity that guarantees payments for the ------------------------------ rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments to the beneficiary will continue until that amount has been recovered. This payout option is available only as a fixed annuity. o Period certain annuity: An annuity that guarantees payments for a specific ----------------------- period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. Currently, this payout option is available only as a fixed annuity. All of the above payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for you. The life annuity, life annuity -- period certain, and life annuity -- refund certain payout options are available on a single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, payments continue to the survivor. The following annuity payout options are available as variable annuities: o Life annuity. o Life annuity -- period certain. o Joint and survivor life annuity (100% to survivor). o Joint and survivor life period certain annuity (100% to survivor). Variable annuities may be funded through your choice of variable investment options investing in Portfolios of The Hudson River Trust. The amount of each variable annuity payment will fluctuate, depending upon the performance of the variable investment options, and whether the actual rate of investment return is higher or lower than an assumed base rate. Please see "Annuity Unit Values" in the SAI. We may offer other payout options not outlined here. Your registered representative can provide details. SELECTING AN ANNUITY PAYOUT OPTION When you select a payout option, we will issue you a separate written agreement confirming your right to receive annuity payments. We require you to return your contract before annuity payments begin. For NQ, Rollover IRA, and Roth Conversion IRA contracts, unless you choose a different payout option, we will pay annuity payments under a life annuity with a certain period of 10 years. The only payout options available under QP contracts and Rollover TSA contracts are the life annuity 10 year period certain and the joint and survivor life annuity 10 year period certain. You can choose the date annuity payments begin but it may not be earlier than one year from the contract date. You can change the date your annuity payments are to begin anytime before that date as long as you do not choose a date later than the 28th day of any month. Also, that date may not be later than the contract date anniversary that follows the annuitant's 90th birthday. This may be different in some states. - -------------------------------------------------------------------------------- Accessing your money 34 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Before your annuity payments are to begin, we will notify you by letter that the annuity payout options are available. Once you have selected a payout option and payments have begun, no change can be made other than transfers (if permitted in the future) among the variable investment options if a variable annuity is selected. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and whether it is fixed or variable, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). Amounts in the fixed maturity options that are applied to a payout option before a maturity date will result in a market value adjustment. If, at the time you elect a payout option, the amount to be applied is less than $2,000 or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. INCOME MANAGER PAYOUT OPTIONS For NQ, Rollover IRA, and Roth Conversion IRA contracts, two Income Manager payout options are also available. These are the Income Manager (Life Annuity with a Period Certain) and the Income Manager (Period Certain). For QP contracts, the Income Manager payout options are available only after the trustee of the qualified plan directly rolls over the QP contract to a Rollover IRA contract. In this process the ownership of the QP contract is changed to the annuitant. The rollover to a Rollover IRA contract and the change of ownership may only occur when the annuitant will no longer be a participant in the qualified plan. For Rollover TSA contracts, the Income Manager payout annuity options are available only after the Rollover TSA contract is rolled over to a Rollover IRA contract. This may generally occur when you are age 59 1/2, or you have separated from service with the employer who provided the Rollover TSA funds. The Income Manager (Life Annuity with a Period Certain) provides guaranteed payments for the annuitant's life or for the annuitant's life and the life of a joint annuitant. The Income Manager (Period Certain) provides payments for a specified period. The contract owner and annuitant must meet the issue age and payment requirements. Both Income Manager annuities provide guaranteed level payments (NQ and IRA contracts). The Income Manager (Life Annuity with a Period Certain) also provides guaranteed increasing payments (NQ contracts only). No additional contributions will be permitted under an Income Manager (Life Annuity with a Period Certain). The Income Manager annuities are described in a separate prospectus. Copies of the most current version are available from your registered representative. To purchase an Income Manager annuity we also require the return of your contract. We will issue an Income Manager annuity to put one of the payout annuities into effect. Depending upon your circumstances, this may be done on a tax-free basis. Please consult your tax adviser. - -------------------------------------------------------------------------------- Charges and expenses 35 - -------------------------------------------------------------------------------- 5 Charges and expenses - -------------------------------------------------------------------------------- CHARGES THAT EQUITABLE LIFE DEDUCTS We deduct the following charges each day from the net assets of each variable investment option. These charges are reflected in the unit values of each variable investment option: o A mortality and expense risks charge. o An administrative charge. o A distribution charge. We deduct the following charges from your account value. When we deduct these charges from your variable investment options, we reduce the number of units credited to your contract: o If you elect the optional benefit a charge for the optional baseBUILDER benefit. o At the time annuity payments are to begin charges for state premium and other taxes. More information about these charges appears below. We will not increase these charges for the life of your contract, except as noted. We may reduce certain charges under group or sponsored arrangements. See "Group or sponsored arrangements" below. We also offer an Equitable Accumulator contract that has a withdrawal charge but no distribution charge. This other contract may also provide higher rates to maturity for the fixed maturity options. A current prospectus for this other Equitable Accumulator contract may be obtained from your registered representative. MORTALITY AND EXPENSE RISKS CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for mortality and expense risks, including the guaranteed minimum death benefit. The daily charge is equivalent to an annual rate of 1.10% of the net assets in each variable investment option. The mortality risk we assume is the risk that annuitants as a group will live for a longer time than our actuarial tables predict. If that happens, we would be paying more in annuity income than we planned. We also assume a risk that the mortality assumptions reflected in our guaranteed annuity payment tables, shown in each contract, will differ from actual mortality experience. Lastly, we assume a mortality risk to the extent that at the time of death, the guaranteed minimum death benefit exceeds the cash value of the contract. The expense risk we assume is the risk that it will cost us more to issue and administer the contracts than we expect. ADMINISTRATIVE CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for administrative expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. We reserve the right under the contracts to increase this charge to an annual rate of 0.35%. DISTRIBUTION CHARGE We deduct a daily charge from the net assets in each variable investment option to compensate us for a portion of our sales expenses under the contracts. The daily charge is equivalent to an annual rate of 0.25% of the net assets in each variable investment option. BASEBUILDER BENEFITS CHARGE If you elect the baseBUILDER combined guaranteed minimum income benefit and guaranteed minimum death benefit, we deduct a charge annually from your account value on each contract date anniversary. The charge is equal to 0.30% of the benefit base in effect on the contract date anniversary. We will deduct this charge from your value in the variable investment options on a pro rata basis. If there is not enough value in the variable investment options, we will deduct all or a portion of the charge from the fixed maturity options in order of the earliest maturity date(s) first. A market value adjustment may apply. - -------------------------------------------------------------------------------- Charges and expenses 36 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. Generally, we deduct the charge from the amount applied to provide an annuity payout. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands ). ANNUITY ADMINISTRATIVE FEE We generally deduct a fee of up to $350 from the amount to be applied to purchase a life annuity payout option. CHARGES THAT THE TRUSTS DEDUCT The Hudson River Trust and EQ Advisors Trust each deducts charges for the following types of fees and expenses: o Investment advisory fees ranging from 0.25% to 1.15%. o 12b-1 fees of 0.25%. o Operating expenses, such as trustees' fees, independent auditors' fees, legal counsel fees, administrative service fees, custodian fees, and liability insurance. o Investment-related expenses, such as brokerage commissions. These charges are reflected in the daily share price of each Portfolio. Since shares of each trust are purchased at their net asset value, these fees and expenses are, in effect, passed on to the variable investment options and are reflected in their unit values. For more information about these charges, please refer to the prospectuses for The Hudson River Trust and EQ Advisors Trust following this prospectus. GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the mortality and expense risks charge or change the minimum initial contribution requirements. We also may change the guaranteed minimum income benefit and the guaranteed minimum death benefit, or offer variable investment options that invest in shares of The Hudson River Trust or EQ Advisors Trust that are not subject to the 12b-1 fee. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. Group arrangements are not available for Rollover IRA and Roth Conversion IRA contracts. Sponsored arrangements include those in which an employer allows us to sell contracts 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 or sponsoring organization, 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, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We also may establish different rates to maturity for the fixed maturity options under different classes of contracts for group or sponsored arrangements. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variations will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, ERISA, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. - -------------------------------------------------------------------------------- Charges and expenses 37 - -------------------------------------------------------------------------------- 6 Payment of death benefit - -------------------------------------------------------------------------------- YOUR BENEFICIARY AND PAYMENT OF BENEFIT You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for the change is signed. Under jointly owned contracts, the surviving owner is considered the beneficiary, and will take the place of any other beneficiary. You may be limited as to the beneficiary you can designate in a Rollover TSA contract. In a QP contract, the beneficiary must be the trustee. The death benefit is equal to your account value, or, if greater, the guaranteed minimum death benefit. The guaranteed minimum death benefit is part of your contract, whether you select the combined baseBUILDER benefit or not. We determine the amount of the death benefit as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. Under Rollover TSA contracts we will deduct the amount of any outstanding loan plus accrued interest from the amount of the death benefit. EFFECT OF THE ANNUITANT'S DEATH If the annuitant dies before the annuity payments begin, we will pay the death benefit to your beneficiary. Generally, the death of the annuitant terminates the contract. However, a beneficiary who is the surviving spouse of the owner/annuitant can choose to be treated as the successor owner/annuitant and continue the contract. Only a spouse can be a successor owner/annuitant. Under Rollover TSA contracts, you cannot have a successor owner/annuitant. For Rollover IRA contracts, a beneficiary who is not a surviving spouse may be able to have limited ownership. WHEN AN NQ CONTRACT OWNER DIES BEFORE THE ANNUITANT Under certain conditions the owner can change after the original owner's death. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the successor owner. If you do not want the person named to receive the death benefit upon the annuitant's death to be the successor owner, you should name a successor owner. You may name a different person that will become the successor owner at any time by sending satisfactory notice to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the "beneficiary" for purposes of the distribution rules described in this section. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the owner who has died (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the successor owner for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value of the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The successor owner may instead elect to receive the cash value as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy). Payments must begin no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the successor owner or joint owner, the spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and annuitant are living. HOW DEATH BENEFIT PAYMENT IS MADE We will pay the death benefit to the beneficiary in the form of the annuity payout option you have chosen. If you have not chosen an annuity payout option as of the time of the - -------------------------------------------------------------------------------- Payment of death benefit 38 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- annuitant's death, the beneficiary will receive the death benefit in a single sum. However, subject to any exceptions in the contract, our rules and any applicable requirements under federal income tax rules, the beneficiary may elect to apply the death benefit to one or more annuity payout options we offer at the time. See "Choosing your annuity payout options" earlier in this prospectus. Please note that if you are both the contract owner and the annuitant, you may elect only a life annuity or an annuity that does not extend beyond the life expectancy of the beneficiary. SUCCESSOR OWNER AND ANNUITANT If you are both the contract owner and the annuitant, and your spouse is the sole beneficiary or the joint owner, then your spouse may elect to receive the death benefit or continue the contract as successor owner/annuitant. If your surviving spouse decides to continue the contract, then on the contract date anniversary following your death, we will increase the account value to equal your current guaranteed minimum death benefit, if it is higher than the account value. In determining whether the guaranteed minimum death benefit will continue to grow, we will use your surviving spouse's age (as of the contract date anniversary). BENEFICIARY CONTINUATION OPTION FOR ROLLOVER IRA CONTRACTS Upon your death under a Rollover IRA contract, a non-spouse beneficiary may generally elect to keep the contract in your name and receive distributions under the contract instead of the death benefit being paid in a single sum. If you die AFTER the "required beginning date" (see "Tax information") for required minimum distributions, the contract will continue if: (a) you were receiving minimum distribution withdrawals from this contract; and (b) the pattern of minimum distribution withdrawals you chose was based in part on the life of the designated beneficiary. The withdrawals will then continue to be paid to the beneficiary on the same basis as you chose before your death. We will be able to tell your beneficiary whether this option is available to them. You should contact our Processing Office for further information. If you die BEFORE the "required beginning date" (and therefore you were not taking minimum distribution withdrawals under the contract), the beneficiary may begin taking minimum distribution withdrawals under the contract. We will increase the account value to equal the death benefit if the death benefit is greater than the account value. That amount will be used to provide the withdrawals. These withdrawals will begin by December 31st of the calendar year following your death and will be based on the beneficiary's life expectancy. If there is more than one beneficiary, the shortest life expectancy is used. The designated beneficiary must be a natural person and of legal age at the time of election. The beneficiary must elect this option within 30 days following the date we receive proof of your death. While the contract continues in your name, the beneficiary may make transfers among the investment options. However, additional contributions will not be permitted and the guaranteed minimum income benefit and the death benefit (including the guaranteed minimum death benefit) provisions will no longer be in effect. Although the only withdrawals that will be permitted are minimum distribution withdrawals, the beneficiary may choose at any time to withdraw all of the account value. - -------------------------------------------------------------------------------- Tax information 39 - -------------------------------------------------------------------------------- 7 Tax information - -------------------------------------------------------------------------------- OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Equitable Accumulator Select contracts owned by United States taxpayers. The tax rules can differ, depending on the type of contract, whether NQ, Rollover IRA, Roth Conversion IRA, QP or Rollover TSA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. If you are buying a contract to fund a retirement plan that already provides tax deferral under sections of the Internal Revenue Code (IRA, QP and Rollover TSA), you should do so for the contract's features and benefits other than tax deferral. In such situations, the tax deferral of the contract does not provide additional benefits. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TRANSFERS AMONG INVESTMENT OPTIONS You can make transfers among investment options inside the contract without triggering taxable income. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal or as an annuity payment. However, earnings are taxable, even without a distribution: o if a contract fails investment diversification requirements as specified in federal income tax rules (these rules are based on or are similar to those specified for mutual funds under the securities laws); o if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse); o if you use a contract as security for a loan (in this case, the amount pledged will be treated as a distribution); and o if the owner is other than an individual (such as a corporation, partnership, trust, or other non-natural person). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract for calculating the taxable amount of any distribution from any of those contracts. ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get back the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. For fixed annuity payments, the tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount - -------------------------------------------------------------------------------- Tax information 40 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- of the payment. For variable annuity payments, your investment in the contract divided by the number of expected payments is your tax-free portion of each payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Equitable Accumulator Select NQ contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Equitable Accumulator Select NQ contract. SURRENDERS If you surrender or cancel the contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. DEATH BENEFIT PAYMENTS MADE TO A BENEFICIARY AFTER YOUR DEATH For the rules applicable to death benefits, see "Payment of Death Benefit" and "When an NQ contract owner dies before the annuitant" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and a beneficiary. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The calculation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your - -------------------------------------------------------------------------------- Tax information 41 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "Traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis; and o SEP-IRAs and SIMPLE-IRAs, issued and funded in connection with employer-sponsored retirement plans. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (http:// www.irs.ustreas.gov). The Equitable Accumulator Select IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. You may purchase the contract as a traditional IRA ("Rollover IRA") or Roth IRA ("Roth Conversion IRA"). This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The next section covers Roth IRAs. Education IRAs are not discussed in this prospectus because they are not available in individual retirement annuity form. The Equitable Accumulator Select IRA contract has been approved by the IRS as to form for use as a traditional IRA. We expect to submit the Roth IRA version for formal IRS approval in 1999. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Equitable Accumulator Select IRA contract. CANCELLATION You can cancel an Equitable Accumulator Select IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. You can cancel an Equitable Accumulator Select Roth Conversion IRA contract issued as a result of a full conversion of an Equitable Accumulator Select Rollover IRA contract by following the instructions in the request for full conversion form. The form is available from our Processing Office or your registered representative. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a traditional IRA: - -------------------------------------------------------------------------------- Tax information 42 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other traditional IRAs ("direct transfers"); or o regular contributions out of earned income or compensation. We require that all of your contributions to the Equitable Accumulator Select Rollover IRA contract must be either a rollover or a direct custodian-to-custodian transfer. See "Rollovers and transfers" below. Since we do not permit regular contributions under the Equitable Accumulator Select Rollover IRA contract, we do not discuss them in great detail in this prospectus. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o regular contributions of more than $2,000; or o regular contributions of more than earned income for the year, if that amount is under $2,000; or o regular contributions to a traditional IRA made after you reach age 70 1/2; or o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or regular) before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess regular traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions, discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. ROLLOVERS AND TRANSFERS Rollover contributions may be made to a traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other traditional IRAs. You may also change your Roth IRA funds to traditional IRA funds, in accordance with special federal income tax rules, if you use the forms we prescribe. This is referred to as having "recharacterized" your contribution. Any amount contributed to a traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. - -------------------------------------------------------------------------------- Tax information 43 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions, unless the distribution is: o only after-tax contributions you made to the plan; or o "required minimum distributions" after age 70 1/2 or separation from service; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; or o a hardship withdrawal; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one traditional IRA to one or more of your other traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited traditional IRA to one or more other traditional IRAs. Also, in some cases, traditional IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a traditional IRA at any time. You do not need to wait for a special event like retirement. Taxation of payments Earnings in traditional IRAs are not subject to federal income tax until you or your beneficiary receives them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any traditional IRA (it does not have to be to this particular traditional IRA contract), those contributions are recovered tax free when you get distributions from any traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to traditional IRAs. At the end of any year in which you have received a distribution from any traditional IRA, you calculate the ratio of your total nondeductible traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all traditional IRAs you own at the end of the year plus all traditional IRA distributions made during the year. Multiply this by all distributions from the traditional IRA during the year to determine the nontaxable portion of each distribution. - -------------------------------------------------------------------------------- Tax information 44 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- In addition, a distribution is not taxable if: o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; or o the entire amount received is rolled over to another traditional IRA (see "Rollovers and transfers" above); or o in certain limited circumstances, where the traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" traditional IRA treatment: o the source of funds you used to establish the traditional IRA must have been a rollover contribution from a qualified plan, and o the entire amount received from the traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. The Rollover IRA contract can be used as a conduit IRA if amounts are not commingled. Distributions from a traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1 - April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year - the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions - "account-based" or "annuity-based." Account-based method. If you choose an "account-based" method, you divide the value of your traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of calculating annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of calculating annual - -------------------------------------------------------------------------------- Tax information 45 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- account-based required minimum distributions, you have to use the "term certain" method of calculating that person's life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). For example, if you anticipate exercising your guaranteed minimum income benefit or selecting any other form of life annuity payout after you are age 70 1/2, you must have elected to recalculate life expectancies. Annuity-based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your traditional IRA based on the method you choose? No, unless you affirmatively select an annuity payout option or an account-based withdrawal option such as our minimum distribution withdrawal option. Because the options we offer do not cover every option permitted under federal income tax rules, you may prefer to do your own required minimum distribution calculations for one or more of your traditional IRAs. What if you take more than you need to for any year? The required minimum distribution amount for your traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you take from your qualified plans to the amounts you have to take from your traditional IRAs and vice-versa. However, the IRS will let you calculate the required minimum distribution for each traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall traditional IRA required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal income tax rules require complete distribution of your entire value in the contract - -------------------------------------------------------------------------------- Tax information 46 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your traditional IRA into his or her own traditional IRA. Successor annuitant and owner If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a traditional IRA. You cannot use a traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o used to pay certain extraordinary medical expenses (special federal income tax definition); or o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); or o used to pay certain first-time home buyer expenses (special federal income tax definition); or o used to pay certain higher education expenses (special federal income tax definition); or o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. To meet this last exception, you could elect to apply your contract value to an Income Manager (Life Annuity with a Period Certain) payout annuity contract (level payments version). You could also elect the substantially equal withdrawals option. We will calculate the substantially equal annual payments under a method we select based on guidelines issued by the IRS (currently contained in IRS Notice 89-25, Question and Answer 12). Although substantially equal withdrawals and Income Manager payments are not subject to the 10% penalty tax, they are taxable as discussed in "Withdrawals, payments and transfers of funds out of traditional IRAs" above. Once substantially equal withdrawals or Income Manager annuity payments begin, the distributions should not be stopped or changed until the later of your reaching age 59 1/2 or five years after the date of the first distribution, or the penalty tax, including an interest charge for the prior penalty avoidance, may apply to all prior distributions under this option. Also, it is possible that the IRS could view any additional withdrawal or payment you take from your contract as changing your pattern of substantially equal withdrawals or Income Manager payments for purposes of determining whether the penalty applies. ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRAS) This section of the prospectus covers some of the special tax rules that apply to Roth IRAs. If the rules are the same as those that apply to the traditional IRA, we will refer you to the same topic under "traditional IRAs." - -------------------------------------------------------------------------------- Tax information 47 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Equitable Accumulator Select Roth Conversion IRA contract is designed to qualify as a Roth individual retirement annuity under Sections 408A and 408(b) of the Internal Revenue Code. CONTRIBUTIONS TO ROTH IRAS Individuals may make four different types of contributions to a Roth IRA: o taxable "rollover" contributions from traditional IRAs ("conversion" contributions); or o tax-free rollover contributions from other Roth IRAs; or o tax-free direct custodian-to-custodian transfers from other Roth IRAs ("direct transfers"); or o regular after-tax contributions out of earnings. Since we only permit direct transfer and rollover contributions under the Equitable Accumulator Select Roth Conversion IRA contract, we do not discuss regular after-tax contributions here. If you use the forms we require, we will also accept traditional IRA funds which are subsequently recharacterized as Roth IRA funds following special federal income tax rules. ROLLOVERS AND DIRECT TRANSFERS What is the difference between rollover and direct transfer transactions? You may make rollover contributions to a Roth IRA from only two sources: o another Roth IRA ("tax-free rollover contribution"); or o another traditional IRA, including a SEP-IRA or SIMPLE-IRA, in a taxable "conversion" rollover ("conversion contribution"). You may not make contributions to a Roth IRA from a qualified plan under Section 401(a) of the Internal Revenue Code, or a TSA under Section 403(b) of the Internal Revenue Code. You may make direct transfer contributions to a Roth IRA only from another Roth IRA. The difference between a rollover transaction and a direct transfer transaction is the following: in a rollover transaction you actually take possession of the funds rolled over, or are considered to have received them under tax law in the case of a change from one type of plan to another. In a direct transfer transaction, you never take possession of the funds, but direct the first Roth IRA custodian, trustee, or issuer to transfer the first Roth IRA funds directly to Equitable Life, as the Roth IRA issuer. You can make direct transfer transactions only between identical plan types (for example, Roth IRA to Roth IRA). You can also make rollover transactions between identical plan types. However, you can only use rollover transactions between different plan types (for example, traditional IRA to Roth IRA). You may make both Roth IRA to Roth IRA rollover transactions and Roth IRA to Roth IRA direct transfer transactions. This can be accomplished on a completely tax-free basis. However, you may make Roth IRA to Roth IRA rollover transactions only once in any 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers can be made more frequently than once a year. Also, if you send us the rollover contribution to apply it to a Roth IRA, you must do so within 60 days after you receive the proceeds from the original IRA to get rollover treatment. