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[INSERT COMPANY LETTERHEAD]
June 15, 2007
VIA HAND DELIVERY AND EDGAR TRANSMISSION
Ms. Sally Samuel
Senior Counsel
Office of Insurance Products
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Commonwealth Annuity and Life Insurance Company
Commonwealth Annuity Separate Account A
Pre-Effective Amendments to the Registration Statements on Form N-4
FILE NOS. 333-141019 AND 333-141045/811-22024____________________
Dear Ms. Samuel:
On behalf of Commonwealth Annuity and Life Insurance Company (the "Company") and
Commonwealth Annuity Separate Account A (the "Account"), enclosed for your
convenience are courtesy copies of Pre-Effective Amendment No. 1 (the
"Amendments") to the above-captioned registration statements on Form N-4. The
Amendments were filed with the Securities and Exchange Commission (the
"Commission") on June [ ], 2007. For your convenience, the enclosed copies have
been marked to highlight changes made from the initial registration statements.
The Amendments incorporate changes made in response to comments raised by the
Commission staff in a letter to the Company dated May 1, 2007 on the
registration statements originally filed with the Commission. The Amendments
also contain updated information on certain product features and include other
information necessary to complete the registration statements, such as financial
statements and the remainder of the required exhibits. The Amendments also
reflect clarifying or stylistic changes.
Acceleration requests from the Company, on behalf of the Account, and from the
principal underwriter accompany the filings.
The following paragraphs provide the Company's response to each comment raised
by the Commission staff. For the staff's convenience, each of the staff's
comments is set forth in full below, and then the response follows. Each
response applies to both of the above-referenced registration statements, unless
otherwise indicated.
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Ms. Sally Samuel
June 15, 2007
Page 2
1. COVER
COMMENT: Please move all required cover page information, currently shown
on page 2, to the cover, except that the list of funds may be shown on the
inside cover if it is too long to fit on the cover.
RESPONSE: The Company has moved all required cover page information to the
cover page (except for the list of funds, which is too long to fit on the
cover).
2. DEFINITIONS
COMMENT: Please correct the typographical error in line 4 of the definition
of "Contingent Beneficiary" (i.e. "wills" to "will"). Also, please explain
the language "as well as each day otherwise required" added at the end
of the definition of "Valuation Date."
RESPONSE: The Company has corrected the typographical error in line 4 of
the definition of "Contingent Beneficiary." Also, the Company has deleted
the language "as well as each day otherwise required" from the definition
of "Valuation Date."
3. CONTRACT OWNER TRANSACTION EXPENSES (PAGES 7-8)
(a). COMMENT: Please explain how earnings attributable to Purchase Payment
Bonuses are excluded when calculating the withdrawal charges. Please
provide an example of this calculation in the discussion of withdrawal
charges in the prospectus, and cross-reference that discussion through a
footnote in the table. Please also include a representation that the
withdrawal charges will never exceed 9% of purchase payments as required by
Rule 6c-8 under the Investment Company Act of 1940 (1940 Act).
RESPONSE: When calculating the withdrawal charge under the Preferred Plus
annuity, the Company applies the charge to Purchase Payments, Purchase
Payment Bonuses, and earnings attributable to Purchase Payments and
Purchase Payment Bonuses. The Company has revised the Preferred Plus
annuity prospectus so that this is clear. The Company also has revised each
prospectus to include an example of the withdrawal charge calculation, and
has revised the footnote to the withdrawal charge in the fee table to
provide a cross-reference to the withdrawal charge calculation set forth in
the Contract Charges and Expenses section of the prospectus. The Company
also has revised each prospectus to include a representation that the
withdrawal charges will never exceed 9% of Purchase Payments.
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Ms. Sally Samuel
June 15, 2007
Page 3
(b). COMMENT: Please include the range of premium taxes that are deducted in the
table. Please also include a footnote referencing the "Premium Taxes"
disclosure in the prospectus.
RESPONSE: The Company has revised each prospectus to include the range of
premium taxes in the fee table and has included a footnote referencing the
"Premium Taxes" disclosure in the prospectus.
(c). COMMENT: Please revise the table in accordance with Item 3, Instruction 2,
which instructs that a registrant assume that the annuity contract is owned
during the accumulation period. The existence of a Commutation Charge
during the annuity period can be disclosed in a brief narrative footnote
which provides a cross-reference to the portion of the prospectus
describing the charge.
RESPONSE: The Company has revised each prospectus to disclose the
Commutation Charge in a brief narrative footnote with a cross-reference to
the portion of the prospectus describing the charge.
(d). COMMENT: So as not to obscure the information required to be disclosed by
Item 3, please place all footnotes at the bottom of the appropriate page or
at the end of the Item 3 disclosure. In this regard, please note
Instruction 9 permits a tabular presentation, within the larger table, of
the range of contingent deferred sales loads over time.
RESPONSE: The Company has revised each prospectus to place all footnotes at
the bottom of the appropriate page.
(e). COMMENT: Please include the net interest rates for loans in the table, with
a footnote referencing the more complete disclosure later in the
prospectus.
RESPONSE: The Company has revised each prospectus to include the net
interest rates for loans in the fee table and has added a footnote with a
cross reference to the prospectus section that provides more complete
disclosure on loans.
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Ms. Sally Samuel
June 15, 2007
Page 4
4. PERIODIC EXPENSES (PAGES 8-9)
(a). COMMENT: Please add a line item showing the highest combination of base
contract and optional feature charges.
RESPONSE: The fee table for each prospectus does contain a line item
showing the highest combination of base contract and optional feature
charges that are a percentage of Separate Account Contract Value ("Total
Separate Account Annual Expenses including Step-Up Death Benefit").
However, the Company is unable to add a line item showing the highest
combination with all optional feature charges because the other optional
feature charges are not based only on Separate Account Contract Value. The
Company calculates the Guaranteed Lifetime Withdrawal Benefit Rider charge
as a percentage of the Lifetime Income Base and the No Withdrawal Charge
Rider charge as a percentage of Contract Value. Accordingly, the Guaranteed
Lifetime Withdrawal Benefit Rider charge and the No Withdrawal Charge Rider
cannot be combined with the base contract charges and the Step-Up Death
Benefit charge.
(b). COMMENT: Please confirm that all acquired fund fees will be included in the
"Total Annual Fund Operating Expenses" figures shown in the table.
RESPONSE: The Company confirms that all acquired fund fees have been
included in the "Total Annual Fund Operating Expenses" figures shown in the
table.
5. SUMMARY (PAGE 12)
COMMENT: In those states that require a return of Purchase Payments, please
explain why you are not returning the greater of Contract Value or Purchase
Payment. SEE Section 1(32) of the 1940 Act. See also "Free Look Period" on
page 18.
RESPONSE: The Company returns the Purchase Payment rather than Contract
Value in accordance with state laws or regulations that require a return of
Purchase Payment in the event a contract owner exercises his or her "free
look" right. The Company is not aware of any state that requires a return
of the greater of Contract Value or Purchase Payment.
6. FIXED ACCOUNT (PAGE 16)
COMMENT: Please indicate that disclosures regarding the Fixed Account in
the prospectus ARE subject to the federal securities law, rather than "may
be."
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Ms. Sally Samuel
June 15, 2007
Page 5
RESPONSE: The Company has revised each prospectus to indicate that the
disclosures regarding the Fixed Account in the prospectus ARE subject to
the general provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
7. THE ACCUMULATION PERIOD (PAGE 20)
COMMENT: Please use the close of business on the Valuation Date, rather
than 3:00 p.m. Central time, as the cut-off time to avoid conflicts in the
event the NYSE closes earlier or is not open on a given date. This change
should also be reflected in the third paragraph on page 23 and elsewhere as
applicable.
RESPONSE: The Company has revised each prospectus to use the close of
business on the Valuation Date, rather than 3:00 p.m. Central time, as the
cut-off time for all applicable transaction requests.
8. DISRUPTIVE TRADING (PAGE 25)
COMMENT: In the first paragraph on this page, please delete the third
sentence or explain your basis for including this language.
RESPONSE: The Company has included this disclosure as it believes it is in
the interest of contract owners to be informed that the Company may not be
able to apply the Funds' excessive trading policies and procedures. As a
general note, Rule 22c-2 does not require an intermediary to apply the
market timing policies and procedures of the Funds. Rather, the purpose of
the rule is to provide the Funds the information that they need to apply
their own policies and procedures. Intermediaries are not required to
monitor investor trades to determine if they violate frequency, numerical
limits, holding period requirements, or any other policies and procedures
of the Funds. Intermediaries are only required to provide information, and
then block trades by an investor IDENTIFIED BY THE FUND.
9. WITHDRAWALS AND SURRENDERS (PAGE 26)
COMMENT: Please disclose that the contract value may be transferred to
another investment option as permitted under the Texas Optional Retirement
System.
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Ms. Sally Samuel
June 15, 2007
Page 6
RESPONSE: The Company has revised each prospectus to disclose that
participants under the Texas Optional Retirement System may transfer
Contract Value among the Investment Options.
10. GUARANTEED LIFETIME WITHDRAWAL BENEFIT (PAGE 31)
COMMENT: Please move the definitions shown on pages 32-34 before the
discussion.
RESPONSE: The Company has moved the definitions in each prospectus to
precede the discussion.
11. TAKING WITHDRAWALS (PAGES 39)
COMMENT: Since you reserve the right to impose a withdrawal charge on
Non-Excess Withdrawals, please disclose the amount of that charge. SEE ALSO
page 56, fifth paragraph.
RESPONSE: The Company has revised each prospectus to clarify that if it
does assess a withdrawal charge on a Non-Excess Withdrawal or an Excess
Withdrawal (or a required minimum distribution), the Company will calculate
and impose the charge in the same manner that it would for any partial
withdrawal. The amount of the charge depends on several factors
including the contribution year and is calculated separately for each
Purchase Payment. Therefore, the Company does not believe it is possible to
disclose the amount of the charge for a Non-Excess Withdrawal or a required
minimum distribution. However, the Company has added examples to illustrate
the assessment of the withdrawal charge on several types of withdrawals.
12. BENEFIT PHASE EXAMPLE (PAGES 44 - 45)
COMMENT: Please explain the basis for using 34 payments in the examples
under "If the Benefit Phase Start Date Occurs Before [or ON OR AFTER] the
Lifetime Income Date."
RESPONSE: There is no particular significance in choosing to use 34
payments in the examples. The Company chose this number at random and uses
it throughout the examples for consistency.
13. REDUCTION OR ELIMINATION OF CERTAIN CHARGES (PAGE 60)
COMMENT: Please provide your basis for reducing the mortality and expense
risk charge and other asset based charges for certain sales.
RESPONSE: The Company has decided not to reduce the mortality and expense
risk charge or other asset based charges for certain sales and has revised
each prospectus accordingly.
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Ms. Sally Samuel
June 15, 2007
Page 7
14. PART C
(a). COMMENT: Please specifically identify the Financial Statements included in
Part B.
RESPONSE: The Company has revised the Part C to specifically identify the
Financial Statements included in Part B.
(b). COMMENT: Please identify the Company as Commonwealth Annuity and Life
Insurance Company in the representation as to fees and charges. Also,
please add the word "deducted" before "under the Contracts."
RESPONSE: The Company has revised the Part C to identify the Company by
name in the representation as to fees and charges. The Company also has
added the word "deducted" before "under the Contracts."
COMMENT: The actual participation agreement with each underlying fund
should be filed as an exhibit to each registration statement.
