AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON November 27, 2001
REGISTRATION NO. 333-62246
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
(Exact Name of Registrant)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2426091
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-5740
(Address and telephone number of principal executive offices)
----------
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4780
(Name, address and telephone number of agent for service)
Copies to:
CHRISTOPHER E. PALMER ADAM SCARAMELLA
SHEA & GARDNER VICE PRESIDENT, CORPORATE COUNSEL
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE
WASHINGTON, D.C. 20036 COMPANY OF AMERICA
(202) 828-2093 213 WASHINGTON STREET
NEWARK, NJ 07102-2992
(973) 802-4940
================================================================================
Approximate date of commencement of proposed sale to the public--immediately
upon effectiveness
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box .............................[X]
<Table>
<Caption>
Calculation of Registration fee
- --------------------------------------------------------------------------------
Title of each Amount Proposed Proposed Amount
class of to maximum maximum of
securities to be offering aggregate registration
be registered registered* price per unit* offering price fee **
- --------------------------------------------------------------------------------
Market-value
adjustment
annuity contracts
(or modified
guaranteed
annuity
contracts) 10,000,000 10,000,000 $ -0-
</Table>
- ---------------
* Securities are not issued in predetermined units
** Registration fee for these securities was paid the time were originally
registered on Form S-3 as filed by Pruco Life Insurance Company of New
Jersey on June 4, 2001. The current amount of registered, but unsold,
securities is reported quarterly by the Registrant on Form 10-Q and annually
on form 10-K.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission may determine.
STRATEGIC PARTNERS(SM)
SELECT
- --------------------------------------------------------------------------------
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
PROSPECTUS: DECEMBER 17, 2001
This prospectus describes an individual variable annuity contract offered by
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey). Pruco
Life of New Jersey is an indirect wholly-owned subsidiary of The Prudential
Insurance Company of America.
The Funds
- ------------------------------------------------------------
Strategic Partners Select offers a wide variety of investment choices, including
27 variable investment options that invest in mutual funds managed by these
leading asset managers.
Prudential Investments
A I M Capital Management, Inc.
Alliance Capital Management L.P.
Davis Selected Advisers, L.P.
Deutsche Asset Management
Fidelity Management & Research Co.
GE Asset Management
INVESCO Funds Group, Inc.
Janus Capital
Jennison Associates
Key Asset Management
MFS
PIMCO
Salomon Brothers Asset Management
Please Read this Prospectus
- ------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Select
variable annuity contract and keep it for future reference. Current prospectuses
for each of the underlying mutual funds accompany this prospectus. These
prospectuses contain important information about the mutual funds. Please read
these prospectuses and keep them for reference.
To Learn More About
Strategic Partners Select
- ------------------------------------------------------------
To learn more about the Strategic Partners Select variable annuity, you can
request a copy of the Statement of Additional Information (SAI) dated December
17, 2001. The SAI has been filed with the Securities and Exchange Commission
(SEC) and is legally a part of this prospectus. Pruco Life of New Jersey also
files other reports with the SEC. All of these filings can be reviewed and
copied at the SEC's offices, and can also be obtained from the SEC's Public
Reference Room, 450 5th Street N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
(800) SEC-0330. The SEC also maintains a Web site (http://www.sec.gov) that
contains the Strategic Partners Select SAI, material incorporated by reference,
and other information regarding registrants that file electronically with the
SEC. The Table of Contents of the SAI is on Page 34 of this prospectus.
For a Free Copy of the SAI call us at:
- ------------------------------------------------------------
- ---- (888) PRU-2888 or write to us at:
- ---- Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
- ---- Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT
TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN STRATEGIC
PARTNERS SELECT IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
1
CONTENTS
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<Table>
PART I: STRATEGIC PARTNERS SELECT PROSPECTUS
------------------------------------------------------------
SUMMARY
------------------------------------------------------------
Glossary........................................... 6
Summary............................................ 7
Summary of Contract Expenses....................... 10
Expense Examples................................... 12
PART II: STRATEGIC PARTNERS SELECT PROSPECTUS
------------------------------------------------------------
SECTIONS 1-9
------------------------------------------------------------
Section 1: What is the Strategic Partners Select
Variable Annuity?..................................... 16
Short Term Cancellation Right or "Free Look"....... 16
Section 2: What Investment Options Can I Choose?........ 17
Variable Investment Options........................ 17
Fixed Interest-Rate Options........................ 18
Transfers Among Options............................ 18
Other Available Features........................... 19
Voting Rights...................................... 19
Substitution....................................... 20
Section 3: What Kind of Payments Will I Receive During
the Income Phase? (Annuitization)..................... 21
Payment Provisions................................. 21
Option 1: Annuity Payments for a Fixed
Period....................................... 21
Option 2: Life Annuity with 120 Payments (10
Years) Certain............................... 21
Option 3: Interest Payment Option.............. 21
Option 4: Other Annuity Options................ 21
Section 4: What is the Death Benefit?................... 22
Beneficiary........................................ 22
Calculation of the Death Benefit................... 22
Section 5: How Can I Purchase a Strategic Partners
Select Contract?...................................... 23
Purchase Payments.................................. 23
Allocation of Purchase Payments.................... 23
Calculating Contract Value......................... 23
Section 6: What are the Expenses Associated with the
Strategic Partners Select Contract?................... 24
Insurance Charges.................................. 24
Annual Contract Fee................................ 24
Withdrawal Charge.................................. 24
Taxes Attributable to Premium...................... 25
Transfer Fee....................................... 25
Company Taxes...................................... 25
Section 7: How Can I Access My Money?................... 26
Automated Withdrawals.............................. 26
Suspension of Payments or Transfers................ 26
</Table>
2
- --------------------------------------------------------------------------------
<Table>
Section 8: What are the Tax Considerations Associated with the Strategic
Partners Select Contract?................................................ 27
Contracts Owned By Individuals (Not Associated with Tax Favored
Retirement Plans)................................................... 27
Contracts Held by Tax Favored Plans................................... 28
Section 9: Other Information............................................... 33
Pruco Life Insurance Company of New Jersey............................ 33
The Separate Account.................................................. 33
Sale and Distribution of the Contract................................. 34
Assignment............................................................ 34
Financial Statements.................................................. 34
Statement of Additional Information................................... 34
Householding.......................................................... 34
Market-Value Adjustment Formula....................................... 35
IRA Disclosure Statement.............................................. 37
</Table>
<Table>
PART III: PROSPECTUSES
------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
JANUS ASPEN SERIES
</Table>
3
THIS PAGE INTENTIONALLY LEFT BLANK
4
PART I SUMMARY
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS SELECT PROSPECTUS
5
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
GLOSSARY
- --------------------------------------------------------------------------------
We have tried to make this prospectus as easy to read and understand as
possible. By the nature of the contract, however, certain technical words or
terms are unavoidable. We have identified the following as some of these words
or terms.
ACCUMULATION PHASE
The period that begins with the contract date (see below definition) and ends
when you start receiving income payments or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ANNUITANT
The person whose life determines how long the contract lasts and the amount of
income payments that will be paid.
ANNUITY DATE
The date when income payments are scheduled to begin.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
CASH VALUE
This is the total value of your contract minus any withdrawal charge(s) or
market-value adjustment, if applicable.
CO-ANNUITANT
The person shown on the contract data pages who becomes the Annuitant upon the
death of the Annuitant before the Annuity Date. No Co-Annuitant may be
designated if the Owner is a non-natural person.
CONTRACT DATE
The date we receive your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACTOWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
The total value of the amounts in a contract allocated to the variable
investment options and the interest rate options as of a particular date.
DEATH BENEFIT
If the sole or last surviving annuitant dies, the designated person(s) or the
beneficiary will receive, at a minimum, the total amount invested or a
potentially greater amount related to market appreciation. See "What is the
Death Benefit?" on page 22.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, these are referred to as payout or annuity options.
INTEREST CELL
A division of the interest-rate options that is established whenever you
allocate or transfer money into an interest-rate option.
INTEREST-RATE OPTION
An investment option that offers a fixed-rate of interest for a one-year period
(fixed-rate option) or a seven-year period (market-value adjustment option).
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The phone number is (888)
PRU-2888.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. Generally, you can make
additional purchase payments at any time during the accumulation phase.
SEPARATE ACCOUNT
Purchase payments allocated to the variable investment options are held by us in
a separate account called the Pruco Life of New Jersey Flexible Premium Variable
Annuity Account. The Separate Account is set apart from all of the general
assets of Pruco Life of New Jersey.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. You do not
pay taxes on your contract earnings until you take money out of your contract.
VARIABLE INVESTMENT OPTION
When you choose a variable investment option, we purchase shares of the mutual
fund which are held as an investment for that option. We hold these shares in
the Separate Account. The division of the Separate Account of Pruco Life of New
Jersey that invests in a particular mutual fund is referred to in your contract
as a subaccount.
6
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SUMMARY OF SECTIONS 1-9
- --------------------------------------------------------------------------------
For a more complete discussion of the following topics, see the corresponding
section in the prospectus.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY?
This variable annuity contract, offered by Pruco Life of New Jersey, is a
contract between you, as the owner, and us. The contract allows you to invest on
a tax-deferred basis in one or more of 27 variable investment options.* There
are also two fixed interest-rate options. The contract is intended for
retirement savings or other long-term investment purposes and provides a death
benefit and guaranteed income options.
The variable investment options are designed to offer the opportunity over
the long term for a better return than the fixed interest rate options. However,
this is NOT guaranteed. It is possible, due to market changes, that your
investments may decrease in value.
The fixed interest-rate options offer an interest-rate that is guaranteed.
While your money is in a fixed account, your principal amount is guaranteed and
the interest amount that your money will earn is guaranteed by us to always be
at least 3.0%. Payments allocated to the fixed interest-rate options become part
of Pruco Life of New Jersey's general assets. As a result, the strength of our
guarantee is based on the overall financial strength of Pruco Life of New
Jersey.
You can invest your money in any or all of the variable investment options
and the interest-rate options. You are allowed 12 transfers each contract year
among the variable investment options, without a charge. There are certain
restrictions on transfers involving the interest-rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
grow on a tax-deferred basis and are taxed as income when you make a withdrawal.
The income phase starts when you begin receiving regular payments from your
contract. The amount of money you are able to accumulate in your contract during
the accumulation phase will help determine the amount of the payments you will
receive during the income phase. Other factors will affect the amount of your
payments such as age, gender and the payout option you selected.
Free Look. If you change your mind about owning Strategic Partners Select,
you may cancel your contract within a time period known as the "free look
period," which is 10 days in New York (or 30 days if your contract was sold by
mail order).