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Roth IRA to one or more other Roth IRAs. In some cases, Roth IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. Conversion contributions to Roth IRAs In a conversion rollover transaction, you withdraw (or are considered to have withdrawn) all or a portion of funds from a traditional IRA you maintain and convert it to a Roth IRA within 60 days after you receive (or are considered to have received) the traditional IRA proceeds. Unlike a rollover from a traditional IRA to another traditional IRA, the conversion rollover transaction is not tax exempt. Instead, the distribution from the traditional IRA is generally fully taxable. - -------------------------------------------------------------------------------- Tax information 48 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For this reason, we are required to withhold 10% federal income tax from the amount converted unless you elect out of such withholding. (If you have ever made nondeductible regular contributions to any traditional IRA -- whether or not it is the traditional IRA you are converting -- a pro rata portion of the distribution is tax-free.) There is, however, no early distribution penalty tax on the traditional IRA withdrawal that you are converting to a Roth IRA, even if you are under age 59 1/2. You cannot make conversion contributions to a Roth IRA for any taxable year in which your adjusted gross income exceeds $100,000. (For this purpose, your adjusted gross income is calculated without the gross income stemming from the traditional IRA conversion.) You also cannot make conversion contributions to a Roth IRA for any taxable year in which your federal income tax filing status is "married filing separately." Finally, you cannot make conversion contributions to a Roth IRA to the extent that the funds in your traditional IRA are subject to the annual required minimum distribution rule applicable to traditional IRAs beginning at age 70 1/2. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Roth IRA at any time; you do not need to wait for a special event like retirement. DISTRIBUTIONS FROM ROTH IRAS Distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also distributions. The following distributions from Roth IRAs are free of income tax: o Rollovers from a Roth IRA to another Roth IRA; o Direct transfers from a Roth IRA to another Roth IRA; o "Qualified Distributions" from Roth IRAs; and o Return of excess contributions or amounts recharacterized to a traditional IRA. Qualified distributions from Roth IRAs Qualified distributions from Roth IRAs made because of one of the following four qualifying events or reasons are not includable in income: o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o your distribution is a "qualified first-time homebuyer distribution" (special federal income tax definition; $10,000 lifetime total limit for these distributions from all of your traditional and Roth IRAs). You also have to meet a five-year aging period. A qualified distribution is any distribution made after the five-taxable year period beginning with the first taxable year for which you made any contribution to any Roth IRA (whether or not the one from which the distribution is being made). It is not possible to have a tax-free qualified distribution before the year 2003 because of the five-year aging requirement. Nonqualified distributions from Roth IRAs Nonqualified distributions from Roth IRAs are distributions that do not meet the qualifying event and five-year aging period tests described above. Such distributions are potentially taxable as ordinary income. Nonqualified distributions receive return-of-investment-first treatment. Only the difference between the amount of the distribution and the amount of contributions to all of your Roth IRAs is taxable. You have to reduce the amount of contributions to all of your Roth IRAs to reflect any previous tax-free recoveries. You must keep your own records of regular and conversion contributions to all Roth IRAs to assure appropriate taxation. You may have to file information on your contributions to and distributions from any Roth IRA on your tax return. You may have to retain all income tax returns and records - -------------------------------------------------------------------------------- Tax information 49 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- pertaining to such contributions and distributions until your interests in all Roth IRAs are distributed. Like traditional IRAs, taxable distributions from a Roth IRA are not entitled to the special favorable five-year averaging method (or, in certain cases, favorable ten-year averaging and long-term capital gain treatment) available in certain cases to distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS AT DEATH Same as traditional IRA under "What are the required minimum distribution payments after you die?" Lifetime required minimum distributions do not apply. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Distributions to a beneficiary generally receive the same tax treatment as if the distribution had been made to you. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS Same as traditional IRA. EXCESS CONTRIBUTIONS Same as traditional IRA, except that regular contributions made after age 70 1/2 are not "excess contributions." Excess rollover contributions to Roth IRAs are contributions not eligible to be rolled over (for example, conversion contributions from a traditional IRA if your adjusted gross income is in excess of $100,000 in the conversion year). You can withdraw or recharacterize any contribution to a Roth IRA before the due date (including extensions) for filing your federal income tax return for the tax year. If you do this, you must also withdraw or recharacterize any earnings attributable to the contribution. EARLY DISTRIBUTION PENALTY TAX Same as traditional IRA. For Roth IRAs, special penalty rules may apply to amounts withdrawn attributable to 1998 conversion rollovers. SPECIAL RULES FOR NONQUALIFIED CONTRACTS IN QUALIFIED PLANS Under QP contracts your plan administrator or trustee notifies you as to tax consequences. See Appendix I. TAX SHELTERED ANNUITY CONTRACTS (TSAS) GENERAL This section of the prospectus covers some of the special tax rules that apply to TSA contracts under Section 403(b) of the Internal Revenue Code (TSAs). If the rules are the same as those that apply to another kind of contract, for example, traditional IRAs, we will refer you to the same topic under "traditional IRAs." CONTRIBUTIONS TO TSAS There are two ways you can make contributions to this Equitable Accumulator Select Rollover TSA contract: o a rollover from another TSA contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code, or o a full or partial direct transfer of assets ("direct transfer") from another contract or arrangement that meets the requirements of Section 403(b) of the Internal Revenue Code by means of IRS Revenue Ruling 90-24. With appropriate written documentation satisfactory to us, we will accept rollover contributions from "conduit IRAs" for TSA funds. If you make a direct transfer, you must fill out our transfer form. Employer-remitted contributions The Equitable Accumulator Select Rollover TSA contract does not accept employer-remitted contributions. However, we provide the following discussion as part of our description of restrictions on the distribution of funds directly transferred, which include employer-remitted contributions to other TSAs. - -------------------------------------------------------------------------------- Tax information 50 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Employer-remitted contributions to TSAs made through the employer's payroll are subject to annual limits. (Tax-free transfer or tax-deferred rollover contributions from another 403(b) arrangement are not subject to these annual contribution limits.) Commonly, some or all of the contributions made to a TSA are made under a salary reduction agreement between the employee and the employer. These contributions are called "salary reduction" or "elective deferral" contributions. However, a TSA can also be wholly or partially funded through nonelective employer contributions or after-tax employee contributions. Amounts attributable to salary reduction contributions to TSAs are generally subject to withdrawal restrictions. Also, all amounts attributable to investments in a 403(b)(7) custodial account are subject to withdrawal restrictions discussed below. Rollover or direct transfer contributions You may make rollover contributions to your Equitable Accumulator Select Rollover TSA contract from TSAs under Section 403(b) of the Internal Revenue Code. Generally, you may make a rollover contribution to a TSA when you have a distributable event from an existing TSA as a result of your: o termination of employment with the employer who provided the TSA funds; or o reaching age 59 1/2 even if you are still employed; or o disability (special federal income tax definition). A transfer occurs when changing the funding vehicle, even if there is no distributable event. Under a direct transfer, you do not receive a distribution. We accept direct transfers of TSA funds under Revenue Ruling 90-24 only if: o you give us acceptable written documentation as to the source of the funds, and o the Equitable Accumulator Select contract receiving the funds has provisions at least as restrictive as the source contract. Before you transfer funds to an Equitable Accumulator Select Rollover TSA contract, you may have to obtain your employer's authorization or demonstrate that you do not need employer authorization. For example, the transferring TSA may be subject to Title I of ERISA, if the employer makes matching contributions to salary reduction contributions made by employees. In that case, the employer must continue to approve distributions from the plan or contract. Your contribution to the Equitable Accumulator Select TSA must be net of the required minimum distribution for the tax year in which we issue the contract if: o you are or will be at least age 70 1/2 in the current calendar year, and o you have separated from service with the employer who provided the funds to purchase the TSA you are transferring or rolling over to the Equitable Accumulator Select Rollover TSA. This rule applies regardless of whether the source of funds is a: o rollover by check of the proceeds from another TSA; or o direct rollover from another TSA; or o direct transfer under Revenue Ruling 90-24 from another TSA. Further, you must use the same elections regarding recalculation of your life expectancy (and if applicable, your spouse's life expectancy), if you have already begun to receive required minimum distributions from or with respect to the TSA from which you are making your contribution to the Equitable Accumulator Select Rollover TSA. You must also elect or have elected a minimum distribution calculation method requiring recalculation of your life expectancy (and if applicable, your spouse's life expectancy) if you elect an annuity payout for the funds in this contract subsequent to this year. DISTRIBUTIONS FROM TSAS General Depending on the terms of the employer plan and your employment status, you may have to get your employer's - -------------------------------------------------------------------------------- Tax information 51 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- consent to take a loan or withdrawal. Your employer will tell us this when you establish the TSA through a direct transfer. Withdrawal restrictions If this is a Revenue Ruling 90-24 direct transfer, we will treat all amounts transferred to this contract and any future earnings on the amount transferred as not eligible for withdrawal until one of the following events happens: o you are separated from service with the employer who provided the funds to purchase the TSA you are transferring to the Equitable Accumulator Select Rollover TSA; o you reach age 59 1/2; or o you die; or o you become disabled (special federal income tax definition); or o you take a "hardship" withdrawal (special federal income tax definition). If any portion of the funds directly transferred to your TSA contract is attributable to amounts that you invested in a 403(b)(7) custodial account, such amounts, including earnings, are subject to withdrawal restrictions. With respect to the portion of the funds that were never invested in a 403(b)(7) custodial account, these restrictions apply to the salary reduction (elective deferral) contributions to a TSA annuity contract you made and any earnings on them. These restrictions do not apply to the amount directly transferred to your TSA contract that represents your December 31, 1988 account balance attributable to salary reduction contributions to a TSA annuity contract and earnings. To take advantage of this grandfathering you must properly notify us in writing at our Processing Office of your December 31, 1988 account balance if you have qualifying amounts transferred to your TSA contract. This paragraph applies only to participants in a Texas Optional Retirement Program. Texas Law permits withdrawals only after one of the following distributable events occur: (1) the requirements for minimum distribution (discussed under "Required minimum distributions" below) are met; or (2) death; or (3) retirement; or (4) termination of employment in all Texas public institutions of higher education. For you to make a withdrawal, we must receive a properly completed written acknowledgement from the employer. If a distributable event occurs before you are vested, we will refund to the employer any amounts provided by an employer's first-year matching contribution. We reserve the right to change these provisions without your consent, but only to the extent necessary to maintain compliance with applicable law. Loans are not permitted under Texas Optional Retirement Programs. Tax treatment of distributions Amounts held under TSAs are generally not subject to federal income tax until benefits are distributed. Distributions include withdrawals from your TSA contract and annuity payments from your TSA contract. Death benefits paid to a beneficiary are also taxable distributions. Unless an exception applies, amounts distributed from TSAs are includable in gross income as ordinary income. Distributions from TSAs may be subject to 20% federal income tax withholding. See "Federal and state income tax withholding and information reporting" below. In addition, TSA distributions may be subject to additional tax penalties. If you have made after-tax contributions, you will have a tax basis in your TSA contract, which will be recovered tax-free. Since we do not track your investment in the contract, if any, it is your responsibility to determine how much of the distribution is taxable. Distributions before annuity payments begin. On a total surrender, the amount received in excess of the investment in the contract is taxable. We will report the total amount of the distribution. The amount of any partial distribution from a TSA prior to the annuity starting date is generally taxable, - -------------------------------------------------------------------------------- Tax information 52 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- except to the extent that the distribution is treated as a withdrawal of after-tax contributions. Distributions are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. Annuity payments. If you elect an annuity payout option, you will recover any investment in the contract as each payment is received by dividing the investment in the contract by an expected return determined under an IRS table prescribed for qualified annuities. The amount of each payment not excluded from income under this exclusion ratio is fully taxable. The full amount of the payments received after your investment in the contract is recovered is fully taxable. If you (and your beneficiary under a joint and survivor annuity) die before recovering the full investment in the contract, a deduction is allowed on your (or your beneficiary's) final tax return. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH Death benefit distributions from a TSA generally receive the same tax treatment as distributions during your lifetime. In some instances, distributions from a TSA made to your surviving spouse may be rolled over to a traditional IRA. LOANS FROM TSAS You may take loans from a TSA unless restricted by the employer (for example, under an employer plan subject to ERISA). If you cannot take a loan, or cannot take a loan without approval from the employer who provided the funds, we will have this information in our records based on what you and the employer who provided the TSA funds told us when you purchased your contract. Loans are generally not treated as a taxable distribution. If the amount of the loan exceeds permissible limits under federal income tax rules when made, the amount of the excess is treated (solely for tax purposes) as a taxable distribution. Additionally, if the loan is not repaid at least quarterly, amortizing (paying down) interest and principal, the amount not repaid when due will be treated as a taxable distribution. Under Proposed Treasury Regulations the entire unpaid balance of the loan is includable in income in the year of the default. TSA loans are subject to federal income tax limits and may also be subject to the limits of the plan from which the funds came. Federal income tax rule requirements apply even if the plan is not subject to ERISA. For example, loans offered by TSAs are subject to the following conditions: o The amount of a loan to a participant, when combined with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding loan balance of plan loans on the date the loan was made. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. Equitable Accumulator Select Rollover TSA contracts have a term limit of 10 years for loans used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. The amount borrowed and not repaid may be treated as a distribution if: o the loan does not qualify under the conditions above, o the participant fails to repay the interest or principal when due, or o in some instances, the participant separates from service with the employer who provided the funds or the plan is terminated. In this case, the participant may have to include the unpaid amount due as ordinary income. In addition, the 10% early distribution penalty tax may apply. The amount of the unpaid loan balance is reported to the IRS on Form 1099-R as a distribution. - -------------------------------------------------------------------------------- Tax information 53 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS You may roll over any "eligible rollover distribution" from a TSA into another eligible retirement plan, either directly or within 60 days of your receiving the distribution. To the extent rolled over, a distribution remains tax-deferred. You may roll over a distribution from a TSA to another TSA or to a traditional IRA. A spousal beneficiary may roll over death benefits only to a traditional IRA. The taxable portion of most distributions will be eligible for rollover, except as specifically excluded under federal income tax rules. Distributions that you cannot roll over generally include periodic payments for life or for a period of 10 years or more, hardship withdrawals, and required minimum distributions under federal income tax rules. Direct transfers of TSA funds from one TSA to another under Revenue Ruling 90-24 are not distributions. REQUIRED MINIMUM DISTRIBUTIONS Same as traditional IRA with these differences: When you have to take the first required minimum distribution The minimum distribution rules force TSA participants to start calculating and taking annual distributions from their TSAs by a required date. Generally, you must take the first required minimum distribution for the calendar year in which you turn age 70 1/2. You may be able to delay the start of required minimum distributions for all or part of your account balance until after age 70 1/2, as follows: o For TSA participants who have not retired from service with the employer who provided the funds for the TSA by the calendar year the participant turns age 70 1/2, the required beginning date for minimum distributions is extended to April 1 following the calendar year of retirement. o TSA plan participants may also delay the start of required minimum distributions to age 75 of the portion of their account value attributable to their December 31, 1986 TSA account balance, even if retired at age 70 1/2. We will know whether or not you qualify for this exception because it will only apply to people who establish their Equitable Accumulator Select Rollover TSA by direct Revenue Ruling 90-24 transfers. If you do not give us the amount of your December 31, 1986 account balance that is being transferred to the Equitable Accumulator Select Rollover TSA on the form used to establish the TSA, you do not qualify. SPOUSAL CONSENT RULES This will only apply to you if you establish your Equitable Accumulator Select Rollover TSA by direct Revenue Ruling 90-24 transfer. Your employer will tell us on the form used to establish the TSA whether or not you need to get spousal consent for loans, withdrawals, or other distributions. If you do, you will need such consent if you are married when you request a withdrawal under the TSA contract. In addition, unless you elect otherwise with the written consent of your spouse, the retirement benefits payable under the plan must be paid in the form of a qualified joint and survivor annuity. A qualified joint and survivor annuity is payable for the life of the annuitant with a survivor annuity for the life of the spouse in an amount not less than one-half of the amount payable to the annuitant during his or her lifetime. In addition, if you are married, the beneficiary must be your spouse, unless your spouse consents in writing to the designation of another beneficiary. If you are married and you die before annuity payments have begun, payments will be made to your surviving spouse in the form of a life annuity unless at the time of your death a contrary election was in effect. However, your surviving spouse may elect, before payments begin, to receive payments in any form permitted under the terms of the TSA contract and the plan of the employer who provided the funds for the TSA. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a TSA before you reach age 59 1/2. This is in addition to any income tax. There are exceptions to the extra penalty tax. No penalty tax applies to pre-age 59 1/2 distributions made: - -------------------------------------------------------------------------------- Tax information 54 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- o on or after your death; or o because you are disabled (special federal income tax definition); or o to pay for certain extraordinary medical expenses (special federal income tax definition); or o if you are separated from service, any form of payout after you are age 55; or o only if you are separated from service, a payout in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. You should note the following special situations: o We might have to withhold on amounts we pay under a free look or cancellation. o We are generally required to withhold on conversion rollovers of traditional IRAs to Roth IRAs, as it is considered a withdrawal from the traditional IRA and is taxable. o We are required to withhold on the gross amount of a distribution from a Roth IRA unless you elect out of withholding. This may result in tax being withheld even though the Roth IRA distribution is not taxable in whole or in part. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at the toll-free number. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999, your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS (WITHDRAWALS) For a non-periodic distribution (total surrender or partial withdrawal), we generally withhold at a flat 10% rate. We - -------------------------------------------------------------------------------- Tax information 55 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs and Roth IRAs. You cannot elect out of withholding if the payment is an "eligible rollover distribution" from a qualified plan or TSA. If a non-periodic distribution from a qualified plan or TSA is not an "eligible rollover distribution" then the 10% withholding rate applies. MANDATORY WITHHOLDING FROM TSA AND QUALIFIED PLAN DISTRIBUTIONS Unless you have the distribution go directly to the new plan, eligible rollover distributions from qualified plans and TSAs are subject to mandatory 20% withholding. An eligible rollover distribution from a TSA can be rolled over to another TSA or a traditional IRA. An eligible rollover distribution from a qualified plan can be rolled over to another qualified plan or traditional IRA. All distributions from a TSA or qualified plan are eligible rollover distributions unless they are on the following list of exceptions: o any after-tax contributions you made to the plan; or o any distributions which are "required minimum distributions" after age 70 1/2 or separation from service; or o hardship withdrawals; or o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancy) of you and your designated beneficiary; or o substantially equal periodic payments made for a specified period of 10 years or more; or o corrective distributions which fit specified technical tax rules; or o loans that are treated as distributions; or o a death benefit payment to a beneficiary who is not your surviving spouse; or o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. A death benefit payment to your surviving spouse, or a qualified domestic relations order distribution to your current or former spouse, may be a distribution subject to mandatory 20% withholding. IMPACT OF TAXES TO EQUITABLE LIFE The contracts provide that we may charge Separate Account No. 45 for taxes. We do not now, but may in the future set up reserves for such taxes. - -------------------------------------------------------------------------------- More information 56 - -------------------------------------------------------------------------------- 8 More information - -------------------------------------------------------------------------------- ABOUT OUR SEPARATE ACCOUNT NO. 45 Each variable investment option is a subaccount of our Separate Account No. 45. We established Separate Account No. 45 in 1994 under special provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our variable investment options for owners of our variable annuity contracts, including these contracts. We are the legal owner of all of the assets in Separate Account No. 45 and may withdraw any amounts that exceed our reserves and other liabilities with respect to variable investment options under our contracts. The results of Separate Account No. 45's operations are accounted for without regard to Equitable Life's other operations. Separate Account No. 45 is registered under the Investment Company Act of 1940 and is classified by that act as a "unit investment trust." The SEC, however, does not manage or supervise Equitable Life or Separate Account No. 45. Each subaccount (variable investment option) within Separate Account No. 45 invests solely in class 1B shares issued by the corresponding Portfolio of The Hudson River Trust and EQ Advisors Trust. We reserve the right subject to compliance with laws that apply: (1) to add variable investment options to, or to remove variable investment options from, Separate Account No. 45, or to add other separate accounts; (2) to combine any two or more variable investment options; (3) to transfer the assets we determine to be the shares of the class of contracts to which the contracts belong from any variable investment option to another variable investment option; (4) to operate Separate Account No. 45 or any variable investment option as a management investment company under the Investment Company Act of 1940 (in which case, charges and expenses that otherwise would be assessed against an underlying mutual fund would be assessed against Separate Account No. 45 or a variable investment option directly); (5) to deregister Separate Account No. 45 under the Investment Company Act of 1940; (6) to restrict or eliminate any voting rights as to Separate Account No. 45; and (7) to cause one or more variable investment options to invest some or all of their assets in one or more other trusts or investment companies. ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST The Hudson River Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each trust issues different shares relating to each Portfolio. The Hudson River Trust and EQ Advisors Trust do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on a trust's shares are reinvested in full. The Board of Trustees of The Hudson River Trust and EQ Advisors Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about The Hudson River Trust and EQ Advisors Trust, their investment objectives, policies, restrictions, risks, expenses, their Rule 12b-1 Plans relating to their Class 1B shares, and other aspects of their operations, appears in their prospectuses, or in their SAIs which are available upon request. ABOUT OUR FIXED MATURITY OPTIONS RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE We can determine the amount required to be allocated to one or more fixed maturity options in order to produce specified maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. - -------------------------------------------------------------------------------- More information 57 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows: - -------------------------------------------------------------------------------- FIXED MATURITY OPTIONS WITH FEBRUARY 15TH RATE TO MATURITY PRICE MATURITY DATE OF AS OF PER $100 OF MATURITY YEAR APRIL 1, 1999 MATURITY VALUE - -------------------------------------------------------------------------------- 2000 3.00% $97.44 2001 3.79% $93.25 2002 4.08% $89.12 2003 4.21% $85.22 2004 4.27% $81.54 2005 4.42% $77.54 2006 4.52% $73.77 2007 4.54% $70.47 2008 4.62% $66.95 2009 4.72% $63.39 - -------------------------------------------------------------------------------- HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw ll of your value from a fixed maturity option before its maturity date. (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. - -------------------------------------------------------------------------------- Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation. - -------------------------------------------------------------------------------- If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. See Appendix II for an example. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) above would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. INVESTMENTS UNDER THE FIXED MATURITY OPTIONS Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides - -------------------------------------------------------------------------------- More information 58 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- an additional measure of assurance that we will make full payment of amounts due under the fixed maturity options. Under New York Insurance Law, the portion of the separate account's assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law that applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your value in the fixed maturity options, regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities, and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the fixed maturity options under the contracts, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options, as well as our general obligations. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account (other than market value adjustment interests). The disclosure with regard to the general account, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. ABOUT OTHER METHODS OF PAYMENT AUTOMATIC INVESTMENT PROGRAM - FOR NQ CONTRACTS ONLY You may use our automatic investment program, or "AIP," to have a specified amount automatically deducted from a checking account, money market account, or credit union checking account and contributed as an additional contribution into an NQ contract on a monthly or quarterly basis. AIP is not available for Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contracts. The minimum amounts we will deduct are $100 monthly and $300 quarterly. AIP additional contributions may be allocated to any of the variable investment options and available fixed maturity options. You choose the day of the month you wish to have your account debited as long as it is not later than the 28th day of the month. You may cancel AIP at any time by notifying our Processing Office. We are not responsible for any debits made to your account before the time written notice of cancellation is received at our Processing Office. - -------------------------------------------------------------------------------- More information 59 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR We describe below the general rules for when, and at what prices, events under your contract will occur. Other portions of this prospectus describe circumstances that may cause exceptions. We generally do not repeat those exceptions below. BUSINESS DAY Our business day is any day the New York Stock Exchange is open for trading. Each business day ends at the time trading on the exchange closes (or is suspended) for the day. We calculate unit values for our variable investment options as of the end of each business day. This is usually 4:00 p.m., Eastern Time. Contributions will be applied and any other transaction requests will be processed when they are received along with all the required information. o If your contribution, transfer or any other transaction request, containing all the required information, reaches us on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. o A loan request under your Rollover TSA contract will be processed on the first business day of the month following the date on which the properly completed loan request form is received. o If your transaction is set to occur on the same day of the month as the contract date and that date is the 29th, 30th or 31st of the month, then the transaction will occur on either the 28th day of the month or the 1st day of the next month, whichever is the closest business day. o When a charge is to be deducted on a contract date anniversary that is a non-business day, we will deduct the charge on the next business day. CONTRIBUTIONS AND TRANSFERS o Contributions allocated to the variable investment options are invested at the value next determined after the close of the business day. o Contributions allocated to a fixed maturity option will receive the rate to maturity in effect for that fixed maturity option on that business day. o Transfers to or from variable investment options will be made at the value next determined after the close of the business day. o Transfers to a fixed maturity option will be based on the rate to maturity in effect for that fixed maturity option on the business day of the transfer. ABOUT YOUR VOTING RIGHTS As the owner of the shares of The Hudson River Trust and EQ Advisors Trust we have the right to vote on certain matters involving the Portfolios, such as: o The election of trustees. o The formal approval of independent auditors selected for each trust. o Any other matters described in the prospectuses for the trusts or requiring a shareholders' vote under the Investment Company Act of 1940. We will give contract owners the opportunity to instruct us how to vote the number of shares attributable to their contracts if a shareholder vote is taken. If we do not receive instructions in time from all contract owners, we will vote the shares of a Portfolio for which no instructions have been received in the same proportion as we vote shares of that Portfolio for which we have received instructions. We will also vote any shares that we are entitled to vote directly because of amounts we have in a Portfolio in the same proportions that contract owners vote. VOTING RIGHTS OF OTHERS Currently, we control each trust. EQ Advisors Trust shares are sold only to our separate accounts and an affiliated qualified plan trust. The Hudson River Trust shares are held by other separate accounts of ours and by separate accounts of insurance companies unaffiliated with us. Shares held by these separate accounts will probably be voted according to - -------------------------------------------------------------------------------- More information 60 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- the instructions of the owners of insurance policies and contracts issued by those insurance companies. While this will dilute the effect of the voting instructions of the contract owners, we currently do not foresee any disadvantages because of this. The Hudson River Trust Board of Trustees intends to monitor events in order to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a response to any of those events insufficiently protects our contract owners, we will see to it that appropriate action is taken. SEPARATE ACCOUNT NO. 45 VOTING RIGHTS If actions relating to Separate Account No. 45 require contract owner approval, contract owners will be entitled to one vote for each unit they have in the variable investment options. Each contract owner who has elected a variable annuity payout option may cast the number of votes equal to the dollar amount of reserves we are holding for that annuity in a variable investment option divided by the annuity unit value for that option. We will cast votes attributable to any amounts we have in the variable investment options in the same proportion as votes cast by contract owners. CHANGES IN APPLICABLE LAW The voting rights we describe in this prospectus are created under applicable federal securities laws. To the extent that those laws or the regulations published under those laws eliminate the necessity to submit matters for approval by persons having voting rights in separate accounts of insurance companies, we reserve the right to proceed in accordance with those laws or regulations. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting to address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission-critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system that is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). - -------------------------------------------------------------------------------- More information 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon Separate Account No. 45, our ability to meet our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The financial statements of Equitable Life incorporated in this prospectus by reference to the Annual Report on Form 10-K at December 31, 1998 and 1997, and for the three years ended December 31, 1998, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING You can transfer ownership of an NQ contract at any time before annuity payments begin. We will continue to treat you as the owner until we receive written notification of any change at our Processing Office. You cannot assign your NQ contract as collateral or security for a loan. Loans are also not available under your NQ contract. In some cases, an assignment or change of ownership may have adverse tax consequences. See "Tax information." You cannot assign or transfer ownership of Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contract except by surrender to us. Loans are not available and you cannot assign Rollover IRA, Roth Conversion IRA and QP contracts as security for a loan or other obligation. If the employer that provided the funds does not restrict them, loans are available under a Rollover TSA contract. For limited transfers of ownership after the owner's death see "Payment of death benefit" and "Beneficiary continuation option for Rollover IRA contracts." You may direct the transfer of the values under your Rollover IRA, Roth Conversion IRA, QP or Rollover TSA contract to another similar arrangement. DISTRIBUTION OF THE CONTRACTS EQ Financial Consultants, Inc ("EQF"), an indirect, wholly owned subsidiary of Equitable Life, is the distributor of the contracts and has responsibility for sales and marketing functions for Separate Account No 45. During 1999, EQF plans to change its name to AXA Advisors, Inc. EQF serves as the principal underwriter of Separate Account No. 45. EQF is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. EQF's principal business address is 1290 Avenue of the Americas, New York, New York 10104. Pursuant to a Distribution and Servicing Agreement between EQF, Equitable Life, and certain of Equitable Life's separate accounts, including Separate Account No. 45, Equitable Life paid EQF distribution fees of $325,380 for 1998, as the distributor of certain contracts and as the principal underwriter of certain separate accounts including Separate Account No. 45. Before May 1, 1998, Equitable Distributors, Inc. ("EDI"), also an indirect, wholly owned subsidiary of Equitable Life, served as the distributor of the contracts and the principal underwriter of Separate Account No. 45. Pursuant to a Distribution Agreement between Equitable Life, certain of Equitable Life's separate accounts, including Separate Account No. 45, and EDI, Equitable Life paid EDI distribution fees of $9,444,621 for 1997 and $888,486 for 1996 as the distributor of certain contracts and as the principal underwriter of certain separate accounts including Separate Account No. 45. The contracts will be sold by registered representatives of EQF and its affiliates, who are also our licensed agents. EQF may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. The offering of the contracts is intended to be continuous. - -------------------------------------------------------------------------------- Investment performance 62 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- We provide the following tables to show five different measurements of the investment performance of the variable investment options and/or the Portfolios in which they invest. We include these tables because they may be of general interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR RESULTS WILL DIFFER. Table 1 shows the average annual total return of the variable investment options. Average annual total return is the annual rate of growth that would be necessary to achieve the ending value of a contribution invested in the variable investment options for the periods shown. Table 2 shows the growth of a hypothetical $1,000 investment in the variable investment options over the periods shown. Both Tables 1 and 2 take into account all fees and charges under the contract, including the optional baseBUILDER benefits charge, but do not take the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee, into account. Tables 3, 4, and 5 show the rates of return of the variable investment options on an annualized, cumulative, and year-by-year basis. These tables take into account all fees and charges under the contract, but do not reflect the optional baseBUILDER benefits charge or the charges for any applicable taxes such as premium taxes, or any applicable annuity administrative fee. If the charges were reflected they would effectively reduce the rates of return shown. In all cases the results shown are based on the actual historical investment experience of the Portfolios in which the variable investment options invest. Since the contracts are being offered for the first time as of the date of this prospectus, we adjusted the results of the Portfolios to reflect the charges under the contracts that would have applied had the investment options and/or contracts been available. In addition, we have adjusted the results prior to October 1996, when The Hudson River Trust Class IB shares were not available, to reflect the 12b-1 fees currently imposed. Finally, the results shown for the Alliance Money Market and Alliance Common Stock options for periods before March 22, 1985 reflect the results of the variable investment options that preceded them. The "Since inception" figures for these options are based on the date of inception of the preceding variable investment options. We have adjusted these results to reflect the maximum investment advisory fee payable for the Portfolios, as well as an assumed charge of 0.06% for direct operating expenses. EQ Advisors Trust commenced operations on May 1, 1997. All rates of return presented are time-weighted and include reinvestment of investment income, including interest and dividends. BENCHMARKS Tables 3 and 4 compare the performance of variable investment options to market indices that serve as benchmarks. Market indices are not subject to any charges for investment advisory fees, brokerage commission or other operating expenses typically associated with a managed portfolio. Also, they do not reflect other contract charges such as the mortality and expense risks charge, administrative charge, distribution charge or optional benefit charge. Comparisons with these benchmarks, therefore, may be of limited use. We include them because they are widely known and may help you to understand the universe of securities from which each Portfolio is likely to select its holdings. Benchmark data reflect the reinvestment of dividend income. The benchmarks include: - -------------------------------------------------------------------------------- Investment performance 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard & Poor's Mid-Cap Total Return Index. ALLIANCE COMMON STOCK: Standard & Poor's 500 Index. ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond Composite Index and 30% Standard & Poor's 500 Index. ALLIANCE GLOBAL: Morgan Stanley Capital International World Index. ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index and 25% Value Line Convertibles Index. ALLIANCE GROWTH INVESTORS: 70% Standard & Poor's 500 Index and 30% Lehman Government/Corporate Bond Index. ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index. ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman Intermediate Government Bond Index. ALLIANCE INTERNATIONAL: Morgan Stanley Capital International Europe, Australia, Far East Index. ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index. ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index. EQ/ALLIANCE PREMIER GROWTH: Standard & Poor's 500 Index. BT EQUITY 500 INDEX: Standard & Poor's 500 Index. BT INTERNATIONAL EQUITY INDEX: Morgan Stanley Capital International Europe, Australia, Far East Index. BT SMALL COMPANY INDEX: Russell 2000 Index. CAPITAL GUARDIAN RESEARCH: Standard & Poor's 500 Index. CAPITAL GUARDIAN EQUITY: Standard & Poor's 500 Index. EQ/EVERGREEN: Russell 2000 Index. EQ/EVERGREEN FOUNDATION: 60 % Standard & Poor's 500 Index/40% Lehman Brothers Aggregate Bond Index MFS Emerging Growth Companies: Russell 2000 Index. MFS GROWTH WITH INCOME: Standard & Poor's 500 Index. MFS RESEARCH: Standard & Poor's 500 Index. MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index. MERRILL LYNCH WORLD STRATEGY: 36% Standard & Poor's 500 Index/24% Morgan Stanley Capital International Europe, Australia, Far East Index/21% Salomon Brothers U.S. Treasury Bond 1 Year+/14% Salomon Brothers World Government Bond (excluding U.S.)/and 5% Three-Month U.S. Treasury Bill. MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International Emerging Markets Free Price Return Index. EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40% Lehman Government/ Corporate Bond Index. EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index. T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index. T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital International Europe, Australia, Far East Index. WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index. - -------------------------------------------------------------------------------- LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis Survey (Lipper Survey) records the performance of a large group of variable annuity products, including managed separate accounts of insurance companies. According to Lipper Analytical Services, Inc., the data are presented net of investment management fees, direct operating expenses and asset-based charges applicable under annuity contracts. Lipper data provide a more accurate picture than market benchmarks of the Equitable Accumulator Select performance relative to other variable annuity products. - -------------------------------------------------------------------------------- Investment performance 64 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 1 AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------ Length of investment period - ------------------------------------------------------------------------------------------------------------------------------------ SINCE PORTFOLIO 1 3 5 10 PORTFOLIO INCEPTION VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------------------------------------------------ Alliance Aggressive Stock (1.55)% 8.51% 9.16% 16.54% - 1/27/86 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Common Stock 27.00% 25.05% 19.42% 16.22% - 1/13/76 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Conservative Investors 11.79% 8.44% 7.11% - 7.07% 10/2/89 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Global 19.56% 13.55% 11.90% 12.46% 9.59% 8/27/87 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Growth & Income 18.63% 20.07% 15.39% - 12.46% 10/1/93 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Growth Investors 16.93% 13.78% 11.55% - 12.59% 10/2/89 - --------------------------------------------------------------------------------------------------------------------------------- Alliance High Yield (6.90)% 9.11% 7.72% 8.85% - 1/2/87 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Intermediate Government Securities 5.76% 4.08% 3.17% - 4.70% 4/1/91 - --------------------------------------------------------------------------------------------------------------------------------- Alliance International 8.53% 3.42% - - 4.90% 4/3/95 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Money Market 3.40% 3.20% 2.97% 3.34% - 7/13/81 - --------------------------------------------------------------------------------------------------------------------------------- Alliance Small Cap Growth (5.97)% - - - 8.35% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- BT Equity 500 Index 23.13% - - - 23.13% 12/31/97 - --------------------------------------------------------------------------------------------------------------------------------- BT International Equity Index 18.17% - - - 18.17% 12/31/97 - --------------------------------------------------------------------------------------------------------------------------------- BT Small Company Index (3.87)% - - - (3.87)% 12/31/97 - --------------------------------------------------------------------------------------------------------------------------------- MFS Emerging Growth Companies 32.37% - - - 26.45% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- MFS Research 22.12% - - - 18.24% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch Basic Value Equity 9.80% - - - 2.01% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- Merrill Lynch World Strategy 5.11% - - - 4.18% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Emerging Markets Equity (28.19)% - - - (24.67)% 8/20/97 - --------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Balanced 10.02% - - - 11.46% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & Income Value 11.02% - - - 12.82% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- T. Rowe Price Equity Income 7.33% - - - 13.72% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- T. Rowe Price International Stock 11.88% - - - 4.24% 5/1/97 - --------------------------------------------------------------------------------------------------------------------------------- Warburg Pincus Small Company Value (11.45)% - - - 2.01% 5/1/97 - ---------------------------------------------------------------------------------------------------------------------------------
- ---------- The inception dates for the Portfolios that became available on or after December 31, 1998 and are therefore not shown in the tables are: EQ/Evergreen, EQ/Evergreen Foundation, and MFS Growth with Income (December 31, 1998); EQ/Alliance Premier Growth, Capital Guardian Research, and Capital Guardian U.S. Equity (May 1, 1999). - -------------------------------------------------------------------------------- Investment performance 65 - -------------------------------------------------------------------------------- TABLE 2 GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ LENGTH OF INVESTMENT PERIOD - ------------------------------------------------------------------------------------------------------------------------------------ SINCE 1 3 5 10 PORTFOLIO VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE AGGRESSIVE STOCK $ 984.50 $1,277.63 $1,549.85 $4,619.71 - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE COMMON STOCK $1,270.00 $1,955.50 $2,428.99 $4,494.80 - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE CONSERVATIVE INVESTORS $1,117.90 $1,275.32 $1,410.03 - $1,979.28 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GLOBAL $1,195.60 $1,464.22 $1,754.46 $3,235.83 $3,001.81 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH & INCOME $1,186.30 $1,731.03 $2,045.73 - $2,023.23 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH INVESTORS $1,169.30 $1,473.15 $1,727.10 - $3,272.51 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE HIGH YIELD $ 931.00 $1,299.09 $1,450.09 $2,335.95 - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES $1,057.60 $1,127.36 $1,169.06 - $1,444.19 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERNATIONAL $1,085.30 $1,106.18 - - $1,210.96 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE MONEY MARKET $1,034.00 $1,099.25 $1,157.42 $1,388.83 - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE SMALL CAP GROWTH $ 940.30 - - - $1,173.92 - ------------------------------------------------------------------------------------------------------------------------------------ BT EQUITY 500 INDEX $1,231.30 - - - $1,231.30 - ------------------------------------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX $1,181.70 - - - $1,181.70 - ------------------------------------------------------------------------------------------------------------------------------------ BT SMALL COMPANY INDEX $ 961.30 - - - $ 961.30 - ------------------------------------------------------------------------------------------------------------------------------------ MFS EMERGING GROWTH COMPANIES $1,323.70 - - - $1,598.96 - ------------------------------------------------------------------------------------------------------------------------------------ MFS RESEARCH $1,221.20 - - - $1,398.09 - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH BASIC VALUE EQUITY $1,098.00 - - - $1,267.70 - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH WORLD STRATEGY $1,051.10 - - - $1,085.42 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY $ 718.10 - - - $ 567.48 - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM BALANCED $1,100.20 - - - $1,242.40 - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE $1,110.20 - - - $1,272.79 - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE EQUITY INCOME $1,073.30 - - - $1,293.27 - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE INTERNATIONAL STOCK $1,118.80 - - - $1,086.52 - ------------------------------------------------------------------------------------------------------------------------------------ WARBURG PINCUS SMALL COMPANY VALUE $ 885.50 - - - $1,040.68 - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 66 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE 3 ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998: - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE AGGRESSIVE STOCK (1.55)% 8.69% 9.39% 16.69% - 15.59% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% - 13.69% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 8.28% 17.77% 15.56% 16.49% - 14.78% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE COMMON STOCK 27.00% 25.24% 19.66% 16.44% 16.42% 14.24% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 16.01% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 15.98% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE CONSERVATIVE INVESTORS 11.79% 8.66% 7.37% - - 7.96% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio 14.20% 15.62% 14.31% - - 12.55% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 15.59% 14.45% 13.37% - - 12.08% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GLOBAL 19.56% 13.76% 12.14% 12.69% - 10.47% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Global 14.34% 14.67% 11.98% 11.21% - - - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 24.34% 17.77% 11.98% 11.21% - 9.55% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH & INCOME 18.63% 20.27% 15.64% - - 14.68% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.61% 21.25% 18.35% - - 17.89% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 22.85% 22.69% 19.96% - - 20.48% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH INVESTORS 16.93% 13.99% 11.80% - - 13.93% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio 14.20% 15.62% 14.31% - - 12.55% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 22.85% 22.69% 19.96% - - 15.55% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE HIGH YIELD (6.90)% 9.30% 7.96% 9.11% - 8.45% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper High Current Yield (0.44)% 8.21% 7.37% 9.34% - 8.97% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 3.66% 9.11% 9.01% 11.08% - 10.72% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 5.76% 4.29% 3.44% - - 5.14% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Intermediate Government 7.68% 6.21% 5.91% - - 7.25% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 8.49% 6.74% 6.45% - - 7.60% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERNATIONAL 8.53% 3.63% - - - 5.49% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 13.02% 9.94% - - - 10.74% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% 9.00% - - - 9.68% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE MONEY MARKET 3.40% 3.42% 3.23% 3.63% - 5.11% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Money Market 4.84% 4.87% 4.77% 5.20% - 6.77% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 5.05% 5.18% 5.11% 5.44% - 6.76% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE SMALL CAP GROWTH (5.97)% - - - - 10.25% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Company Growth (0.33)% - - - - 16.72% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 1.23% - - - - 16.58% - ------------------------------------------------------------------------------------------------------------------------------------ BT EQUITY 500 INDEX 23.13% - - - - 23.13% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper S&P 500 Index 26.78% - - - - 26.78% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% - - - - 28.58% - ------------------------------------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX 18.17% - - - - 18.17% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 12.17% - - - - 12.17% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% - - - - 20.00% - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Investment performance 67 - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX 18.17% - - - - 18.17% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 12.17% - - - - 12.17% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% - - - - 20.00% - ------------------------------------------------------------------------------------------------------------------------------------ BT SMALL COMPANY INDEX (3.87)% - - - - (3.87)% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Cap 1.53% - - - - 1.53% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% - - - - (2.54)% - ------------------------------------------------------------------------------------------------------------------------------------ MFS EMERGING GROWTH COMPANIES 32.37% - - - - 32.69% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap 15.97% - - - - 22.72% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% - - - - 14.53% - ------------------------------------------------------------------------------------------------------------------------------------ MFS RESEARCH 22.12% - - - - 22.44% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth 25.82% - - - - 28.73% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% - - - - 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH BASIC VALUE EQUITY 9.80% - - - - 15.46% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.54% - - - - 21.32% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% - - - 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH WORLD STRATEGY 5.11% - - - - 5.23% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Global Flexible Portfolio 9.34% - - - - 11.15% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 19.55% - - - - 20.00% - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY (28.19)% - - - - (33.79)% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Emerging Markets (30.50)% - - - - (36.28)% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (25.34)% - - - - (28.92)% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM BALANCED 10.02% - - - - 14.09% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Balanced 14.61% - - - - 17.83% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 21.36% - - - - 23.48% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE 11.02% - - - - 15.74% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.54% - - - - 21.32% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% - - - - 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE EQUITY INCOME 7.33% - - - - 16.85% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Equity Income 10.76% - - - - 19.07% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% - - - - 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE INTERNATIONAL STOCK 11.88% - - - - 5.30% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 12.17% - - - - 9.06% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% - - - - 13.43% - ------------------------------------------------------------------------------------------------------------------------------------ WARBURG PINCUS SMALL COMPANY VALUE (11.45)% - - - - 2.58% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Cap 1.53% - - - - 16.77% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% - - - - 14.53% - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 68 - -------------------------------------------------------------------------------- TABLE 4 CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998: - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE AGGRESSIVE STOCK (1.55)% 28.42% 56.67% 368.05% -- 550.62% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth \ 12.16% 58.64% 102.73% 334.88% -- 448.32% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 8.28% 63.35% 106.12% 360.30% -- 494.67% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE COMMON STOCK 27.00% 96.46% 145.35% 358.29% 1,991.24% 2,026.84% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 3,490.04% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 2,919.92% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE CONSERVATIVE INVESTORS 11.79% 28.29% 42.73% -- -- 103.05% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 15.59% 14.45% 13.37% -- -- 12.08% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GLOBAL 19.56% 47.23% 77.37% 230.13% -- 209.63% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Global 14.34% 14.67% 11.98% 11.21% -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 24.34% 17.77% 11.98% 11.21% -- 9.55% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH & INCOME 18.63% 73.96% 196.77% -- -- 105.27% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.61% 21.25% 18.35% -- -- 17.89% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 22.85% 22.69% 19.96% -- -- 20.48% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH INVESTORS 16.93% 48.12% 74.67% -- -- 233.85% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 22.85% 22.69% 19.96% -- -- 15.55% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE HIGH YIELD (6.90)% 30.56% 46.65% 139.11% -- 164.68% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper High Current Yield (0.44)% 26.80% 43.00% 145.62 -- 182.21% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 5.76% 13.43% 18.44% -- -- 47.46% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Intermediate Government 7.68% 6.21% 5.91% -- -- 7.25% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 8.49% 6.74% 6.45% -- -- 7.60% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE INTERNATIONAL 8.53% 11.30% -- -- -- 22.17% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 13.02% 9.94% -- -- -- 10.74% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% 9.00% -- -- -- 9.68% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE MONEY MARKET 3.40% 10.60% 17.22% 42.89% -- 138.78% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45% - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE SMALL CAP GROWTH (5.97)% -- -- -- -- 17.69% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Company Growth (0.33)% -- -- -- -- 28.98% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 1.23% -- -- -- -- 29.23% - ------------------------------------------------------------------------------------------------------------------------------------ BT EQUITY 500 INDEX 23.13% -- -- -- -- 23.13% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper S&P 500 Index 26.78% -- -- -- -- 26.78% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 28.58% - ------------------------------------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX 18.17% -- -- -- -- 18.17% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 12.17% -- -- -- -- 2.23% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% -- -- -- -- 20.00% - ------------------------------------------------------------------------------------------------------------------------------------ BT SMALL COMPANY INDEX (3.87)% -- -- -- -- (3.87)% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Cap 1.53% -- -- -- -- 1.49% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% -- -- -- -- (2.54)% - ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- Investment performance 69 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION* - ------------------------------------------------------------------------------------------------------------------------------------ MFS EMERGING GROWTH COMPANIES 32.37% -- -- -- -- 60.31% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap 15.97% -- -- -- -- 42.16% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% -- -- -- -- 25.40% - ------------------------------------------------------------------------------------------------------------------------------------ MFS RESEARCH 22.12% -- -- -- -- 40.19% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth 25.82% -- -- -- -- 52.86% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH BASIC VALUE EQUITY 9.80% -- -- -- -- 27.11% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.54% -- -- -- -- 21.32% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ MERRILL LYNCH WORLD STRATEGY 5.11% -- -- -- -- 8.88% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 19.55% -- -- -- -- 20.00% - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY (28.19)% -- -- -- -- (43.02)% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Emerging Markets (30.50) -- -- -- (45.67)% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (25.34) -- -- -- (36.71)% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM BALANCED 10.02% -- -- -- -- 24.59% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Balanced 14.61% -- -- -- -- 17.83% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 21.36% -- -- -- -- 23.48% - ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE 11.02% -- -- -- -- 27.62% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Growth & Income 15.54% -- -- -- -- 38.49% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 57.60% - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE EQUITY INCOME -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Equity Income 10.76% -- -- -- -- 19.07% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 28.58% -- -- -- -- 31.63% - ------------------------------------------------------------------------------------------------------------------------------------ T. ROWE PRICE INTERNATIONAL STOCK 7.33% -- -- -- -- 29.66% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper International 12.17% -- -- -- -- 9.06% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark 20.00% -- -- -- -- 13.43% - ------------------------------------------------------------------------------------------------------------------------------------ WARBURG PINCUS SMALL COMPANY VALUE (11.45)% -- -- -- -- 4.35% - ------------------------------------------------------------------------------------------------------------------------------------ Lipper Small Cap 1.53% -- -- -- -- 16.77% - ------------------------------------------------------------------------------------------------------------------------------------ Benchmark (2.54)% -- -- -- -- 14.53% - ------------------------------------------------------------------------------------------------------------------------------------