RESPONSE: The Company has filed the actual participation agreement with
each underlying fund as an exhibit to each registration statement.
(d). COMMENT: In each registration statement, please file a Power of Attorney
that relates specifically to that registration statement. SEE Rule 483(b)
of the Securities Act of 1933.
RESPONSE: The Company has filed as an exhibit to each registration
statement Powers of Attorneys that relate specifically to the applicable
registration statement. Each Power of Attorney meets this requirement by
listing the applicable registration statement's 1933 Act filing number.
15. FINANCIAL STATEMENTS, EXHIBITS, AND OTHER INFORMATION
COMMENT: Financial statements, exhibits, and other required or missing
disclosure not included in the registration statements must be filed in a
pre-effective amendment to the registration statements.
RESPONSE: The Company has included the financial statements, exhibits, and
other required or missing disclosure in the Amendments.
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Ms. Sally Samuel
June 15, 2007
Page 8
16. TANDY COMMENT
COMMENT: We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to be
certain that they have provided all information investors require for an
informed decision. Since the fund and its management are in possession of
all facts relating to the fund's disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the event the fund requests acceleration
of the effective date of the pending registration statements, it should
furnish a letter, at the time or such request, acknowledging that
- should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose
the Commission from taking any action with respect to the filing;
- the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the fund from its full responsibility for the adequacy
and accuracy of the disclosure in the filing; and
- the fund may not assert this action as defense in any proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
In addition, please be advised that the Division of Enforcement has access
to all information you provide to the staff of the Division of Investment
Management in connection with our review of your filings or in response to
our comments on your filings.
We will consider a written request for acceleration of the effective date
of the registration statements as a confirmation of the fact that those
requesting acceleration are aware of their respective responsibilities. We
will act on the request and, pursuant to delegated authority, grant
acceleration of the effective date.
RESPONSE: The Company has submitted a letter for each registration
statement under separate cover acknowledging the above statements.
17. ADDITIONAL ORAL COMMENT
COMMENT: Clarify fees and services rendered under the section
"Administrative, Marketing, and Support Service Fees."
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Ms. Sally Samuel
June 15, 2007
Page 9
RESPONSE: The Company has finalized this disclosure - now titled "Certain
Payments We Receive With Regard to the Funds" - including the fee ranges
that were previously bracketed.
We believe that the Amendments are complete and respond to all Commission staff
comments. We respectfully request that the staff review these materials as soon
as possible. As noted above, requests for acceleration from the Company, on
behalf of the Account, and from the principal underwriter accompany the
Amendments and seek acceleration of the effectiveness of the registration
statements to July 9, 2007 or as soon as practicable thereafter. Any assistance
you can provide to the Company to assist it in meeting this request would be
very much appreciated.
If you have any questions or comments, please call the undersigned at (508)
460-2408 or Elisabeth M. Bentzinger at (202) 383-0717. We greatly appreciate the
staff's efforts in assisting the Company with these filings.
Sincerely,
/s/ Jon-Luc Dupuy
----------------------
Jon-Luc Dupuy
Assistant General Counsel and Vice President
Attachments
cc: Stephen E. Roth
Elisabeth M. Bentzinger
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As filed with the Securities and Exchange Commission on June 15, 2007
Registration Nos. 333-141045/811-22024
Advantage IV
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
COMMONWEALTH ANNUITY SEPARATE ACCOUNT A OF
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
(Exact Name of Registrant)
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
(Name of Depositor)
132 Turnpike Road, Suite 210
Southborough, Massachusetts 01772
Telephone: (508) 460-2400
(Address of Depositor's Principal Executive Office)
Jon-Luc Dupuy, Vice President, Assistant General Counsel and
Assistant Corporate Secretary
Commonwealth Annuity and Life Insurance Company
132 Turnpike Road, Suite 210
Southborough, Massachusetts 01772
Telephone: (508) 460-2400
(Name and Address of Agent for Service of Process)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
effectiveness of the Registration Statement.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date or
dates as the Commission, acting pursuant to said Section 8(a) may determine.
TITLE & SECURITIES BEING REGISTERED: Interests in a separate account funding
variable annuity contracts.
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PROSPECTUS FOR
FLEXIBLE PREMIUM FIXED AND VARIABLE DEFERRED
ANNUITY CONTRACTS
----------
COMMONWEALTH ANNUITY SEPARATE ACCOUNT A
----------
COMMONWEALTH ANNUITY VARIABLE ANNUITY ADVANTAGE IV
ISSUED BY
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
HOME OFFICE: SERVICE CENTER MAILING ADDRESS:
132 Turnpike Road, Suite 210 P.O. Box 758550
Southborough, MA 01772 Topeka, Kansas 66675-8550
[phone number] [phone number]
This Prospectus describes flexible premium fixed and variable deferred
annuity contracts (the "Contract") issued by Commonwealth Annuity and Life
Insurance Company ("we" "Company" or "Commonwealth Annuity"). The Contract is
designed to provide annuity benefits for retirement which may or may not qualify
for certain federal tax advantages. This Prospectus describes both Qualified
Contracts and Non-Qualified Contracts, and the Contract may be purchased by
natural persons, or by trusts or custodial accounts that hold the Contract as
agent for and for the sole benefit of a natural person. The Contract is not
available for sale to other types of purchasers without our prior approval.
INVESTING IN THE CONTRACT INVOLVES RISKS, INCLUDING POSSIBLE LOSS OF SOME OR ALL
OF YOUR INVESTMENT. REPLACING YOUR EXISTING ANNUITY OR LIFE INSURANCE POLICY
WITH THE CONTRACT MAY NOT BE TO YOUR ADVANTAGE. The Contract may be purchased
only if the older Owner and Annuitant have not attained age 80.
THE CONTRACTS ARE NOT INSURED BY THE FDIC. THEY ARE OBLIGATIONS OF THE
ISSUING INSURANCE COMPANY AND NOT A DEPOSIT OF, OR GUARANTEED BY, ANY BANK OR
SAVINGS INSTITUTION AND ARE SUBJECT TO RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
THIS PROSPECTUS CONTAINS IMPORTANT INFORMATION ABOUT THE CONTRACTS THAT YOU
SHOULD KNOW BEFORE INVESTING. YOU SHOULD READ IT BEFORE INVESTING AND KEEP IT
FOR FUTURE REFERENCE. WE HAVE FILED A STATEMENT OF ADDITIONAL INFORMATION
("SAI") WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CURRENT SAI HAS THE
SAME DATE AS THIS PROSPECTUS AND IS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. YOU MAY OBTAIN A FREE COPY BY WRITING US AT OUR SERVICE CENTER OR
CALLING [PHONE NUMBER]. A TABLE OF CONTENTS FOR THE SAI APPEARS AT THE END OF
THIS PROSPECTUS. YOU MAY ALSO FIND THIS PROSPECTUS AND OTHER INFORMATION ABOUT
THE SEPARATE ACCOUNT REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") AT THE SEC'S WEB SITE AT http://www.sec.gov.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS [JULY 9], 2007.
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You may allocate Purchase Payments and/or transfer Contract Value to the
Fixed Account or to one or more of the variable Investment Options, each of
which is a Subaccount of the Commonwealth Annuity Separate Account A. Currently,
you may choose among Subaccounts that invest in the following Insurance Funds:
GOLDMAN SACHS VARIABLE INSURANCE TRUST (CLASS S)
- Goldman Sachs VIT Capital Growth Fund
- Goldman Sachs VIT Core Fixed Income Fund
- Goldman Sachs VIT Equity Index Fund Goldman Sachs VIT Government Income
Fund
- Goldman Sachs VIT Growth & Income Fund
- Goldman Sachs VIT Growth Opportunities Fund
- Goldman Sachs VIT Money Market Fund
- Goldman Sachs VIT Strategic International Equity Fund
- Goldman Sachs VIT Structured Small Cap Equity Fund
- Goldman Sachs VIT Structured U.S. Equity Fund
AIM VARIABLE INSURANCE FUNDS (SERIES II)
- AIM V.I. Core Equity Fund
- AIM V.I. Leisure Fund
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. (CLASS B)
- AllianceBernstein VPS Americas Government Income Portfolio
- AllianceBernstein VPS International Value Portfolio
- AllianceBernstein VPS Small Cap Growth Portfolio
- AllianceBernstein VPS Small/Mid Cap Value Portfolio
FRANKLIN TEMPLETON INSURANCE PRODUCTS TRUST (CLASS 2)
- FT VIP Templeton Global Asset Allocation Fund
- FT VIP Franklin Global Communications Fund
- FT VIP Templeton Growth Securities Fund
- FT VIP Franklin Income Securities Fund
- FT VIP Franklin Mutual Discovery Securities Fund
- FT VIP Franklin Mutual Shares Securities Fund
- FT VIP Franklin Small Cap Value Securities Fund
JANUS ASPEN SERIES (SERVICE SHARES)
- Janus Aspen Forty Portfolio
- Janus Aspen Midcap Growth Portfolio
- Janus Aspen Midcap Value Portfolio
- Janus Aspen Small Company Value Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS (SERVICE SHARES)
- Oppenheimer Balanced Fund/VA
- Oppenheimer Global Securities Fund/VA
- Oppenheimer Main Street Small Cap Fund/VA
- Oppenheimer Strategic Bond Fund/VA
PIONEER VARIABLE CONTRACTS TRUST (CLASS II)
- Pioneer Cullen Value VCT Portfolio
- Pioneer Emerging Markets VCT Portfolio
- Pioneer Growth Opportunities VCT Portfolio
- Pioneer Mid Cap Value VCT Portfolio
In addition, Qualified Contracts also may choose among Subaccounts that invest
in the following Publicly-Available Funds:
- Goldman Sachs Balanced Strategy Portfolio (Class A)
- Goldman Sachs Equity Growth Strategy Portfolio (Class A)
- Goldman Sachs Growth and Income Strategy Portfolio (Class A)
- Goldman Sachs Growth Strategy Portfolio (Class A)
- Goldman Sachs International Real Estate Security Fund
- Goldman Sachs Real Estate Security Fund (Class A)
- Goldman Sachs Tollkeeper Fund (Class A)
Many of the Publicly-Available Funds are also available for direct purchase
outside of an annuity or life insurance policy. If you purchase shares of these
funds directly from a broker-dealer or mutual fund
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company, you will not pay Contract fees or charges, but you also will not have
Annuity Options available. Because of the additional Contract fees and charges,
which affect Contract Value and Subaccount returns, you should refer only to
performance information regarding the Publicly-Available Funds available through
us, rather than to information that may be available through alternate sources.
If you elect the Guaranteed Lifetime Withdrawal Benefit (GLWB) Rider, we
will restrict the Investment Options to which you may allocate Purchase Payments
and transfer Contract Value. (See "Guaranteed Lifetime Withdrawal Benefit.")