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You generally can invest your money in any of the variable investment options
that invest in the mutual funds described in the fund prospectuses provided with
this prospectus:
The Prudential Series Fund
Prudential Equity Portfolio*
Prudential Global Portfolio
Prudential Jennison Portfolio (domestic equity)
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
Prudential Value Portfolio*
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
SP Alliance Large Cap Growth Portfolio
SP Alliance Technology Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP MFS Mid-Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small/Mid Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
*PRUDENTIAL EQUITY AND PRUDENTIAL VALUE PORTFOLIOS WILL NOT BE AVAILABLE UNTIL
FEBRUARY 4, 2002.
7
SUMMARY OF SECTIONS 1-9 CONTINUED
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
Janus Aspen Series
Growth Portfolio -- Service Shares
Depending upon market conditions, you may earn or lose money in any of these
options. The value of your contract will fluctuate depending upon the investment
performance of the mutual funds used by the variable investment options you
choose. Performance information for the variable investment options is provided
in the Statement of Additional Information (SAI). Past performance is not a
guarantee of future results.
You can also put your money into one of the fixed interest-rate options.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
SECTION 4
WHAT IS THE DEATH BENEFIT?
If the sole or last surviving annuitant dies, the designated person(s) or the
beneficiary will receive at a minimum, the total amount invested or a
potentially greater amount related to market appreciation.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS SELECT ANNUITY CONTRACT?
You can purchase this contract, under most circumstances, with a minimum initial
purchase payment of $10,000. You can add $500 or more at any time during the
accumulation phase of the contract. Your representative can help you fill out
the proper forms.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT CONTRACT?
The contract has insurance features and investment features, and there are costs
related to each.
Each year we deduct a $30 contract maintenance charge if your contract value
is less than $50,000. For insurance and administrative costs, we also deduct an
annual charge of 1.52% of the average daily value of all assets allocated to the
variable investment options. This charge is not assessed against amounts
allocated to the fixed interest-rate options.
There are also charges associated with the mutual funds. These charges
currently range from 0.39% to 1.30% per year of a fund's average daily assets.
During the accumulation phase, if you withdraw money less than eight years
after making a purchase payment, you may have to pay a withdrawal charge on all
or part of the withdrawal. This charge ranges from 1-7%.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may take money out at any time during the accumulation phase. If you do so,
however, you may be subject to income tax, and if you make a withdrawal prior to
age 59 1/2, an additional tax penalty as well. Each year, you may withdraw up to
10% of your total purchase payments without charge. Withdrawals greater than 10%
of your purchase payments will be subject to a withdrawal charge. This charge
decreases 1% each year. After the 7th year, there is no charge for a withdrawal.
You may also be subject to income tax and a tax penalty if you make an early
withdrawal.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT
CONTRACT?
Your earnings are not taxed until withdrawn. If you take money out during the
accumulation phase, earnings are withdrawn first and are taxed as ordinary
income. If you are younger than age 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty on the earnings in addition to ordinary
taxation. A portion of the payments you receive during the income phase is
considered partly a return of your original investment. As a result, that
portion of each payment is not taxable as income. Generally, all amounts
withdrawn from IRA contracts (excluding Roth IRAs) are fully taxable and subject
to the 10% penalty if withdrawn prior to age 59 1/2.
8
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life of New Jersey, an indirect wholly-owned
subsidiary of The Prudential Insurance Company of America, and sold by
registered representatives.
9
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
The purpose of this summary is to help you to understand the costs you will pay
for Strategic Partners Select. This summary includes the expenses of the mutual
funds used by the variable investment options.
For More Detailed Information:
More detailed information can be found on page 24 under the section called,
"What Are The Expenses Associated With The Strategic Partners Select Contract?"
For more detailed expense information about the mutual funds, please refer to
the individual fund prospectuses which you will find at the back of this
prospectus.
TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
WITHDRAWAL CHARGE (see Note 1 below)
- --------------------------------------------------------------------------------
During contract year 1 7%
During contract year 2 6%
During contract year 3 5%
During contract year 4 4%
During contract year 5 3%
During contract year 6 2%
During contract year 7 1%
TRANSFER FEE (see Note 2 below)
- --------------------------------------------------------------------------------
first 12 transfers per year $0.00
each transfer after 12 $25.00
ANNUAL CONTRACT FEE (see Note 3 below)
- --------------------------------------------------------------------------------
$30.00
ANNUAL ACCOUNT EXPENSES
- --------------------------------------------------------------------------------
AS A PERCENTAGE OF THE AVERAGE ACCOUNT VALUE
Mortality and Expense Risk: 1.37%
Administrative Fee: 0.15%
Total: 1.52%
NOTE 1: As of the beginning of the contract year, you may withdraw up to 10% of
the total purchase payments plus any charge-free amount carried over from the
previous contract year without charge. There is no withdrawal charge on any
amount used to provide income under the Life Annuity with 120 payments (10
years) certain option. (see page 21). Surrender charges are waived when a death
benefit is paid.
NOTE 2: You will not be charged for transfers made in connection with dollar
cost averaging and auto-rebalancing.
NOTE 3: This fee is not charged if the value of your contract is $50,000 or
more.
NOTES FOR ANNUAL MUTUAL FUND
EXPENSES:
These expenses are based on the
historical fund expenses for the
year ended December 31, 2000,
except as indicated. Fund expenses
are not fixed or guaranteed by the
Strategic Partners Select contract
and may vary from year to year.
(1) THE PRUDENTIAL SERIES FUND:
Because this is the first full year
of operations for all "SP"
Portfolios, other expenses are
estimated based on management
projections of non-advisory fee
expenses. Each "SP" Portfolio has
expense reimbursements in effect,
and the table shows total expenses
both with and without these expense
reimbursements. These expense
reimbursements are voluntary and
may be terminated at any time.
(2) Each Asset Allocation Portfolio
of The Prudential Series Fund
invests in a combination of
underlying portfolios of The
Prudential Series Fund. The Total
Expenses and Total Expenses After
Expense Reimbursement for each
Asset Allocation Portfolio are
calculated as a blend of the fees
of the underlying portfolios, plus
a 0.05% advisory fee payable to the
investment adviser, Prudential
Investments LLC.
(3) JANUS ASPEN SERIES
Table reflects expenses based upon
expenses for the fiscal year ended
December 31, 2000, restated to
reflect a reduction in the
management fee. All expenses are
shown without the effect of any
offset arrangement.
10
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
<Table>
<Caption>
ANNUAL MUTUAL FUND EXPENSES (AFTER REIMBURSEMENT, IF ANY):
- --------------------------------------------------------------------------------------------------------------------------
AS A PERCENTAGE OF EACH FUND'S AVERAGE DAILY NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES
INVESTMENT OTHER AFTER EXPENSE
ADVISORY FEES EXPENSES TOTAL EXPENSES REIMBURSEMENT*
THE PRUDENTIAL SERIES FUND(1)
- --------------------------------------------------------------------------------------------------------------------------
Prudential Equity Portfolio 0.45% 0.04% 0.49% 0.49%
Prudential Global Portfolio 0.75% 0.10% 0.85% 0.85%
Prudential Jennison Portfolio 0.60% 0.04% 0.64% 0.64%
Prudential Money Market Portfolio 0.40% 0.04% 0.44% 0.44%
Prudential Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
Prudential Value Portfolio 0.40% 0.05% 0.45% 0.45%
SP Aggressive Growth Asset Allocation Portfolio(2) 0.84% 0.40% 1.24% 1.04%
SP AIM Aggressive Growth Portfolio 0.95% 1.29% 2.24% 1.07%
SP AIM Growth and Income Portfolio 0.85% 0.87% 1.72% 1.00%
SP Alliance Large Cap Growth Portfolio 0.90% 0.37% 1.27% 1.10%
SP Alliance Technology Portfolio 1.15% 0.65% 1.80% 1.30%
SP Balanced Asset Allocation Portfolio(2) 0.75% 0.33% 1.08% 0.92%
SP Conservative Asset Allocation Portfolio(2) 0.71% 0.30% 1.01% 0.87%
SP Davis Value Portfolio 0.75% 0.18% 0.93% 0.83%
SP Deutsche International Equity Portfolio 0.90% 0.72% 1.62% 1.10%
SP Growth Asset Allocation Portfolio(2) 0.80% 0.35% 1.15% 0.97%
SP INVESCO Small Company Growth Portfolio 0.95% 1.08% 2.03% 1.15%
SP Jennison International Growth Portfolio 0.85% 0.45% 1.30% 1.24%
SP Large Cap Value Portfolio 0.80% 1.00% 1.80% 0.90%
SP MFS Capital Opportunities Portfolio 0.75% 0.96% 1.71% 1.00%
SP MFS Mid-Cap Growth Portfolio 0.80% 0.63% 1.43% 1.00%
SP PIMCO High Yield Portfolio 0.60% 0.44% 1.04% 0.82%
SP PIMCO Total Return Portfolio 0.60% 0.26% 0.86% 0.76%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.47% 1.07% 0.90%
SP Small/Mid Cap Value Portfolio 0.90% 0.51% 1.41% 1.05%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.85% 1.75% 1.01%
</Table>
<Table>
<Caption>
INVESTMENT
ADVISORY FEES 12b-1 FEE(2) OTHER EXPENSES TOTAL EXPENSES
JANUS ASPEN SERIES(3)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio--Service Shares 0.65% 0.25% 0.02% 0.92%
</Table>
* Reflects fee waivers and reimbursement of expenses, if any. See notes on
previous page.
The "Expense Examples" on the following pages are calculated using the figures
in the "Total Actual Expenses After Expense Reimbursement" column in the above
table. The examples assume that expense waivers and reimbursements will be the
same for each of the periods shown.
11
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES WILL HELP YOU COMPARE THE FEES AND EXPENSES OF THE DIFFERENT
VARIABLE INVESTMENT OPTIONS OFFERED BY STRATEGIC PARTNERS SELECT. YOU CAN ALSO
USE THE EXAMPLES TO COMPARE THE COST OF STRATEGIC PARTNERS SELECT WITH OTHER
VARIABLE ANNUITY CONTRACTS.
Example 1: If You Withdraw Your Assets
Example 1 assumes that you invest $10,000 in Strategic Partners Select and that
you allocate all of your assets to one of the variable investment options and
withdraw all your assets at the end of the time period indicated. The example
also assumes that your investment has a 5% return each year and that the mutual
fund's operating expenses remain the same. Your actual costs may be higher or
lower.
Example 2: If You Do Not Withdraw Your Assets
Example 2 assumes that you invest $10,000 in Strategic Partners Select and
allocate all of your assets to one of the variable investment options and DO NOT
WITHDRAW any of your assets at the end of the time period indicated. The example
also assumes that your investment has a 5% return each year and that the mutual
fund's operating expenses remain the same. Your actual costs may be higher or
lower.
On the following page are examples of what your costs would be using these
assumptions.