- ---------- * Portfolio inception dates are shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 70 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- TABLE 5 YEAR-BY-YEAR RATES OF RETURN - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ 1989 1990 1991 1992 1993 - ------------------------------------------------------------------------------------------------------ ALLIANCE AGGRESSIVE STOCK 40.86% 6.16% 83.43% (4.95)% 14.59% - ------------------------------------------------------------------------------------------------------ ALLIANCE COMMON STOCK 23.28% (9.82)% 35.34% 1.31% 22.52% - ------------------------------------------------------------------------------------------------------ ALLIANCE CONSERVATIVE INVESTORS 2.61% 4.40% 17.67% 3.76% 8.77% - ------------------------------------------------------------------------------------------------------ ALLIANCE GLOBAL 24.41% (7.81)% 28.15% (2.35)% 29.68% - ------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH & INCOME - - - - (0.72)% - ------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH INVESTORS 3.35% 8.61% 46.16% 2.96% 13.15% - ------------------------------------------------------------------------------------------------------ ALLIANCE HIGH YIELD 3.20% (2.95)% 22.17% 10.23% 20.88% - ------------------------------------------------------------------------------------------------------ ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES - - 10.71% 3.64% 8.50% - ------------------------------------------------------------------------------------------------------ ALLIANCE INTERNATIONAL - - - - - - ------------------------------------------------------------------------------------------------------ ALLIANCE MONEY MARKET 7.18% 6.23% 4.23% 1.65% 1.06% - ------------------------------------------------------------------------------------------------------ ALLIANCE SMALL CAP GROWTH - - - - - - ------------------------------------------------------------------------------------------------------ BT EQUITY 500 INDEX - - - - - - ------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX - - - - - - ------------------------------------------------------------------------------------------------------ BT SMALL COMPANY INDEX - - - - - - ------------------------------------------------------------------------------------------------------ MFS EMERGING GROWTH COMPANIES - - - - - - ------------------------------------------------------------------------------------------------------ MFS RESEARCH - - - - - - ------------------------------------------------------------------------------------------------------ MERRILL LYNCH BASIC VALUE EQUITY - - - - - - ------------------------------------------------------------------------------------------------------ MERRILL LYNCH WORLD STRATEGY - - - - - - ------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY - - - - - - ------------------------------------------------------------------------------------------------------ EQ/PUTNAM BALANCED - - - - - - ------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE - - - - - - ------------------------------------------------------------------------------------------------------ T. ROWE PRICE EQUITY INCOME - - - - - - ------------------------------------------------------------------------------------------------------ T. ROWE PRICE INTERNATIONAL STOCK - - - - - - ------------------------------------------------------------------------------------------------------ WARBURG PINCUS SMALL COMPANY VALUE - - - - - - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ 1994 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------ ALLIANCE AGGRESSIVE STOCK (5.59)% 29.21% 19.93% 8.77% (1.55)% - ------------------------------------------------------------------------------------------------------ ALLIANCE COMMON STOCK (3.94)% 30.01% 21.97% 26.84% 27.00% - ------------------------------------------------------------------------------------------------------ ALLIANCE CONSERVATIVE INVESTORS (5.86)% 18.19% 3.25% 11.15% 11.79% - ------------------------------------------------------------------------------------------------------ ALLIANCE GLOBAL 3.29% 16.63% 12.47% 9.49% 19.56% - ------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH & INCOME (2.41)% 21.79% 17.86% 24.42% 18.63% - ------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH INVESTORS (4.94)% 24.05% 10.51% 14.63% 16.93% - ------------------------------------------------------------------------------------------------------ ALLIANCE HIGH YIELD (4.58)% 17.71% 20.60% 16.28% (6.90)% - ------------------------------------------------------------------------------------------------------ ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES (6.13)% 11.24% 1.85% 5.31% 5.76% - ------------------------------------------------------------------------------------------------------ ALLIANCE INTERNATIONAL - 9.76% 7.77% (4.84)% 8.53% - ------------------------------------------------------------------------------------------------------ ALLIANCE MONEY MARKET 2.10% 3.80% 3.37% 3.48% 3.40% - ------------------------------------------------------------------------------------------------------ ALLIANCE SMALL CAP GROWTH - - - 25.16%+ (5.97)% - ------------------------------------------------------------------------------------------------------ BT EQUITY 500 INDEX - - - - 23.13% - ------------------------------------------------------------------------------------------------------ BT INTERNATIONAL EQUITY INDEX - - - - 18.17% - ------------------------------------------------------------------------------------------------------ BT SMALL COMPANY INDEX - - - - (3.87)% - ------------------------------------------------------------------------------------------------------ MFS EMERGING GROWTH COMPANIES - - - 21.11%+ 32.37% - ------------------------------------------------------------------------------------------------------ MFS RESEARCH - - - 14.80%+ 22.12% - ------------------------------------------------------------------------------------------------------ MERRILL LYNCH BASIC VALUE EQUITY - - - 15.77%+ 9.80% - ------------------------------------------------------------------------------------------------------ MERRILL LYNCH WORLD STRATEGY - - - 3.58%+ 5.11% - ------------------------------------------------------------------------------------------------------ MORGAN STANLEY EMERGING MARKETS EQUITY - - - (20.66)% (28.19)% - ------------------------------------------------------------------------------------------------------ EQ/PUTNAM BALANCED - - - 13.24%+ 10.02% - ------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME VALUE - - - 14.96%+ 11.02% - ------------------------------------------------------------------------------------------------------ T. ROWE PRICE EQUITY INCOME - - - 20.81%+ 7.33% - ------------------------------------------------------------------------------------------------------ T. ROWE PRICE INTERNATIONAL STOCK - - - (2.57)%+ 11.88% - ------------------------------------------------------------------------------------------------------ WARBURG PINCUS SMALL COMPANY VALUE - - - 17.84%+ (11.45)% - ------------------------------------------------------------------------------------------------------
- ---------- + Returns for these options represent less than 12 months of performance. The returns are as of each Portfolio inception date as shown in Table 1. - -------------------------------------------------------------------------------- Investment performance 71 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- COMMUNICATING PERFORMANCE DATA In reports or other communications to contract owners or in advertising material, we may describe general economic and market conditions affecting our variable investment options, and the Portfolios and may compare the performance or ranking of those options and the Portfolios with: o those of other insurance company separate accounts or mutual funds included in the rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., VARDS, or similar investment services that monitor the performance of insurance company separate accounts or mutual funds; o other appropriate indices of investment securities and averages for peer universes of mutual funds which are shown under "Benchmarks" above; or o data developed by us derived from such indices or averages. We also may furnish to present or prospective contract owners advertisements or other communications that include evaluations of a variable investment option or Portfolio by nationally recognized financial publications. Examples of such publications are: - -------------------------------------------------------------------------------- BARRON'S MONEY MANAGEMENT LETTER - -------------------------------------------------------------------------------- MORNINGSTAR'S VARIABLE ANNUITY SOURCEBOOK INVESTMENT DEALERS DIGEST - -------------------------------------------------------------------------------- BUSINESS WEEK NATIONAL UNDERWRITER - -------------------------------------------------------------------------------- FORBES PENSION & INVESTMENTS - -------------------------------------------------------------------------------- FORTUNE USA TODAY - -------------------------------------------------------------------------------- INSTITUTIONAL INVESTOR INVESTOR'S BUSINESS DAILY - -------------------------------------------------------------------------------- MONEY THE NEW YORK TIMES - -------------------------------------------------------------------------------- KIPLINGER'S PERSONAL FINANCE THE WALL STREET JOURNAL - -------------------------------------------------------------------------------- FINANCIAL PLANNING THE LOS ANGELES TIMES - -------------------------------------------------------------------------------- INVESTMENT ADVISER THE CHICAGO TRIBUNE - -------------------------------------------------------------------------------- INVESTMENT MANAGEMENT WEEKLY - -------------------------------------------------------------------------------- Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer universes of funds with similar investment objectives in its Lipper Survey. Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life Report (Morningstar Report). The Lipper Survey records performance data as reported to it by over 800 mutual funds underlying variable annuity and life insurance products. It divides these actively managed portfolios into 25 categories by portfolio objectives. The Lipper Survey contains two different universes, which reflect different types of fees in performance data: o The "separate account" universe reports performance data net of investment management fees, direct operating expenses and asset-based charges applicable under variable insurance and annuity contracts; and o The "mutual fund" universe reports performance net only of investment management fees and direct operating expenses, and therefore reflects only charges that relate to the underlying mutual fund. The Morningstar Variable Annuity/Life Report consists of nearly 700 variable life and annuity funds, all of which report their data net of investment management fees, direct operating expenses and separate account level charges. VARDS is a monthly reporting service that monitors approximately 2,500 variable life and variable annuity funds on performance and account information. YIELD INFORMATION Current yield for the Alliance Money Market option will be based on net changes in a hypothetical investment over a given seven-day period, exclusive of capital changes, and then "annualized" (assuming that the same seven-day result would occur each week for 52 weeks). Current yield for the Alliance High Yield option and Alliance Intermediate Government Securities option will be based on net changes in a hypothetical investment over a given 30-day period, exclusive of capital changes, and then "annualized" (assuming that the same 30-day result would occur each month for 12 months). "Effective yield" is calculated in a similar manner, but when annualized, any income earned by the investment is assumed to be reinvested. The "effective yield" will be slightly higher than the "current yield" because any earnings are compounded weekly for the Alliance Money Market option and monthly for the Alliance High Yield option and Alliance Intermediate Government Securities option. The yields and - -------------------------------------------------------------------------------- Investment performance 72 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- effective yields assume the deduction of all contract charges and expenses other than the optional baseBUILDER benefits charge and any charge for taxes such as premium tax. The yields and effective yields for the Alliance Money Market option, when used for the special dollar cost averaging program, assume that no contract charges are deducted. For more information, see "Yield Information for the Alliance Money Market Option, Alliance High Yield Option, and Alliance Intermediate Government Securities Option" in the SAI. - -------------------------------------------------------------------------------- Investment performance 73 - -------------------------------------------------------------------------------- 10 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - -------------------------------------------------------------------------------- Equitable Life's annual report on Form 10-K for the year ended December 31, 1998 and a current report on Form 8-K dated April 9, 1999, are considered to be a part of this prospectus because they are incorporated by reference. After the date of this prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our Exchange Act documents and reports, including our annual and quarterly reports on Form 10-K and Form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered, a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone : (212) 554-1234). - -------------------------------------------------------------------------------- Appendix I: Purchase considerations for QP contracts A-1 - -------------------------------------------------------------------------------- APPENDIX I: PURCHASE CONSIDERATIONS FOR QP CONTRACTS - -------------------------------------------------------------------------------- Trustees who are considering the purchase of an Equitable Accumulator Select QP contract should discuss with their tax advisers whether this is an appropriate investment vehicle for the employer's plan. Trustees should consider whether the plan provisions permit the investment of plan assets in the QP contract, the distribution of such an annuity, the purchase of the guaranteed minimum income benefit, and the payment of death benefits in accordance with the requirements of the federal income tax rules. The QP contract and this prospectus should be reviewed in full, and the following factors, among others, should be noted. Assuming continued plan qualification and operation, earnings on qualified plan assets will accumulate value on a tax-deferred basis even if the plan is not funded by the Equitable Accumulator Select QP contract or another annuity. Therefore, you should purchase an Equitable Accumulator QP contract to fund a plan for the contract's features and benefits other than tax deferral. This QP contract accepts transfer contributions only and not regular, ongoing payroll contributions. For 401(k) plans under defined contribution plans, no employee after-tax contributions are accepted. Under defined benefit plans, we will not accept rollovers from a defined contribution plan to a defined benefit plan. We will only accept transfers from a defined benefit plan or a change of investment vehicles in the plan. For defined benefit plans, the maximum percentage of actuarial value of the plan participant/employee's "normal retirement benefit" that can be funded by a QP contract is 80%. The account value under a QP contract may at any time be more or less than the lump sum actuarial equivalent of the "accrued benefit" for a defined benefit plan participant/employee. Equitable Life does not guarantee that the account value under a QP contract will at any time equal the actuarial value of 80% of a participant/employee's accrued benefit. If overfunding of a plan occurs, withdrawals from the QP contract may be required. A market value adjustment may apply. Further, Equitable Life will not perform or provide any plan recordkeeping services with respect to the QP contracts. The plan's administrator will be solely responsible for performing or providing for all such services. There is no loan feature offered under the QP contracts, so if the plan provides for loans and a participant/employee takes a loan from the plan, other plan assets must be used as the source of the loan and any loan repayments must be credited to other investment vehicles and/or accounts available under the plan. Given that required minimum distributions must commence from the plan for annuitants after age 70 1/2 (unless the annuitant is not a 5% owner who provided the plan funds) trustees should consider whether the QP contract is an appropriate purchase for annuitants approaching or over age 70 1/2. Finally, because the method of purchasing the QP contract and the features of the QP contract may appeal more to plan participants/employees who are older and tend to be highly paid, and because certain features of the QP contract are available only to plan participants/employees who meet certain minimum and/or maximum age requirements, plan trustees should discuss with their advisers whether the purchase of the QP contract would cause the plan to engage in prohibited discrimination in contributions, benefits or otherwise. - -------------------------------------------------------------------------------- Appendix II: Market value adjustment example B-1 - -------------------------------------------------------------------------------- Appendix II: Market value adjustment example - -------------------------------------------------------------------------------- The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 (nine years later) at a rate to maturity of 7.00%, resulting in a maturity value at the maturity date of $183,846. We further assume that a withdrawal of $50,000 is made four years later on February 15, 2004.
- ---------------------------------------------------------------------------------------------- Assumed rate to maturity on February 15, 2004 --------------------------- 5.00% 9.00% - ---------------------------------------------------------------------------------------------- AS OF FEBRUARY 15, 2004, (BEFORE WITHDRAWAL) - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- AS OF FEBRUARY 15, 2004 (BEFORE WITHDRAWAL) - ---------------------------------------------------------------------------------------------- (1) Market adjusted amount $144,048 $119,487 - ---------------------------------------------------------------------------------------------- (2) Fixed maturity amount 131,080 131,080 - ---------------------------------------------------------------------------------------------- (3) Market value adjustment: (1) - (2) 12,968 (11,593) - ---------------------------------------------------------------------------------------------- On February 15, 2004 (after withdrawal) - ---------------------------------------------------------------------------------------------- (4) Portion of market value adjustment associated with withdrawal: (3) x [$50,000/(1)] $ 4,501 $ (4,851) - ---------------------------------------------------------------------------------------------- (5) Reduction in fixed maturity amount: 54,851 [$50,000 - (4)] 45,499 - ---------------------------------------------------------------------------------------------- (6) Fixed maturity amount: (2) - (5) 85,581 76,229 - ---------------------------------------------------------------------------------------------- (7) Maturity value 120,032 106,915 - ---------------------------------------------------------------------------------------------- (8) Market adjusted amount of (7) 94,048 69,487 - ----------------------------------------------------------------------------------------------
You should note that under this example if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. - -------------------------------------------------------------------------------- Appendix III: Guaranteed minimum death benefit example C-1 - -------------------------------------------------------------------------------- Appendix III: Guaranteed minimum death benefit example - -------------------------------------------------------------------------------- The death benefit under the contracts is equal to the account value or, if greater, the guaranteed minimum death benefit. The following illustrates the guaranteed minimum death benefit calculation. Assuming $100,000 is allocated to the variable investment options (with no allocation to the Alliance Money Market option, Alliance Intermediate Government Securities option or the fixed maturity options), no additional contributions, no transfers and no withdrawals, and no loans under a Rollover TSA contract, the guaranteed minimum death benefit for an annuitant age 45 would be calculated as follows:
- ----------------------------------------------------------------------------------------- 5% ROLL UP TO END OF AGE 80 ANNUAL RATCHET TO AGE 80 GUARANTEED CONTRACT GUARANTEED MINIMUM MINIMUM YEAR ACCOUNT VALUE DEATH BENEFIT(1) DEATH BENEFIT - ----------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------- 1 $105,000 $105,000(1) $105,000(3) - ----------------------------------------------------------------------------------------- 2 $115,500 $110,250(2) $115,500(3) - ----------------------------------------------------------------------------------------- 3 $129,360 $115,763(2) $129,360(3) - ----------------------------------------------------------------------------------------- 4 $103,488 $121,551(1) $129,360(4) - ----------------------------------------------------------------------------------------- 5 $113,837 $127,628(1) $129,360(4) - ----------------------------------------------------------------------------------------- 6 $127,497 $134,010(1) $129,360(4) - ----------------------------------------------------------------------------------------- 7 $127,497 $140,710(1) $129,360(4) - -----------------------------------------------------------------------------------------
The account values for contract years 1 through 7 are based on hypothetical rates of return of 5.00%, 10.00%, 12.00%, (20.00)%, 10.00%, 12.00% and 0.00%. We are using these rates solely to illustrate how the benefit is determined. The return rates bear no relationship to past or future investment results. 5% ROLL UP TO AGE 80 (1) At the end of contract year 1, and again at the end of contract years 4 through 7, the death benefit will be equal to the guaranteed minimum death benefit. (2) At the end of contract years 2 and 3, the death benefit will be equal to the current account value since it is higher than the current guaranteed minimum death benefit. ANNUAL RATCHET TO AGE 80 (3) At the end of contract years 1 through 3, the guaranteed minimum death benefit is equal to the current account value. (4) At the end of contract years 4 through 7, the guaranteed minimum death benefit is equal to the guaranteed minimum death benefit at the end of the prior year since it is equal to or higher than the current account value. Statement of additional information - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page Unit Values 2 Annuity Unit Values 2 Custodian and Independent Accountants 3 Yield Information for the Alliance Money Market Option, Alliance High Yield Option, and Alliance Intermediate Government Securities option 3 Long-Term Market Trends 4 Key Factors in Retirement Planning 6 Financial Statements 9
HOW TO OBTAIN AN EQUITABLE ACCUMULATOR SELECT STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT NO. 45 Send this request form to: Equitable Accumulator Select P.O. Box 1547 Secaucus, NJ 07096-1547 - -------------------------------------------------------------------------------- Please send me an Equitable Accumulator Select SAI for Separate Account No. 45 dated May 1, 1999: - ------------------------------------------------------------------------------ Name - ------------------------------------------------------------------------------ Address - ------------------------------------------------------------------------------ City State Zip (AGTSELSAI) INCOME MANAGER(R) Payout Annuity Contracts May 1, 1999 Please read and keep this prospectus for future reference. It contains important information that you should know before purchasing or taking any other action under your contract. WHAT IS INCOME MANAGER? Income Manager contracts are payout annuity contracts issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES. They are designed to provide retirement income. We offer two versions of the Income Manager payout annuity contract from which you may choose to receive your retirement income. You may choose to receive income payable for a specified period ("period certain"). Or, you may choose to receive lifetime income payable for at least a specified period ("life annuity with a period certain"). Under the life annuity with a period certain contract you may choose whether payments are made on a single life or a joint and survivor life basis. TYPES OF CONTRACTS. We offer the contracts for use as: o A nonqualified annuity ("NQ") for after-tax contributions only. o An individual retirement annuity ("IRA"). There are two types of IRAs, Traditional IRAs or Roth IRAs. Because Roth IRAs were newly introduced in 1998 and have a five year aging period before distributions should begin, we do not expect to offer payout annuity Roth IRA contracts before the year 2003. A contribution of at least $10,000 is required to purchase a contract. FIXED MATURITY OPTIONS. We allocate your contributions to a series of fixed maturity options to provide your income payments during the period certain. Amounts allocated to these fixed maturity options will receive a fixed rate of interest during the period certain. Interest is earned at a guaranteed rate we set ("rate to maturity"). We make a market value adjustment (up or down) if you make a withdrawal from a fixed maturity option before its maturity date. A registration statement relating to this offering has been filed with the Securities and Exchange Commission ("SEC"). This prospectus can be obtained from the SEC's website at http://www.sec.gov. THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CONTRACTS ARE NOT INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL. - -------------------------------------------------------------------------------- Copyright 1999 The Equitable Life Assurance Society of the United States. All rights reserved. Income Manager is a registered service mark of The Equitable Life Assurance Society of the United States. IM PROS (5/99) CONTENTS OF THIS PROSPECTUS PAGE IN PROSPECTUS ---------- INDEX OF KEY WORDS AND PHRASES..............................................4 WHO IS EQUITABLE LIFE?......................................................5 HOW TO REACH US.............................................................5 INCOME MANAGER AT A GLANCE --KEY FEATURES...................................7 CONTRACT FEATURES AND BENEFITS..............................................9 How you can purchase and contribute to your contract.....................9 Source of contributions..................................................9 Owner and annuitant requirements.........................................9 What are your investments under the contract?...........................10 What are your contract choices?.........................................12 Life annuity with a period certain contract.............................12 Period certain contract.................................................21 OTHER BENEFITS AND FEATURES OF THE CONTRACTS...............................23 How you can make your contributions.....................................23 Your right to cancel within a certain number of days....................24 Surrendering your contract to receive its cash value....................24 When to expect payments.................................................25 CHARGES....................................................................25 Withdrawal charges......................................................25 Amounts applied from other contracts issued by Equitable Life...........26 Charges for state premium and other applicable taxes....................26 Group or sponsored arrangements.........................................26 Other distribution arrangements.........................................27 PAYMENT OF DEATH BENEFIT...................................................27 Your beneficiary........................................................27 Choosing annuity payout options.........................................27 Traditional annuity payout options......................................27 TAX INFORMATION............................................................28 Overview................................................................28 Taxation of nonqualified annuities......................................29 Special rules for NQ contracts issued in Puerto Rico....................31 Individual retirement arrangements (IRAs)...............................32 Traditional individual retirement annuities (Traditional IRAs)..........33 Federal and state income tax withholding and information reporting......42 MORE INFORMATION...........................................................43 About our fixed maturity options........................................43 About the separate account for the fixed maturity options...............44 About our general account...............................................44 Other methods of payment................................................45 About payments under period certain contracts...........................45 Dates and prices at which contract events occur.........................45 About our year 2000 progress............................................46 About legal proceedings.................................................47 2 About our independent accountants.......................................47 Transfers of ownership, collateral assignments, loans, and borrowing....47 Distribution of contracts...............................................47 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................49 APPENDIX: MARKET VALUE ADJUSTMENT EXAMPLE..................................50 "WE," "OUR," AND "US" REFER TO EQUITABLE LIFE. WHEN WE ADDRESS THE READER OF THIS PROSPECTUS WITH WORDS SUCH AS "YOU" AND "YOUR," WE MEAN THE PERSON WHO HAS THE RIGHT OR RESPONSIBILITY THAT THE PROSPECTUS IS DISCUSSING AT THAT POINT. THIS IS USUALLY THE CONTRACT OWNER. WHEN WE USE THE WORD "CONTRACT" IT ALSO INCLUDES CERTIFICATES THAT ARE ISSUED UNDER GROUP CONTRACTS IN SOME STATES. ALSO, TO MAKE THIS PROSPECTUS EASIER TO READ, WE SOMETIMES USE DIFFERENT WORDS THAN IN THE CONTRACT. YOUR EQUITABLE ASSOCIATE CAN PROVIDE FURTHER EXPLANATION ABOUT YOUR CONTRACT. 3 INDEX OF KEY WORDS AND PHRASES This index should help you locate more information on the terms used in this prospectus. TERM PAGE IN PROSPECTUS account value 24 annuitant 9 beneficiary 27 business day 24 cash value 18 contract date 8 contract year 8 deferral period 14 fixed maturity amount 10 fixed maturity options 10 IRA cover IRS 29 joint and survivor 12 joint owners 9 life annuity with a period certain 12 life contingent annuity 13 market adjusted amount 10 market value adjustment 11 maturity value 10 off maturity date 12 NQ cover payout option 27 period certain 21 Processing Office 5 SEC cover separate account 44 single life 13 Traditional IRA cover 4 WHO IS EQUITABLE LIFE? We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a stock life insurance company. We are a New York corporation and have been doing business since 1859. Equitable Life is a wholly owned subsidiary of The Equitable Companies, Incorporated, whose majority shareholder is AXA, a French insurance holding company. As a majority shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. Equitable Life's related companies, however, have no legal responsibility to pay amounts that Equitable Life owes under the contract. During 1999, The Equitable Companies, Incorporated plans to change its name to AXA Financial, Inc. We managed approximately $347.5 billion in assets as of December 31, 1998. For over 100 years we have been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, NY 10104. HOW TO REACH US: You may communicate with our Processing Office listed below for any of the following purposes: o FOR CONTRIBUTIONS SENT BY REGULAR MAIL: o FOR CONTRIBUTIONS SENT BY EXPRESS DELIVERY: Equitable Life Equitable Life Income Manager Income Manager P.O. Box 13014 c/o First Chicago National Processing Center Newark, NJ 07188-0014 300 Harmon Meadows Boulevard, 3rd Floor Attn: Box 13014 Secaucus, NJ 07094 o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR o FOR ALL OTHER COMMUNICATIONS (E.G., REQUESTS FOR WITHDRAWALS, OR REQUIRED NOTICES) SENT BY REGULAR WITHDRAWALS, OR REQUIRED NOTICES) SENT BY EXPRESS MAIL: DELIVERY: Equitable Life Equitable Life Income Manager Income Manager P.O. Box 1547 200 Plaza Drive, 4th Floor Secaucus, NJ 07096-1547 Secaucus, NJ 07094