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TABLE OF CONTENTS
PAGE
----
DEFINITIONS
SUMMARY
SUMMARY OF EXPENSES
CONDENSED FINANCIAL INFORMATION
DISTRIBUTION COSTS
COMMONWEALTH ANNUITY, THE SEPARATE ACCOUNT AND THE FUNDS
FIXED ACCOUNT
THE CONTRACTS
CONTRACT CHARGES AND EXPENSES
THE ANNUITY PERIOD
PAYMENTS TO CONTRACT OWNERS
FEDERAL TAX MATTERS
DISTRIBUTION OF CONTRACTS
VOTING RIGHTS
REPORTS TO CONTRACT OWNERS AND INQUIRIES
DOLLAR COST AVERAGING
AUTOMATIC ASSET REBALANCING
SYSTEMATIC WITHDRAWAL PLAN
SPECIAL CONSIDERATIONS
LEGAL PROCEEDINGS
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
APPENDIX A - COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY DEFERRED
FIXED AND VARIABLE ANNUITY IRA, ROTH IRA AND SIMPLE IRA DISCLOSURE
STATEMENT
APPENDIX B - GLWB EXAMPLE
APPENDIX C - GLWB EXAMPLE
APPENDIX D - GLWB EXAMPLE
4
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DEFINITIONS
The following terms as used in this Prospectus have the indicated meanings:
ACCUMULATION PERIOD--The period between the Date of Issue of a Contract and the
Annuity Date.
ACCUMULATION UNIT--A unit of measurement used to determine the value of each
Subaccount during the Accumulation Period. Each Subaccount will have an
Accumulation Unit for each combination of charges.
ANNUITANT-- The person(s) during whose lifetime the annuity is to be paid. When
two people are named as joint Annuitants, the term "Annuitant" means the joint
Annuitants or the survivor.
ANNUITY DATE--The Valuation Date on which annuity payments are to commence.
Subject to state variation, the Annuity Date may not be after the Valuation Date
on or next following the later of the original older Owner's or Annuitant's 90th
birthday.
ANNUITY OPTION--One of several forms in which annuity payments can be made.
ANNUITY PERIOD--The period starting on the Annuity Date during which we make
annuity payments to you.
ANNUITY UNIT--A unit of measurement used to determine the amount of Variable
Annuity payments after the first payment.
BENEFICIARY--The person designated to receive any benefits under a Contract upon
your death. (see Primary Beneficiary and Contingent Beneficiary).
CODE--The Internal Revenue Code of 1986, as amended.
COMPANY ("WE", "US", "OUR", "COMMONWEALTH ANNUITY")--Commonwealth Annuity and
Life Insurance Company.
CONTINGENT BENEFICIARY--The person designated to receive any benefits under a
Contract upon your death should all Primary Beneficiaries predecease you. In the
event that a Contingent Beneficiary predeceases you, the benefits will be
distributed pro rata to the surviving Contingent Beneficiaries. If there are no
surviving Contingent Beneficiaries, the benefits will be paid to your estate
(see Beneficiary and Primary Beneficiary).
CONTRACT--A Flexible Premium Fixed and Variable Deferred Annuity Contract.
CONTRACT ANNIVERSARY--The same date each year as the Date of Issue. If there is
no Valuation Date in a year that coincides with the Date of Issue, the Contract
Anniversary is the next Valuation Date.
CONTRACT VALUE--The sum of your Fixed Account Contract Value and Separate
Account Contract Value.
CONTRACT YEAR--A period of twelve consecutive months starting on the Date of
Issue or on any Contract Anniversary.
CONTRIBUTION YEAR--Each Contract Year in which a Purchase Payment is made and
each later year measured from the start of the Contract Year when the Purchase
Payment was made. We only refer to Contribution Years for purposes of
calculating the withdrawal charge. For example, if you make an initial Purchase
Payment of $15,000 and then during the fourth Contract Year you make an
additional Purchase Payment of $10,000, the fifth Contract Year will be the
fifth Contribution Year with respect to the initial Purchase Payment (and
earnings attributable to that Purchase Payment) and the second
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Contribution Year with respect to the $10,000 Purchase Payment (and earnings
attributable to that Purchase Payment).
DATE OF ISSUE--The date on which the first Contract Year commences.
DEBT--The principal of any outstanding loan from the Fixed Account Contract
Value, plus any accrued interest.
FIXED ACCOUNT-- A portion of a Contract that is supported by the assets of our
General Account. We guarantee a minimum rate of interest on Purchase Payments
allocated and Contract Value transferred to the Fixed Account.
FIXED ACCOUNT CONTRACT VALUE--The value of your interest in the Fixed Account.
FIXED ANNUITY--An annuity under which we guarantee the amount of each annuity
payment; it does not vary with the investment experience of a Subaccount.
FREE WITHDRAWAL AMOUNT--The guaranteed amount you may withdraw each Contract
Year without incurring a withdrawal charge.
FUND OR FUNDS-- An investment company or separate series thereof, in which
Subaccounts of the Separate Account invest.
GENERAL ACCOUNT--All our assets other than those allocated to any legally
segregated separate account.
INVESTMENT OPTION--The Subaccounts and the Fixed Account available under the
Contract for allocation of Purchase Payments and/or transfers of Contract Value.
MONTHIVERSARY--The same date each month as the Date of Issue. If the Date of
Issue falls on the 29th, 30th, or 31st and there is no corresponding date in a
subsequent month, the Monthiversary will be the last date of that month. If
there is no Valuation Date in the calendar month that coincides with the Date of
Issue, the Monthiversary is the next Valuation Date.
NON-QUALIFIED CONTRACT--A Contract which does not receive favorable tax
treatment under Section 401, 403, 408, 408A or 457 of the Code.
OWNER ("CONTRACT OWNER", "YOU", "YOUR", "YOURS")--The person designated in the
Contract as having the privileges of Ownership. The Contract may be owned by
natural persons, or by trusts or custodial accounts that hold the Contract as
agent for and for the sole benefit of a natural person. When two people are
named as joint Owners, the term "Owner" means the joint Owners or the survivor.
Joint Owners are not permitted if the Contract is owned by a non-natural person.
PRIMARY BENEFICIARY--The person designated to receive any benefits under a
Contract upon your death. In the event that a Primary Beneficiary predeceases
you, the benefits will be distributed pro rata to the surviving Primary
Beneficiaries. In the event that all Primary Beneficiaries predecease you,
proceeds will be paid to the surviving Contingent Beneficiaries (see Beneficiary
and Contingent Beneficiary).
PURCHASE PAYMENTS--The dollar amount we receive in U.S. currency to buy the
benefits the Contract provides.
QUALIFIED CONTRACT--A Contract issued in connection with a retirement plan which
receives favorable tax treatment under Sections 401, 403, 408, 408A or 457 of
the Code.
SEPARATE ACCOUNT--Commonwealth Annuity Separate Account A.
6
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SEPARATE ACCOUNT CONTRACT VALUE--The sum of your interests in the Subaccount(s).
SERVICE CENTER--P.O. Box 758550, Topeka, Kansas 66675-8550, [phone number].
SUBACCOUNTS--The subdivisions of the Separate Account, the assets of which
consist solely of shares of the corresponding Fund.
VALUATION DATE--Each day when the New York Stock Exchange is open for trading.
The close of business on each Valuation Date is generally 3:00 p.m. Central
time.
VALUATION PERIOD--The interval of time between two consecutive Valuation Dates.
VARIABLE ANNUITY--An annuity with payments varying in amount in accordance with
the investment experience of the Subaccount(s) in which you have an interest.
WITHDRAWAL VALUE--The amount you will receive upon full surrender or the amount
applied upon annuitization of the Contract. It is equal to the Contract Value
minus Debt, any applicable withdrawal charge, premium taxes, and minus any
applicable contract fee and pro rata portion of the GLWB Rider charge. Federal
and state income taxes and penalty taxes also may reduce the amount you receive
if you surrender the Contract.
7
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SUMMARY OF EXPENSES
THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN
BUYING, OWNING, AND SURRENDERING THE CONTRACT. THE FIRST TABLE DESCRIBES THE
FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT,
SURRENDER THE CONTRACT, OR TRANSFER CONTRACT VALUE AMONG INVESTMENT OPTIONS.
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Load Imposed on Purchase Payments None
Maximum Withdrawal Charge(2)
(as a percentage of Purchase Payments (and earnings attributable to
Purchase Payments) withdrawn, surrendered, or annuitized): 6%
Qualified Plan Loan Interest Rate Charged:(3)
Loans not subject to ERISA 5.50%
Loans subject to ERISA Moody's Corporate Bond
Yield Average --
Monthly Average
Corporates (rounded to the nearest
0.25%)
State Premium Taxes(4) 0% to 3.50%
----------
(1) During the Annuity Period, we deduct a commutation charge if you request a
lump sum payment with respect to: 1) any remaining annuity payments in the
certain period under Annuity Options 1, 3, or 5 upon the death of an Annuitant;
or 2) any remaining annuity payments under Annuity Option 1. Please see
"Commutation Charge."
(2) In certain circumstances we may reduce or waive the withdrawal charge. In
addition, a Contract Owner may withdraw the Free Withdrawal Amount each Contract
Year without incurring a withdrawal charge. If you withdraw more than the Free
Withdrawal Amount, we may impose a withdrawal charge on the excess. We impose a
withdrawal charge on the withdrawal of each Purchase Payment (and earnings
attributable to that Purchase Payment) made within the previous 6 Contribution
Years, as follows:
WITHDRAWAL
CONTRIBUTION YEAR CHARGE
----------------- ----------
First 6%
Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh + 0%
Total withdrawal charges assessed under a Contract will never exceed 9% of the
total Purchase Payments made under the Contract. For more information on the
withdrawal charge, including an example of how we calculate the withdrawal
charge, see "Withdrawal Charge."
(3) Loans are only available under certain qualified plans, and the interest
rate depends on whether the plan is subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"). (See "Loans".)
(4) For a discussion of state premium taxes, please see "State Premium Taxes."
8
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THE NEXT TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING FUND FEES
AND EXPENSES.
PERIODIC EXPENSES*
<Table>
Annual Contract Fee (deducted from Contract Value)(5) $30.00
Separate Account Annual Expenses
(as a percentage of Separate Account Contract Value)
Mortality and Expense Risk Charge 1.15%
Administration Charge 0.15%
------
Total Separate Account Annual Expenses without the Step-Up Death Benefit 1.30%
======
Optional Step-Up Death Benefit Charge(6) 0.20%
------
Total Separate Account Annual Expenses including Step-Up Death Benefit 1.50%
======
Additional Rider Charges:
Guaranteed Lifetime Withdrawal Benefit (GLWB) Rider (as a percentage of the
Lifetime Income Base):
GLWB Plus For One(7)
Maximum Charge: 1.00%
Current Charge: 0.50%
GLWB Plus For Two(8)
Maximum Charge: 1.50%
Current Charge: 0.75%
No Withdrawal Charge Rider (as a percentage of Contract Value) 0.35%
</Table>
----------
(5) We will waive this fee for Contracts with Contract Value of $50,000 or more
as of the Valuation Date we would otherwise deduct the fee. We assess the
contract fee at the end of each calendar quarter and upon surrender or
annuitization.
(6) The Optional Step-Up Death Benefit Charge does not apply to amounts
allocated to the Fixed Account.
(7) We reserve the right to increase the charge to a maximum of 1.00% on an
annual basis if we Step-Up the Lifetime Income Base to equal the Contract Value.
(8) We reserve the right to increase the charge to a maximum of 1.50% on an
annual basis if we Step-Up the Lifetime Income Base to equal the Contract Value.
9
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THE NEXT TABLE SHOWS THE LOWEST AND HIGHEST TOTAL OPERATING EXPENSES
CHARGED BY THE FUNDS FOR THE YEAR ENDED DECEMBER 31, 2006 THAT YOU MAY PAY
PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. CURRENT AND FUTURE
EXPENSES COULD BE HIGHER OR LOWER THAN THOSE SHOWN IN THE FOLLOWING TABLE. MORE
DETAIL CONCERNING EACH FUND'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUS
FOR EACH FUND.