NOTES FOR ANNUAL MUTUAL FUND
EXPENSES:
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
The charges shown in the 10 year
column are the same for Example 1
and Example 2. This is because
after 10 years, the withdrawal
charges are no longer deducted by
us when you make a withdrawal or
when you begin the income phase of
your contract.
If your contract value is less than
$50,000 on your contract
anniversary (or upon a surrender),
we deduct a $30 fee. The examples
use an average number as the amount
of the annual contract fee. Based
on this calculation the annual
contract fee is included as an
annual charge of .023% of contract
value.
Your actual fees will vary based on
the amount of your contract and
your specific allocation(s).
Charges for premium taxes are not
reflected in these examples.
12
- --------------------------------------------------------------------------------
PART I
STRATEGIC PARTNERS SELECT PROSPECTUS SUMMARY
<Table>
<Caption>
EXPENSE EXAMPLES 1 AND 2
- -----------------------------------------------------------------------------------------------------------------------
<Caption>
EXAMPLE 2:
EXAMPLE 1: IF YOU DO NOT WITHDRAW YOUR
IF YOU WITHDRAW YOUR ASSETS ASSETS
-------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
- -----------------------------------------------------------------------------------------------------------------------
Prudential Equity Portfolio $839 $1186 $1468 $2390 $209 $646 $1108 $2390
Prudential Global Portfolio $875 $1295 $1651 $2756 $245 $755 $1291 $2756
Prudential Jennison Portfolio $854 $1231 $1545 $2544 $224 $691 $1185 $2544
Prudential Money Market Portfolio $834 $1170 $1443 $2338 $204 $630 $1083 $2338
Prudential Stock Index Portfolio $829 $1155 $1417 $2285 $199 $615 $1057 $2285
Prudential Value Portfolio $835 $1174 $1448 $2348 $205 $634 $1088 $2348
SP Aggressive Growth Asset Allocation Portfolio $894 $1351 $1745 $2944 $264 $811 $1385 $2944
SP AIM Aggressive Growth Portfolio $897 $1360 $1760 $2973 $267 $820 $1400 $2973
SP AIM Growth and Income Portfolio $890 $1339 $1725 $2905 $260 $799 $1365 $2905
SP Alliance Large Cap Growth Portfolio $900 $1369 $1775 $3003 $270 $829 $1415 $3003
SP Alliance Technology Portfolio $920 $1429 $1873 $3195 $290 $889 $1513 $3195
SP Balanced Asset Allocation Portfolio $882 $1316 $1686 $2826 $252 $776 $1326 $2826
SP Conservative Asset Allocation Portfolio $877 $1301 $1661 $2776 $247 $761 $1301 $2776
SP Davis Value Portfolio $873 $1288 $1640 $2736 $243 $748 $1280 $2736
SP Deutsche International Equity Portfolio $900 $1369 $1775 $3003 $270 $829 $1415 $3003
SP Growth Asset Allocation Portfolio $887 $1331 $1710 $2875 $257 $791 $1350 $2875
SP INVESCO Small Company Growth Portfolio $905 $1384 $1800 $3051 $275 $844 $1440 $3051
SP Jennison International Growth Portfolio $914 $1411 $1844 $3138 $284 $871 $1484 $3138
SP Large Cap Value Portfolio $890 $1339 $1725 $2905 $260 $799 $1365 $2905
SP MFS Capital Opportunities Portfolio $890 $1339 $1725 $2905 $260 $799 $1365 $2905
SP MFS Mid-Cap Growth Portfolio $880 $1310 $1676 $2806 $250 $770 $1316 $2806
SP PIMCO High Yield Portfolio $872 $1285 $1635 $2726 $242 $745 $1275 $2726
SP PIMCO Total Return Portfolio $866 $1267 $1605 $2666 $236 $727 $1245 $2666
SP Prudential U.S. Emerging Growth Portfolio $880 $1310 $1676 $2806 $250 $770 $1316 $2806
SP Small/Mid Cap Value Portfolio $895 $1354 $1750 $2954 $265 $814 $1390 $2954
SP Strategic Partners Focused Growth Portfolio $891 $1342 $1730 $2915 $261 $802 $1370 $2915
JANUS ASPEN SERIES
- -----------------------------------------------------------------------------------------------------------------------
Growth Portfolio--Service Shares $882 $1316 $1686 $2826 $252 $776 $1326 $2826
</Table>
THESE EXAMPLES DO NOT SHOW PAST OR FUTURE EXPENSES. ACTUAL EXPENSES FOR A
PARTICULAR YEAR MAY BE MORE OR LESS THAN SHOWN IN THE EXAMPLES.
13
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14
PART II SECTIONS 1-9
- --------------------------------------------------------------------------------
STRATEGIC PARTNERS SELECT PROSPECTUS
15
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
1:
WHAT IS THE STRATEGIC PARTNERS SELECT
VARIABLE ANNUITY?
- --------------------------------------------------------------------------------
THE STRATEGIC PARTNERS SELECT VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU, THE
OWNER, AND US, THE INSURANCE COMPANY, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(PRUCO LIFE OF NEW JERSEY, WE OR US).
Under our contract or agreement, in exchange for your payment to us, we promise
to pay you a guaranteed income stream that can begin any time after the first
contract anniversary. Your annuity is in the accumulation phase until you decide
to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract.
Strategic Partners Select is a variable annuity contract. This means that
during the accumulation phase, you can allocate your assets among 27 variable
investment options as well as 2 guaranteed interest-rate options. If you select
a variable investment option, the amount of money you are able to accumulate in
your contract during the accumulation phase depends upon the investment
performance of the mutual fund associated with that variable investment option.
Because the mutual funds' portfolios fluctuate in value depending upon market
conditions, your contract value can either increase or decrease. This is
important, since the amount of the annuity payments you receive during the
income phase depends upon the value of your contract at the time you begin
receiving payments.
As mentioned above, Strategic Partners Select also contains two guaranteed
interest-rate options: a fixed-rate option, and a market-value adjustment
option. The fixed-rate option offers an interest rate that is guaranteed by us
for one year and will always be at least 3.0% per year. The market-value
adjustment option guarantees a stated interest rate, generally higher than the
fixed-rate option. However, in order to get the full benefit of the stated
interest rate, assets in this option must be held for a seven-year period.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant(s) is the person upon whose death during the accumulation
phase, the death benefit is payable. The annuitant is the person who receives
the annuity payments when the income phase begins. The annuitant is also the
person whose life is used to determine how much and how long these payments will
continue. On and after the annuity date, the annuitant is the owner and may not
be changed. The beneficiary becomes the owner when a death benefit is payable.
The beneficiary is: the person(s) or entity designated to receive any death
benefit if the annuitant (or last surviving annuitant, if there are
co-annuitants) dies during the accumulation phase. You may change the
beneficiary any time prior to the annuity date by making a written request to
us. Your request becomes effective when we approve it.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Select, you may cancel
your contract within 10 days after receiving it (or 30 days if your contract was
sold by mail order). You can request a refund by returning the contract either
to the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive:
- - Your contract value; and
- - Any fees deducted at the time of sale.
16
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
- --------------------------------------------------------------------------------
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF 27 VARIABLE INVESTMENT OPTIONS.
The 27 variable investment options invest in mutual funds managed by leading
investment advisers.* Separate prospectuses for these funds are attached to this
prospectus. You should read a mutual fund's prospectus before you decide to
allocate your assets to the variable investment option using that fund.
VARIABLE INVESTMENT OPTIONS
Listed below are the mutual funds in which the variable investment options
invest. Each variable investment option has a separate investment objective.
The Prudential Series Fund
- - Prudential Equity Portfolio*
- - Prudential Global Portfolio
- - Prudential Jennison Portfolio (domestic equity)
- - Prudential Money Market Portfolio
- - Prudential Stock Index Portfolio
- - Prudential Value Portfolio*
- - SP Aggressive Growth Asset Allocation Portfolio
- - SP AIM Aggressive Growth Portfolio
- - SP AIM Growth and Income Portfolio
- - SP Alliance Large Cap Growth Portfolio
- - SP Alliance Technology Portfolio
- - SP Balanced Asset Allocation Portfolio
- - SP Conservative Asset Allocation Portfolio
- - SP Davis Value Portfolio
- - SP Deutsche International Equity Portfolio
- - SP Growth Asset Allocation Portfolio
- - SP INVESCO Small Company Growth Portfolio
- - SP Jennison International Growth Portfolio
- - SP Large Cap Value Portfolio
- - SP MFS Capital Opportunities Portfolio
- - SP MFS Mid-Cap Growth Portfolio
- - SP PIMCO High Yield Portfolio
- - SP PIMCO Total Return Portfolio
- - SP Prudential U.S. Emerging Growth Portfolio
- - SP Small/Mid Cap Value Portfolio
- - SP Strategic Partners Focused Growth Portfolio
The Prudential Global Portfolio, Prudential Jennison Portfolio, Prudential Money
Market Portfolio, and Prudential Stock Index Portfolio, and each "SP" Portfolio
of the Prudential Series Fund, are managed by a subsidiary of Prudential called
Prudential Investments LLC (PI). The portfolios listed below have subadvisers,
which are listed below and which have day-to-day responsibility for managing the
portfolio, subject to the oversight of PI.
Prudential Money Market Portfolio and Prudential Stock Index Portfolio:
Prudential Investment Management, Inc.
Prudential Equity Portfolio: GE Asset Management, Incorporated, Jennison
Associates LLC and Salomon Brothers Asset Management Inc.
Prudential Global Portfolio, Prudential Jennison Portfolio, SP Jennison
International Growth Portfolio, and SP Prudential U.S. Emerging Growth
Portfolio: Jennison Associates LLC
Prudential Value Portfolio: Deutsche Asset Management Inc., Jennison Associates
LLC and Key Asset Management Inc.
SP Strategic Partners Focused Growth Portfolio: Jennison Associates LLC and
Alliance Capital Management L.P.
SP AIM Aggressive Growth Portfolio and SP AIM Growth and Income Portfolio: A I M
Capital Management, Inc.
SP Alliance Large Cap Growth Portfolio and SP Alliance Technology Portfolio:
Alliance Capital Management L.P.
SP Davis Value Portfolio: Davis Selected Advisers, L.P.
SP Deutsche International Equity Portfolio: Deutsche Asset Management Inc., a
wholly-owned subsidiary of Deutsche Bank AG
SP INVESCO Small Company Growth Portfolio: INVESCO Funds Group, Inc.
SP Large Cap Value Portfolio and SP Small/Mid Cap Value Portfolio: Fidelity
Management and Research Company
SP MFS Capital Opportunities Portfolio and SP MFS Mid-Cap Growth Portfolio:
Massachusetts Financial Services Company
SP PIMCO High Yield Portfolio and SP PIMCO Total Return Portfolio: Pacific
Investment Management Company
Janus Aspen Series
- - Growth Portfolio--Service Shares
Janus Capital serves as investment adviser to the Growth Portfolio--Service
Shares of Janus Aspen Series.