o CUSTOMER SERVICE REPRESENTATIVES: During our regular business hours you may also use our toll-free number (1-800-789-7771) to speak with one of our customer service representatives. Our customer service representatives are available on any business day from 8:30 a.m. until 5:30 p.m., Eastern Time. o REPORTS WE PROVIDE: o Statement of your contract values as of the last day of the calendar year; o Three written reports of your contract values each year; and o Written confirmation of financial transactions. --------------------- 5 You should send all contributions, required notices, and requests to exercise any of your rights or privileges to our Processing Office at the address above. WE HAVE SPECIFIC FORMS THAT WE RECOMMEND YOU USE FOR THE FOLLOWING TYPES OF REQUESTS: 1) address changes; 2) beneficiary changes; 3) withdrawal requests; and 4) contract surrender. You must sign and date all these requests. Any written request that is not on one of our forms must include your name and your contract number along with adequate details about the notice you wish to give or the action you wish us to take. SIGNATURES: The proper person to sign forms, notices and requests would normally be the owner. If there are joint owners both must sign. Any irrevocable beneficiary or assignee that we have recorded on our records also must sign certain types of requests. 6
INCOME MANAGER AT A GLANCE -- KEY FEATURES - -------------------------------------------------------------------------------------------------------------------- INCOME MANAGER INCOME MANAGER (LIFE ANNUITY WITH A PERIOD CERTAIN) (PERIOD CERTAIN) - -------------------------------------------------------------------------------------------------------------------- INCOME PAYMENTS NQ - Level or increasing NQ and IRA - Level payments payments. only. IRA - Level payments only. - -------------------------------------------------------------------------------------------------------------------- PERIOD CERTAIN You will receive payments for periods ranging from 7 to 15 years depending on the age of the annuitant. - -------------------------------------------------------------------------------------------------------------------- FORM OF PAYMENT AVAILABLE Single life or joint and survivor. Single life only. - -------------------------------------------------------------------------------------------------------------------- PAYMENTS AFTER THE END OF THE Payments continue while the annuitant or PERIOD CERTAIN joint annuitant is living. None - -------------------------------------------------------------------------------------------------------------------- CONTRIBUTION AMOUNTS: INITIAL MINIMUM: o $10,000 o $10,000 ADDITIONAL MINIMUM: o $1,000 (subject to o Not permitted restrictions) Maximum investment limitations may Maximum investment limitations may apply. apply. - -------------------------------------------------------------------------------------------------------------------- FIXED MATURITY OPTIONS o 15 fixed maturity options with maturities ranging from approximately 1 to 15 years. o Each fixed maturity option offers a guarantee of principal and interest rate if you hold it to maturity. o Principal guarantees. - If you make withdrawals from a fixed maturity option before maturity, there will be a market value adjustment due to differences in interest rates. This may increase or decrease any value you have left in that fixed maturity option. - -------------------------------------------------------------------------------------------------------------------- TAXES Generally, earnings will be taxed at your ordinary income tax rate when distributions are made from your contract. o NQ - A portion of each payment is generally not considered taxable income until you have received a tax-free recovery of your investment in the contract. o IRA - All amounts distributed are generally taxable. - -------------------------------------------------------------------------------------------------------------------- DEATH BENEFIT A death benefit is provided if A death benefit is provided if the the annuitant dies before the end of the annuitant dies before the end of the period certain. There is no death the period certain. benefit after the period certain. - --------------------------------------------------------------------------------------------------------------------
7 - -------------------------------------------------------------------------------------------------------------------- ACCESS TO YOUR o Withdrawals. o Withdrawals. MONEY DURING THE o Contract surrender. o Contract surrender. PERIOD CERTAIN A market value adjustment may apply. You A market value adjustment may may also incur income tax and a penalty apply. You may also incur income tax. tax and a penalty tax. You can not take a withdrawal from, or surrender your life contingent annuity. - -------------------------------------------------------------------------------------------------------------------- CHARGES o We deduct a charge for taxes o We deduct a charge for such as premium taxes that may be taxes such as premium taxes imposed in your state. We deduct that may be imposed in your this charge from your contributions. state. We deduct this charge o During the first seven contract from your contributions. years following a contribution, a o During the first seven charge will be deducted from amounts contract years a charge will that you withdraw that exceed 10% of be deducted from amounts that your account value. We use the you withdraw. The charge account value on the most recent begins at 7% in the first contract date anniversary to contract year. It declines calculate the 10% amount available. each year to 1% in the seventh The charge begins at 7% in the first contract year. There is no contract year following a withdrawal charge in the contribution. It declines each year eighth and later contract to 1% in the seventh contract year. years. There is no withdrawal charge in the o There is no free eighth and later contract years withdrawal amount. following a contribution. - -------------------------------------------------------------------------------------------------------------------- [Sidebar: The 12-month period beginning on your contract date and each anniversary of that date is a "contract year." The "contract date" is the effective date of a contract. This usually is the business day we receive your initial contribution.] - -------------------------------------------------------------------------------------------------------------------- ANNUITANT NQ and IRA level payments: 45 - 83 NQ and IRA: 59 1/2 - 78 ISSUE AGES NQ increasing payments: 59 1/2 - 83 Different ages may apply depending on when annuity payments start. - --------------------------------------------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your Equitable associate, or call us, if you have any questions. 8 CONTRACT FEATURES AND BENEFITS HOW YOU CAN PURCHASE AND CONTRIBUTE TO YOUR CONTRACT You may purchase your contract by making payments to us we call "contributions." We require a contribution of at least $10,000 for you to purchase a contract. Under life annuity with a period certain contracts, you may make additional contributions subject to the limitations as described under "Additional contributions" later in this prospectus. SOURCE OF CONTRIBUTIONS NQ CONTRACTS. We will accept only contributions made with after-tax money. You may make your contributions by check or by transfer of your contract value in a tax-deferred exchange under Section 1035 of the Internal Revenue Code. IRA CONTRACTS. Contributions may be made from: o Rollovers from a qualified plan. o Rollovers from a tax sheltered annuity (TSA). o Rollovers from another traditional individual retirement arrangement. o Direct custodian-to-custodian transfers from another Traditional individual retirement arrangement. See "Tax information" for a more detailed discussion of sources of contributions and contribution limitations. We may refuse to accept any contribution if the sum of all contributions under all Income Manager contracts with the same annuitant would then total more than $1,500,000. We may also refuse to accept any contributions if the sum of all contributions under all Equitable Life annuity payout contracts that you own would then total more than $2,500,000. For information on when contributions are credited see "Dates and prices at which contract events occur" later in this prospectus. OWNER AND ANNUITANT REQUIREMENTS NQ CONTRACTS. The annuitant can be different from the contract owner. A joint owner may also be named provided both owners are of legal age. Only natural persons can be joint owners. This means that an entity such as a corporation or a trust cannot be a joint owner. [Sidebar: The "annuitant" is the person who is the measuring life for determining contract benefits. The annuitant is not necessarily the contract owner.] IRA CONTRACTS. The owner and the annuitant must be the same person. Joint owners are not permitted. A joint annuitant may be named. 9 WHAT ARE YOUR INVESTMENTS UNDER THE CONTRACT? FIXED MATURITY OPTIONS To provide your income payments during the period certain, we allocate your contributions to fixed maturity options that mature in consecutive date order. When we allocate your contributions to the fixed maturity options they become part of our general account assets. They accumulate interest at a rate to maturity for each fixed maturity option. The total amount allocated to and accumulated in each fixed maturity option is called the "fixed maturity amount." The rate to maturity you will receive for each fixed maturity amount is the interest rate in effect for new contributions allocated to that fixed maturity option on the date we apply your contribution. If you make any withdrawals from a fixed maturity option before the maturity date, we will make a market value adjustment that may increase or decrease any fixed maturity amount you have left in that fixed maturity option. We will discuss market value adjustment below and in greater detail later in this prospectus under "More information." For applications we receive under certain types of transactions, we may offer you the opportunity to lock in rates to maturity on contributions. On the maturity date of each of your fixed maturity options your fixed maturity amount, assuming you have not made any withdrawals, will equal your contribution to each fixed maturity option plus interest at the rate to maturity for that contribution, to the date of calculation. This is the fixed maturity option's "maturity value." On the maturity date, your fixed maturity amount and the maturity value are the same. Before maturity, the current value we will report for your fixed maturity amount will reflect a market value adjustment. It will reflect the market value adjustment that we would make if you were to withdraw all of your fixed maturity amount on the date of the report. We call this your "market adjusted amount." RATES TO MATURITY AND PRICE PER $100 OF MATURITY VALUE. We can determine the amount required to be allocated to each fixed maturity option in order to produce target maturity values. For example, we can tell you how much you need to allocate per $100 of maturity value. 10 Guaranteed rates to maturity for new allocations as of April 1, 1999 and the related price per $100 of maturity value were as follows: --------------------------------------------------------------------- FIXED MATURITY OPTIONS WITH FEBRUARY 15TH PRICE MATURITY DATE OF RATE TO MATURITY AS PER $100 OF MATURITY YEAR OF APRIL 1, 1999 MATURITY VALUE --------------------------------------------------------------------- 2000 3.25% $97.23 2001 4.04% $92.83 2002 4.33% $88.51 2003 4.46% $84.43 2004 4.52% $80.60 2005 4.67% $76.45 2006 4.77% $72.56 2007 4.79% $69.16 2008 4.87% $65.55 2009 4.97% $61.91 2010 4.90% $59.41 2011 4.90% $56.63 2012 4.90% $53.99 2013 4.90% $51.46 2014 4.90% $49.05 --------------------------------------------------------------------- MARKET VALUE ADJUSTMENT. If you make any withdrawals, (including surrender of your contract or when we make deductions for withdrawal charges), from a fixed maturity option before it matures we will make a market value adjustment, which will increase or decrease any fixed maturity amount you have left in that fixed maturity option. The amount of the adjustment will depend on two factors: (a) the difference between the rate to maturity that applies to the amount being withdrawn and the rate to maturity in effect at that time for new allocations to that same fixed maturity option, and (b) the length of time remaining until the maturity date. In general, if interest rates rise from the time that we originally allocate an amount to a fixed maturity option to the time that you take a withdrawal, the market value adjustment will be negative. Likewise, if interest rates drop at the end of that time, the market value adjustment will be positive. Also, the amount of the market value adjustment, either up or down, will be greater the longer the time remaining until the fixed maturity option's maturity date. Therefore, it is possible that the market value adjustment could greatly reduce your value in the fixed maturity options, particularly in the fixed maturity options with later maturity dates. We provide an illustration of the market adjusted amount of target maturity values, an explanation of how we calculate the market value adjustment, and information concerning our general account under "More information" later in this prospectus. We provide an example of how we calculate the market value adjustment in the Appendix to this prospectus. 11 SEPARATE ACCOUNT FOR THE FIXED MATURITY OPTIONS Amounts allocated to the fixed maturity options are held in a "nonunitized" separate account we have established under the New York Insurance Law. This separate account provides an additional measure of assurance that we will make full payment of amounts due under the fixed maturity options. We provide additional information about this separate account later in this prospectus under "More information." OFF MATURITY DATE PAYMENTS. Under Income Manager contracts you may choose to receive payments monthly, quarterly or annually. If you choose annual payments, generally your payments will be made on February 15th as each fixed maturity option matures. You may instead choose to have your annual payments made in a month other than February. We refer to payments we make on an annual basis in any month other than February and monthly or quarterly payments, as payments made "off maturity dates." If you choose to have your payments made off maturity dates, we will be required to begin making your payments before the maturity date of a fixed maturity option. In planning for these payments we will allocate a portion of your initial contribution to the separate account, but not to the fixed maturity options contained in the separate account. We will credit these amounts with interest at rates that will not be less than 3%. After that, as each fixed maturity option expires we will transfer your maturity value from the expired fixed maturity option and hold the maturity value in the separate account. We will credit interest to these amounts at the same rate as the rate to maturity that was credited in the expired fixed maturity option. These amounts will then be used to provide for payments off maturity dates during the period certain. [Sidebar: Whether you choose monthly, quarterly, or annual payments, your payments will be made on the 15th day of the month.] We will not make a market value adjustment to the amounts held in the separate account to provide for payments off maturity dates. WHAT ARE YOUR CONTRACT CHOICES? We offer two versions of the Income Manager payout annuity contracts from which you may choose to receive your retirement income, a "life annuity with a period certain" and a "period certain" annuity. We discuss both versions below. LIFE ANNUITY WITH A PERIOD CERTAIN CONTRACT This payout annuity contract provides you with guaranteed payments during the period certain. When the period certain ends you will continue to receive payments for as long as an annuitant is living. Payments based solely on the life of one annuitant are called "single life" payments. You may also elect to receive "joint and survivor" payments that are based on the lives of an annuitant and a joint annuitant. These payments will continue as long as one of the annuitants is living. Payments during the period certain are designed to pay out your entire account value by the end of the period certain. 12 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) [Sidebar: "Single life" payments are made to you as long as the annuitant is living. "Joint and survivor" payments continue as long as either annuitant is living. For IRA contracts, if you are married, the joint annuitant must be your spouse.] For annuitant ages at which the contracts are available see the chart under "Your period certain" below. ADDITIONAL CONTRIBUTIONS If your annuity payments are set to begin on February 15, 2000 or later, and you are age 78 or younger, you may make additional contributions of at least $1,000 at any time up until 15 days before your payments actually begin. If the annuitant is over age 78 you can only make additional contributions during the first contract year. Under IRA contracts we will accept additional contributions that are "regular" contributions, rollover contributions or direct transfers. Additional "regular" contributions may no longer be made after you are age 70 1/2. If you make a direct transfer or rollover contribution after you turn age 70 1/2 you must have taken the required minimum distribution for the year before the contribution is applied to this contract. See "Tax information" later in this prospectus. If you are using the proceeds from another type of contract issued by us to purchase this contract, you will not be permitted to make additional contributions. HOW WE ALLOCATE YOUR CONTRIBUTIONS We determine the allocation of your contributions based on a number of factors. They are: o the amount of your contribution; o the form of payments; o the age and sex of the annuitant (and the age and sex of the joint annuitant, if joint and survivor annuity payments are elected); o the frequency of payments; and o the period certain. We then allocate your initial contribution among the fixed maturity options, the separate account if we need to make payments to you off maturity dates, and the "life contingent annuity." We will allocate your additional contributions in the same manner. Additional contributions will increase the level of all future payments. You may not change this allocation. [Sidebar: The life contingent annuity continues the payments after the period certain ends.] 13 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) PAYMENTS NQ CONTRACTS. If you are age 45 or older, you may elect to receive level payments. You will receive level payments during the period certain and under the life contingent annuity. However, if you are younger than age 59 1/2, there are tax issues that you should consider before you purchase a contract. If you are age 53 1/2 or older you may instead elect to receive payments that increase. However, your payments may not start before you are age 59 1/2. Such payments will increase by 10% every three years during the period certain on each third anniversary of the date annuity payments begin. After the end of the period certain, your first payment under the life contingent annuity will be 10% greater than the final payment made under the period certain. See "Payments after the period certain" below. IRA CONTRACTS. Only level payments are available under IRA contracts. Whether you choose monthly, quarterly or annual payments, you will usually begin receiving payments one payment period from the contract date, unless you elect otherwise as described under "Off maturity date payments" earlier in this prospectus. Your payments will always be made on the 15th day of the month. However, if you are age 53 1/2 or older, you must defer the date your payments will start until you are age 59 1/2. If you are at least age 59 1/2 you may elect to defer the date your payments will start. Generally, you may defer payments for a period of up to 72 months. This is called the deferral period. Deferral of the payment start date permits you to lock in rates at a time when you may consider current rates to be high, while permitting you to delay receiving payments if you have no immediate need to receive income under your contract. [Side bar: The deferral period together with the period certain may be referred to as a "liquidity period." Unlike traditional life annuities that provide periodic payments, you will be able to make withdrawals before the end of the period certain. You may also choose to surrender your contract for its cash value while keeping the life contingent annuity in effect.] Before you decide to defer payments, you should consider the fact that the amount of income you purchase is based on the rates to maturity in effect on the date we allocate your contribution. Therefore, if rates rise during the deferral period, your payments may be less than they would have been if you had purchased a contract at a later date. Deferral of the payment start date is not available if the annuitant is older than age 80. Under IRA contracts, if your deferred payment start date is after you are age 70 1/2, you should consider the effect that deferral may have on your required minimum distributions. 14 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) YOUR PERIOD CERTAIN LEVEL PAYMENTS. Under level payments, you may select a period certain of not less than 7 years nor more than 15 years. The maximum period certain available based on the age of the annuitant when your contract is issued is as follows: - ------------------------------------------------------------------------ NQ CONTRACTS ANNUITANT'S AGE AT ISSUE* MAXIMUM PERIOD CERTAIN - ------------------------------------------------------------------------ 45 through 70 15 years 71 through 75 85 less age at issue 76 through 80 10 years 81 though 83 90 less age at issue - ------------------------------------------------------------------------ - ------------------------------------------------------------------------ IRA CONTRACTS ANNUITANT'S AGE AT ISSUE* MAXIMUM PERIOD CERTAIN - ------------------------------------------------------------------------ 45 through 70 15 years 71 through 78 85 less age at issue 79 through 83 7 years * For joint and survivor payments, the period certain is based on the age of the younger annuitant. - ------------------------------------------------------------------------ The minimum and maximum period certain will be reduced by each year you defer the date your payments will start. INCREASING PAYMENTS. Under NQ contracts if you elect increasing payments, you do not have a choice as to the period certain. Based on the age of the annuitant when your contract is issued, your period certain will be as follows: - ------------------------------------------------------------------------ ANNUITANT'S AGE AT ISSUE* PERIOD CERTAIN - ------------------------------------------------------------------------ 53 1/2 through 70 15 years 71 through 75 12 years 76 through 80 9 years 81 through 83 6 years * For joint and survivor payments, the period certain is based on the age of the younger annuitant. - ------------------------------------------------------------------------ 15 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) If you elect increasing payments and defer the date payments will start, your period certain will be as follows:
PERIOD CERTAIN BASED ON DEFERRAL PERIOD ------------------------------------------------------------------------------ ANNUITANT'S AGE AT ISSUE* 1 - 36 37 - 60 61 - 72 MONTHS MONTHS MONTHS - ----------------------------------------------------------------------------------------------------------- 59 1/2 through 70 12 years 9 years 9 years 71 through 75 9 years 9 years n/a 76 through 80 6 years 6 years n/a 81 through 83 n/a n/a n/a * For joint and survivor payments, the period certain is based on the age of the younger annuitant. - -----------------------------------------------------------------------------------------------------------
The annuitant ages at issue in the above table are also the annuitant ages for which the contracts are available. Different ages may apply if you purchase a contract by exercising a benefit under another type of contract that we issue. PURCHASE RESTRICTIONS FOR JOINT AND SURVIVOR ANNUITY PAYMENTS If you elect payments on a joint and survivor basis; o the joint annuitant must also be the beneficiary under the contract. Under IRA contracts, the joint annuitant must be your spouse; o neither the annuitant nor the joint annuitant can be over age 83; and o under level payments the joint and 100% to survivor form is only available for the longest period certain we permit. PAYMENTS AFTER THE PERIOD CERTAIN After the end of the period certain, we will continue your payments under the life contingent annuity if the annuitant or joint annuitant is living. Payments continue throughout the annuitant's lifetime (or the lifetime of the joint annuitant, if joint and survivor payments are elected) on the same payment schedule (either monthly, quarterly or annually) as the payments you received during the period certain. [Sidebar: The portion of your contribution allocated to the life contingent annuity does not have a cash value or an account value and, therefore, does not provide for withdrawals.] 16 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) THERE IS NO DEATH BENEFIT PROVIDED UNDER THE LIFE CONTINGENT ANNUITY AND PAYMENTS ARE MADE TO YOU ONLY IF THE ANNUITANT (OR JOINT ANNUITANT) IS LIVING WHEN THE PAYMENTS ARE SCHEDULED TO BEGIN. THESE PAYMENTS ARE ONLY MADE DURING THE ANNUITANT'S LIFETIME AND, IF APPLICABLE, THE LIFETIME OF A JOINT ANNUITANT. THEREFORE, YOU SHOULD CONSIDER THE POSSIBILITY THAT NO PAYMENTS WILL BE MADE TO YOU UNDER THE LIFE CONTINGENT ANNUITY IF THE ANNUITANT (OR JOINT ANNUITANT) DOES NOT SURVIVE TO THE DATE PAYMENTS ARE TO BEGIN. Under the life contingent annuity you may elect single life or joint and survivor payments. Joint and survivor payments are available on a 100%, one-half or two-thirds to survivor basis. If you elect increasing payments under NQ contracts, your first payment under the life contingent annuity will be 10% greater than the final payment under the period certain. After the period certain we will increase your payments annually on each anniversary of the payment start date under the life contingent annuity. We will base this increase on the annual increase in the Consumer Price Index, but it will never be greater than 3% per year. EXAMPLE OF PAYMENTS We provide the chart below to illustrate level payments under the contract using the following assumptions: (1) a male age 70 (who is both the contract owner and the annuitant); (2) single life annuity payments; (3) a contribution of $100,000; (4) no additional contributions; and (5) a period certain of 15 years. If you had a contract date of April 1, 1999, based on rates to maturity on that date, an election of either monthly, quarterly, or annual payments with payments starting one payment period from the contract date, the following level payments would be provided: ----------------------------------------------------------------------- PAYMENT PERIOD MONTHLY QUARTERLY ANNUAL ----------------------------------------------------------------------- START DATE 5/15/99 7/15/99 4/15/00 PAYMENT $654 $1,971 $8,092 ----------------------------------------------------------------------- WITHDRAWALS After the first contract year and before the end of the period certain, you may take withdrawals from your account value. You may take one withdrawal per contract year at any time during the contract year. The minimum amount you may withdraw at any time is $1,000. If you request to withdraw more than 90% of your current "cash value" we will treat it as a request to surrender your 17 LIFE ANNUITY WITH A PERIOD CERTAIN(CONTINUED) contract for its cash value. See "Surrendering your contract to receive its cash value" later in this prospectus. [Sidebar: Your account value is the sum of your market adjusted amounts in each fixed maturity option plus your amounts held in the separate account to provide for payments off maturity dates. Your cash value is equal to your account value minus any withdrawal charge.] Withdrawals in excess of a 10% free withdrawal amount may be subject to a withdrawal charge. There is no free withdrawal amount if your contract is surrendered for its cash value. Amounts withdrawn from a fixed maturity option before its maturity date will result in a market value adjustment. ALLOCATION OF WITHDRAWALS We will subtract your withdrawal from all remaining fixed maturity options to which your account value is allocated as well as from amounts held in the separate account to provide for payments off maturity dates. As a result we will reduce the amount of your payments and the length of your period certain. We will also begin making payments to you under the life contingent annuity at an earlier date. In order to achieve this result we will withdraw additional amounts over the amount of the withdrawal you requested. We will withdraw these amounts from the fixed maturity options and from amounts held in the separate account to provide for payments off maturity dates and allocate them to the life contingent annuity. The exact additional amount we withdraw will depend on how much is necessary to assure that the same pattern of payments will continue in reduced amounts for the annuitant's life, and if it applies, the life of the joint annuitant. If you have elected increasing payments, the first increase in your payments will take place no later than the date of the next planned increase. EXAMPLE The example below illustrates the effect of a withdrawal based on: (1) a single contribution of $100,000 made on April 1, 1999; (2) level annual payments of $7,601 to be made on February 15th of each year; (3) joint and two-thirds to survivor payments for a male and female, both age 70; (4) a period certain of 15 years; (5) a withdrawal made at the beginning of the fourth contract year of 25% of an account value of $67,907.44 when the annuitants are age 73. The requested withdrawal amount would be $16,976.86 ($67,907.44 x .25). In this case, $6,790.74 ($67,907.44 x .10) would be the free withdrawal amount and could be withdrawn free of a withdrawal charge. The balance of $10,186.12 ($16,976.86 - $6,790.74) would be considered a withdrawal of a part of the contribution of $100,000. This contribution would be subject to a 4.0% withdrawal charge of $407.44 ($10,186.12 x .04). The account value after the withdrawal is $50,523.14 ($67,907.44 - $16,976.86 - $407.44). The payments would be reduced to $6,254.75 and the remaining period certain would be reduced to 10 years from 12. 18 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) DEATH BENEFIT WHEN THE ANNUITANT DIES BEFORE PAYMENTS BEGIN. Generally, when we receive satisfactory proof of the annuitant's death before annuity payments begin we will pay the death benefit to the "beneficiary" named in your contract. See "Your beneficiary" later in this prospectus. If the joint owner who is also the annuitant dies, we will consider the surviving owner to be the beneficiary, taking the place of any other beneficiary designations. We determine the amount of the death benefit payable to your beneficiary as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. The death benefit is the greater of: (1) your account value; and (2) the sum of the fixed maturity amounts in each fixed maturity option plus any amounts held in the separate account to provide for payments off maturity dates. However, if you are the annuitant and your spouse is the joint owner or the designated beneficiary under the contract, your spouse may elect to receive the payments instead of taking the death benefit if payments have not been deferred, or payments are scheduled to begin within one year. The payments will then begin on the scheduled date. We will not make any payments under the life contingent annuity after the annuitant's death unless you have elected the joint and survivor form of payments. If you elect joint and one-half or joint and two-thirds to survivor payments, at the death of either annuitant, we will reduce the payments by one-half or one-third, whichever applies. [Sidebar: A death benefit is never payable under the life contingent annuity. The death benefit applies only during the period certain.] WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENTS BEGIN. If the annuitant dies after the payments begin, we will continue to make payments during the period certain to either the joint owner or the designated beneficiary, whichever applies. The payments will be made on the same schedule that was in effect before the annuitant's death. If you elected joint and survivor payments under the life contingent annuity, the payments will be made as long as one of the annuitants is living. At the beneficiary's option, payments during the period certain may be discontinued and paid in a single sum. If the single sum is elected within one year after the annuitant's death, the single sum will be equal to the greater of: (1) the account value; and (2) the sum of the fixed maturity amounts in each fixed maturity options plus any amounts held in the separate account to provide for payments off maturity dates. 