LOWEST -- HIGHEST
Total Annual Fund Operating Expenses (expenses that
are deducted from Fund assets, including management fees,
distribution and/or service (12b-1) fees,
and other expenses, prior to any fee waivers or expense
reimbursements) 0.67% -- 2.20%
The advisers and/or other service providers of certain Funds have agreed to
reduce their fees and/or reimburse the Funds' expenses in order to keep the
Funds' expenses below specified limits. The expenses of certain Funds are
reduced by contractual fee reduction and expense reimbursement arrangements,
while other Funds have voluntary fee reduction and/or expense reimbursement
arrangements that may be terminated at any time. The lowest and highest Total
Annual Fund Operating Expenses for all Funds after all fee reductions and
expense reimbursements are 0.40% and 1.75% respectively for the year ended
December 31, 2006. Each fee reduction and/or expense reimbursement arrangement
is described in the relevant Fund's prospectus.
THE FUND'S INVESTMENT MANAGER OR ADVISER PROVIDED THE ABOVE EXPENSES FOR
THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND FUND FEES AND EXPENSES.
The Example assumes that you invest $10,000 in the Contract for the time
periods indicated and that your Contract includes the Step-Up Death Benefit, the
No Withdrawal Charge Rider, and the GLWB Plus For Two Rider (at the maximum
charge). If these features were not elected, the expense figures shown below
would be lower. The Example also assumes that your investment has a 5% return
each year and assumes the maximum fees and expenses of any of the Funds, prior
to any fee waivers or expense reimbursements. If these arrangements were
considered, the expenses shown would be lower.
Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
IF YOU SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------
577.88 1,744.46 2,923.21 5,905.24
IF YOU ANNUITIZE YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD UNDER ANNUITY
OPTION 2,3, 4, OR 5, OR UNDER ANNUITY OPTION 1 FOR A PERIOD OF 10 YEARS OF MORE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------
577.88 1,744.46 2,923.21 5,905.24
IF YOU ANNUITIZE YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD UNDER ANNUITY
OPTION 1 FOR A PERIOD OF LESS THAN 10 YEARS:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------
577.88 1,744.46 2,923.21 5,905.24
10
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IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------
577.88 1,744.46 2,923.21 5,905.24
The Example assumes that you invest $10,000 in the Contract for the time
periods indicated and that your Contract includes the Step-Up Death Benefit and
the GLWB Plus For Two Rider (at the maximum charge). If these features were not
elected, the expense figures shown below would be lower. The Example also
assumes that your investment has a 5% return each year and assumes the maximum
fees and expenses of any of the Funds, prior to any fee waivers or expense
reimbursements. If these arrangements were considered, the expenses shown would
be lower.
Although your actual costs may be higher or lower, based on these
assumptions, your costs would be:
IF YOU SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------
1,080.41 1,998.14 2,939.11 5,633.84
IF YOU ANNUITIZE YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD UNDER ANNUITY
OPTION 2,3, 4, OR 5, OR UNDER ANNUITY OPTION 1 FOR A PERIOD OF 10 YEARS OF MORE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------
542.99 1,644.72 2,765.45 5,633.84
IF YOU ANNUITIZE YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD UNDER ANNUITY
OPTION 1 FOR A PERIOD OF LESS THAN 10 YEARS:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------
1,080.41 1,998.14 2,939.11 5,633.84
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE PERIOD:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------
542.99 1,644.72 2,765.45 5,633.84
The fee table and Example should not be considered a representation of past
or future expenses and charges of the Subaccounts. Your actual expenses may be
greater or less than those shown. The Example assumes no transfers were made and
does not include the deduction of state premium taxes, which may be assessed
before or upon surrender or annuitization or any taxes or penalties you may be
required to pay if you surrender the Contract. Similarly, the 5% annual rate of
return assumed in the Example is not intended to be representative of past or
future performance of any Subaccount.
CONDENSED FINANCIAL INFORMATION
Because the Contract was not offered for sale as of December 31, 2006,
condensed financial information for the Separate Account is not available.
11
<Page>
DISTRIBUTION COSTS
For information concerning the compensation we pay for sales of the
Contract, see "Distribution of Contracts."
SUMMARY
The summary does not contain all information that may be important. Read
the entire Prospectus and the Contract before deciding to invest. States may
require variations to the Contract. If a state variation applies, it will appear
in the Contract, an endorsement to the Contract, or a supplement to this
Prospectus.
The Contract provides for tax-deferred investments and annuity benefits.
Both Qualified Contracts and Non-Qualified Contracts are described in this
Prospectus.
You may make Purchase Payments under the Contract, subject to certain
minimum limitations and other restrictions. You may make Purchase Payments to
Non-Qualified Contracts and Contracts issued as Individual Retirement Annuities
("IRAs") by authorizing us to draw on your account via check or electronic debit
("Pre-Authorized Checking (PAC) Agreement"). (See "Purchase Payments.") We do
not deduct a sales charge from any Purchase Payment.
We provide for variable accumulations and benefits for amounts allocated to
one or more Subaccounts selected by you. Each Subaccount invests in a
corresponding Fund. (See "The Funds.") Purchase Payments and Contract Value
allocated to the Separate Account will vary with the investment performance of
the Funds you select.
We also provide for fixed accumulations and benefits for amounts allocated
to the Fixed Account. We credit Purchase Payments and Contract Value allocated
to the Fixed Account with interest daily at a rate periodically declared by us
at our discretion, but not less than the minimum guaranteed rate. (See "Fixed
Account.")
The investment risk under the Contract is borne by you, except to the
extent that Purchase Payments and Contract Value are allocated to the Fixed
Account and are therefore guaranteed to earn at least the minimum guaranteed
rate.
Transfers among Subaccounts are permitted before and after the Annuity
Date, if allowed by your qualified plan and subject to limitations. Restrictions
apply to transfers into and out of the Fixed Account. (See "Transfers During the
Accumulation Period" and "Transfers During the Annuity Period.")
You may make partial withdrawals from the Contract or surrender the
Contract, subject to certain restrictions. (See "Withdrawals and Surrenders
During the Accumulation Period.") You may withdraw up to the Free Withdrawal
Amount in any Contract Year without assessment of a withdrawal charge. If you
withdraw an amount in excess of the Free Withdrawal Amount, the excess may be
subject to a withdrawal charge. We also may assess a withdrawal charge upon
surrender of the Contract, although we will first apply the Free Withdrawal
Amount. The withdrawal charge is assessed as a percentage of each Purchase
Payment and earnings attributable to that Purchase Payment withdrawn or
surrendered during the first 6 Contribution Years following our receipt of the
Purchase Payment. The withdrawal charge starts at 6% in the first Contribution
Year and reduces each subsequent Contribution Year. We do not assess a
withdrawal charge on any Purchase Payment (or earnings attributable to that
Purchase Payment) withdrawn or surrendered more than six Contribution Years
following our receipt of that Purchase Payment. We also may apply a withdrawal
charge upon annuitization to amounts attributable to Purchase Payments (and
earnings attributable to those Purchase Payments) in their sixth Contribution
Year or earlier. (See "Withdrawal Charge.") If you elect the No Withdrawal
Charge Rider for an additional fee, we will not assess any withdrawal charge
upon partial withdrawal or surrender of the Contract during the Accumulation
Period or upon annuitization. See "No Withdrawal Charge Rider" for a description
of the Rider, including its charges and restrictions.
Withdrawals and surrenders will have tax consequences, which may include
the amount of the withdrawal being subject to income tax and in some
circumstances an additional 10% penalty tax.
12
<Page>
Withdrawals also reduce your Contract Value and your death benefit. Certain
withdrawals also may reduce the value of the guarantees provided by the GLWB
Rider. (See "Guaranteed Lifetime Withdrawal Benefit.") Withdrawals are permitted
from Contracts issued in connection with Section 403(b) qualified plans only
under limited circumstances. (See "Withdrawals and Surrenders During the
Accumulation Period" and "Federal Tax Matters.")
We offer Automatic Asset Rebalancing, Dollar Cost Averaging, and a
Systematic Withdrawal Plan. (See "Automatic Asset Rebalancing," "Dollar Cost
Averaging," and "Systematic Withdrawal Plan.")
If you die before the Annuity Date, we will pay the Beneficiary a death
benefit. We also offer for an additional charge the Step-Up Death Benefit, which
provides an optional enhanced death benefit if certain conditions are met. See
"Death Benefits."
We provide for an additional charge a Guaranteed Lifetime Withdrawal
Benefit Rider ("GLWB Rider"), which, subject to certain conditions, makes the
following guarantees: Prior to the Lifetime Income Date, we will make the
Guaranteed Withdrawal Amount available for Non-Excess Withdrawals each Contract
Year or we will pay it in monthly installments as Settlement Payments if your
Contract enters the Benefit Phase before the Lifetime Income Date, until the
Guaranteed Withdrawal Balance is reduced to zero. If your Contract Value is
greater than zero on the Lifetime Income Date, we will make the Lifetime Income
Amount available for Non-Excess Withdrawals each Contract Year on and after the
Lifetime Income Date (if you have not annuitized your Contract) or we will pay
it in monthly installments as Settlement Payments on and after the Maximum
Annuity Date (if you elect the GLWB Rider annuitization option on the Maximum
Annuity Date) or if your Contract enters the Benefit Phase prior to the Maximum
Annuity Date. This guarantee applies on and after the Lifetime Income Date,
while a Covered Person is living or until the Guaranteed Withdrawal Balance is
reduced to zero, if later. After the Covered Person's death (or the death of the
last surviving Covered Person in the case of the GLWB Plus for Two), your
Beneficiary will receive the remaining Guaranteed Withdrawal Balance as a lump
sum death benefit (if greater than the standard death benefit or any optional
death benefit you elected) in certain cases or in monthly installments as
Settlement Payments (until the Guaranteed Withdrawal Balance is reduced to zero)
in others. This guarantee applies even if the Covered Person dies (or the last
surviving Covered Person dies in the case of GLWB Plus For Two) on or after the
Maximum Annuity Date, if you elect the GLWB Rider annuitization option on the
Maximum Annuity Date. Currently, the GLWB Rider is only available to Qualified
Contracts. You should consult with a qualified tax adviser prior to electing the
Rider for further information on tax rules affecting Qualified Contracts,
including IRAs. (See "Guaranteed Lifetime Withdrawal Benefit.")
In addition to the withdrawal charge, we assess a mortality and expense
risk charge, an administration charge, a contract fee, and applicable premium
taxes. (See "Contract Charges and Expenses.") We also charge for the Step-Up
Death Benefit (see "Death Benefits"), the GLWB Rider (see "Guaranteed Lifetime
Withdrawal Benefit"), and the No Withdrawal Charge Rider (see "No Withdrawal
Charge Rider"). The Funds will incur certain management fees and other expenses.
(See "Summary of Expenses," "Investment Management Fees and Other Expenses," and
the Funds' prospectuses.) We may assess a commutation charge during the Annuity
Period when calculating lump sum payments with respect to any remaining periodic
payments in the certain period under Annuity Options 1, 3 and 5 upon the death
of an Annuitant during the Annuity Period and, for Annuity Option 1, upon
election to cancel remaining payments. (See "Annuity Period--Annuity Options.")