*PRUDENTIAL EQUITY AND PRUDENTIAL VALUE PORTFOLIOS WILL NOT BE AVAILABLE UNTIL
FEBRUARY 4, 2002.
17
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Except for the Prudential Series Fund Inc., we may be paid by a fund or an
affiliate of the fund for administrative and other services that we provide. The
amount we receive is based on an annual percentage of the average assets of
Strategic Partners Select invested in the fund held by the associated variable
investment option.
FIXED INTEREST-RATE OPTIONS
We offer two interest-rate options: a one-year fixed-rate option, and a
market-value adjustment option. We set a one year guaranteed annual interest
rate that is always available for the one-year fixed-rate option.
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest-rate option. You may have money allocated in more than one interest
rate period at the same time. This could result in your money earning interest
at different rates and each interest rate period maturing at a different time.
While these interest rates may change from time to time, the minimum rate will
never be less than 3.0%.
Payments that you apply to the fixed interest-rate option become part of
Pruco Life of New Jersey's general assets. As a result, the strength of the
interest rate guarantee is based on the overall financial strength of Pruco Life
of New Jersey. If Pruco Life of New Jersey suffered a material financial set
back, the ability of Pruco Life of New Jersey to meet its financial obligations
could be affected.
MARKET-VALUE ADJUSTMENT
If you transfer or withdraw assets or annuitize from the market-value adjustment
option before an interest rate period is over, the assets will be subject to a
market value adjustment. The market-value adjustment may increase or decrease
the amount being withdrawn or transferred and may be substantial. The
adjustment, whether up or down will never be greater than 40%. The amount of the
market-value adjustment is based on the difference between the:
1) Guaranteed interest rate for the amount you are withdrawing or transferring;
and
2) Interest rate that is in effect on the date of the withdrawal or transfer.
The amount of time left in the interest rate period is also a factor. You
will find a detailed description of how the market-value adjustment is
calculated on Page 35 of this prospectus.
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options and the fixed
interest-rate options. Your transfer request may be made by telephone,
electronically, or in paper form to the Prudential Annuity Service Center
(electronic transfer capability will become available during 2001). Only two
transfers per month may be made by telephone or electronically. After that, all
transfer requests must be in writing with an original signature. We have
procedures in place to confirm that instructions received by telephone or
electronically are genuine. We will not be liable for following telephone or
electronic instructions that we reasonably believe to be genuine. Your transfer
request will take effect at the end of the business day on which it was
received. Our business day usually closes at 4:00 p.m. Eastern time.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST-RATE OPTION, ONLY DURING THE
30-DAY PERIOD FOLLOWING THE END OF AN INTEREST RATE PERIOD. IF YOU TRANSFER
MONEY FROM A MARKET-VALUE ADJUSTMENT OPTION AFTER THE 30-DAY PERIOD HAS ENDED,
THE MONEY WILL BE SUBJECT TO A MARKET-VALUE ADJUSTMENT.
During the contract accumulation phase, you can make 12 transfers each
contract year, among the investment options, without charge. If you make more
than 12 transfers in one contract year, you will be charged $25 for each
additional transfer. (Dollar Cost Averaging and Auto-Rebalancing transfers do
not count toward the 12 free transfers per year.)
18
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
OTHER AVAILABLE FEATURES
DOLLAR COST AVERAGING FEATURE
This feature allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option or the one-year fixed
interest-rate option and into any variable investment option(s). You can
transfer money to more than one variable investment option. The investment
option used for the transfers is designated as the DCA account. You can have
these automatic transfers made from the DCA account monthly, quarterly,
semiannually or annually. By allocating amounts on a regular schedule instead of
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations. Of course, there is no guarantee that
dollar cost averaging will ensure a profit or protect against a loss in
declining markets.
Transfers must be at least $100 from your DCA account. After that, transfers
will continue automatically until the entire amount in your DCA account has been
transferred or until you tell us to discontinue the transfers. If your DCA
account balance drops below $100, the entire remaining balance of the account
will be transferred on the next transfer date. You can allocate subsequent
purchase payments to re-open the DCA account at any time.
Your transfers will be made on the last calendar day of each transfer period
you have selected, provided that the New York Stock Exchange is open on that
date. If the New York Stock Exchange is not open on a particular transfer date,
the transfer will take effect on the next business day.
Any transfers you make because of dollar cost averaging are not counted
toward the 12 free transfers you are allowed per year. This feature is available
only during the contract accumulation phase, and is offered without charge.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding on the allocation of your
money. If you choose to participate in the Asset Allocation Program, your
financial professional will give you a questionnaire to complete that will help
determine a program that is appropriate for you. Your asset allocation will be
prepared based on your answers to the questionnaire. You will not be charged for
this service and you are not obligated to participate or to invest according to
program recommendations.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation or to change allocations by selecting the
Auto-Rebalancing feature. The fixed interest-rate options and the DCA account
cannot participate in this feature.
Your rebalancing will be done monthly, quarterly, semiannually or annually
based on your choice. The rebalancing will be done on the last calendar day of
the period you have chosen, provided that the New York Stock Exchange is open on
that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the
12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase, and is offered without charge. If you
choose auto-rebalancing and dollar cost averaging, auto-rebalancing will take
place after the transfers from your DCA account.
VOTING RIGHTS
We are the legal owner of the shares in the mutual funds associated with the
variable investment options. However, we vote the shares of the mutual funds
according to voting instructions we receive from contractowners. We will mail
you a proxy which is a form you need to complete and return to us to tell us how
you wish us to vote. When we receive those
19
2:
WHAT INVESTMENT OPTIONS CAN I CHOOSE? continued
- --------------------------------------------------------------------------------
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
instructions, we will vote all of the shares we own on your behalf in accordance
with those instructions. We will vote the shares for which we do not receive
instructions, and shares that we own in our own right, in the same proportion as
the shares for which instructions are received. We may change the way your
voting instructions are calculated if it is required by federal or state
regulation.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We may also cease to allow investments in existing funds. We
would do this only if events such as investment policy changes or tax law
changes make the mutual fund unsuitable. We would not do this without the
approval of the Securities and Exchange Commission and necessary state insurance
department approvals. You will be given specific notice in advance of any
substitution we intend to make.
20
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
- --------------------------------------------------------------------------------
PAYMENT PROVISIONS
We can begin making annuity payments any time after the first contract
anniversary. Annuity payments must begin no later than the annuitant's 90th
birthday.
We make the income plans described below available at any time before the
annuity date. These plans are called annuity options. During the income phase,
all of the annuity options under this contract are fixed annuity options. This
means that your participation in the variable investment options ends on the
annuity date. If an annuity option is not selected by the annuity date, the
Interest Payment Option (Option 3, described below) will automatically be
selected. However, if your contract is held in an Individual Retirement Account
and an annuity option is not selected by the annuity date or prior to the
annuitant's 90th birthday, a lump sum payment of the contract value will be made
to you on the annuitant's 90th birthday. ONCE THE ANNUITY PAYMENTS BEGIN, THE
ANNUITY OPTION CAN NOT BE CHANGED.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years. The annuity payments may be made monthly, quarterly, semiannually, or
annually for as long as the annuitant is alive. If the annuitant dies during the
income phase, a lump sum payment will be made to the beneficiary. The amount of
the lump sum payment is determined by calculating the present value of the
unpaid future payments. This is done by using the interest rate used to compute
the actual payments. The interest rate used will always be at least 3.50% a
year. For payment periods of 5 years or more, we will waive any withdrawal
charges that otherwise would have been applied.
OPTION 2
LIFE ANNUITY WITH 120 PAYMENTS (10 YEARS) CERTAIN
Under this option, we will make annuity payments monthly, quarterly,
semiannually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
the present value of the remaining annuity payments in one lump sum unless we
are specifically instructed that the remaining monthly annuity payments continue
to be paid to the beneficiary. The present value of the remaining annuity
payments is calculated by using the interest rate used to compute the amount of
the original 120 payments. The interest rate used will always be at least 3.50%
a year.
OPTION 3
INTEREST PAYMENT OPTION
Under this option, we hold all or a portion of your contract value in order to
accumulate interest. We can make interest payments on a monthly, quarterly,
semiannual, or annual basis or allow the interest to accrue on your contract
assets. If an annuity option is not selected by the annuity date, this is the
option we will automatically select for you. Under this option, we will pay you
interest at an effective rate of at least 3.0% a year. Under this option, all
gains in the annuity will be taxable as of the annuity date. Under this option,
you can withdraw some or all of your contract value that we are holding at any
time.
This option is not available if your contract is held in an Individual
Retirement Account.
OPTION 4
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available any of the fixed
annuity options that are offered at your annuity date.
You should be aware that depending on your contract date and the annuity
option you choose, you may have to pay withdrawal charges.
21
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
4:
WHAT IS THE
DEATH BENEFIT?
- --------------------------------------------------------------------------------
THE DEATH BENEFIT FEATURE PROTECTS THE VALUE OF THE CONTRACT FOR THE
BENEFICIARY.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before the annuitant or last surviving
annuitant dies.
CALCULATION OF THE DEATH BENEFIT
If the annuitant (or the last surviving annuitant, if there are co-annuitants)
dies during the accumulation phase, we will, upon receiving appropriate proof of
death and any other needed documentation ("due proof of death"), pay a death
benefit to the beneficiary designated by the contractowner. If death is prior to
age 80, the beneficiary will receive the greater of the following (as of the
time we receive due proof of death):
- - Current value of your contract; or
- - Guaranteed Minimum Death Benefit--This is the highest value of the contract
on any contract anniversary date. This is called the step-up value. Between
anniversary dates, the step-up value is only increased by additional purchase
payments and reduced proportionally by withdrawals.
If death occurs on or after age 80, the beneficiary will receive the greater
of: 1) the current contract value as of the date that due proof of death is
received, and 2) the Guaranteed Minimum Death benefit as of age 80, increased by
additional purchase payments, and reduced proportionally by withdrawals. For
this purpose, an annuitant is deemed to reach age 80 on the contract anniversary
on or following the annuitant's actual 80th birthday.
If the sole or older annuitant is age 80 or older at the time the contract is
issued, upon death, the beneficiary will receive, as of the date that due proof
of death is received, the greater of: 1) current contract value as of the date
due proof of death is received; or 2) the total purchase payments reduced
proportionally by withdrawals.
Here is an example of a proportional reduction:
If an owner withdrew 50% of a contract valued at $100,000 and if the step-up
value was $80,000, the new step-up value following the withdrawal would be
$40,000 or 50% of what it had been prior to the withdrawal.