19 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) If a single sum is elected and there is a joint annuitant, we will begin making payments to you under the life contingent annuity at an earlier date. These payments will be made in reduced amounts to compensate for the earlier start date. WHEN THE NQ CONTRACT OWNER WHO IS NOT THE ANNUITANT DIES BEFORE THE ANNUITANT AND BEFORE THE ANNUITY PAYMENTS BEGIN. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the new contract owner. You may name a different person that will become the owner at any time by sending an acceptable written form to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the beneficiary for purposes of the distribution rules described below. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the deceased owner (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the designated beneficiary for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value in the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The new owner may instead elect to receive payments as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy), with payments beginning no later than December 31st following the calendar year of the non-annuitant owner's death. Unless the alternative is elected, we will pay any cash value in the contract as a single sum on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the designated beneficiary or joint owner, the surviving spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and the annuitant are living. WHEN THE NQ CONTRACT OWNER WHO IS NOT THE ANNUITANT DIES AFTER THE ANNUITY PAYMENTS BEGIN. If your death occurs after annuity payments begin, payments will continue to be made during the period certain to the designated beneficiary, or in the case of joint owners, to the surviving owner. In either case this person becomes the new contract owner. The payments will be made on the same payment schedule that was in effect before your death. After the period certain, lifetime payments will be made under the life contingent annuity for as long the annuitant (or joint annuitant) is living. SURRENDERING YOUR LIFE ANNUITY WITH PERIOD CERTAIN CONTRACT You may surrender your contract for its cash value at any time during the period certain and receive lifetime payments after that under the life contingent annuity. Once your contract is 20 LIFE ANNUITY WITH A PERIOD CERTAIN (CONTINUED) surrendered, the date your payments are to start under the life contingent annuity will be moved forward to the date when you were supposed to receive the next payment under the period certain. However, your payments will be made in reduced amounts. Once your contract is surrendered, we will return it to you with a notation that the life contingent annuity is still in effect. You may not surrender the life contingent annuity. PERIOD CERTAIN CONTRACT You may purchase the period certain contract if you are age 59 1/2 or older. The annuitant must be at least age 59 1/2, but not older than age 78. This contract provides you with level guaranteed payments for a period certain that you select. The minimum period certain you may select is 7 years and the maximum period certain is 15 years. If the annuitant is over age 70 when the contract is issued, the maximum period certain you may select is 85 less the annuitant's age when the contract is issued. ADDITIONAL CONTRIBUTIONS Additional contributions are not permitted under the contract. HOW WE ALLOCATE YOUR CONTRIBUTIONS Based on the amount of your single contribution and the period certain you select, we allocate your contribution among the fixed maturity options and, if necessary, to the separate account to provide for payments off maturity dates. You may not change this allocation. See "More information" for an example of payments. PAYMENTS Whether you choose monthly, quarterly, or annual payments, your payments normally will start one payment period from the contract date unless you elect otherwise as described under "Off maturity date payments" earlier in this prospectus. Your payments will always be made on the 15th day of the month. [Sidebar: The period certain may also be referred to as the "liquidity period" because you have access to your money through withdrawals or surrender of your contract.] WITHDRAWALS After the first contract year you may take withdrawals from your account value. You may take one withdrawal per contract year at any time during the contract year. The minimum amount you may withdraw at any time is $2,000 or 25% of your current cash value if it produces a larger amount. If you request to withdraw more than 90% of your current cash value we will treat it as a request for surrender of the contract for its cash value. See "Surrendering your contract to receive its cash value" later in this prospectus. Any amounts withdrawn from a fixed maturity option, before its maturity 21 PERIOD CERTAIN CONTRACT (CONTINUED) date, will result in a market value adjustment. See "Market value adjustment" earlier in this prospectus. Withdrawals made during the first seven contract years may be subject to a withdrawal charge. There is no free withdrawal amount under the period certain contracts. ALLOCATION OF WITHDRAWALS We will subtract your withdrawals pro rata from all remaining fixed maturity options to which your account value is allocated as well as from amounts held in the separate account to provide for payments off maturity dates. As a result, your payments will continue in reduced level amounts over the remaining term of the period certain. DEATH BENEFIT WHEN THE ANNUITANT DIES BEFORE PAYMENTS BEGIN. Generally, when we receive satisfactory proof of the annuitant's death before annuity payments begin we will pay the death benefit to the beneficiary named in your contract. See "Your beneficiary" later in this prospectus. If the joint owner who is also the annuitant dies, we will consider the surviving owner to be the beneficiary, taking the place of any other beneficiary designations. We determine the amount of the death benefit payable to your beneficiary as of the date we receive satisfactory proof of the annuitant's death and any required instructions for the method of payment. The death benefit is the greater of: (1) your account value; and (2) the sum of the fixed maturity amounts in each fixed maturity option plus any amounts held in the separate account to provide for payments off maturity dates. However, if you are the annuitant and your spouse is the joint owner or the designated beneficiary under the contract, your spouse may elect to receive the payments instead of taking the death benefit. The payments will then begin on the scheduled date. WHEN THE ANNUITANT DIES AFTER THE ANNUITY PAYMENTS BEGIN. If the annuitant dies after the payments begin, payments will continue to be made during the period certain to either the joint owner or the designated beneficiary, whichever applies. The payments will be made on the same schedule that was in effect before the annuitant's death. At the beneficiary's option, payments may be discontinued and paid in a single sum. If the single sum is elected within one year after the annuitant's death, the single sum will be equal to the greater of: (1) account value; and (2) the sum of the fixed maturity amounts in each fixed maturity option plus any amounts held in the separate account to provide for payments off maturity dates. 22 PERIOD CERTAIN CONTRACT (CONTINUED) WHEN THE NQ CONTRACT OWNER WHO IS NOT THE ANNUITANT DIES BEFORE THE ANNUITANT AND BEFORE THE ANNUITY PAYMENTS BEGIN. When you are not the annuitant under an NQ contract and you die before annuity payments begin, the beneficiary named to receive the death benefit upon the annuitant's death will automatically become the new contract owner. You may instead name a different person to become the new contract owner at any time by sending an acceptable written form to our Processing Office. If the contract is jointly owned and the first owner to die is not the annuitant, the surviving owner becomes the sole contract owner. This person will be considered the beneficiary for purposes of the distribution rules described below. The surviving owner automatically takes the place of any other beneficiary designation. Unless the surviving spouse of the deceased owner (or in the case of a joint ownership situation, the surviving spouse of the first owner to die) is the designated beneficiary for this purpose, the entire interest in the contract must be distributed under the following rules: o The cash value in the contract must be fully paid to the designated beneficiary (new owner) by December 31st of the fifth calendar year after your death (or in a joint ownership situation, the death of the first owner to die). o The new owner may elect instead to receive payments as a life annuity (or payments for a period certain of not longer than the new owner's life expectancy), with payments beginning no later than December 31st following the calendar year of the non-annuitant owner's death. Unless this alternative is elected, we will pay any cash value in the contract as a single sum on December 31st of the fifth calendar year following the year of your death (or the death of the first owner to die). o If the surviving spouse is the designated beneficiary or joint owner, the surviving spouse may elect to continue the contract. No distributions are required as long as the surviving spouse and the annuitant are living. WHEN THE NQ CONTRACT OWNER WHO IS NOT THE ANNUITANT DIES AFTER THE ANNUITY PAYMENTS BEGIN. If your death occurs after annuity payments begin, payments will continue to be made during the period certain to the designated beneficiary or in the case of joint owners to the surviving owner. In either case, this person becomes the new contract owner and receives the payments. OTHER BENEFITS AND FEATURES OF THE CONTRACTS HOW YOU CAN MAKE YOUR CONTRIBUTIONS Except as noted below, contributions must be by check drawn on a bank in the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made payable to Equitable Life. We do not accept third party checks endorsed to us except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to collection. We reserve the right to reject a payment if it is received in an unacceptable form. 23 For your convenience, we will accept initial and additional contributions, if applicable, by wire transmittal from certain broker-dealers who have agreements with us for this purpose. These methods of payment are discussed in detail under "More information" later in this prospectus. Your initial contribution must generally be accompanied by an application and any other form we need to process the payments. If any information is missing or unclear, we will try to obtain that information. If we are unable to obtain all of the information we require within five business days, we will inform the Equitable associate submitting the application, on your behalf. We will then return the contribution to you unless you specifically direct us to keep your contribution until we receive the required information. [Sidebar: Our "business day" generally is any day the New York Stock Exchange is open for trading.] SECTION 1035 EXCHANGES You may apply the value of an existing nonqualified deferred annuity contract (or life insurance or endowment contract) to purchase an Income Manager NQ contract in a tax-deferred exchange if you follow certain procedures as shown in the form that we require you to use. Also see "Tax information" later in this prospectus. YOUR RIGHT TO CANCEL WITHIN A CERTAIN NUMBER OF DAYS If for any reason you are not satisfied with your contract, you may return it to us for a refund. To exercise this cancellation right you must mail the contract directly to our Processing Office within 10 days after you receive it. In some states, this "free look" period may be longer. Generally, your refund will equal your account value under the contract. Your account value reflects any positive or negative market value adjustments in the fixed maturity options through the date we receive your contract. Under the life annuity with a period certain your refund will also include any amount applied to the life contingent annuity. However, some states require that we refund the full amount of your contribution (not including any investment gain or loss). For IRA contracts returned to us within seven days after you receive it, we are required to refund the full amount of your contribution. If you cancel your contract during the free look period, we may require that you wait six months before you may apply for a contract with us again. Please see "Tax information" for possible consequences of cancelling your contract. SURRENDERING YOUR CONTRACT TO RECEIVE ITS CASH VALUE You may surrender your contract to receive its cash value at any time during the period certain. Your cash value is equal to your account value minus any withdrawal charge. There is no free withdrawal amount if you surrender your contract. 24 For a surrender to be effective, we must receive your written request and your contract at our Processing Office. We will determine your cash value on the date we receive the required information. All benefits under your contract will terminate as of that date unless you have elected the life contingent annuity. See "Surrendering your life annuity with a period certain contract" earlier in this prospectus. WHEN TO EXPECT PAYMENTS Generally, we will fulfill requests for payments within seven days of the transaction to which the request relates. We can defer payment of any portion of the account value (other than for death benefits) for up to six months while you are living. We also may defer payments for any reasonable amount of time (not to exceed 15 days) while we are waiting for a contribution check to clear. CHARGES WITHDRAWAL CHARGES A withdrawal charge applies in two circumstances: (1) if you make a withdrawal during a contract year and it exceeds any applicable free withdrawal amount, described below, or (2) if you surrender your contract to receive its cash value. The withdrawal charge equals a percentage of each contribution (or single contribution) withdrawn. The percentage that applies depends on how long each contribution has been invested in the contract. We determine the withdrawal charge separately for each contribution according to the following table:
CONTRACT YEAR 1 2 3 4 5 6 7 8+ - ---------------------------------------------------------------------------------------------------------------------- PERCENTAGE OF CONTRIBUTION 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
For purposes of calculating the withdrawal charge, we treat the contract year in which we receive a contribution as "contract year 1." Amounts withdrawn up to the free withdrawal amount are not considered withdrawal of any contribution. We also treat contributions that have been invested the longest as being withdrawn first. We treat contributions as withdrawn before earnings for purposes of calculating the withdrawal charge. However, federal income tax rules treat earnings under your contract as withdrawn first. See "Tax information." We deduct the withdrawal charge from your account value in proportion to the amount withdrawn from each fixed maturity option and any amounts held in the separate account to provide for payments off maturity dates. In order to give you the exact dollar amount of the withdrawal you request, we deduct the amount of the withdrawal and the amount of the withdrawal charge from your account value. Any amount deducted to pay a withdrawal charge is also subject to a withdrawal charge. The withdrawal charge does not apply to the 10% free withdrawal amount described below. 25 10% free withdrawal amount applies only to life annuity with a period certain contracts. It does not apply to your period certain contract or if you surrender your contract to receive its cash value. Under life annuity with a period certain contracts, each contract year you can withdraw up to 10% of your account value without paying a withdrawal charge. This 10% free withdrawal amount is determined using your account value on the most recent contract date anniversary. AMOUNTS APPLIED FROM OTHER CONTRACTS ISSUED BY EQUITABLE LIFE LIFE ANNUITY WITH A PERIOD CERTAIN CONTRACT. If you own certain types of contracts that we issue, you may apply the account value under those contracts to purchase the life annuity with a period certain contract provided the issue age and payment restrictions for the new contract are met. If you apply your account value at a time when the dollar amount of the withdrawal charge under such other contract is greater than 2% of remaining contributions (after withdrawals), we reserve the right to waive the remaining withdrawal charge. However, a new withdrawal charge schedule will apply under the new contract. For purposes of the withdrawal charge schedule, the year in which your account value is applied under the life annuity with a period certain contract will be "contract year 1." If you apply your account value when the dollar amount of the withdrawal charge is 2% or less, we reserve the right to waive the withdrawal charges under the new contract. You should consider the timing of your purchase as it relates to the potential for withdrawal charges under the life annuity with a period certain contract. PERIOD CERTAIN CONTRACT. If you own certain types of contracts that we issue, you may apply your account value to purchase the period certain contract once any withdrawal charges are no longer in effect under the other contracts. No withdrawal charges will apply under the period certain contract. To purchase any Income Manager contracts we require that you return your original contract to us. A new Income Manager contract will be issued putting this annuity into effect. CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES We deduct a charge for applicable taxes such as premium taxes that may be imposed in your state. We deduct the charge from your contributions. The current tax charge that might be imposed varies by state and ranges from 0% to 3.5% (1% in Puerto Rico and 5% in the U.S. Virgin Islands). GROUP OR SPONSORED ARRANGEMENTS For certain group or sponsored arrangements, we may reduce the withdrawal charge or change the minimum initial contribution requirements. We also may increase the rates to maturity for the fixed maturity options and reduce purchase rates for the life contingent annuity. Group arrangements include those in which a trustee or an employer, for example, purchases contracts covering a group of individuals on a group basis. Sponsored arrangements include those in which an employer allows us to sell contracts to its employees or retirees on an individual basis. IRA contracts are not available for group arrangements. 26 Our costs for sales, administration, and mortality generally vary with the size and stability of the group or sponsoring organization, 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, such as requirements for size and number of years in existence. Group or sponsored arrangements that have been set up solely to buy contracts or that have been in existence less than six months will not qualify for reduced charges. We will make these and any similar reductions according to our rules in effect when we approve a contract for issue. We may change these rules from time to time. Any variation in the withdrawal charge will reflect differences in costs or services and will not be unfairly discriminatory. Group or sponsored arrangements may be governed by federal income tax rules, the Employee Retirement Income Security Act of 1974, or both. We make no representations with regard to the impact of these and other applicable laws on such programs. We recommend that employers, trustees, and others purchasing or making contracts available for purchase under such programs seek the advice of their own legal and benefits advisers. OTHER DISTRIBUTION ARRANGEMENTS We may reduce or eliminate withdrawal charges when sales are made in a manner that results in savings of sales and administrative expenses. This may include sales through persons who are compensated by clients for recommending investments and who receive no commission or reduced commissions in connection with the sale of the contracts. We will not permit a reduction or elimination of the withdrawal charge where it will be unfairly discriminatory. PAYMENT OF DEATH BENEFIT YOUR BENEFICIARY You designate your beneficiary when you apply for your contract. You may change your beneficiary at any time. The change will be effective on the date the written request for change is signed. CHOOSING ANNUITY PAYOUT OPTIONS If you die before annuity payments begin, your beneficiary may elect to apply the death benefit to an annuity payout option. We offer several annuity payout options to choose from. Restrictions apply, depending on the type of contract you own. TRADITIONAL ANNUITY PAYOUT OPTIONS Your beneficiary can choose from among the following traditional annuity payout options: o Life annuity: An annuity that guarantees payments for the rest of the annuitant's life. Payments end with the last monthly payment before the annuitant's death. Because there is no death benefit with this payout option, it provides the highest monthly payment of any of the life annuity options, so long as the annuitant is living. 27 o Life annuity -- period certain: An annuity that guarantees payments for the rest of the annuitant's life, and, if the annuitant dies before the end of a selected period of time ("period certain"), payments to the beneficiary will continue for the balance of the period certain. o Life annuity -- refund certain: An annuity that guarantees payments for the rest of the annuitant's life. If the annuitant dies before the amount applied to purchase the annuity option has been recovered, payments continue to the beneficiary until that amount has been recovered. o Period certain annuity: An annuity that guarantees payments for a specific period of time, usually 5, 10, 15 or 20 years. This option does not guarantee payments for the rest of the annuitant's life. It does not permit any repayment of the unpaid principal, so you cannot elect to receive part of the payments as a single sum payment with the rest paid in monthly annuity payments. The life annuity, life annuity - period certain and the life annuity - refund certain are available on either single life or joint and survivor life basis. The joint and survivor life annuity guarantees payments for the rest of the annuitant's life and, after the annuitant's death, continuation of payments to the survivor. All of the above traditional annuity payout options are available as fixed annuities. With fixed annuities, we guarantee fixed annuity payments that will be based either on the tables of guaranteed annuity payments in your contract or on our then current annuity rates, whichever is more favorable for the annuitant. When the beneficiary selects a payout option, we will issue a separate written agreement confirming the beneficiary's right to receive annuity payments. We require the return of the contract before annuity payments begin. The amount of the annuity payments will depend on the amount applied to purchase the annuity, the type of annuity chosen and, in the case of a life annuity, the annuitant's age (or the annuitant's and joint annuitant's ages) and in certain instances, the sex of the annuitant(s). Once a payout option has been chosen and payments begin, no change can be made. At the time that you elect a payout option if the amount to be applied is less than $2,000, or the initial payment under the form elected is less than $20 monthly, we reserve the right to pay the account value in a single sum rather than as payments under the payout option chosen. TAX INFORMATION OVERVIEW In this part of the prospectus, we discuss the current federal income tax rules that generally apply to Income Manager contracts owned by United States taxpayers. The tax rules can differ, 28 depending on the type of contract, whether NQ or Traditional IRA. Therefore, we discuss the tax aspects of each type of contract separately. We cannot provide detailed information on all tax aspects of the contracts. Moreover, the tax aspects that apply to a particular person's contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Transfers of the contract, rights under the contract, or payments under the contract may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax adviser before your purchase. Federal income tax rules include the United States laws in the Internal Revenue Code, and Treasury Department Regulations and Internal Revenue Service ("IRS") interpretations of the Internal Revenue Code. These tax rules may change. We cannot predict whether, when, or how these rules could change. Any change could affect contracts purchased before the change. TAXATION OF NONQUALIFIED ANNUITIES CONTRIBUTIONS You may not deduct the amount of your contributions for a nonqualified annuity contract. CONTRACT EARNINGS Generally, you are not taxed on contract earnings until you receive a distribution from your contract, whether as a withdrawal, or as an annuity payment. This contract is intended to be a payout annuity. However, because you may be able to delay beginning payments, rules governing deferred annuity contracts could apply. Earnings in a deferred annuity contract are taxable even without a distribution if you transfer a contract, for example, as a gift to someone other than your spouse (or former spouse). All nonqualified deferred annuity contracts that we issue to you during the same calendar year are linked together and treated as one contract when figuring out the taxable amount of any distribution from any of those contracts. Corporations, partnerships, trusts and other non-natural persons generally cannot defer the taxation of current income credited to the contract unless an exception under the federal income tax rules apply. There is an exception for immediate annuities. [Sidebar: Immediate annuities are generally annuities in which payments begin within one year from purchase and provide for a series of substantially equal payments made at least annually.] ANNUITY PAYMENTS Once annuity payments begin, a portion of each payment is taxable as ordinary income. You get the remaining portion without paying taxes on it. This is your "investment in the contract." Generally, your investment in the contract equals the contributions you made, less any amounts you previously withdrew that were not taxable. 29 The tax-free portion of each payment is determined by (1) dividing your investment in the contract by the total amount you are expected to receive out of the contract, and (2) multiplying the result by the amount of the payment. Once you have received the amount of your investment in the contract, all payments after that are fully taxable. If payments under a life annuity stop because the annuitant dies, there is an income tax deduction for any unrecovered investment in the contract. PAYMENTS MADE BEFORE ANNUITY PAYMENTS BEGIN If you make withdrawals before annuity payments begin under your contract, they are taxable to you as ordinary income if there are earnings in the contract. Generally, earnings are your account value less your investment in the contract. If you withdraw an amount which is more than the earnings in the contract as of the date of the withdrawal, the balance of the distribution is treated as a return of your investment in the contract and is not taxable. CONTRACTS PURCHASED THROUGH EXCHANGES You may purchase your NQ contract through an exchange of another contract. Normally, exchanges of contracts are taxable events. The exchange will not be taxable under Section 1035 of the Internal Revenue Code if: o The contract which is the source of the funds you are using to purchase the NQ contract is another nonqualified deferred annuity contract (or life insurance or endowment contract). o The owner and the annuitant are the same under the source contract and the Income Manager contract (if you are using a life insurance or endowment contract the owner and the insured must be the same on both sides of the exchange transaction). The tax basis of the source contract carries over to the Income Manager NQ contract. SURRENDERS If you surrender or cancel the NQ contract, the distribution is taxable as ordinary income (not capital gain) to the extent it exceeds your investment in the contract. WITHDRAWALS MADE AFTER ANNUITY PAYMENTS BEGIN If you make a withdrawal that terminates all periodic payments due, it will be taxable as a complete surrender as discussed above. If you make a withdrawal that does not terminate all periodic payments due, then a portion of the remaining reduced payments will be eligible for tax-free recovery of investment. Also, a portion of the withdrawal may not be taxable. 30 DEATH BENEFIT PAYMENT MADE TO A BENEFICIARY AFTER YOUR DEATH For the rules applicable to death benefits, see "Payment of death benefit" and "When the NQ contract owner who is not the annuitant dies before the annuitant and before the annuity payments begin" earlier in this prospectus. The tax treatment of a death benefit taken as a single sum is generally the same as the tax treatment of a withdrawal from or surrender of your contract. The tax treatment of a death benefit taken as annuity payments is generally the same as the tax treatment of annuity payments under your contract. EARLY DISTRIBUTION PENALTY TAX If you take distributions before you are age 59 1/2 a penalty tax of 10% of the taxable portion of your distribution applies in addition to the income tax. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; or o because you are disabled (special federal income tax definition); or o in the form of substantially equal periodic annuity payments for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and a beneficiary; or o payments under an immediate annuity. Periodic annuity payments we make to you from the life annuity with a period certain while you are under age 59 1/2 should qualify for the "substantially equal payments for life" exception noted above. However, this exception may not apply if you take a withdrawal, surrender your contract or change the payment pattern in any way. SPECIAL RULES FOR NQ CONTRACTS ISSUED IN PUERTO RICO Under current law we treat income from NQ contracts as U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is excludable from U.S. taxation. Income from NQ contracts is also subject to Puerto Rico tax. The computation of the taxable portion of amounts distributed from a contract may differ in the two jurisdictions. Therefore, you might have to file both U.S. and Puerto Rico tax returns, showing different amounts of income from the contract for each tax return. Puerto Rico generally provides a credit against Puerto Rico tax for U.S. tax paid. Depending on your personal situation and the timing of the different tax liabilities, you may not be able to take full advantage of this credit. 31 INDIVIDUAL RETIREMENT ARRANGEMENTS ("IRAS") GENERAL "IRA" stands for individual retirement arrangement. There are two basic types of such arrangements, individual retirement accounts and individual retirement annuities. In an individual retirement account, a trustee or custodian holds the assets for the benefit of the IRA owner. The assets can include mutual funds and certificates of deposit. In an individual retirement annuity, an insurance company issues an annuity contract that serves as the IRA. There are several types of IRAs, as follows: o "Traditional IRAs," typically funded on a pre-tax basis; o Roth IRAs, first available in 1998, funded on an after-tax basis. Regardless of the type of IRA, your ownership interest in the IRA cannot be forfeited. You or your beneficiaries who survive you are the only ones who can receive the IRA's benefits or payments. You can hold your IRA assets in as many different accounts and annuities as you would like, as long as you meet the rules for setting up and making contributions to IRAs. However, if you own multiple IRAs, you may be required to combine IRA values or contributions for tax purposes. For further information about individual retirement arrangements, you can read Internal Revenue Service Publication 590 ("Individual Retirement Arrangements (IRAs)"). This Publication is usually updated annually, and can be obtained from any IRS district office or the IRS website (www.irs.ustreas.gov). The Income Manager IRA contract is designed to qualify as an "individual retirement annuity" under Section 408(b) of the Internal Revenue Code. This prospectus contains the information that the IRS requires you to have before you purchase an IRA. This section of the prospectus covers some of the special tax rules that apply to IRAs. The Income Manager IRA contract has been approved by the IRS as to form for use as a Traditional IRA. This IRS approval is a determination only as to the form of the annuity. It does not represent a determination of the merits of the annuity as an investment. The IRS approval does not address every feature possibly available under the Income Manager IRA contract. CANCELLATION You can cancel an Income Manager IRA contract by following the directions under "Your right to cancel within a certain number of days" earlier in the prospectus. If you cancel an IRA contract, we may have to withhold tax, and we must report the transaction to the IRS. A contract cancellation could have an unfavorable tax impact. 