Currently, the Contracts may be purchased in connection with retirement
plans qualifying either under Section 401 or 403(b) of the Code or as individual
retirement annuities including Roth IRAs. The Contracts are also available in
connection with state and municipal deferred compensation plans and
non-qualified deferred compensation plans. A Contract purchased in connection
with a qualified plan does not provide any additional tax deferred treatment of
earnings beyond the treatment that is already provided by the qualified plan
itself. (See "Taxation of Annuities in General" and "Qualified Plans.")
Therefore, the tax deferral provided by the Contract is not necessary for
Contracts used in qualified plans, so for such plans the Contract should be
purchased for other features and benefits, such as the Fixed Account's minimum
13
<Page>
interest rate guarantee, the standard death benefit, the Step-Up Death Benefit,
the GLWB Rider, or the Annuity Options.
You have the right within the "free look" period (generally ten days,
subject to state variation) after receiving the Contract to cancel the Contract
by delivering or mailing it to us. If you decide to return your Contract for a
refund during the "free look" period, also include a letter instructing us to
cancel the Contract. Upon receipt by us, the Contract will be cancelled and
amounts refunded. The amount of the refund depends on the state where issued.
Generally the refund will be the Contract Value as of the Valuation Date on
which we receive your Contract at our Service Center. Some states require us
instead to return your Purchase Payment. In addition, a special "free look"
period applies in some circumstances to Contracts issued as Individual
Retirement Annuities, Simplified Employee Pensions--IRAs or as Roth Individual
Retirement Annuities. (See "Free Look Period.")
Certain provisions of the Contract may be different than the general
description in this Prospectus, and certain riders and options may not be
available, because of legal restrictions in your state. See your Contract for
specific variations since any such state variations will be included in your
Contract or in riders or endorsements attached to your Contract. See your agent
or contact us for specific information that may be applicable to your state.
You can generally exchange all or a portion of one annuity contract for
another, or a life insurance policy for an annuity contract, in a `tax-free
exchange' under Section 1035 of the Code. If you are thinking about a 1035
exchange, you should compare the old contract and the Contract described in this
Prospectus carefully. Remember that if you exchange another contract for the
Contract described in this Prospectus, you might have to pay a withdrawal charge
and tax, including a possible penalty tax, on your old contract, AND there will
be a new withdrawal charge period for the Contract. Also, other charges may be
higher (or lower) and the benefits may be different. If the exchange does not
qualify for Section 1035 treatment, you may have to pay federal income and
penalty taxes on the exchange. You should not exchange another contract for the
Contract described in this Prospectus unless you determine, after knowing all
the facts, that the exchange is in your best interest (the person selling you
the Contract will generally earn a commission if you buy the Contract through an
exchange or otherwise). If you contemplate such an exchange, you should consult
a tax adviser to discuss the potential tax effects of such a transaction.
We offer other variable annuity contracts that have different policy
features. However, these other contracts also have different charges that would
affect your Subaccount performance and Contract Value. To obtain more
information about these other contracts, contact our Service Center or your
agent.
COMMONWEALTH ANNUITY, THE SEPARATE ACCOUNT AND THE FUNDS
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
Commonwealth Annuity and Life Insurance Company ("we," "Commonwealth
Annuity" or the "Company") is a life insurance company organized under the laws
of Delaware in July 1974. Prior to December 31, 2002, Commonwealth Annuity (then
known as Allmerica Financial Life Insurance and Annuity Company or "Allmerica
Financial") was a direct subsidiary of First Allmerica Financial Life Insurance
Company ("First Allmerica"), which in turn was a direct subsidiary of The
Hanover Insurance Group ("THG," formerly Allmerica Financial Corporation).
Effective December 31, 2002, the Company became a Massachusetts domiciled
insurance company and a direct subsidiary of THG. On December 30, 2005, THG
completed the closing of the sale of the Company to The Goldman Sachs Group,
Inc. ("Goldman Sachs"), 85 Broad Street, New York, NY 10004. On September 1,
2006, Allmerica Financial officially changed its name to Commonwealth Annuity
and Life Insurance Company.
Commonwealth Annuity is subject to the laws of the state of Massachusetts
governing insurance companies and to regulation by the Commissioner of Insurance
of Massachusetts. In addition, Commonwealth Annuity is subject to the insurance
laws and regulations of other states and jurisdictions in which it is licensed
to operate. As of December 31, 2006, Commonwealth Annuity had over $11 billion
in
14
<Page>
combined assets and over $13 billion of life insurance in force. Its principal
office is located at 132 Turnpike Road, Suite 210, Southborough, MA 01772,
telephone [phone number].
Subject to the provisions of the Contract, units of the Subaccounts under
the Contract are offered on a continuous basis.
THE SEPARATE ACCOUNT
We established the Commonwealth Annuity Separate Account A on February 15,
2007 pursuant to Massachusetts law. The SEC does not supervise the management,
investment practices or policies of the Separate Account or Commonwealth
Annuity.
Benefits provided under the Contracts are our obligations. Although the
assets in the Separate Account are our property, they are held separately from
our other assets and are not chargeable with liabilities arising out of any
other business we may conduct. Income, capital gains and capital losses, whether
or not realized, from the assets allocated to the Separate Account are credited
to or charged against the Separate Account without regard to the income, capital
gains and capital losses arising out of any other business we may conduct.
Each Subaccount of the Separate Account invests exclusively in shares of
one of the corresponding Funds. We may add or delete Subaccounts in the future.
Not all Subaccounts may be available in all jurisdictions, under all Contracts
or in all retirement plans.
The Separate Account purchases and redeems shares from the Funds at net
asset value. We redeem shares of the Funds as necessary to provide benefits, to
deduct Contract charges and fees, and to transfer assets from one Subaccount to
another as requested by Owners. All dividends and capital gains distributions
received by the Separate Account from a Fund are reinvested in that Fund at net
asset value and retained as assets of the corresponding Subaccount.
THE FUNDS
SELECTION OF FUNDS. We select the Funds offered through the Contract, and
we may consider various factors, including, but not limited to asset class
coverage, the strength of the investment adviser's (and/or subadviser's)
reputation and tenure, brand recognition, performance, and the capability and
qualification of each investment firm. We also consider whether the Fund or one
of its service providers (e.g., the investment adviser, administrator,
distributor, and/or their affiliates) will make payments to us or our
affiliates, as described below. We review the Funds periodically and may remove
a Fund or limit its availability to new Purchase Payments and/or transfers of
Contract Value if we determine that the Fund no longer meets one or more of the
selection criteria, and/or if the Fund has not attracted significant allocations
from Contract Owners.
You are responsible for choosing the Subaccounts and the amounts allocated
to each that are appropriate for your own individual circumstances and your
investment goals, financial situation, and risk tolerance. Since you bear the
investment risk of investing in the Subaccounts, we encourage you to thoroughly
investigate all of the information regarding the Funds that is available to you,
including each Fund's prospectus, statement of additional information, and
annual and semi/annual reports. Other sources such as the Fund's website or
newspapers and financial and other magazines provide more current information,
including information about any regulatory actions or investigations relating to
a Fund. After you select Subaccounts for your initial Purchase Payment, you
should monitor and periodically reevaluate your allocations to determine if they
are still appropriate. YOU BEAR THE RISK OF ANY DECLINE IN YOUR CONTRACT VALUE
RESULTING FROM THE PERFORMANCE OF THE SUBACCOUNTS YOU HAVE CHOSEN.
We do not provide investment advice and we do not recommend or endorse any
of the particular Funds available as Investment Options in the Contract.
THE FUNDS. The Separate Account invests in shares of registered, open-end
management investment companies. There are two types of Funds generally offered
under the Contract:
15
<Page>
- INSURANCE FUNDS: Insurance Funds are available solely to variable annuity
or life insurance contracts and certain qualified retirement plans. (See
"Federal Tax Matters.") Nonqualified Contracts generally can invest only in
Insurance Funds. All Contracts, both Qualified and Nonqualified, may choose
among Subaccounts that invest in the following Insurance Funds:
GOLDMAN SACHS VARIABLE INSURANCE TRUST (CLASS S)
- Goldman Sachs VIT Capital Growth Fund
- Goldman Sachs VIT Core Fixed Income Fund
- Goldman Sachs VIT Equity Index Fund Goldman Sachs VIT Government Income
Fund
- Goldman Sachs VIT Growth & Income Fund
- Goldman Sachs VIT Growth Opportunities Fund
- Goldman Sachs VIT Money Market Fund
- Goldman Sachs VIT Strategic International Equity Fund
- Goldman Sachs VIT Structured Small Cap Equity Fund
- Goldman Sachs VIT Structured U.S. Equity Fund
AIM VARIABLE INSURANCE FUNDS (SERIES II)
- AIM V.I. Core Equity Fund
- AIM V.I. Leisure Fund
ALLIANCEBERNSTEIN VARIABLE PRODUCTS SERIES FUND, INC. (CLASS B)
- AllianceBernstein VPS Americas Government Income Portfolio
FRANKLIN TEMPLETON INSURANCE PRODUCTS TRUST (CLASS 2)
- FT VIP Templeton Global Asset Allocation Fund
- FT VIP Franklin Global Communications Fund
- FT VIP Templeton Growth Securities Fund
- FT VIP Franklin Income Securities Fund
- FT VIP Franklin Mutual Discovery Securities Fund
- FT VIP Franklin Mutual Shares Securities Fund
- FT VIP Franklin Small Cap Value Securities Fund
JANUS ASPEN SERIES (SERVICE SHARES)
- Janus Aspen Forty Portfolio
- Janus Aspen Midcap Growth Portfolio
- Janus Aspen Midcap Value Portfolio
- Janus Aspen Small Company Value Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS (SERVICE SHARES)
- Oppenheimer Balanced Fund/VA
- Oppenheimer Global Securities Fund/VA
- Oppenheimer Main Street Small Cap Fund/VA
- Oppenheimer Strategic Bond Fund/VA
- AllianceBernstein VPS International Value Portfolio
- AllianceBernstein VPS Small Cap Growth Portfolio
- AllianceBernstein VPS Small/Mid Cap Value Portfolio
PIONEER VARIABLE CONTRACTS TRUST (CLASS II)
- Pioneer Cullen Value VCT Portfolio
- Pioneer Emerging Markets VCT Portfolio
- Pioneer Growth Opportunities VCT Portfolio
- Pioneer Mid Cap Value VCT Portfolio
The Insurance Funds provide investment vehicles for variable life insurance
and variable annuity contracts and, in some cases, certain qualified retirement
plans. Shares of the Insurance Funds are sold only to insurance company separate
accounts and qualified retirement plans. In addition to selling shares to our
separate accounts, shares of the Insurance Funds may be sold to separate
accounts of other insurance companies. It is conceivable that in the future it
may be disadvantageous for variable life insurance separate accounts and
variable annuity separate accounts of other companies, or for variable life
insurance separate accounts, variable annuity separate accounts, and qualified
retirement plans to invest simultaneously in the Insurance Funds. Currently,
neither we nor the Insurance Funds foresee any such disadvantages to variable
life insurance Owners, variable annuity Owners, or qualified retirement plans.
The Insurance Funds must monitor events to identify material conflicts between
such Owners and determine what action, if any, should be taken. In addition, if
we believe an Insurance Fund's response to any of those events or conflicts
insufficiently protects Owners, we will take appropriate action.
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- PUBLICLY-AVAILABLE FUNDS. Publicly-Available Funds are
"publicly-available," i.e., shares can be purchased by the public directly
without purchasing a variable annuity or life insurance contract. ONLY
QUALIFIED CONTRACTS MAY INVEST IN THESE PUBLICLY-AVAILABLE FUNDS.