If the contractowner and annuitant are not the same, the death benefit is
payable only in the event of the death of a sole annuitant or last surviving
annuitant, not the death of the contractowner.
22
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
SELECT CONTRACT?
- --------------------------------------------------------------------------------
PURCHASE PAYMENTS
A purchase payment is the amount of money you give us to purchase the contract.
The minimum purchase payment is $10,000. You can make additional purchase
payments of at least $500 or more at any time during the accumulation phase. You
must get our prior approval for any purchase payments over $5 million.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable investment options and the fixed interest-rate options based on the
percentages you choose. The percentage of your allocation to a specific
investment option can range in whole percentages from 0% to 100%. If, after the
initial invested purchase payment, we receive a purchase payment without
allocation instructions, we will allocate the corresponding invested purchase
payment in the same proportion as your most recent purchase payment (unless you
directed us to allocate that purchase payment on a one-time-only basis). You may
submit an allocation change request at any time. Contact the Prudential Annuity
Service Center for details.
We will credit the initial purchase payment to your contract within two
business days from the day on which we receive your payment at the Prudential
Annuity Service Center. If, however, your first payment is made without enough
information for us to set up your contract, we may need to contact you to obtain
the required information. If we are not able to obtain this information within
five business days, we will within that five business day period either return
your purchase payment or obtain your consent to continue holding it until we
receive the necessary information. We will generally credit each subsequent
purchase payment as of the business day we receive it in good order at the
Prudential Annuity Service Center. Our business day generally closes at 4:00
p.m. Eastern time. We will generally credit subsequent purchase payments
received in good order after the close of a business day on the following
business day.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment option(s) you choose.
To determine the value of your contract, we use a unit of measure called an
accumulation unit. An accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1) Adding up the total amount of money allocated to a specific investment
option;
2) Subtracting from that amount insurance charges and any other applicable
charges; and
3) Dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment, we credit your contract with accumulation
units relating to the variable investment options you have chosen. The number of
accumulation units credited to your contract is determined by dividing the
amount of the purchase payment allocated to an investment option by the unit
price of the accumulation unit for that investment option. We calculate the unit
price for each investment option after the New York Stock Exchange closes each
day and then credit your contract. The value of the accumulation units can
increase, decrease, or remain the same from day to day.
We cannot guarantee that the value of your contract will increase or that it
will not fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 3.0% a year on that portion of the contract
value allocated to the fixed interest-rate options.
23
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS SELECT CONTRACT?
- --------------------------------------------------------------------------------
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. THESE CHARGES AND EXPENSES ARE DESCRIBED BELOW.
INSURANCE CHARGES
Each day, we makes a deduction for insurance charges. The insurance charges have
two parts:
1) Mortality and expense risk charge
2) Administrative expense charge
1) MORTALITY AND EXPENSE RISK CHARGE
The mortality risk charge is for assuming the risk that the annuitant(s) will
live longer than expected based on our life expectancy tables. When this
happens, we pay a greater number of annuity payments. The expense risk charge is
for assuming the risk that the current charges will be insufficient in the
future to cover the cost of administering the contract.
The mortality and expense risk charge is equal, on an annual basis, to 1.37%
of the daily value of the contract invested in the variable investment options,
after expenses have been deducted. This charge is not assessed against amounts
allocated to the fixed interest-rate options.
If the charges under the contract are not sufficient, then we will bear the
loss. We do, however, expect to profit from this charge. The mortality and
expense risk charge cannot be increased. Any profits made from this charge may
be used by us to pay for the costs of distributing the contracts.
2) ADMINISTRATIVE EXPENSE CHARGE
This charge is for the expenses associated with the administration of the
contract. The administration of the contract includes preparing and issuing the
contract, establishing and maintaining contract records, issuing confirmations
and annual reports, personnel costs, legal and accounting fees, filing fees, and
systems costs.
This charge is equal, on an annual basis, to 0.15% of the daily value of the
contract invested in the variable investment options, after expenses have been
deducted.
ANNUAL CONTRACT FEE
During the accumulation phase, if your contract value is less than $50,000, we
will deduct $30 per contract year. This annual contract fee is used for
administrative expenses and cannot be increased. The $30 charge will be deducted
proportionately from each of the contract's investment options. This charge will
also be deducted when you surrender your contract if your contract value is less
than $50,000.
WITHDRAWAL CHARGE
During the accumulation phase you can make withdrawals from your contract. When
you make a withdrawal, money will be taken first from your purchase payments for
purposes of determining withdrawal charges. When your purchase payments have
been used up, then we will take the money from your earnings. You will not have
to pay any withdrawal charge when you withdraw your earnings.
The withdrawal charge is for the payment of the expenses involved in selling
and distributing the contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature and other
promotional activities. If the contract is sold under circumstances that reduce
the sales expenses, we may reduce or eliminate the withdrawal charge. For
example, a large group of individuals purchasing contracts or an individual who
already has a relationship with us may receive such a reduction.
You can withdraw up to 10% of your total purchase payments each contract year
without paying a withdrawal charge. This amount is referred to as the
"charge-free amount." If any of the charge-free amount is not used during a
contract year, it will be carried over to the next contract year. During the
first seven contract years, if your withdrawal of purchase payments is more than
the charge-free amount, a withdrawal charge will be applied. This charge is
based on your contract date.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
The following table shows the percentage of withdrawal charges that would
apply:
PERCENTAGE OF APPLICABLE WITHDRAWAL CHARGES
- ------------------------------------------------------------
<Table>
During contract year 1 7%
During contract year 2 6%
During contract year 3 5%
During contract year 4 4%
During contract year 5 3%
During contract year 6 2%
During contract year 7 1%
After that 0%
</Table>
Note: As of the beginning of the contract year, you may withdraw up to 10% of
the total purchase payments plus any charge-free amount carried over from the
previous contract year without charge. There is no withdrawal charge on any
amount used to provide income under the Life Annuity with 120 Payments (10
years) Certain Option or for a fixed period of 5 years or more. Surrender
charges are waived when a death benefit is paid. There will be a reduction in
the withdrawal charge for contracts issued to contractowners whose age is 84 and
older.
TAXES ATTRIBUTABLE TO PREMIUM
There may be federal, state and local premium based taxes applicable to your
purchase payment. We are responsible for the payment of these taxes and may make
a deduction from the value of the contract to pay some or all of these taxes.
Some of these taxes are due when the contract is issued, others are due when the
annuity payments begin. It is our current practice not to deduct a charge for
state premium taxes until annuity payments begin. New York does not, however,
currently charge premium taxes. It is also our current practice not to deduct a
charge for the federal deferred acquisition costs paid by us that are based on
premium received. However, we reserve the right to charge the contractowner in
the future for any such deferred acquisition costs and any federal, state or
local income, excise, business or any other type of tax measured by the amount
of premium received by us.
TRANSFER FEE
You can make 12 free transfers every year. If you make more than 12 transfers in
a year (excluding Dollar Cost Averaging and Auto-Rebalancing), we will deduct a
transfer fee of $25 for each additional transfer. We will deduct the transfer
fee pro-rata from the investment options from which the transfer is made. The
transfer fee is deducted before the market value adjustment, if any, is
calculated.
COMPANY TAXES
We will pay the taxes on the earnings of the Separate Account. We are not
currently charging the Separate Account for taxes. We will periodically review
the issue of charging the Separate Account for these taxes, and may impose such
a charge in the future.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
7:
HOW CAN I
ACCESS MY MONEY?
- --------------------------------------------------------------------------------
YOU CAN ACCESS YOUR MONEY BY:
- - MAKING A WITHDRAWAL (EITHER PARTIAL OR COMPLETE); OR
- - ELECTING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
YOU CAN MAKE WITHDRAWALS ONLY DURING THE ACCUMULATION PHASE
When you make a complete withdrawal, you will receive the value of your contract
on the day you made the withdrawal, less any applicable charges. We will
calculate the value of your contract, and charges, if any, as of the date we
receive your request in good order at the Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal will be made
proportionately from all of the affected investment options and interest-rate
options you have selected. You will need our consent to make a partial
withdrawal if the requested withdrawal is less than $250.
We will generally pay the withdrawal amount, less any required tax
withholding, within seven days after we receive a properly completed withdrawal
request. We will deduct applicable charges, and apply a market-value adjustment,
if any, from the assets in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS
PROSPECTUS AND THE TAX DISCUSSION IN THE STATEMENT OF ADDITIONAL INFORMATION.
AUTOMATED WITHDRAWALS
We offer an Automated Withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or
proportionally from all investment options. Market-value adjustments may apply.
Withdrawal charges may be deducted if the withdrawals in any contract year are
more than the charge-free amount. The minimum automated withdrawal amount you
can make is $100.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO AUTOMATED
WITHDRAWALS. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS PROSPECTUS
AND THE TAX DISCUSSION IN THE STATEMENT OF ADDITIONAL INFORMATION.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
- - The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- - Trading on the New York Stock Exchange is restricted;
- - An emergency exists, as determined by the SEC, during which sales of shares
of the mutual funds are not feasible or we cannot reasonably value the
accumulation units; or
- - The Securities and Exchange Commission, by order, permits suspension or
postponement of payments for the protection of owners.
We expect to pay the amount of any withdrawal or transfer made from the fixed
interest-rate options promptly upon request.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS SELECT CONTRACT?
- --------------------------------------------------------------------------------
The tax considerations associated with the Strategic Partners Select contract
vary depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan, or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. It is not intended as tax advice. A qualified
tax adviser should be consulted for complete information and advice.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned will be treated as a withdrawal. Also, if you elect the
interest payment option, that election will be treated, for tax purposes, as
surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on the gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of level annuity payments paid or
received not less frequently than annually under a lifetime annuity; and
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
If you modify the lifetime annuity payment stream (other than as a result of
death or disability) before you reach age 59 1/2 (or before the end of the five
year period beginning with the first payment and ending after you reach age
59 1/2), your tax for the year of modification will be increased by the penalty
tax that
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
8:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT CONTRACT
CONTINUED
- --------------------------------------------------------------------------------
would have been imposed without the exception, plus interest for the deferral.
TAXES PAYABLE BY BENEFICIARIES
All the death benefit options are subject to income tax to the extent the
distribution exceeds the adjusted basis in the contract and the full value of
the death benefit is included in the owner's estate.
Generally, the same tax rules apply to amounts received by your beneficiary
as those set forth above with respect to you. The election of an annuity payment
option instead of a lump sum death benefit may defer taxes. Certain minimum
distribution requirements apply upon your death, as discussed further below.
WITHHOLDING OF TAX FROM DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. These elections must be made on the appropriate forms that we provide.