32 TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES (TRADITIONAL IRAS) CONTRIBUTIONS TO TRADITIONAL IRAS Individuals may make three different types of contributions to a Traditional IRA: o tax-free "rollover" contributions; or o direct custodian-to-custodian transfers from other Traditional IRAs ("direct transfers"); or o "regular" contributions out of earned income or compensation. We require that your initial contribution to the Income Manager Traditional IRA contract must be either a rollover or a direct custodian-to-custodian transfer. See "Rollovers and transfers" below. Any additional contributions you make may be rollovers, direct transfers, or "regular" Traditional IRA contributions. LIMITS ON CONTRIBUTIONS Generally, $2,000 is the maximum amount that you may contribute to all IRAs in any taxable year. When your earnings are below $2,000, your earned income or compensation for the year is the most you can contribute. This $2,000 limit does not apply to rollover contributions or direct custodian-to-custodian transfers into a Traditional IRA. You cannot make regular Traditional IRA contributions for the tax year in which you reach age 70 1/2 or any tax year after that. SPECIAL RULES FOR SPOUSES If you are married and file a joint income tax return, you and your spouse may combine your compensation to determine the amount of regular contributions you are permitted to make to Traditional IRAs. Even if one spouse has no compensation or compensation under $2,000, married individuals filing jointly can contribute up to $4,000 for any taxable year to any combination of Traditional IRAs. The maximum amount may be less if earned income is less and the other spouse has made IRA contributions. No more than a combined total of $2,000 can be contributed annually to either spouse's Traditional IRAs. Each spouse owns his or her Traditional IRAs even if the other spouse funded the contributions. A working spouse age 70 1/2 or over can contribute up to the lesser of $2,000 or 100% of "earned income" to a Traditional IRA for a non-working spouse until the year in which the non-working spouse reaches age 70 1/2. DEDUCTIBILITY OF CONTRIBUTIONS The amount of Traditional IRA contributions that you can deduct for a tax year depends on whether you are covered by an employer-sponsored tax-favored retirement plan, as defined under special federal income tax rules. Your Form W-2 will indicate whether or not you are covered by such a retirement plan. IF YOU ARE NOT COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, you can make fully deductible contributions to your Traditional IRAs for each tax year up to $2,000 or, if less, your earned income. 33 IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your adjusted gross income (AGI) is BELOW THE LOWER DOLLAR FIGURE IN A PHASE-OUT RANGE, you can make fully deductible contributions to your Traditional IRAs. For each tax year, your fully deductible contribution can be up to $2,000 or, if less, your earned income. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls within a PHASE-OUT range, you can make PARTIALLY DEDUCTIBLE CONTRIBUTIONS to your Traditional IRAs. IF YOU ARE COVERED BY A RETIREMENT PLAN DURING ANY PART OF THE YEAR, and your AGI falls ABOVE THE HIGHER FIGURE IN THE PHASE-OUT RANGE, you may not deduct any of your regular contribution to your Traditional IRAs. If you are single and covered by a retirement plan during any part of the taxable year, the deduction for IRA contributions phases out with AGI between $31,000 and $41,000 in 1999. This range will increase every year until 2005 when the range is $50,000-$60,000. If you are married and file a joint return, and you are covered by a retirement plan during any part of the taxable year, the deduction for Traditional IRA contributions phases out with AGI between $51,000 and $61,000 in 1999. This range will increase every year until 2007 when the range is $80,000-$100,000. Married individuals filing separately and living apart at all times are not considered married for purposes of this deductible contribution calculation. Generally, the active participation in an employer-sponsored retirement plan of an individual is determined independently for each spouse. Where spouses have "married filing jointly" status, however, the maximum deductible Traditional IRA contribution for an individual who is not an active participant (but whose spouse is an active participant) is phased out for taxpayers with AGI of between $150,000 and $160,000. To determine the deductible amount of the contribution in 1999, you determine AGI and subtract $31,000 if you are single, or $51,000 if you are married and file a joint return with your spouse. The resulting amount is your excess AGI. You then determine the limit on the deduction for Traditional IRA contributions using the following formula: ($10,000-excess AGI) times $2,000 equals the adjusted -------------------- divided by x (or earned = deductible $10,000 income, if less) contribution limit NONDEDUCTIBLE CONTRIBUTIONS If you are not eligible to deduct part or all of the Traditional IRA contribution, you may still make nondeductible contributions on which earnings will accumulate on a tax-deferred basis. The combined deductible and nondeductible contributions to your Traditional IRA (or the non-working spouse's Traditional IRA) may not, however, exceed the maximum $2,000 per person limit. See "Excess contributions" below. You must keep your own records of deductible and nondeductible 34 contributions in order to prevent double taxation on the distribution of previously taxed amounts. See "Withdrawals, payments and transfer of funds out of Traditional IRAs" below. If you are making nondeductible contributions in any taxable year, or you have made nondeductible contributions to a Traditional IRA in prior years and are receiving distributions from any Traditional IRA, you must file the required information with the IRS. Moreover, if you are making nondeductible Traditional IRA contributions, you must retain all income tax returns and records pertaining to such contributions until interests in all Traditional IRAs are fully distributed. WHEN YOU CAN MAKE CONTRIBUTIONS If you file your tax returns on a calendar year basis like most taxpayers, you have until the April 15 return filing deadline (without extensions) of the following calendar year to make your regular Traditional IRA contributions for a tax year. EXCESS CONTRIBUTIONS Excess contributions to IRAs are subject to a 6% excise tax for the year in which made and for each year after until withdrawn. The following are excess contributions to IRAs: o "regular" contributions of more than $2,000; o "regular" contributions of more than earned income for the year, if that amount is under $2,000; o "regular" contributions to a Traditional IRA made after you reach age 70 1/2; and o rollover contributions of amounts which are not eligible to be rolled over. For example, after-tax contributions to a qualified plan or minimum distributions required to be made after age 70 1/2. You can avoid the excise tax by withdrawing an excess contribution (rollover or "regular") before the due date (including extensions) for filing your federal income tax return for the year. If it is an excess "regular" Traditional IRA contribution, you cannot take a tax deduction for the amount withdrawn. You do not have to include the excess contribution withdrawn as part of your income. It is also not subject to the 10% additional penalty tax on early distributions discussed below under "Early distribution penalty tax." You do have to withdraw any earnings that are attributed to the excess contribution. The withdrawn earnings would be included in your gross income and could be subject to the 10% penalty tax. Even after the due date for filing your return, you may withdraw an excess rollover contribution, without income inclusion or 10% penalty, if: (1) the rollover was from a qualified retirement plan to a Traditional IRA; (2) the excess contribution was due to incorrect information that the plan provided; and (3) you took no tax deduction for the excess contribution. 35 ROLLOVERS AND TRANSFERS Rollover contributions may be made to a Traditional IRA from these sources: o qualified plans; o TSAs (including Internal Revenue Code Section 403(b)(7) custodial accounts); and o other Traditional IRAs. Any amount contributed to a Traditional IRA after you reach age 70 1/2 must be net of your required minimum distribution for the year in which the rollover or direct transfer contribution is made. ROLLOVERS FROM QUALIFIED PLANS OR TSAS There are two ways to do rollovers: o Do it yourself You actually receive a distribution that can be rolled over and you roll it over to a Traditional IRA within 60 days after the date you receive the funds. The distribution from your qualified plan or TSA will be net of 20% mandatory federal income tax withholding. If you want, you can replace the withheld funds yourself and roll over the full amount. o Direct rollover You tell your qualified plan trustee or TSA issuer/custodian/fiduciary to send the distribution directly to your Traditional IRA issuer. Direct rollovers are not subject to mandatory federal income tax withholding. All distributions from a TSA or qualified plan are eligible rollover distributions and may be rolled over tax-free to an IRA unless the distribution is: o only after-tax contributions you made to the plan; o "required minimum distributions" after age 70 1/2 or separation from service; o substantially equal periodic payments made at least annually for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary; o substantially equal periodic payments made for a specified period of 10 years or more; o a hardship withdrawal; o corrective distributions which fit specified technical tax rules; o loans that are treated as distributions; o a death benefit payment to a beneficiary who is not your surviving spouse; and o a qualified domestic relations order distribution to a beneficiary who is not your current spouse or former spouse. 36 ROLLOVERS FROM TRADITIONAL IRAS TO TRADITIONAL IRAS You may roll over amounts from one Traditional IRA to one or more of your other Traditional IRAs if you complete the transaction within 60 days after you receive the funds. You may make such a rollover only once in every 12-month period for the same funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not rollover transactions. You can make these more frequently than once in every 12-month period. The surviving spouse beneficiary of a deceased individual can roll over or directly transfer an inherited Traditional IRA to one or more other Traditional IRAs. Also, in some cases, Traditional IRAs can be transferred on a tax-free basis between spouses or former spouses as a result of a court ordered divorce or separation decree. WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS No federal income tax law restrictions on withdrawals You can withdraw any or all of your funds from a Traditional IRA at any time. You do not need to wait for a special event like retirement. TAXATION OF PAYMENTS Earnings in Traditional IRAs are not subject to federal income tax until you or your beneficiary receive them. Taxable payments or distributions include withdrawals from your contract, surrender of your contract and annuity payments from your contract. Death benefits are also taxable. Except as discussed below, the total amount of any distribution from a Traditional IRA must be included in your gross income as ordinary income. If you have ever made nondeductible IRA contributions to any Traditional IRA (it does not have to be to this particular Traditional IRA contract), those contributions are recovered tax free when you get distributions from any Traditional IRA. You must keep permanent tax records of all of your nondeductible contributions to Traditional IRAs. At the end of any year in which you have received a distribution from any Traditional IRA, you calculate the ratio of your total nondeductible Traditional IRA contributions (less any amounts previously withdrawn tax free) to the total account balances of all Traditional IRAs you own at the end of the year plus all Traditional IRA distributions made during the year. Multiply this by all distributions from the Traditional IRA during the year to determine the nontaxable portion of each distribution. In addition, a distribution is not taxable if: o the amount received is a withdrawal of excess contributions, as described under "Excess contributions" above; o the entire amount received is rolled over to another Traditional IRA (see "Rollovers and transfers" above); or 37 o in certain limited circumstances, where the Traditional IRA acts as a "conduit," you roll over the entire amount into a qualified plan or TSA that accepts rollover contributions. To get this "conduit" Traditional IRA treatment: - the source of funds you used to establish the Traditional IRA must have been a rollover contribution from a qualified plan, and - the entire amount received from the Traditional IRA (including any earnings on the rollover contribution) must be rolled over into another qualified plan within 60 days of the date received. Similar rules apply in the case of a TSA. However, you may lose conduit treatment, if you make an eligible rollover distribution contribution to a Traditional IRA and you commingle this contribution with other contributions. In that case, you may not be able to roll over these eligible rollover distribution contributions and earnings to another qualified plan or TSA at a future date. Since the Income Manager annuity is intended to be a payout contract, it may not be an appropriate contract if you plan to use it as a conduit IRA. Distributions from a Traditional IRA are not eligible for favorable five-year averaging (or, in some cases, ten-year averaging and long-term capital gain treatment) available to certain distributions from qualified plans. REQUIRED MINIMUM DISTRIBUTIONS Lifetime required minimum distributions You must start taking annual distributions from your Traditional IRAs beginning at age 70 1/2. When you have to take the first required minimum distribution The first required minimum distribution is for the calendar year in which you turn age 70 1/2. You have the choice to take this first required minimum distribution during the calendar year you actually reach age 70 1/2, or to delay taking it until the first three-month period in the next calendar year (January 1 - April 1). Distributions must start no later than your "required beginning date," which is April 1st of the calendar year after the calendar year in which you turn age 70 1/2. If you choose to delay taking the first annual minimum distribution, then you will have to take two minimum distributions in that year - -- the delayed one for the first year and the one actually for that year. Once minimum distributions begin, they must be made at some time each year. How you can calculate required minimum distributions There are two approaches to taking required minimum distributions -- "account-based" or "annuity-based." Account based method. If you choose an "account-based" method, you divide the value of your Traditional IRA as of December 31st of the past calendar year by a life expectancy factor from IRS 38 tables. This gives you the required minimum distribution amount for that particular IRA for that year. The required minimum distribution amount will vary each year as the account value and your life expectancy factors change. You have a choice of life expectancy factors, depending on whether you choose a method based only on your life expectancy, or the joint life expectancies of you and another individual. You can decide to "recalculate" your life expectancy every year by using your current life expectancy factor. You can decide instead to use the "term certain" method, where you reduce your life expectancy by one every year after the initial year. If your spouse is your designated beneficiary for the purpose of figuring out annual account-based required minimum distributions, you can also annually "recalculate" your spouse's life expectancy if you want. If you choose someone who is not your spouse as your designated beneficiary for the purpose of figuring out annual account-based required minimum distributions, you have to use the "term certain" method of calculating that person's life expectancy. If you pick a nonspouse designated beneficiary, you may also have to do another special calculation. You can later apply your Traditional IRA funds to a life annuity-based payout. You can only do this if you already chose to recalculate your life expectancy annually (and your spouse's life expectancy if you select a spousal joint annuity). Annuity based method. If you choose an "annuity-based" method, you do not have to do annual calculations. You apply the account value to an annuity payout for your life or the joint lives of you and a designated beneficiary, or for a period certain not extending beyond applicable life expectancies. Do you have to pick the same method to calculate your required minimum distributions for all of your Traditional IRAs and other retirement plans? No. If you want, you can choose a different method and a different beneficiary for each of your Traditional IRAs and other retirement plans. For example, you can choose an annuity payout from one IRA, a different annuity payout from a qualified plan, and an account-based annual withdrawal from another IRA. Will we pay you the annual amount every year from your Traditional IRA based on the method you choose? No, we do not automatically make distributions from your contract before your annuity payments begin. What if you take more than you need to for any year? The required minimum distribution amount for your Traditional IRAs is calculated on a year-by-year basis. There are no carry-back or carry-forward provisions. Also, you cannot apply required minimum distribution amounts you take from your qualified plans to the amounts you have to take from your Traditional IRAs and vice-versa. However, the IRS will let you figure out the required minimum distribution for each Traditional IRA that you maintain, using the method that you picked for that particular IRA. You can add these required minimum distribution amount calculations together. As long as the total amount you take out every year satisfies your overall Traditional IRA 39 required minimum distribution amount, you may choose to take your annual required minimum distribution from any one or more Traditional IRAs that you own. What if you take less than you need to for any year? Your IRA could be disqualified, and you could have to pay tax on the entire value. Even if your IRA is not disqualified, you could have to pay a 50% penalty tax on the shortfall (required amount for Traditional IRAs less amount actually taken). It is your responsibility to meet the required minimum distribution rules. We will remind you when our records show that your age 70 1/2 is approaching. If you do not select a method with us, we will assume you are taking your required minimum distribution from another Traditional IRA that you own. What are the required minimum distribution payments after you die? If you die after either (a) the start of annuity payments, or (b) your required beginning date, your beneficiary must receive payment of the remaining values in the contract at least as rapidly as under the distribution method before your death. In some circumstances, your surviving spouse may elect to become the owner of the Traditional IRA and halt distributions until he or she reaches age 70 1/2. If you die before your required beginning date and before annuity payments begin, federal tax rules require complete distribution of your entire value in the contract within five years after your death. Payments to a designated beneficiary over the beneficiary's life or over a period certain that does not extend beyond the beneficiary's life expectancy are also permitted, if these payments start within one year of your death. A surviving spouse beneficiary can also (a) delay starting any payments until you would have reached age 70 1/2 or (b) roll over your Traditional IRA into his or her own Traditional IRA. IMPORTANT INFORMATION ABOUT MINIMUM DISTRIBUTIONS UNDER YOUR CONTRACT Although the life contingent annuity portion of the life annuity with a period certain does not have a cash value, it will be assigned a value for tax purposes. This value will generally be changed each year. When you determine the amount of account-based required minimum distributions from your IRA this value must be included. This must be done before annuity payments begin even though the life contingent annuity may not be providing a source of funds to satisfy the required minimum distribution. You will generally be required to determine your required minimum distribution by annually recalculating your life expectancy. Recalculation is no longer required once the only payments you or your spouse receive are under the life contingent annuity. If you surrender your contract, or withdraw any remaining account value before your annuity payments begin, it may be necessary for you to satisfy your required minimum distribution by moving forward the start date of payments under your life contingent annuity. Or to the extent available, you have to take distributions from other IRA funds you may have. Or, you may convert your IRA life contingent annuity under the IRA contract to a nonqualified life contingent annuity. This would be viewed as a distribution of the value of the life contingent annuity from your IRA, and therefore, would be a taxable event. However, since the life contingent annuity would no longer be part of the IRA, you would not have to include its value when determining future required minimum distributions. 40 If you have elected a joint and survivor form of the life contingent annuity, the joint annuitant must be your spouse. You must determine your required minimum distribution by annually recalculating both your life expectancy and your spouse's life expectancy. Once the only payments you or your spouse are receiving are under the life contingent annuity recalculation is no longer required. In the event of your death or the death of your spouse the value of such annuity will change. For this reason, it is important that someone tell us if you or your spouse dies before the life contingent annuity has started payments so that a lower valuation can be made. Otherwise, a higher tax value may result in an overstatement of the amount that would be necessary to satisfy your required minimum distribution amount. Allocation of funds to the life contingent annuity may prevent the contract from later receiving "conduit" IRA treatment. SUCCESSOR ANNUITANT AND OWNER If your spouse is the sole primary beneficiary and elects to become the successor annuitant and owner, no death benefit is payable until your surviving spouse's death. PAYMENTS TO A BENEFICIARY AFTER YOUR DEATH IRA death benefits are taxed the same as IRA distributions. BORROWING AND LOANS ARE PROHIBITED TRANSACTIONS You cannot get loans from a Traditional IRA. You cannot use a Traditional IRA as collateral for a loan or other obligation. If you borrow against your IRA or use it as collateral, its tax-favored status will be lost as of the first day of the tax year in which this prohibited event occurs. If this happens, you must include the value of the Traditional IRA in your federal gross income. Also, the early distribution penalty tax of 10% will apply if you have not reached age 59 1/2 before the first day of that tax year. EARLY DISTRIBUTION PENALTY TAX A penalty tax of 10% of the taxable portion of a distribution applies to distributions from a Traditional IRA made before you reach age 59 1/2. The extra penalty tax does not apply to pre-age 59 1/2 distributions made: o on or after your death; o because you are disabled (special federal income tax definition); o used to pay certain extraordinary medical expenses (special federal income tax definition); o used to pay medical insurance premiums for unemployed individuals (special federal income tax definition); o used to pay certain first-time home buyer expenses (special federal income tax definition); o used to pay certain higher education expenses (special federal income tax definition); or 41 o in the form of substantially equal periodic payments made at least annually over your life (or your life expectancy), or over the joint lives of you and your beneficiary (or your joint life expectancy) using an IRS-approved distribution method. Will payments we make to you from the life annuity with a period certain while you are under age 59 1/2 qualify as substantially equal payments for life? Same as nonqualified annuities under "Early distribution penalty tax." FEDERAL AND STATE INCOME TAX WITHHOLDING AND INFORMATION REPORTING We must withhold federal income tax from distributions from annuity contracts. You may be able to elect out of this income tax withholding in some cases. Generally, we do not have to withhold if your distributions are not taxable. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of your distribution. Any income tax withheld is a credit against your income tax liability. If you do not have sufficient income tax withheld or do not make sufficient estimated income tax payments, you may incur penalties under the estimated income tax rules. You must file your request not to withhold in writing before the payment or distribution is made. Our Processing Office will provide forms for this purpose. You cannot elect out of withholding unless you provide us with your correct Taxpayer Identification Number and a United States residence address. You cannot elect out of withholding if we are sending the payment out of the United States. We might have to withhold on amounts we pay under a free look or cancellation. Special withholding rules apply to foreign recipients and United States citizens residing outside the United States. We do not discuss these rules here. Certain states have indicated that state income tax withholding will also apply to payments from the contracts made to residents. In some states, you may elect out of state withholding, even if federal withholding applies. Generally, an election out of federal withholding will also be considered an election out of state withholding. If you need more information concerning a particular state or any required forms, call our Processing Office at their toll-free number. If you are receiving periodic and/or non-periodic payments, you will be notified of the withholding requirements and of your right to make withholding elections. FEDERAL INCOME TAX WITHHOLDING ON PERIODIC ANNUITY PAYMENTS We withhold differently on "periodic" and "non-periodic" payments. For a periodic annuity payment, for example, unless you specify a different number of withholding exemptions, we withhold assuming that you are married and claiming three withholding exemptions. If you do not give us your correct Taxpayer Identification Number, we withhold as if you are single with no exemptions. Based on the assumption that you are married and claiming three withholding exemptions, if you receive less than $14,700 in periodic annuity payments in 1999 your payments will generally be exempt from federal income tax withholding. You could specify a different choice of withholding exemption or request that tax be withheld. Your withholding election remains effective unless and until you revoke it. You may revoke or change your withholding election at any time. 42 FEDERAL INCOME TAX WITHHOLDING ON NON-PERIODIC ANNUITY PAYMENTS For a non-periodic distribution (total surrender or partial withdrawal) we generally withhold at a flat 10% rate. We apply that rate to the taxable amount in the case of nonqualified contracts, and to the payment amount in the case of IRAs. MORE INFORMATION ABOUT OUR FIXED MATURITY OPTIONS HOW WE DETERMINE THE MARKET VALUE ADJUSTMENT. We use the following procedure to calculate the market value adjustment (up or down) we make if you withdraw all of your value from a fixed maturity option before its maturity date. (1) We determine the market adjusted amount on the date of the withdrawal as follows: (a) We determine the fixed maturity amount that would be payable on the maturity date, using the rate to maturity for the fixed maturity option. (b) We determine the period remaining in your fixed maturity option (based on the withdrawal date) and convert it to fractional years based on a 365-day year. For example, three years and 12 days becomes 3.0329. (c) We determine the current rate to maturity that applies on the withdrawal date to new allocations to the same fixed maturity option. (d) We determine the present value of the fixed maturity amount payable at the maturity date, using the period determined in (b) and the rate determined in (c). (2) We determine the fixed maturity amount as of the current date. (3) We subtract (2) from the result in (1)(d). The result is the market value adjustment applicable to such fixed maturity option, which may be positive or negative. [Sidebar: Your market adjusted amount is the present value of the maturity value discounted at the rate to maturity in effect for new contributions to that same fixed maturity option on the date of the calculation.] If you withdraw only a portion of the amount in a fixed maturity option, the market value adjustment will be a percentage of the market value adjustment that would have applied if you had withdrawn the entire value in that fixed maturity option. This percentage is equal to the percentage of the value in the fixed maturity option that you are withdrawing. See the Appendix to this prospectus for an example of how we calculate the market value adjustment. For purposes of calculating the rate to maturity for new allocations to a fixed maturity option (see (1)(c) above), we use the rate we have in effect for new allocations to that fixed maturity option. We use this rate even if new allocations to that option would not be accepted at that time. This rate will not be less than 3%. If we do not have a rate to maturity in effect for a fixed maturity option to which the "current rate to maturity" in (1)(c) would apply, we will use the rate at the next closest maturity date. If we are no longer offering new fixed maturity options, the "current rate to maturity" 43 will be determined in accordance with our procedures then in effect. We reserve the right to add up to 0.25% to the current rate in (1)(c) above for purposes of calculating the market value adjustment only. ABOUT THE SEPARATE ACCOUNT FOR THE FIXED MATURITY OPTIONS INVESTMENTS. Under New York Insurance law, the portion of the separate account assets equal to the reserves and other contract liabilities relating to the contracts are not chargeable with liabilities from any other business we may conduct. We own the assets of the separate account, as well as any favorable investment performance on those assets. You do not participate in the performance of the assets held in this separate account. We may, subject to state law which applies, transfer all assets allocated to the separate account to our general account. We guarantee all benefits relating to your account value in the fixed maturity options regardless of whether assets supporting fixed maturity options are held in a separate account or our general account. We have no specific formula for establishing the rates to maturity for the fixed maturity options. We expect the rates to be influenced by, but not necessarily correspond to, among other things, the yields that we can expect to realize on the separate account's investments from time to time. Our current plans are to invest in fixed-income obligations, including corporate bonds, mortgage-backed and asset-backed securities and government and agency issues having durations in the aggregate consistent with those of the fixed maturity options. Although the above generally describes our plans for investing the assets supporting our obligations under the fixed maturity options, we are not obligated to invest those assets according to any particular plan except as we may be required to by state insurance laws. We will not determine the rates to maturity we establish by the performance of the nonunitized separate account. ABOUT OUR GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the fixed maturity options, as well as our general obligations. Amounts applied under the life contingent annuity become part of our general account. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, nor is the general account an investment company under the Investment Company Act of 1940. However, the market value adjustment interests under the contracts are registered under the Securities Act of 1933. We have been advised that the staff of the SEC has not made a review of the disclosure that is included in the prospectus for your information that relates to the general account (other than market value adjustment interests) and the life contingent annuity. The disclosure, however, may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. 44 OTHER METHODS OF PAYMENT WIRE TRANSMITTALS We accept initial contributions sent by wire to our Processing Office by agreement with certain broker-dealers. The transmittals must be accompanied by information we require to allocate your contribution. Wire orders not accompanied by complete information may be retained as described under "How you can make your contributions." Even if we accept the wire order and essential information, a contract generally will not be issued until we receive and accept a properly completed application. In certain cases we may issue a contract based on information forwarded electronically. Where we require a signed application, no financial transactions will be permitted until we receive the signed application and have issued the contract. After your contract has been issued, additional contributions under the life annuity with a period certain contract may be transmitted by wire. ABOUT PAYMENTS UNDER PERIOD CERTAIN CONTRACTS The following example illustrates a ten-year level stream of annual payments, each in the amount of $10,000, purchased on April 1, 1999 with the first payment on February 15, 2000. To achieve this result, a single contribution of $78,923.30 is required, and is allocated among the fixed maturity options as indicated below.