- Goldman Sachs Balanced Strategy Portfolio (Class A)
- Goldman Sachs Equity Growth Strategy Portfolio (Class A)
- Goldman Sachs Growth and Income Strategy Portfolio (Class A)
- Goldman Sachs Growth Strategy Portfolio (Class A)
- Goldman Sachs International Real Estate Security Fund (Class A)
- Goldman Sachs Real Estate Security Fund (Class A)
- Goldman Sachs Tollkeeper Fund (Class A)
The Publicly-Available Funds are also available for direct purchase outside
of an annuity or life insurance policy. If you purchase shares of these funds
directly from a broker-dealer or mutual fund company, you will not pay Contract
fees or charges, but you also will not have Annuity Options available. Because
of the additional Contract fees and charges, which affect Contract Value and
Subaccount returns, you should refer only to performance information regarding
the Publicly-Available Funds available through us, rather than to information
that may be available through alternate sources.
NOTE: If you elect the GLWB Rider, we will restrict the Investment Options
to which you may allocate Purchase Payments and transfer Contract
Value. (See "Guaranteed Lifetime Withdrawal Benefit.")
SEC REGISTRATION DOES NOT INVOLVE SEC SUPERVISION OF THE FUNDS' MANAGEMENT,
INVESTMENT PRACTICES OR POLICIES. THE ASSETS OF EACH FUND ARE HELD SEPARATE FROM
THE ASSETS OF THE OTHER FUNDS, AND EACH FUND HAS ITS OWN DISTINCT INVESTMENT
OBJECTIVE AND POLICIES. EACH FUND OPERATES AS A SEPARATE INVESTMENT FUND, AND
THE INVESTMENT PERFORMANCE OF ONE FUND HAS NO EFFECT ON THE INVESTMENT
PERFORMANCE OF ANY OTHER FUND.
<Table>
<Caption>
INSURANCE FUND PORTFOLIO NAME INVESTMENT OBJECTIVE INVESTMENT ADVISER
------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Variable Goldman Sachs VIT Capital Seeks long term growth of capital. Goldman Sachs Asset
Insurance Trust (Service Growth Fund Management, LP
Shares)
Goldman Sachs Variable Goldman Sachs VIT Core Seeks a total return consisting of Goldman Sachs Asset
Insurance Trust (Service Fixed Income Fund capital appreciation and income that Management, LP
Shares) exceeds the total return of the
Lehman Brothers Aggregate Bond
Index.
Goldman Sachs Variable Goldman Sachs VIT Equity Seeks to achieve investment results Goldman Sachs Asset
Insurance Trust (Service Index Fund that correspond to the aggregate Management, LP
Shares) price and yield performance of a
benchmark index that measures the
investment returns of large
capitalization stocks.
Goldman Sachs Variable Goldman Sachs VIT Seeks a high level of current Goldman Sachs Asset
Insurance Trust (Service Government Income Fund income, consistent with safety of Management, LP
Shares) principal.
Goldman Sachs Variable Goldman Sachs VIT Growth & Seeks long-term growth of capital Goldman Sachs Asset
Insurance Trust (Service Income Fund and growth of income. Management, LP
Shares)
</Table>
17
<Page>
<Table>
Goldman Sachs Variable Goldman Sachs VIT Growth Seek long term growth of capital. Goldman Sachs Asset
Insurance Trust (Service Opportunities Fund Management, LP
Shares)
Goldman Sachs Variable Goldman Sachs VIT Money Seeks to maximize current income to Goldman Sachs Asset
Insurance Trust (Service Market Fund the extent consistent with the Management, LP
Shares) preservation of capital and the
maintenance of liquidity by
investing exclusively in high
quality money market instruments.
Goldman Sachs Variable Goldman Sachs VIT Strategic Seeks long-term capital Goldman Sachs Asset Management
Insurance Trust (Service International Equity Fund appreciation. International
Shares)
Goldman Sachs Variable Goldman Sachs VIT Seeks long-term growth of capital. Goldman Sachs Asset
Insurance Trust (Service Structured Small Cap Equity Management, LP
Shares) Fund
Goldman Sachs Variable Goldman Sachs VIT Seeks long-term growth of capital Goldman Sachs Asset
Insurance Trust (Service Structured U.S. Equity Fund and dividend income. Management, LP
Shares)
AIM Variable Insurance Funds AIM V.I. Core Equity Fund Seeks growth of capital. AIM Advisors, Incorporated
(Series II Shares)
AIM Variable Insurance Funds AIM V.I. Leisure Fund Seeks capital growth. AIM Advisors, Incorporated
(Series II Shares)
AllianceBernstein Variable AllianceBernstein VPS Seeks to maximize current income. AllianceBernstein L.P
Products Series Fund, Inc. Americas Government
(Class B) Income Portfolio
AllianceBernstein Variable AllianceBernstein VPS Seeks long term growth of capital. AllianceBernstein L.P
Products Series Fund, Inc. International Value
(Class B) Portfolio
AllianceBernstein Variable AllianceBernstein VPS Small Seeks long term growth of capital. AllianceBernstein L.P
Products Series Fund, Inc. Cap Growth Portfolio
(Class B)
AllianceBernstein Variable AllianceBernstein VPS Seeks long term growth of capital. AllianceBernstein L.P
Products Series Fund, Inc. Small/Mid Cap Value
(Class B) Portfolio
Franklin Templeton Variable FT VIP Templeton Global Seeks high total return. Templeton Investment Council,
Insurance Products Trust Asset Allocation Fund LLC
(Class2)
Franklin Templeton Variable FT VIP Franklin Global Seeks capital appreciation and Franklin Advisers, Inc.
Insurance Products Trust Communications Fund current income.
(Class2)
Franklin Templeton Variable FT VIP Templeton Growth Seeks long-term capital growth. Templeton Global Advisors
Insurance Products Trust Securities Fund Limited
(Class2)
</Table>
18
<Page>
<Table>
Franklin Templeton Variable FT VIP Franklin Income Seeks to maximize income while Franklin Advisers, Inc.
Insurance Products Trust Securities Fund maintaining prospects for capital
(Class2) appreciation.
Franklin Templeton Variable FT VIP Franklin Mutual Seeks capital appreciation. Franklin Mutual Advisers, LLC
Insurance Products Trust Discovery Securities Fund
(Class2)
Franklin Templeton Variable FT VIP Franklin Mutual Seeks capital appreciation, with Franklin Mutual Advisers, LLC
Insurance Products Trust Shares Securities Fund income as a secondary goal.
(Class2)
Franklin Templeton Variable FT VIP Franklin Small Cap Seeks long-term total return. Franklin Advisory Services,
Insurance Products Trust Value Securities Fund LLC
(Class2)
Janus Aspen Series (Service Janus Aspen Forty Portfolio Seeks long term growth of capital. Janus Capital Management LLC
Shares)
Janus Aspen Series (Service Janus Aspen Midcap Growth Seeks long term growth of capital. Janus Capital Management LLC
Shares) Portfolio
Janus Aspen Series (Service Janus Aspen Midcap Value Seeks capital appreciation. Janus Capital Management LLC
Shares) Portfolio
Janus Aspen Series (Service Janus Aspen Small Company Seeks capital appreciation. Janus Capital Management LLC
Shares) Value Portfolio
Oppenheimer Variable Account Oppenheimer Balanced Seeks a high total investment OppenheimerFunds, Inc.
Funds (Service Shares) Fund/VA return, which includes current
income and capital appreciation in
the value of its shares.
Oppenheimer Variable Account Oppenheimer Global Seeks long-term capital appreciation OppenheimerFunds, Inc.
Funds (Service Shares) Securities Fund/VA by investing a substantial portion
of its assets in securities of
foreign issuers, "growth-type"
companies, cyclical industries and
special situations that are
considered to have appreciation
possibilities.
Oppenheimer Variable Account Oppenheimer Main Street Seeks capital appreciation. OppenheimerFunds, Inc.
Funds (Service Shares) Small Cap Fund/VA
Oppenheimer Variable Account Oppenheimer Strategic Bond Seeks a high level of current income OppenheimerFunds, Inc.
Funds (Service Shares) Fund/VA principally derived from interest on
debt securities.
Pioneer Variable Contracts Pioneer Cullen Value VCT Seeks capital appreciation by Pioneer Investment Management,
Trust (Class II) Portfolio investing in equity securities of Inc.
medium-and large-capitalization
companies. Secondarily, the
portfolio may seek income.
</Table>
19
<Page>
<Table>
Pioneer Variable Contracts Pioneer Emerging Markets Seeks long-term growth of capital. Pioneer Investment Management,
Trust (Class II) VCT Portfolio Inc.
Pioneer Variable Contracts Pioneer Growth Seeks growth of capital by investing Pioneer Investment Management,
Trust (Class II) Opportunities VCT Portfolio primarily in equity securities of Inc.
companies considered to be
reasonably priced or undervalued,
with above average growth
potential.
Pioneer Variable Contracts Pioneer Mid Cap Value VCT Seeks capital appreciation by Pioneer Investment Management,
Trust (Class II) Portfolio investing in a diversified portfolio Inc.
of securities consisting primarily
of common stocks.
</Table>
<Table>
<Caption>
RETAIL FUND* INVESTMENT OBJECTIVE INVESTMENT ADVISER
---------------------------------------------------------------------------------------------------------------------
Goldman Sachs Balanced Seeks current income and long-term capital Goldman Sachs Asset Management, LP
Strategy Portfolio (Class A ) appreciation.
Goldman Sachs Equity Growth Seeks long-term capital appreciation. Goldman Sachs Asset Management, LP
Strategy Portfolio (Class A
LW)
Goldman Sachs Growth and Seeks long-term capital appreciation and Goldman Sachs Asset Management, LP
Income Strategy Portfolio current income.
(Class A)
Goldman Sachs Growth Strategy Seeks long-term capital appreciation and Goldman Sachs Asset Management, LP
Portfolio (Class A) secondarily current income.
Goldman Sachs International Seeks total return comprised of long-term Goldman Sachs Asset Management, LP
Real Estate Security Fund growth of capital and dividend income.
(Class A)
Goldman Sachs Real Estate Seeks total return comprised of long-term Goldman Sachs Asset Management, LP
Security Fund (Class A) growth of capital and dividend income.
Goldman Sachs Tollkeeper Seeks long-term growth of capital. Goldman Sachs Asset Management, LP
Fund (Class A )
</Table>
* Each retail fund's most recently ended fiscal year is December 31, 2006.
THE FUNDS MAY NOT ACHIEVE THEIR STATED OBJECTIVES. MORE DETAILED
INFORMATION, INCLUDING A DESCRIPTION OF RISKS INVOLVED IN INVESTING IN THE
FUNDS, IS FOUND IN THE FUNDS' PROSPECTUSES ACCOMPANYING THIS PROSPECTUS AND
STATEMENTS OF ADDITIONAL INFORMATION AVAILABLE FROM US UPON REQUEST.
Although the investment objectives and policies of certain Funds are
similar to the investment objectives and policies of other funds that may be
managed or sponsored by the same investment adviser, subadviser, manager, or
sponsor, we do not represent or assure that the investment results will be
20
<Page>
comparable to those of any other fund, even where the investment adviser,
subadviser, or manager is the same. Certain Funds available through the Contract
have names similar to funds not available through the Contract. The performance
of a fund not available through the Contract does not indicate performance of a
similarly named Fund available through the Contract. Differences in fund size,
actual investments held, fund expenses, and other factors all contribute to
differences in fund performance. For all these reasons, you should expect
investment results to differ.