ANNUITY QUALIFICATION
DIVERSIFICATION AND INVESTOR CONTROL. In order to qualify for the tax rules
applicable to annuity contracts described above, the contract must be an annuity
contract for tax purposes. This means that the assets underlying the annuity
contract must be diversified, according to certain rules. It also means that we,
and not you as the contract-owner, must have sufficient control over the
underlying assets to be treated as the owner of the underlying assets for tax
purposes. We believe these rules, which are further discussed in the Statement
of Additional Information, will be met.
REQUIRED DISTRIBUTIONS UPON YOUR DEATH Upon your death (or the death of a
joint owner, if earlier), certain distributions must be made under the contract.
The required distributions depend on whether you die on or before you start
taking annuity payments under the contract or after you start taking annuity
payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
ownership of the contract passes by reason of death, and must be a natural
person.
If any portion of the contract is payable to (or for the benefit of) your
surviving spouse, that portion of the contract may be continued with your spouse
as the owner.
CHANGES IN THE CONTRACT We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contractowners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You are a nonresident alien.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You wish additional information on withholding taxes.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
28
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities ("IRAs") which are subject to
Sections 408(a), 408(b) and 408A of the Code. At some future time we may allow
the contract to be purchased in connection with other retirement arrangements
which are also entitled to favorable federal income tax treatment ("tax favored
plans"). These other tax favored plans include:
Simplified employee pension plans ("SEPs") under Section 408(k) of the Code;
Saving incentive match plans for employees-IRAs ("SIMPLE-IRAs") under Section
408(p) of the Code; and Tax-deferred annuities ("TDAs") under Section 403(b) of
the Code. This description assumes that (i) we will be offering this to both IRA
and non-IRA tax favored plans, and (ii) you have satisfied the requirements for
eligibility for these products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE TAX
DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS THAT
WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES NOT
RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
TYPES OF TAX FAVORED PLANS
IRAs If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and the contract. The "IRA Disclosure Statement" on page 37
contains information about eligibility, contribution limits, tax particulars and
other IRA information. In addition to this information (some of which is
summarized below), the IRS requires that you have a "free look" after making an
initial contribution to the contract. During this time, you can cancel the
contract by notifying us in writing, and we will refund all of the purchase
payments under the contract (or the amount credited under the contract,
calculated as of the date that we receive this cancellation notice, if greater).
Contributions Limits/Rollovers: Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan or transfer from another IRA. You must
make a minimum initial payment of $10,000 to purchase a contract. This minimum
is greater than the maximum amount of any annual contribution you may make to an
IRA (which is generally $2,000 in 2001. For 2002 to 2004 the limit increases to
$3,000; for 2005 to 2007, to $4,000; and for 2008, $5,000. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contribute an additional $500 in years 2002 to 2005 and an
additional $1,000 in 2006 and years thereafter. The "rollover" rules under the
Code are fairly technical; however, an individual (or his or her surviving
spouse) may generally "roll over" certain distributions from tax favored
retirement plans (either directly or within 60 days from the date of these
distributions) if he or she meets the requirements for distribution. Once you
buy the contract, you can make regular IRA contributions under the contract (to
the extent permitted by law). However, if you make such regular IRA
contributions, you should note that you will not be able to treat the contract
as a "conduit IRA," which means that you will not be able subsequently to "roll
over" the contract funds originally derived from a qualified retirement plan
into another Section 401(a) plan or TDA (although you may be able to transfer
the funds to another IRA).
Required Provisions: Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
- - The annual premium you pay cannot be greater than the maximum amount allowed
by law, including catch-up contributions if applicable (which does not
include any rollover amounts);
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8:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS SELECT CONTRACT
CONTINUED
- --------------------------------------------------------------------------------
- - The date on which annuity payments must begin cannot be later than the April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
(described below).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" (described below);
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution (also generally described below).
SEPS SEPs are a variation on a standard IRA, and contracts issued to a SEP
must satisfy the same general requirements described under IRAs (above). There
are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of (a)
$35,000 (in 2001) or (b) 15% of the employee's earned income (not including
the employer contribution amount as "earned income" for these purposes).
However, for these purposes, compensation in excess of certain limits
established by the IRS will not be considered. In 2001, this limit is
$170,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - Some SEPs for small employers permit salary deferrals (up to $10,500 in 2001)
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SAR-SEPs" can be established after 1996.
You will also be provided the same information, and have the same "free look"
period, as you would have if you were purchasing the contract for a standard
IRA.
SIMPLE-IRAs SIMPLE-IRAs are another variation on the standard IRA, available
to small employers (under 100 employees, on a "controlled group" basis) that do
not offer other tax favored plans. SIMPLE-IRAs are also subject to the same
basic IRA requirements with the following exceptions:
- - Participants in a SIMPLE-IRA may contribute up to $6,500 (in 2001, indexed),
as opposed to the usual $2,000 limit, and employer contributions may also be
provided as a match (up to 3% of your compensation); and
- - SIMPLE-IRAs are not subject to the SEP nondiscrimination rules.
ROTH IRAs Congress amended the Code in 1997 to add a new Section 408A,
creating the "Roth IRA" as a new type of individual retirement plan. Like
standard IRAs, income within a Roth IRA accumulates tax-deferred, and
contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" (generally, held for 5 tax years and payable on
account of death, disability, attainment of age 59 1/2, or first
time-homebuyer) from Roth IRAs are excludable from your gross income; and
- - If eligible, you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA (generally,
$2,000 less any contributions to a traditional IRA), you may purchase a contract
as a Roth IRA only in connection with a "rollover" or "conversion" of the
proceeds of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA, or Roth IRA.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who
30
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
receive certain qualifying distributions from such non-Roth IRAs, to directly
rollover or make, within 60 days, a "rollover" of all or any part of the amount
of such distribution to a Roth IRA which they establish. This conversion
triggers current taxation (but is not subject to a 10% early distribution
penalty). Once the contract has been purchased, regular Roth IRA contributions
will be accepted to the extent permitted by law.
TDAs You may own a TDA generally if you are either an employer or employee of
a tax-exempt organization (as defined under Code Section 501(c)(3)) or a public
educational organization, and you may make contributions to a TDA so long as the
employee's rights to the annuity are nonforfeitable. Contributions to a TDA, and
any earnings, are not taxable until distribution. You may also make
contributions to a TDA under a salary reduction agreement, generally up to a
maximum of $10,500 (2001, indexed). Further, you may roll over TDA amounts to
another TDA or an IRA.A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by April
1st of the calendar year after the calendar year you turn age 70 1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS
minimum distribution requirements must be satisfied. This means that payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount, including a new method permitted under IRS rules
released in January 2001. More information on the mechanics of this calculation
is available on request. Please contact us a reasonable time before the IRS
deadline so that a timely distribution is made. Please note that there is a 50%
IRS penalty tax on the amount of any minimum distribution not made in a timely
manner.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will send you a check for this minimum
distribution amount, less any other partial withdrawals that you made during the
year. Please note that the Minimum Distribution option may need to be modified
after 2001 to satisfy recently announced changes in IRS rules.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received
from an IRA, SEP, SIMPLE-IRA (which may increase to 25%), Roth IRA, TDA or
qualified retirement plan before you attain age 59 1/2. There are only limited
exceptions to this tax, and you should consult your tax adviser for further
details.
WITHHOLDING
The Code requires a mandatory 20% federal income tax withholding for certain
distributions from a TDA or qualified retirement plan, unless the distribution
is an eligible rollover contribution that is "directly" rolled into another
qualified plan, IRA (including the IRA variations described above) or TDA. For
all other distributions, unless you elect otherwise, we will withhold federal
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
income tax from the taxable portion of such distribution at an appropriate
percentage. The rate of withholding on annuity payments where no mandatory
withholding is required is determined on the basis of the withholding
certificate that you file with us. If you do not file a certificate, we will
automatically withhold federal taxes on the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with 3 exemptions;
and
- - For all other distributions, you will be withheld at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are the Expenses Associated with the
Strategic Partners Select Contract" starting on page 24.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale and Distribution of the Contract" on pages 33 and
34.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about the requirements of federal tax law
applicable to tax favored plans, see the "IRA Disclosure Statement" on page 37.
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9:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey is a stock life insurance company
organized in 1982 under the laws of the State of New Jersey. Pruco Life of New
Jersey is licensed to sell life insurance and annuities in the states of New
Jersey and New York and is subject to the insurance laws and regulations of
those states. Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco
Life Insurance Company, which is itself a wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential"), a mutual insurance
company founded in 1875 under the laws of the State of New Jersey.
Pruco Life of New Jersey publishes annual and quarterly reports that are
filed with the SEC. These reports contain financial information about Pruco Life
of New Jersey that is annually audited by independent accountants. The most
recent Audited Consolidated Statements of Financial Position and Management
Discussion of Pruco Life Insurance Company and Subsidiaries are contained in the
SAI. This information, together with all the more current reports filed with the
SEC as required by sections 13 and 15 of the Securities Exchange Act of 1934, is
legally a part of this prospectus. You can obtain copies, at no cost, of any and
all of this information, including the Pruco Life of New Jersey annual report
that is not ordinarily mailed to contractholders, the more current reports and
any subsequently filed documents at no cost by calling us at the number listed
on the cover.
Prudential is currently pursuing reorganizing itself into a stock life
insurance company through a process known as "demutualization." On July 1, 1998,
legislation was enacted in New Jersey that would permit this conversion to occur
and that specified the process for conversion. On December 15, 2000, the Board
of Directors adopted a plan of reorganization pursuant to that legislation and
authorized management to submit an application to the New Jersey Commissioner of
Banking and Insurance ("Commissioner") for approval of the plan. The application
was submitted on March 14, 2001. On July 17 and 18, 2001 the Commissioner held
the required public hearing on the plan. On July 31, 2001, policyholders
overwhelmingly voted to approve the plan. On October 15, 2001, the Commissioner
approved the plan. However, demutualization is a complex process and a number of
additional steps must be taken before the demutualization can occur. Prudential
is planning on completing this process in 2001, but there is no certainty that
the demutualization will be completed in this timeframe or that all of the other
necessary approvals will be obtained. Also it is possible that after careful
review, Prudential could decide not to demutualize or could decide to delay its
plans. As a general rule, the plan of reorganization provides that, in order for
policies or contracts to be eligible for compensation in the demutualization,
they must have been in force on the date the Board of Directors adopted the
plan, December 15, 2000. If demutualization does occur, all the guaranteed
benefits described in your policy or contract would stay the same.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (Separate Account), to hold the assets that are
associated with the contracts. The Separate Account was established under New
Jersey law on May 20, 1996, and is registered with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940, as a unit
investment trust, which is a type of investment company. The assets of the
Separate Account are held in the name of Pruco Life of New Jersey and legally
belong to us. These assets are kept separate from all of our other assets and
may not be charged with liabilities arising out of any other business we may
conduct. More detailed information about Pruco Life of New Jersey, including its
audited financial statements, is provided in the Statement of Additional
Information.