- ----------------------------------------------------------------------------------------------------------------------- FEBRUARY 15TH OF CALENDAR YEAR PRICE PER $100 OF MATURITY ALLOCATION OF CONTRIBUTION PAYMENT VALUE - ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- 2000 $10,000 $97.23 $9,723.50 - ----------------------------------------------------------------------------------------------------------------------- 2001 $10,000 $92.83 $9,282.67 - ----------------------------------------------------------------------------------------------------------------------- 2002 $10,000 $88.51 $8,850.98 - ----------------------------------------------------------------------------------------------------------------------- 2003 $10,000 $84.43 $8,442.76 - ----------------------------------------------------------------------------------------------------------------------- 2004 $10,000 $80.60 $8,059.67 - ----------------------------------------------------------------------------------------------------------------------- 2005 $10,000 $76.45 $7,645.43 - ----------------------------------------------------------------------------------------------------------------------- 2006 $10,000 $72.56 $7,256.47 - ----------------------------------------------------------------------------------------------------------------------- 2007 $10,000 $69.16 $6,915.68 - ----------------------------------------------------------------------------------------------------------------------- 2008 $10,000 $65.55 $6,554.98 - ----------------------------------------------------------------------------------------------------------------------- 2009 $10,000 $61.91 $6,191.16 - ----------------------------------------------------------------------------------------------------------------------- TOTAl $78,923.30 - -----------------------------------------------------------------------------------------------------------------------
DATES AND PRICES AT WHICH CONTRACT EVENTS OCCUR BUSINESS DAY Our "business day" generally is any day the New York Stock Exchange is open for trading. Each business day ends at the time regular trading on the exchange closes (or is suspended) for the day. Our business day ends at 4:00 p.m., Eastern Time for purposes of determining the date when contributions are applied and any other transaction requests are processed. Contributions will be 45 applied and any other transaction requests will be processed when they are received along with all the required information unless another date applies as indicated below. If your contribution or any other transaction request containing all the required information, reaches us on a non-business day or after 4:00 p.m. on a business day, we will use the next business day. CONTRIBUTIONS o Contributions allocated to the fixed maturity options will receive the rate to maturity in effect for that fixed maturity option on that business day. o Contributions allocated to the separate account to provide for payments off maturity dates, will receive the interest rate in effect on that business day or the same rate as the rate to maturity that applied to the expired fixed maturity option. o Contributions allocated to the life contingent annuity will be invested at the purchase rates in effect on that business day. ABOUT OUR YEAR 2000 PROGRESS Equitable Life relies upon various computer systems in order to administer your contract and operate the investment options. Some of these systems belong to service providers who are not affiliated with Equitable Life. In 1995, Equitable Life began addressing the question of whether its computer systems would recognize the year 2000 before, on or after January 1, 2000, and Equitable Life has identified those of its systems critical to business operations that were not year 2000 compliant. By year end 1998, the work of modifying or replacing non-compliant systems was substantially completed. Equitable Life has begun comprehensive testing of its year 2000 compliance and expects that the testing will be substantially completed by June 30, 1999. Equitable Life has contacted third-party service providers to seek confirmation that they are acting to address the year 2000 issue with the goal of avoiding any material adverse effect on services provided to contract owners and on operations of the investment options. Most third-party service providers have provided Equitable Life confirmation of their year 2000 compliance. Equitable Life believes it is on schedule for substantially all such systems and services, including those considered to be mission-critical, to be confirmed as year 2000 compliant, renovated, replaced or the subject of contingency plans, by June 30, 1999, except for one investment accounting system which is scheduled to be replaced by August 31, 1999 and confirmed as year 2000 compliant by September 30, 1999. Additionally, Equitable Life will be supplementing its existing business continuity and disaster recovery plans to cover certain categories of contingencies that could arise as a result of year 2000 related failures. Year 2000 specific contingency plans are anticipated to be in place by June 30, 1999. There are many risks associated with year 2000 issues, including the risk that Equitable Life's computer systems will not operate as intended. Additionally, there can be no assurance that the systems of third parties will be year 2000 compliant. Any significant unresolved difficulty related to the year 2000 compliance initiatives could result in an interruption in, or a failure of, normal business operations and, accordingly, could have a material adverse effect on our ability to administer your contract and operate the investment options. 46 To the fullest extent permitted by law, the foregoing year 2000 discussion is a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998). ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon our obligations under the contracts, or the distribution of the contracts. ABOUT OUR INDEPENDENT ACCOUNTANTS The consolidated financial statements and consolidated financial statement schedules of Equitable Life at December 31, 1998 and 1997 and for each of the three years in the period ended December 31, 1998 included in Equitable Life's Annual Report on Form 10-K, incorporated by reference in the prospectus, have been examined by PricewaterhouseCoopers LLP, independent accountants, whose reports thereon are incorporated herein by reference. Such consolidated financial statements and consolidated financial statement schedules have been incorporated herein by reference in reliance upon the reports of PricewaterhouseCoopers LLP given upon their authority as experts in accounting and auditing. TRANSFERS OF OWNERSHIP, COLLATERAL ASSIGNMENTS, LOANS, AND BORROWING The contracts may not be assigned except through surrender to us. They may not be borrowed against or used as collateral for a loan or other obligation. DISTRIBUTION OF CONTRACTS Equitable Distributors, Inc. ("EDI") and EQ Financial Consultants, Inc. ("EQF"), indirect, wholly owned subsidiaries of Equitable Life, are the distributors of the contracts and have responsibility for sales and marketing functions. EDI and EQF are registered with the SEC as broker-dealers and are members of the National Association of Securities Dealers, Inc. The principal business address of EDI and EQF is 1290 Avenue of the Americas, New York, New York 10104. Under a distribution agreement between Equitable Life, certain of Equitable Life's separate accounts, including the separate account that contains the fixed maturity options, and EDI, Equitable Life paid EDI distribution fees of $129,520 for 1998, $962,599 for 1997 and $202,400 for 1996, as the distributor of the contracts. Under a distribution and services agreement between EQF, Equitable Life and certain of Equitable Life's separate accounts, including the separate account that contains the fixed maturity options, Equitable Life paid EQF $325,380 for 1998, as the distributor for certain contracts including these contracts. During 1999, EQF plans to change its name to AXA Advisors, Inc. The contracts will be sold by registered representatives of EDI and EQF as well as by affiliated and unaffiliated broker-dealers with which EDI and/or EQF has entered into selling agreements. Broker-dealer sales compensation will generally not exceed 5% of total contributions made under the contracts. EDI and EQF may also receive compensation and reimbursement for its 47 marketing services under the terms of their distribution agreements with Equitable Life. Broker-dealers receiving sales compensation will generally pay a portion of it to their registered representatives as commissions related to sales of the contracts. The offering of the contracts is intended to be continuous. 48 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Equitable Life's annual report on form 10-K for the year ended December 31, 1998 and a current report on form 8-K dated April 9, 1999, are considered to be part of this prospectus because they are incorporated by reference. After the date of the prospectus and before we terminate the offering of the securities under this prospectus, all documents or reports we file with the SEC under the Securities Exchange Act of 1934 ("Exchange Act") will be considered to become part of this prospectus because they are incorporated by reference. Any statement contained in a document that is or becomes part of this prospectus, will be considered changed or replaced for purposes of this prospectus if a statement contained in this prospectus changes or is replaced. Any statement that is considered to be a part of this prospectus because of its incorporation, will be considered changed or replaced for the purpose of this prospectus if a statement contained in any other subsequently filed document that is considered to be part of this prospectus changes or replaces that statement. After that, only the statement that is changed or replaced will be considered to be part of this prospectus. We file our exchange act documents and reports, including our annual and quarterly reports on form 10-K and form 10-Q, electronically according to EDGAR under CIK No. 0000727920. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is http://www.sec.gov. Upon written or oral request, we will provide, free of charge, to each person to whom this prospectus is delivered a copy of any or all of the documents considered to be part of this prospectus because they are incorporated herein. This does not include exhibits not specifically incorporated by reference into the text of such documents. Requests for documents should be directed to The Equitable Life Assurance Society of the United States, 1290 Avenue of the Americas, New York, New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234). 49 APPENDIX: MARKET VALUE ADJUSTMENT EXAMPLE The example below shows how the market value adjustment would be determined and how it would be applied to a withdrawal, assuming that $100,000 was allocated on February 15, 2000 to a fixed maturity option with a maturity date of February 15, 2009 at a rate to maturity of 7.00% resulting in a maturity value at the maturity date of $183,846, and further assuming that a withdrawal of $50,000 was made on February 15, 2004.
- --------------------------------------------------------------------------------------------------------------------- ASSUMED RATE TO MATURITY ON FEBRUARY 15, 2004 5.00% 9.00% ------------------------------------------------- As of February 15, 2004 (before withdrawal) - ------------------------------------------ (1) Market adjusted amount...................................... $ 144,048 $ 119,487 (2) Fixed maturity amount....................................... 131,080 131,080 (3) Market value adjustment: (1) - (2).......................... 12,968 (11,593) On February 15, 2004 (after withdrawal) - -------------------------------------- (4) Portion of the market adjusted amount associated with withdrawal: (3) x [$50,000/(1)]........................ $ 4,501 $ (4,851) (5) Reduction in fixed maturity amount: [$50,000 - (4)]..................................... 45,499 54,851 (6) Fixed maturity amount: (2) - (5)............................ 85,581 76,229 (7) Maturity value.............................................. 120,032 106,915 (8) Market adjusted amount of (7)............................... 94,048 69,487 - ---------------------------------------------------------------------------------------------------------------------
You should note that if a withdrawal is made when rates have increased from 7.00% to 9.00% (right column), a portion of a negative market value adjustment is realized. On the other hand, if a withdrawal is made when rates have decreased from 7.00% to 5.00% (left column), a portion of a positive market value adjustment is realized. 50 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The by-laws of The Equitable Life Assurance Society of the United States ("Equitable Life") provide, in Article VII, as follows: 7.4 Indemnification of Directors, Officers and Employees. (a) To the extent permitted by the law of the State of New York and subject to all applicable requirements thereof: (i) any person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that he or she, or his or her testator or intestate, is or was a director, officer or employee of the Company shall be indemnified by the Company; (ii) any person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that he or she, or his or her testator or intestate serves or served any other organization in any capacity at the request of the Company may be indemnified by the Company; and (iii) the related expenses of any such person in any of said categories may be advanced by the Company. (b) To the extent permitted by the law of the State of New York, the Company may provide for further indemnification or advancement of expenses by resolution of shareholders of the Company or the Board of Directors, by amendment of these By-Laws, or by agreement. {Business Corporation Law ss.ss. 721-726; Insurance Law ss.1216} The directors and officers of Equitable Life are insured under policies issued by Lloyd's of London, X. L. Insurance Company and ACE Insurance Company. The annual limit on such policies is $100 million, and the policies insure the officers and directors against certain liabilities arising out of their conduct in such capacities. II-1 ITEM 16. EXHIBITS Exhibits No. (1) (a) Form of Distribution Agreement by and among Equitable Distributors, Inc., Separate Account Nos. 45 and 49 of Equitable Life and Equitable Life Assurance Society of the United States, incorporated by reference to Exhibit 1(a) to the Registration Statement on Form S-3 (File No. 33-88456), filed June 7, 1996. (b) Form of Distribution Agreement dated as of January 1, 1998 among The Equitable Life Assurance Society of the United States for itself and as depositor on behalf of certain separate accounts and Equitable Distributors, Inc., incorporated herein by reference to Exhibit 3(b) to the Registration Statement on Form N-4 (File No. 333-05593) on May 1, 1998. (c) Form of The Hudson River Trust Sales Agreement by and among Equico Securities, Inc. (now EQ Financial Consultants, Inc.), The Equitable Life Assurance Society of the United States, Equitable Distributors, Inc. and Separate Account No. 49 of The Equitable Life Assurance Society of the United States, incorporated by reference to Exhibit 1(c) to the Registration Statement on Form S-3 (File No. 33-88456), filed June 7, 1996. (d) Distribution and Servicing Agreement among Equico Securities (now EQ Financial Consultants, Inc.), The Equitable Life Assurance Society of the United States, and Equitable Variable Life Insurance Company, dated as of May 1, 1994, incorporated herein by reference to Exhibit 3(c) to the Registration Statement on Form N-4 File No. 2-30070, refiled electronically July 10, 1998. (e) Letter of Agreement for Distribution Agreement among The Equitable Life Assurance Society of the United States and EQ Financial Consultants, Inc., dated April 20, 1998, incorporated herein by reference to Exhibit No. 3(c) to Registration Statement (File No. 33-83750), filed on May 1, 1998. (4) (a) Form of group annuity contract no. 1050-94IC, previously filed with this Registration Statement on Form S-3 (File No. 333-24009) on March 6, 1998. (b) Form of group annuity certificate nos. 94ICA and 94ICB, previously filed with this Registration Statement on Form S-3 (File No. 333-24009) on March 6, 1998. (b)(i) Form of Data pages for Equitable Accumulator TSA, incorporated by reference to Exhibit No. 4(s) to the Registration Statement on Form N-4 (File No. 33-05593) filed on May 22, 1998. (c) Forms of Endorsement Nos. 94ENIRAI, 94ENNQI and 94ENMVAI to contract no. 1050-94IC and data pages no. 94ICA/BIM(IRA), (NQ), (NQ Plan A) and (NQ Plan B), previously filed with this Registration Statement on Form S-3 (File No. 333-24009) on March 6, 1998. (c)(i) Form of Data Pages for Equitable Accumulator Select TSA, incorporated by reference to Exhibit 4(k) to the Registration Statement on Form N-4 (File No. 333-31131) filed on May 22, 1998. (d) Forms of Application used with the IRA, NQ and Fixed Annuity Markets, previously filed with this Registration Statement on Form S-3 (File No. 333-24009) on March 6, 1998. (d)(i) Form of Data Pages for Equitable Accumulator TSA, incorporated by reference to Exhibit No. 4(v) to the Registration Statement on Form N-4 (File No. 33-83750) filed on May 22, 1998. (e) Form of Endorsement no. 95ENLCAI to contract no. 1050-94IC and data pages no. 94ICA/BLCA, previously filed with this Registration Statement on Form S-3 (File No. 333-24009) on March 6, 1998. (e)(i) Form of Endorsement Applicable to TSA Certificates, incorporated by reference to Exhibit 4(t) to the Registration Statement on Form N-4 (File No. 333-05593) filed on May 22, 1998. (f) Forms of Data Pages for Rollover IRA, IRA Assured Payment Option, IRA Assured Payment Option Plus, Accumulator, Assured Growth Plan, Assured Growth Plan (Flexible Income Program), Assured Payment Plan (Period Certain) and Assured Payment Plan (Life with a Period Certain), incorporated by reference to Exhibit 4(f) to the Registration Statement on Form S-3 (File No. 33-88456) filed August 31, 1995. (f)(i) Form of Enrollment Form/Application for Equitable Accumulator (IRA, NQ, QF and TSA), incorporated by reference to Exhibit No. 5(f) to the Registration Statement on Form N-4 (File No. 333-05593) filed on May 22, 1998. II-2 Exhibits No. (g) Forms of Data Pages for Rollover IRA, IRA Assured Payment Option, IRA Assured Payment Option Plus, Accumulator, Assured Growth Plan and Assured Payment Plan (Life Annuity with a Period Certain), incorporated by reference to Exhibit 4(g) to the Registration Statement on Form S-3 (File No. 33-88456), filed on April 23, 1996. (h) Form of Separate Account Insulation Endorsement for the Endorsement Applicable to Market Value Adjustment Terms, incorporated by reference to Exhibit 4(h) to the Registration Statement on Form S-3 (File No. 33-88456), filed on April 23, 1996. (i) Forms of Guaranteed Minimum Income Benefit Endorsements (and applicable data page for Rollover IRA) for Endorsement Applicable to Market Value Adjustment Terms and for the Life Contingent Annuity Endorsement, incorporated by reference to Exhibit 4(i) to the Registration Statement on Form S-3 (File No. 33-88456), filed on April 23, 1996. (j) Forms of Enrollment Form/Application for Rollover IRA, Choice Income Plan, Assured Growth Plan, Accumulator and Assured Payment Plan, incorporated by reference to Exhibit 4(j) to the Registration Statement on Form S-3 (File No. 33-88456), filed on April 23, 1996. (k) Forms of Data Pages for the Accumulator, incorporated by reference to Exhibit 4(k) to the Registration Statement on Form S-3 (File No. 33-88456), filed June 7, 1996. (l) Forms of Data Pages for the Rollover IRA, incorporated by reference to Exhibit 4(l) to the Registration Statement on Form S-3 (File No. 33-88456), filed June 7, 1996. (m) Forms of Data Pages for the Accumulator and Rollover IRA, incorporated by reference to Exhibit 4(m) to the Registration Statement on Form S-3 (File No. 33-88456), filed October 9, 1996. (n) Forms of Data Pages for Accumulator and Rollover IRA, incorporated by reference to Exhibit 4(n) to the Registration Statement on Form S-3 (File No. 33-88456), filed October 16, 1996. (o) Forms of Data Pages for the Accumulator, Rollover IRA, Income Manager Accumulator, Income Manager Rollover IRA, Equitable Accumulator, Income Manager (IRA and NQ) and MVA Annuity (IRA and NQ), previously filed with this Registration Statement (File No. 333-24009) on April 30, 1997. (p) Forms of Enrollment Form/Application for Income Manager Accumulator, Income Manager Rollover IRA, Equitable Accumulator, Income Manager (IRA and NQ) and MVA Annuity (IRA and NQ), previously filed with this Registration Statement (File No. 333-24009) on April 30, 1997. (q) Forms of Data Pages for Equitable Accumulator Select (IRA) and Equitable Accumulator Select (NQ), previously filed with this Registration Statement (File No. 333-24009) on September 18, 1997. (r) Forms of Enrollment Form/Application for Equitable Accumulator Select (IRA and NQ), previously filed with this Registration Statement (File No. 333-24009) on September 18, 1997. (s) Form of Data Pages No. 94ICB and 94ICBMVA for Equitable Accumulator (IRA) Certificates, incorporated by reference to Exhibit 4(m) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (t) Form of Data Pages No. 94ICB and 94ICBMVA for Equitable Accumulator (NQ) Certificates, incorporated by reference to Exhibit 4(n) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (u) Form of Data Pages No. 94ICB and 94ICBMVA for Equitable Accumulator (QP) Certificates, incorporated by reference to Exhibit 4(o) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (v) Form of Data Pages No. 94ICB, 94ICBMVA and 94ICBLCA for Assured Payment Option Certificates, incorporated by reference to Exhibit 4(p) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (w) Form of Data Pages No. 94ICB, 94ICBMVA and 94ICBLCA for APO Plus Certificates, incorporated by reference to Exhibit 4(q) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (x) Form of Endorsement applicable to Defined Benefit Qualified Plan Certificates No. 98ENDQPI incorporated by reference to Exhibit 4(r) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (y) Form of Endorsement applicable to Non-Qualified Certificates No. 98ENJONQI, incorporated by reference to Exhibit 4(s) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (z) Form of Endorsement applicable to Charitable Remainder Trusts No. 97ENCRTI, incorporated by reference to Exhibit 4(t) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (a)(a) Form of Enrollment Form/Application No. 126737 (5/98) for Equitable Accumulator (IRA, NQ and QP), incorporated by reference to Exhibit 5(e) to the Registration Statement on Form N-4 (File No. 33-83750) on February 27, 1998. (b)(b) Form of Endorsement for Extra Credit Annuity Form No. 98ECENDI and Data Pages 94ICA/B, incorporated herein by reference to Exhibit No. 4(j) to Amendment No. 14 to the Separate Account No. 49 N-4 Registration Statement, filed September 30, 1998. (c)(c) Form of Endorsement for Extra Credit Annuity Form No. 98ECENDI and Data Pages 94ICA/B, incorporated herein by reference to Exhibit No. 4(k) to Amendment No. 13 to the Separate Account No. 45 N-4 Registration Statement, filed September 30, 1998. (d)(d) Form of Endorsement applicable to Defined Contribution Qualified Plan Certificates No. 97ENQPI and Data Pages 94ICA/B, incorporated herein by reference to Exhibit No. 4 (k) to Amendment No. 14 to the Separate Account 49 N-4 Registration Statement, filed September 30, 1998. (e)(e) Form of Endorsement applicable to Defined Contribution Qualified Plan Certificates No. 97ENQPI and Data Pages 94ICA/B, incorporated herein by reference to Exhibit No. 4(l) to Amendment No. 13 to the Separate Account 45 N-4 Registration Statement, filed September 30, 1998. II-3 Exhibits No. (5) (a) Opinion and Consent of Jonathan E. Gaines, Esq., Vice President and Associate General Counsel of Equitable, as to the legality of the securities being registered, previously filed with this Registration Statement (File No. 333-24009) on April 30, 1997. (b) Copy of the Internal Revenue Service determination letter regarding qualification under Section 401 of the Internal Revenue Code, incorporated by reference to Exhibit 5(b) to the Registration Statement on Form S-3 (File No. 33-88456), filed August 31, 1995. (8) (a) Not applicable. (23) (a) Consent of PricewaterhouseCoopers LLP. (b) Consent of Counsel (see Exhibit 5(a). (c) Powers of Attorney. II-4 ITEM 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-6 SIGNATURES As required by the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has caused this Registration Statement or amendment thereto to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and State of New York, on April 30, 1999. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Registrant) By: /s/ Jerome S. Golden ------------------- Jerome S. Golden Executive Vice President Product Management Group The Equitable Life Assurance Society of the United States As required by the requirements of the Securities Act of 1933, this Registration Statement or amendment thereto has been signed by or on behalf of the following persons in the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICERS: Michael Hegarty President, Chief Operating Officer and Director Edward D. Miller Chairman of the Board, Chief Executive Officer and Director PRINCIPAL FINANCIAL OFFICER: Stanley B. Tulin Vice Chairman of the Board, Chief Financial Officer and Director PRINCIPAL ACCOUNTING OFFICER: /s/ Alvin H. Fenichel Senior Vice President and Controller - --------------------- Alvin H. Fenichel April 30, 1999
DIRECTORS: Francoise Colloc'h Donald J. Greene George T. Lowy Henri de Castries John T. Hartley Edward D. Miller Joseph L. Dionne John H.F. Haskell, Jr. Didier Pineau-Valencienne Denis Duverne Michael Hegarty George J. Sella, Jr. Jean-Rene Fourtou Mary R. (Nina) Henderson Peter J. Tobin Norman C. Francis W. Edwin Jarmain Stanley B. Tulin Dave H. Williams By: /s/Jerome S. Golden ------------------- Jerome S. Golden Attorney-in-Fact April 30, 1999 II-7 EXHIBIT INDEX
EXHIBIT NO. TAG VALUE - ----------- --------- 23(a) Consent of Independent Accountants. EX-99.23a 23(c) Powers of Attorney. EX-99.23c
II-8 EX-99.23A 2 CONSENT OF PRICEWATERHOUSECOOPERS LLP CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in each Prospectus constituting part of this Post-Effective Amendment No. 4 to the Registration Statement No. 333-24009 on Form S-3 of our report dated February 8, 1999 appearing on page F-1 of The Equitable Life Assurance Society of the United States' Annual Report on Form 10-K for the year ended December 31, 1998. We also consent to the incorporation by reference of our report on the Consolidated Financial Statement Schedules dated February 8, 1999 which appears on page F-53 of such Annual Report on Form 10-K. We also consent to the references to us under the heading "Independent Accountants" in each Prospectus. PricewaterhouseCoopers LLP New York, New York April 30, 1999 EX-99.23C 3 1999 POWERS OF ATTORNEY POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day of February, 1999. /s/ Henri de Castries --------------------- Henri de Castries 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ Joseph L. Dionne -------------------- Joseph L. Dionne 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day of February, 1999. /s/ Denis Duverne ----------------- Denis Duverne 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th day of February, 1999. /s/ F. COLLOC'H --------------- F. COLLOC'H 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of February, 1999. /s/ Jean Rene Fourtou --------------------- Jean Rene Fourtou 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of February, 1999. /s/ Norman C. Francis --------------------- Norman C. Francis 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of February, 1999. /s/ Donald J. Greene -------------------- Donald J. Greene 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th day of February, 1999. /s/ John T. Hartley ------------------- John T. Hartley 59838v2 \ POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ John H.F. Haskell, Jr. -------------------------- John H.F. Haskell, Jr. 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ Michael Hegarty ------------------- Michael Hegarty 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ Mary R. (Nina) Henderson ---------------------------- Mary R. (Nina) Henderson 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day of February, 1999. /s/ W. Edwin Jarmain -------------------- W. Edwin Jarmain 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day of February, 1999. /s/ George T. Lowy ------------------ George T. Lowy 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ Edward D. Miller -------------------- Edward D. Miller 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22th day of February, 1999. /s/ Didier Pineau Valencienne ----------------------------- Didier Pineau Valencienne 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day of February, 1999. /s/ George J. Sella, Jr. ------------------------ George J. Sella, Jr. 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day of March, 1999. /s/ Peter J. Tobin ------------------ Peter J. Tobin 58017/36 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 10th day of February, 1999. /s/ Stanley B. Tulin -------------------- Stanley B. Tulin 59838v2 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer or Director of The Equitable Life Assurance Society of the United States (the "Company"), a New York stock life insurance company, hereby constitutes and appoints Jerome S. Golden, Mark A. Hug, James D. Goodwin, Pauline Sherman, Michael F. McNelis, Naomi J. Weinstein, Maureen K. Wolfson, Mildred Oliver, Mary P. Breen and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent, with full power of substitution to each, for him or her and on his or her behalf and in his or her name, place and stead, to execute and file any of the documents referred to below relating to registrations under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 with respect to any insurance or annuity contracts or other agreements providing for allocation of amounts to Separate Accounts of the Company, and related units or interests in Separate Accounts: registration statements on any form or forms under the Securities Act of 1933 and the Investment Company Act of 1940 and annual reports on any form or forms under the Securities Exchange Act of 1934, and any and all amendments and supplements thereto, with all exhibits and all instruments necessary or appropriate in connection therewith, each of said attorneys-in-fact and agents and his, her or their substitutes being empowered to act with or without the others, and to have full power and authority to do or cause to be done in the name and on behalf of the undersigned each and every act and thing requisite and necessary or appropriate with respect thereto to be done in and about the premises in order to effectuate the same, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of February, 1999. /s/ Dave H. Williams -------------------- Dave H. Williams 59838v2 -----END PRIVACY-ENHANCED MESSAGE-----