PLEASE NOTE THAT THERE CAN BE NO ASSURANCE THAT ANY MONEY MARKET FUND WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE PER SHARE. DURING EXTENDED PERIODS
OF LOW INTEREST RATES, AND DUE IN PART TO CONTRACT FEES AND EXPENSES, THE YIELDS
OF ANY SUBACCOUNT INVESTING IN A MONEY MARKET FUND MAY ALSO BECOME EXTREMELY LOW
AND POSSIBLY NEGATIVE.
CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE FUNDS. We and our
distributor, [ ]., (the "Distributor") may receive payments from the Funds or
their service providers (e.g., the investment adviser, administrator,
distributor, and/or their affiliates). These payments may be used for a variety
of purposes, including payment of expenses that we (and our affiliates) incur in
promoting, marketing, and administering the Contract and, in our role as an
intermediary, the Funds. We (and our affiliates) may profit from these payments.
The amount of payments we receive from the Fund's service providers is
based on a percentage of the assets of the particular Fund attributable to the
Contract as well as certain other variable insurance products that we and/or our
affiliates may issue or administer. These percentages are negotiated and vary
with each Fund. These payments may be derived, in whole or in part, from the
investment advisory fee deducted from Fund assets. Contract Owners, through
their indirect investment in the Funds, bear the costs of these investment
advisory fees (see the Funds' prospectuses for more information). Some service
providers may pay us significantly more than others and the amount we receive
may be substantial. These percentages currently range from 0.00% to 0.46%, and
as of the date of this prospectus, we were receiving payments from each Fund's
service providers.
Additionally, certain of the Funds make payments to us or the Distributor
under their distribution plans (12b-1 plans). The payment rates currently range
from 0.09% to 0.25% based on the amount of assets invested in those Funds.
Payments made out of the assets of the Funds will reduce the amount of assets
that otherwise would be available for investment, and will reduce the return on
your investment. The dollar amount of future asset-based fees is not predictable
because these fees are a percentage of the Fund's average net assets, which can
fluctuate over time. If, however, the value of the Funds goes up, then so would
the payment to us or to the Distributor. Conversely, if the value of the Fund
goes down, payments to us or to the Distributor would decrease.
We and/or the Distributor also may directly or indirectly receive
additional amounts or different percentages of assets under management from some
of the Funds' service providers with regard to other variable insurance products
we or our affiliates may issue or administer.
CHANGE OF INVESTMENTS
We reserve the right to make additions to, deletions from, or substitutions
for the shares held by the Separate Account or that the Separate Account may
purchase. If investment in the Funds is no longer possible, in our judgment
becomes inappropriate for the purposes of the Contract, or for any other reason
in our sole discretion, we may substitute another fund without your consent. The
substituted fund may have different fees and expenses. Substitution may be made
with respect to existing investments or the investment of future premiums, or
both. However, no such substitution will be made without the approval of the
Securities and Exchange Commission, if required. Furthermore, we may close
Subaccounts to allocations of Purchase Payments or Contract Value, or both, at
any time in our sole discretion. The Funds, which sell their shares to the
Subaccounts pursuant to participation agreements, also may terminate these
agreements and discontinue offering their shares to the Subaccounts.
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<Page>
We may establish additional Subaccounts of the Separate Account, each of
which would invest in a new fund, or in shares of another investment company.
New Subaccounts may be established when, at our discretion, marketing needs or
investment conditions warrant. New Subaccounts may be made available to existing
Owners as we determine. We may also eliminate or combine one or more
Subaccounts, transfer assets, or substitute one Subaccount for another
Subaccount, if, in our discretion, marketing, tax, or investment conditions
warrant. We will notify you of any such changes.
If we deem it to be in the best interests of persons having voting rights
under the Contract, we may deregister the Separate Account under the Investment
Company Act of 1940 (the "1940 Act"`), make any changes required by the 1940
Act, operate the Separate Account as a management investment company under the
1940 Act or any other form permitted by law, transfer all or a portion of the
assets of a Subaccount or separate account to another Subaccount or separate
account pursuant to a combination or otherwise, and create new separate
accounts. Before we make certain changes we may need approval of the Securities
and Exchange Commission and applicable state insurance departments. We will
notify you of any changes.
FIXED ACCOUNT
Amounts allocated or transferred to the Fixed Account are part of our
General Account, supporting insurance and annuity obligations. Interests in the
Fixed Account are not registered under the Securities Act of 1933 ("1933 Act"),
and the Fixed Account is not registered as an investment company under the 1940
Act. Accordingly, neither the Fixed Account nor any interests therein generally
are subject to the provisions of the 1933 or 1940 Acts. We have been advised
that the staff of the SEC has not reviewed the disclosures in this Prospectus
relating to the Fixed Account. Disclosures regarding the Fixed Account, however,
are subject to the general provisions of the federal securities laws relating to
the accuracy and completeness of statements made in prospectuses. This
Prospectus describes only the aspects of the Contract involving the Separate
Account unless we refer to fixed accumulation and annuity elements.
The Fixed Account Contract Value includes:
1. your Purchase Payments allocated to the Fixed Account;
2. amounts transferred from a Subaccount to the Fixed Account at
your request; and
3. the interest credited to amounts so allocated or transferred.
We reduce the Fixed Account Contract Value when you make transfers and
withdrawals from the Fixed Account, as well as when we assess Contract fees and
charges against the Fixed Account.
We reserve the right to not allow you to allocate Purchase Payments or
transfer Contract Value to the Fixed Account if the Fixed Account interest rate
applicable to such amounts would be less than or equal to 3%.
We guarantee that Purchase Payments allocated and Contract Value
transferred to the Fixed Account earn, on a daily basis, a minimum fixed
interest rate not less than the minimum interest rate allowed by state law. At
our discretion, we may credit interest in excess of the minimum guaranteed rate.
With respect to each Purchase Payment allocation or Contract Value transfer to
the Fixed Account, we reserve the right to change the rate of excess interest
credited, although we will not declare or change any excess interest rate more
frequently than once every twelve months. We also reserve the right to declare
different rates of excess interest depending on when amounts are allocated or
transferred to the Fixed Account and whether the source of the amount is
Purchase Payments allocated or Contract Value transferred. This means that
amounts at any designated time may be credited with a different rate of excess
interest than the rate previously credited to such amounts and to amounts
allocated or transferred at any other designated time, and that these rates of
excess interest may differ based on the source of the amount. You bear the risk
that no excess interest will be credited.
We will declare a current Fixed Account interest rate for each Purchase
Payment allocated and for each transfer of Contract Value to the Fixed Account.
The amount allocated or transferred will be credited
22
<Page>
that rate through the end of the calendar month in which the Purchase Payment or
transfer request is received and for twelve additional calendar months
thereafter. At the beginning of each subsequent guarantee period of twelve
calendar months, we will declare the Fixed Account interest rate applicable for
that period. We reserve the right to declare the current Fixed Account interest
rate based upon: the Date of Issue; the date we receive a Purchase Payment, the
date of any transfer of Contract Value to the Fixed Account , and whether the
source is a Purchase Payment allocated or Contract Value transferred.
While there is a loan, we will credit the portion of the Fixed Account
Contract Value securing the Debt with interest at the daily equivalent of the
annual loan interest rate charged reduced by 2.5%, instead of the current
interest rate credited to the Fixed Account. However, this rate will never be
lower than the minimum guaranteed Fixed Account interest rate.
If you elect the GLWB Rider, you may not allocate Purchase Payments or
transfer Contract Value to the Fixed Account. (See "Guaranteed Lifetime
Withdrawal Benefit.")
Any amounts in the Fixed Account or amounts that we guarantee in excess of
your Contract Value are subject to our financial strength and claims-paying
ability.
THE CONTRACTS
A. GENERAL INFORMATION.
We reserve the right to accept or refuse to issue the Contract at our sole
discretion.
1. PURCHASE PAYMENTS.
You may make Purchase Payments under the Contract during the Accumulation
Period, subject to the restrictions set forth below. We will not accept Purchase
Payments after the date of death of an Owner or on or after the older Owner's or
Annuitant's 80th birthday. We reserve the right to waive or modify any Purchase
Payment limitation and to not accept any Purchase Payment. Please note that if
you elect the GLWB Rider, there may be additional limitations on Purchase
Payments (see "Guaranteed Lifetime Withdrawal Benefit").
The minimum initial and subsequent Purchase Payment for a Qualified
Contract is $50. However, if annualized contribution amounts from a payroll or
salary deduction plan are equal to or greater than $600, we accept a periodic
payment under $50. For a Non-Qualified Contract the minimum initial Purchase
Payment is $2,500 and the minimum subsequent Purchase Payment is $500.
You may make Purchase Payments to Non-Qualified Contracts and Contracts
issued as IRAs by authorizing us to draw on your account via check or electronic
debit through a Pre-Authorized Checking (PAC) Agreement. For Purchase Payments
made pursuant to a PAC Agreement, the following minimum Purchase Payment
provisions apply:
|_| The minimum initial Purchase Payment to an IRA made pursuant to a
PAC Agreement is $100.
|_| The minimum initial Purchase Payment to a Non-Qualified Contract
made pursuant to a PAC Agreement is $1,000 unless you also own an
existing Contract, in which case the minimum is $100.
|_| The minimum subsequent Purchase Payment made pursuant to a PAC
Agreement is $100.
The maximum cumulative Purchase Payments that may be made under the
Contract is $1,000,000 without Company approval. We will aggregate multiple
Contracts you own for purposes of the $1,000,000 limitation. In addition, for
Qualified Contracts, the maximum annual amount of Purchase Payments may be
limited by the retirement plan funded by the Contract.
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You may allocate your Purchase Payments to the Subaccounts and/or the Fixed
Account. The minimum amount of Purchase Payments that may be allocated to any
Subaccount is $50. The maximum amount of Purchase Payments that may be allocated
to the Fixed Account in any Contract Year is $1,000,000 for Qualified Contracts
and $100,000 for Non-Qualified Contracts. We will aggregate multiple Contracts
you own for purposes of this limitation. Purchase Payments that are made under a
systematic investment program that has been approved by us are not subject to
this limitation. However, we reserve the right to modify or terminate this
provision and subject all Purchase Payments to the $100,000 limitation.
We reserve the right to not allow you to allocate Purchase Payments to the
Fixed Account if the Fixed Account interest rate applicable to such Purchase
Payments would be less than or equal to 3%.
2. FREE LOOK PERIOD.
You may examine a Contract and return it for a refund during the "free
look" period. The length of the free look period depends upon the state in which
the Contract is issued. However, it will be at least 10 days from the date you
receive the Contract. Upon receipt by us, the Contract will be cancelled and
amounts refunded. The amount of the refund depends on the state in which the
Contract is issued. Generally the refund will be the Contract Value as of the
Valuation Date on which we receive your Contract at our Service Center. Some
states require us instead to return your Purchase Payment. In addition, a
special "free look" period applies in some circumstances to Contracts issued as
Individual Retirement Annuities, Simplified Employee Pensions--IRAs or as Roth
Individual Retirement Annuities. If you decide to return your Contract for a
refund during the "free look" period, please also include a letter instructing
us to cancel your Contract.
3. OWNERS, ANNUITANTS, AND BENEFICIARIES.
Please note that naming different persons as Owner(s), Annuitant(s), and
Beneficiary(ies) can have important impacts on whether death benefits, annuity
payments, and rider benefits are paid and on whose life payments are based.