33
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
9:
OTHER INFORMATION continued
- --------------------------------------------------------------------------------
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC ("PIMS"), 100 Mulberry Street,
Newark, New Jersey 07102-4077, acts as the distributor of the contracts.
PIMS is a wholly-owned subsidiary of Prudential and is a limited liability
corporation organized under Delaware law in 1996. It is a registered
broker-dealer under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. We pay the broker-dealer whose
registered representatives sell the Contract either:
- - a commission of up to 7.00% of your Purchase Payments; or
- - a combination of a commission on Purchase Payments and a "trail"
commission -- which is a commission determined as a percentage of your
Contract Value that is paid periodically over the life of your Contract.
The commission amount quoted above is the maximum amount which is paid. In
most circumstances, the registered representative who sold the contract will
receive significantly less.
From time to time, Prudential or its affiliates may offer and pay non-cash
compensation to registered representatives who sell the Contract. For example,
Prudential or an affiliate may pay for a training and education meeting that is
attended by registered representatives of both Prudential-affiliated broker-
dealers and independent broker-dealers. Prudential and its affiliates retain
discretion as to which broker-dealers to offer non-cash (and cash) compensation
arrangements, and will comply with NASD rules and other pertinent laws in making
such offers and payments. Our payment of cash or non-cash compensation in
connection with sales of the Contract does not result directly in any additional
charge to you.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice. We will not be liable
for any payment or other action we take in accordance with the contract if that
action occurs before we receive notice of the assignment. An assignment, like
any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your financial professional.
FINANCIAL STATEMENTS
The Separate Account funds several variable annuity contracts in addition to the
contracts described in this prospectus. In the Statement of Additional
Information, we include financial statements for the Separate Account that
reflect the subaccounts corresponding to those other variable annuity contracts.
STATEMENT OF ADDITIONAL INFORMATION
Contents:
- - Company
- - Experts
- - Litigation
- - Legal Opinions
- - Principal Underwriter
- - Determination of Accumulation Unit Values
- - Performance Information
- - Comparative Performance Information
- - Federal Tax Status
- - Directors and Officers
- - Financial Statements
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses and shareholder
reports to each consenting household, in lieu of sending a copy to each
contractholder that resides in the household. If you are a member of such a
household, you should be aware that you can revoke your consent to householding
at any time, and begin to receive your own copy of prospectuses and shareholder
reports, by calling 1-877-778-5008.
34
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
MARKET-VALUE
ADJUSTMENT FORMULA
- --------------------------------------------------------------------------------
MARKET-VALUE ADJUSTMENT FORMULA
The Market-Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1) The number of whole months remaining in the existing interest rate period.
2) The guaranteed interest rate.
3) The interest rate that Pruco Life of New Jersey declares for a duration of
one year longer than the number of whole years remaining on the existing cell
being withdrawn from.
STATED AS A FORMULA, THE MARKET VALUE IS EQUAL TO:
(M/12) X (R-C)
not to exceed +0.40 or be less than -0.40; where,
<Table>
- -----------------------------------------------------
M = the number of whole months (not to be less
than one) remaining in the interest-rate
period
R = the Contract's guaranteed interest-rate
expressed as a decimal. Thus 6.2% is
converted to 0.062.
C = the interest-rate, expressed as a decimal,
that Pruco Life of New Jersey declares for
a duration equal to the number of whole
years remaining in the present
interest-rate period, plus 1 year as of the
date the request for a withdrawal or
transaction is received
- -----------------------------------------------------
</Table>
The Market-Value Adjustment is then equal to the Market Value Factor multiplied
by the amount subject to a Market-Value Adjustment.
STEP BY STEP
The steps below explain how a market-value adjustment is calculated.
STEP 1: Divide the number of whole months left in the existing interest rate
period (not to be less than one) by 12.
STEP 2: Determine the interest rate Pruco Life of New Jersey declares on the
date the request for withdrawal or transfer is received for a duration of years
equal to the whole number of years determined in Step 1, plus 1 additional year.
Subtract this interest rate from the guaranteed interest rate. The result could
be negative.
STEP 3: Multiply the results of Step 1 and Step 2. Again, the result could be
negative. If the result is less than -0.4, use the value -0.4. If the result is
in between -0.4 and 0.4, use the actual value. If the result is more than 0.4,
use the value 0.4.
STEP 4: Multiply the result of Step 3 (which is the Market Value Factor) by the
value of the amount subject to a Market-Value Adjustment. The result is the
Market-Value Adjustment.
STEP 5: The result of Step 4 is added to the value of the interest cell. If the
Market-Value Adjustment is positive, the interest cell will go up in value. If
the Market-Value Adjustment is negative, the interest cell will go down in
value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
The following example will illustrate the application of a market-value
adjustment and the determination of the withdrawal charge:
Suppose a contractowner made two invested purchase payments, the first in the
amount of $10,000 on December 1, 1995, all of which was allocated to the Equity
Subaccount, and the second in the amount of $5,000 on October 1, 1997, all of
which was allocated to the MVA Option with a guaranteed interest rate of 8%
(0.08) for 7 years. A request for withdrawal of $8,500 is made on February 1,
2000 (the contract owner does not provide any withdrawal instructions). On that
date the amount in the Equity Subaccount is equal to $12,000 and the amount in
the interest cell with a maturity date of September 30, 2004 is $5,985.23, so
that the contract fund on that date is equal to $17,985.23.
On February 1, 2000, the interest rates declared by Pruco Life of New Jersey
for the duration of 5 Years (4 whole years remaining until September 30, 2004,
plus 1 year) is 11%.
The following computations would be made:
1) Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
MARKET-VALUE ADJUSTMENT FORMULA CONTINUED
- --------------------------------------------------------------------------------
2) Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
<Table>
<Caption>
DATE PAYMENT FREE
-------------------------
12/1/95 $10,000 $1,000
12/1/96 $2,000
10/1/97 $5,000 $2,500
12/1/97 $4,000
12/1/98 $5,500
12/1/99 $7,000
</Table>
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3) Since the withdrawal request is in the fifth Contract year, a 3% withdrawal
charge rate applies to any portion of the withdrawal which is not
charge-free.
<Table>
--------------------------------------------
$8,500.00 requested withdrawal amount
-$7,000.00 charge-free
--------------------------------------------
$1,500.00 additional amount needed to
complete withdrawal
</Table>
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount
requested. Therefore, in order to produce the amount needed to complete the
withdrawal request ($1,500), we must "gross-up" that amount, before applying
the withdrawal charge rate. This is done by dividing by 1 minus the
withdrawal charge rate.
-----------------------------------------------------------
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces it
to $1,500, the balance needed to complete the request.
<Table>
--------------------------------------------
$1,546.39 grossed-up amount
X .03 withdrawal charge rate
--------------------------------------------
$46.39 withdrawal charge
</Table>
4) The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interest-rate that would be offered for
an interest cell with a duration of the remaining whole years plus 1), which
is -0.03, multiplied by 4.58333 (55 months remaining until September 30,
2004, divided by 12) or -0.13750. Thus, there will be a negative Market-Value
Adjustment of 14% of the amount in the interest cell that is subject to the
adjustment.
<Table>
--------------------------------------------
-0.13750 X $5,985.23 =
-822.97 negative MVA
$5,985.23 unadjusted value
--------------------------------------------
$5,162.26 adjusted value
$12,000.00 equity value
--------------------------------------------
$17,162.26 adjusted contract fund
</Table>
5) The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market-Value
Adjustments, if any, associated with the MVA option.
<Table>
------------------------------------------------
Equity
($12,000/$17,162.26) X $8,546.39 = $5,975.71
------------------------------------------------
7-Yr MVA
($5,162.26/$17,162.26) X $8,546.39 = $2,570.68
---------
$8,546.39
</Table>
6) The adjusted value of the interest cell, $5,162.26, reduced by the withdrawal
of $2,570.68 leaves $2,591.58. This amount must be "unadjusted" by dividing
it by 0.86250 (1 plus the Market-Value Adjustment of -0.13750) to determine
the amount remaining in the interest cell to which the guaranteed
interest-rate of 8% will continue to be credited until September 30, 2004 or
a subsequent withdrawal. That amount is $3,004.73.
36
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
IRA DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
your simplified employee pension IRA (SEP) for employer contributions, your
Savings Incentive Match Plan for Employees (SIMPLE) IRA, or to one you purchase
for your spouse. You can obtain more information regarding your IRA either from
your sales representative or from any district office of the Internal Revenue
Service. Those are federal tax law rules; state tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 10 days (or whatever period is
required by applicable state law) after it is delivered. This is a more liberal
provision than is required in connection with IRAs. To exercise this "free-look"
provision, return the contract to the representative who sold it to you or to
the Prudential Annuity Service Center at the address shown on the first page of
this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA (or SEP) contributions must be made by
no later than the time you file your income tax return for that year. For a
single taxpayer, the applicable dollar limitation is $33,000 in 2001, with the
amount of IRA contribution which may be deducted reduced proportionately for
Adjusted Gross Income between $33,000 -- $43,000. For married couples filing
jointly, the applicable dollar limitation is $53,000, with the amount of IRA
contribution which may be deducted reduced proportionately for Adjusted Gross
Income between $53,000 -- $63,000. There is no deduction allowed for IRA
contributions when Adjusted Gross Income reaches $43,000 for individuals and
$63,000 for married couples filing jointly. These amounts are for 2001. Income
limits are scheduled to increase until 2006 for single taxpayers and 2007 for
married taxpayers.
Contributions made by your employer to your SEP are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEP will be entitled to
elect to have their employer make contributions to their SEP on their behalf or
to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEP are limited to $10,500 in 2001. In 2002, this limit increases to $11,000
with a permitted catch-up contribution of $1,000 for individuals age 50 and
above. Contribution limits and catch-up contribution limits are scheduled to
increase through 2006 and are indexed for inflation thereafter. Salary-reduction
SEPs (also called "SARSEPs") are available only if at least 50% of the employees
elect to have amounts contributed to the SARSEP and if the employer has 25 or
fewer employees at all times during the preceding year. New SARSEPs may not be
established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to the
lesser of: (1) the maximum amount allowed by law, including catch-up
contributions if applicable, or (2) 100% of your earned compensation.
Contributions in excess of the deduction limits may be subject to penalty. See
below.
Under a SEP agreement, the maximum annual contribution which your employer
may make on your behalf to a SEP contract that is excludable from your income is
the lesser of 15% of your salary or $25,500 (in 2001) rising to $30,000 in 2002.
An employee who
37
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
IRA DISCLOSURE STATEMENT CONTINUED
- --------------------------------------------------------------------------------
is a participant in a SEP agreement may make after-tax contributions to the SEP
contract, subject to the contribution limits applicable to IRAs in general.
Those employee contributions will be deductible subject to the deductibility
rules described above.
The maximum tax deductible annual contribution that a divorced spouse with no
other income may make to an IRA is the lesser of: (1) the maximum amount allowed
by law, including catch-up contributions if applicable, or (2) 100% of taxable
alimony.
If you or your employer should contribute more than the maximum contribution
amount to your IRA or SEP, the excess amount will be considered an "excess
contribution." You are permitted to withdraw an excess contribution from your
IRA or SEP before your tax filing date without adverse tax consequences. If,
however, you fail to withdraw any such excess contribution before your tax
filing date, a 6% excise tax will be imposed on the excess for the tax year of
contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions below for penalties imposed on
withdrawal when the contribution exceeds the maximum amount allowed by law,
including catch-up contributions if applicable.)
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than your
compensation for the year. Contributions of up to the maximum amount allowed by
law, including catch-up contributions if applicable, may be made to your IRA and
the spousal IRA if the combined compensation of you and your spouse is at least
equal to the amount contributed. If requirements for deductibility (including
income levels) are met, you will be able to deduct an amount equal to the least
of (i) the amount contributed to the IRAs; (ii) twice the maximum amount allowed
by law, including catch-up contributions if applicable; or (iii) 100% of your
combined gross income.
Contributions in excess of the contribution limits may be subject to penalty.
See above under "Contributions and Deductions." If you contribute more than the
allowable amount, the excess portion will be considered an excess contribution.
The rules for correcting it are the same as discussed above for regular IRAs.
Other than the items mentioned in this section, all of the requirements
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEP and reinvest it in another IRA or bond. Withdrawals may also be made
from other IRAs and contributed to this contract. This transfer of funds from
one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in another
IRA within 60 days after the date it is received. You will not be allowed a
tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with IRA (or SEP) contributions you have deducted from your income. (You may
roll less than all of a qualified distribution into an IRA, but any part of it
not rolled over will be currently includable in your income without any capital
gains treatment.)
Beginning in 2002, the rollover options increase. Funds can be rolled over
from an IRA or SEP to another IRA or SEP or to another qualified retirement plan
or
38
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PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
457 plan even if additional contributions have been made to the account.
DISTRIBUTIONS
(A) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEP be forfeited. To insure that
your contributions will be used for retirement, the federal tax law does not
permit you to use your IRA or SEP as security for a loan. Furthermore, as a
general rule, you may not sell or assign your interest in your IRA or SEP to
anyone. Use of an IRA (or SEP) as security or assignment of it to another will
invalidate the entire annuity. It then will be includable in your income in the
year it is invalidated and will be subject to a 10% tax penalty if you are not
at least age 59 1/2 or totally disabled. (You may, however, assign your IRA or
SEP without penalty to your former spouse in accordance with the terms of a
divorce decree.)
You may surrender any portion of the value of your IRA (or SEP). In the case
of a partial surrender which does not qualify as a rollover, the amount
withdrawn will be includable in your income and subject to the 10% penalty if
you are not at least age 59 1/2 or totally disabled unless you comply with
special rules requiring distributions to be made at least annually over your
life expectancy.
The 10% tax penalty does not apply to the withdrawal of an excess
contribution as long as the excess is withdrawn before the due date of your tax
return. Withdrawals of excess contributions after the due date of your tax
return will generally be subject to the 10% penalty unless the excess
contribution results from erroneous information from a plan trustee making an
excess rollover contribution or unless you are over age 59 1/2 or are disabled.
(B) DISTRIBUTION AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEP) regardless of when you
actually retire. In addition, you must commence distributions from your IRA by
April 1 following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the period payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, the portion of the distribution
attributable to the nondeductible contribution will be tax-free.
(C) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA or SEP is intended to provide retirement benefits over your lifetime.
Thus, federal tax law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If you
elect to receive periodic payments, those payments must be sufficient to pay out
the entire value of your IRA during your life expectancy (or over the joint life
expectancies of you and your spouse/beneficiary). The calculation method is
revised under the IRS proposed regulations for distributions beginning in 2002
and are optional for distributions in 2001. If the payments are not sufficient
to meet these requirements, an excise tax of 50% will be imposed on the amount
of any underpayment.
(D) DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of your
IRA (or SEP), the remaining interest must be distributed to your beneficiary (or
your surviving spouse's beneficiary) in one lump-sum within 5 years of death, or
applied to purchase an immediate annuity for the beneficiary. This annuity must
be payable over the life expectancy of the beneficiary beginning by December
31st of the year following the year after your or your spouse's death. If your
spouse is the designated beneficiary, he or she is treated as the owner of the
IRA. If minimum required distributions have begun, the entire amount must be
distributed at least as rapidly as if the owner had survived. A distribution of
the balance of your IRA upon your death will not be considered a gift for
federal tax purposes,
39
PART II
STRATEGIC PARTNERS SELECT PROSPECTUS SECTIONS 1-9
IRA DISCLOSURE STATEMENT CONTINUED
- --------------------------------------------------------------------------------
but will be included in your gross estate for purposes of federal estate taxes.
ROTH IRAS
Section 408A of the Tax Code permits eligible individuals to contribute to a
type of IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by
taxpayers with adjusted gross incomes of less than $160,000 for married
individuals filing jointly and less than $110,000 for single individuals.
Married individuals filing separately are not eligible to contribute to a Roth
IRA. The maximum amount of contributions allowable for any taxable year to all
IRAs maintained by an individual is generally the lesser of the maximum amount
allowed by law and 100% of compensation for that year (the maximum amount
allowed by law is phased out for incomes between $150,000 and $160,000 for
marrieds and between $95,000 and $110,000 for singles). The contribution limit
is reduced by the amount of any contributions made to a traditional IRA.
Contributions to a Roth IRA are not deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part of
amounts in a traditional IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. If such a rollover, transfer or conversion occurred
before January 1, 1999, the portion of the amount includable in gross income
must be included in income ratably over the next four years beginning with the
year in which the transaction occurred. Provided a rollover contribution meets
the requirements of IRAs under Section 408(d)(3) of the Code, a rollover may be
made from a Roth IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A TRADITIONAL IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
"Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified distribution" is a distribution that satisfies two requirements: (1)
the distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five tax years after the first year for which a contribution was
made to any Roth IRA established for the owner or five years after a rollover,
transfer, or conversion was made from a traditional IRA to a Roth IRA.
Distributions from a Roth IRA that are not qualified distributions will be
treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a traditional IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if
the owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for underpayments),
you must file Form 5329 with the Internal Revenue Service. The form is to be
attached to your federal income tax return for the tax year in which the penalty
applies. Normal contributions and distributions must be shown on your income tax
return for the year to which they relate.
40
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PART III PROSPECTUSES
- --------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
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ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Incorporated by reference to Part II, Item 2 or Part II, Item 5 of the
Registrant's most recently filed report on Form 10-Q or 10-K, respectively.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in connection with certain affiliates, maintains
various insurance coverages under which the underwriter and certain affiliated
persons may be insured against liability which may be incurred in such
capacity, subject to the terms, conditions and exclusions of the insurance
policies.
New Jersey, being the state of organization of Pruco Life Insurance
Company of New Jersey ("PLNJ") permits entities organized under its jurisdiction
to indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-Law Article
V, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit 3(ii) to its Form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") 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 a 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.
ITEM 16. EXHIBITS
(a) Exhibits
(1) (a) Form of Distribution Agreement between Prudential Investment
Management Services LLC (Underwriter) and Pruco Life Insurance Company
of New Jersey (Depositor). (Note 5)
(4) Strategic Partners Select Variable Annuity Contract (Note 1)
(4) (a) Strategic Partners Select Variable Annuity Application (Note 1)
(5) Opinion of Counsel as to legality of the securities being registered.
(Note 1)
(23) Written consent of PricewaterhouseCoopers LLP, Independent Accountants
(Note 1)
(24) Powers of Attorney.
(a) James J. Avery, Jr. (Note 3)
(b) David R. Odenath, Jr. and William J. Eckert, IV (Note 2)
(c) Ronald P. Joelson (Note 4)
(d) Vivian L. Banta, Richard J. Carbone,
Helen M. Galt and Jean D. Hamilton (Note 5)
- ----------
(Note 1) Filed herewith.
C-1
(Note 2) Incorporated by reference to Form S-6, Registration No. 333-49334,
filed February 8, 2001 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 14 to Form
S-1, Registration Statement No. 33-20018, filed April 10, 2001 on
behalf of the Pruco Life of New Jersey Variable Contract Real
Property Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 5 to Form
S-6, Registration No. 333-85117 filed June 28, 2001 on behalf of
the Pruco Life of New Jersey Variable Appreciable Account.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file at least annually, during any period in which offers or sales are
being made, an amended registration statement that (i) includes a
prospectus required by Section 10(a)(3) of the Securities Act of 1933 and
(ii) reflects in that prospectus any facts or events arising after the
effective date of this registration statement that represent a fundamental
change in the information set forth in this registration statement.
(2) 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.
(3) 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 the time shall be deemed to be the initial
bona fide offering thereof.
(4) 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.
(5) 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 section 15(d) of the securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 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.
(6) 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 a 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.
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SIGNATURES
Pursuant to the requirements of 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 duly caused this registration
statement to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newark, State of New
Jersey, on the 21st day of November, 2001.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Registrant)
By: /s/ VIVIAN L. BANTA
------------------------
VIVIAN L. BANTA
PRESIDENT, CHAIRMAN AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and the date indicated.
SIGNATURE AND TITLE
-------------------
/s/ * November 21, 2001
JAMES J. AVERY JR.
VICE CHAIRMAN
AND DIRECTOR
/s/ * *By: /s/ CLIFFORD E. KIRSCH
--------------------------- -------------------------
VIVIAN L. BANTA CLIFFORD E. KIRSCH
PRESIDENT, CHAIRMAN AND DIRECTOR (ATTORNEY-IN-FACT)
/s/ *
---------------------------
WILLIAM J. ECKERT, IV
VICE PRESIDENT AND CHIEF ACCOUNTING OFFICER
(PRINCIPAL FINANCIAL AND CHIEF ACCOUNTING OFFICER)
---------------------------
RONALD P. JOELSON
DIRECTOR
/s/ *
---------------------------
RICHARD J. CARBONE
DIRECTOR
/s/ *
---------------------------
HELEN M. GALT
DIRECTOR
/s/ *
---------------------------
JEAN D. HAMILTON
DIRECTOR
/s/ *
---------------------------
DAVID R. ODENATH, JR.
DIRECTOR
C-3
EXHIBIT INDEX
(4) Strategic Partners Select Contract
(4)(a) Strategic Partners Select Application
(5) Opinion of Counsel
(23)(a) Consent of PricewaterhouseCoopers LLP, independent accountants