Carefully consider the potential consequences under various scenarios when
naming Owners, Annuitants, and Beneficiaries, and consult your agent.
If you elect the GLWB Rider, there are restrictions on naming and changing
Owners, Annuitants, and Beneficiaries. (See "Guaranteed Lifetime Withdrawal
Benefit.")
BENEFICIARIES. You designate the Beneficiary. During the Accumulation
Period and prior to the death of an Owner, you may change a Beneficiary at any
time by signing our form. After the Annuity Date, the Beneficiary may be changed
prior to the death of an Owner or the Annuitant. However, in the case of joint
Owners, the surviving joint Owner is automatically the Primary Beneficiary and
cannot be changed. No Beneficiary change is binding on us until we receive it.
We assume no responsibility for the validity of any Beneficiary change. Under a
Qualified Contract, the provisions of the applicable plan may prohibit a change
of Beneficiary. (See "Federal Tax Matters.")
You may change the Beneficiary if you send a written change form to our
Service Center. Changes are subject to the following:
1. The change must be filed while you are alive
2. The Contract must be in force at the time you file a change;
3. Such change must not be prohibited by the terms of an existing
assignment, Beneficiary designation, or other restriction;
4. Such change will take effect when we receive it. However, action taken
by us before the change form was received will remain in effect;
5. The request for change must provide information sufficient to identify
the new Beneficiary; and
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6. In the case of joint Owners, we will consider the designation of a
Beneficiary other than the surviving joint Owner to be a Contingent
Beneficiary.
In the event that all Primary Beneficiaries predecease you, we will pay the
death benefit proceeds to the surviving Contingent Beneficiaries. In the event
that a Contingent Beneficiary predeceases you, we will distribute the benefits
pro rata to the surviving Contingent Beneficiaries. If there are no surviving
Contingent Beneficiaries, we will pay the benefits to your estate.
When multiple Beneficiaries are involved, we can not determine the death
benefit proceeds until we receive the complete death benefit claim in good
order, that is, receipt of proper elections from all Beneficiaries as well as
proof of death. The Valuation Date on which we receive all required paperwork is
the date the Contract is tendered for redemption and the date for calculation of
the benefits.
OWNERS. You may add or change an Owner by written request to our Service
Center with our prior approval, prior to the death of an Owner. Any replacement
or additional Owner must not have attained age 80 prior to the Valuation Date we
receive your request.
ANNUITANTS. For Contracts with natural Owners, prior to the Annuity Date,
you may add or change an Annuitant, by written request to our Service Center.
For Contracts with non-natural Owners, prior to the Annuity Date, you may add or
change an Annuitant with our prior approval. Additionally, for Contracts with
non-natural Owners, any replacement or additional Annuitant must not have
attained age 80 prior to the Valuation Date we receive your request. On or after
the Annuity Date, you may not change or add an Annuitant for Contracts with
natural or non-natural Owners.
There must be at least one Annuitant at all times. If an Annuitant who is
not an Owner dies prior to the Annuity Date, the youngest Owner will become the
new Annuitant unless there is a surviving joint Annuitant or a new Annuitant is
otherwise named. We will not pay a death benefit upon the death of an Annuitant
unless the sole Owner is a non-natural person. We will pay a death benefit of
Withdrawal Value upon a change of Annuitant if the sole Owner is a non-natural
person. Joint Annuitants are only permitted in Non-Qualified Contracts.
4. ASSIGNMENT.
During the Accumulation Period and prior to the death of an Owner, you may
assign a Non-Qualified Contract at any time by signing our form. No assignment
is binding on us until we receive it, and we assume no responsibility for the
validity of any assignment. Generally, an interest in a Qualified Contract may
not be assigned. If an assignment of the Contract is in effect on the Annuity
Date, we reserve the right to pay the assignee, in one sum, that portion of the
Withdrawal Value to which the assignee appears to be entitled. Also, amounts
payable during the Annuity Period may not be assigned or encumbered (to the
extent permitted by law, annuity payments are not subject to levy, attachment or
other judicial process for the payment of the payee's debts or obligations). An
assignment may subject you to immediate tax liability and may subject you to a
10% tax penalty. (See "Federal Tax Matters.")
B. THE ACCUMULATION PERIOD.
1. APPLICATION OF PURCHASE PAYMENTS.
You select allocation of Purchase Payments to the Subaccount(s) and the
Fixed Account, if permitted. When you allocate Purchase Payments to a
Subaccount, we credit Accumulation Units to that Subaccount based on the value
of an Accumulation Unit, as computed after we receive the Purchase Payment at
our Service Center. If we receive a Purchase Payment at our Service Center
before the close of business on the Valuation Date, we will credit Accumulation
Units based on Accumulation Unit values determined at the end of that Valuation
Date. If we receive a Purchase Payment at our Service Center on or after the
close of business on the Valuation Date, we will credit Accumulation Units based
on
25
<Page>
Accumulation Unit values determined at the end of the next Valuation Date.
Purchase Payments allocated to the Fixed Account begin earning interest one day
after we receive them.
We will credit an initial Purchase Payment no later than the end of the
second Valuation Date following the Valuation Date we receive the Purchase
Payment at our Service Center, provided that the Purchase Payment is preceded or
accompanied by an application that contains sufficient information to establish
an account and properly credit such Purchase Payment.
After the initial purchase, we determine the number of Accumulation Units
credited by dividing the Purchase Payment allocated to a Subaccount by the
Subaccount's Accumulation Unit value, as computed after we receive the Purchase
Payment. After we determine the number of Accumulation Units credited, the
number of Accumulation Units will not change due to investment experience.
Accumulation Unit value varies to reflect the investment experience of the
Subaccount and the assessment of charges against the Subaccount. We reduce the
number of Accumulation Units when we assess the contract fee and the GLWB Rider
charge.
If we are not provided with information sufficient to establish a Contract
or to properly credit the initial Purchase Payment, we will promptly request the
necessary information. If the requested information is not furnished within five
business days after we receive the initial Purchase Payment, or if we determine
that we cannot otherwise issue the Contract within the five day period, we will
return the initial Purchase Payment to you, unless you consent to our retaining
the initial Purchase Payment until the application is completed. If we receive
the information sufficient to establish a Contract, we will issue the Contract
and allocate the Purchase Payment no later than the end of the second Valuation
Date following the Valuation Date we receive the missing information.
We may issue a Contract without a signed application if:
|_| an agent's broker-dealer provides us with application
information, electronically or in writing,
|_| we receive the initial Purchase Payment, and
|_| you confirm in writing, after the Contract is delivered, that all
information in the Contract is correct.
If you submit your application, initial Purchase Payment, and/or subsequent
Purchase Payments to your agent, we will not begin processing your purchase
order until we receive the application and Purchase Payment from your agent's
broker-dealer.
Some of the Funds reserve the right to delay or refuse purchase requests
from the Separate Account, as may be further described in their prospectuses
and/or statements of additional information. Therefore, if you request a
transaction under your Contract that is part of a purchase request delayed or
refused by a Fund, we will be unable to process your request. In that event, we
will notify you promptly in writing or by telephone.
If you elect the GLWB Rider, we will restrict the Investment Options to
which you may allocate Purchase Payments. (See "Guaranteed Lifetime Withdrawal
Benefit.")
2. ACCUMULATION UNIT VALUE.
Each Subaccount has Accumulation Unit values for each combination of asset
based charges. When Purchase Payments are allocated to a Subaccount, the number
of units credited is based on the Subaccount's applicable Accumulation Unit
value at the end of the current Valuation Period. When amounts are transferred
out of or deducted from a Subaccount, units are redeemed in a similar manner.
Generally, we determine the value of an Accumulation Unit as of the close of
business on each Valuation Date.
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The Accumulation Unit value at the end of each subsequent Valuation Period
is the relevant investment experience factor for that Valuation Period times the
Accumulation Unit value for the preceding Valuation Period.
Each Subaccount has its own investment experience factor for each
combination of charges. The investment experience of the Separate Account is
calculated by applying the investment experience factor to the Accumulation Unit
value in each Subaccount during a Valuation Period.
The investment experience factor of a Subaccount for any Valuation Period
is determined by the following formula:
(1 divided by 2) minus 3, where:
(1) is:
|_| the net asset value per share of the Fund held in the
Subaccount as of the end of the current Valuation Period;
plus
|_| the per share amount of any dividend or capital gain
distributions made by the Fund held in the Subaccount, if
the "ex-dividend" date occurs during the current Valuation
Period; plus or minus
|_| a charge or credit for any taxes reserved for the current
Valuation Period which we determine have resulted from the
investment operations of the Subaccount;
(2) is the net asset value per share of the Fund held in the
Subaccount as of the end of the preceding Valuation Period; and
(3) is the factor representing asset-based charges (the mortality
and expense risk charge, the administration charge, the Step-Up Death
Benefit charge (if you elect the Step-Up Death Benefit), and the No
Withdrawal Charge Rider fee (if you elect the No Withdrawal Charge
Rider)).
3. CONTRACT VALUE.
On any Valuation Date, the Contract Value equals the total of:
|_| the number of Accumulation Units credited to each Subaccount,
times
|_| the value of a corresponding Accumulation Unit for each
Subaccount, plus
|_| your interest in the Fixed Account.
4. TRANSFERS DURING THE ACCUMULATION PERIOD.
During the Accumulation Period, you may transfer Contract Value among the
Subaccounts and the Fixed Account subject to the following provisions:
|_| The minimum amount which may be transferred is $500 for each
Subaccount and Fixed Account or, if smaller, the remaining amount
in the Fixed Account or a Subaccount.
|_| No partial transfer will be made if the remaining Contract Value
of the Fixed Account or any Subaccount will be less than $100
unless the transfer will eliminate your interest in such account.
|_| Total transfers out of the Fixed Account in any Contract Year may
not exceed 25% of the value of the Fixed Account as of the prior
Contract Anniversary or, in the case of transfers in the first
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Contract Year, the Date of Issue. Transfers made under a
systematic investment program approved by us are not currently
subject to this limitation, but we reserve the right to impose
this or a modified limitation on such transfers in the future.
The entire Fixed Account Contract Value may be transferred if a
transfer out of the Fixed Account would otherwise result in a
Fixed Account Contract Value less than $5,000.
|_| We will limit a transfer out of the Fixed Account to an amount
that equals the Fixed Account Contract Value less Debt, less any
premium taxes and withdrawal charge that would apply to the total
withdrawal of the Fixed Account Contract Value at the time that
you make the transfer, and less interest for one calendar year on
any loan at the time that you make the transfer.
|_| Total transfers into the Fixed Account in any Contract Year, that
would be credited a current interest rate of 3% or less, may not
exceed 25% of Contract Value as of the prior Contract Anniversary
or, in the case of transfers in the first Contract Year, the Date
of Issue. Transfers made under a systematic investment program
approved by us are not currently subject to this limitation, but
we reserve the right to impose this or a modified limitation on
such transfers in the future.
|_| We reserve the right to not allow any transfer into the Fixed
Account if the Fixed Account interest rate applicable to such
transfer would be less than or equal to 3%.
|_| If you request a transfer from a specific Subaccount or from the
Fixed Account, we will transfer Purchase Payments (and earnings
attributable to those Purchase Payments) previously allocated or
transferred to that Subaccount or to the Fixed Account, in the
chronological order in which we received such Purchase Payments
in the Contract. Otherwise, we will transfer Purchase Payments
(and earnings attributable to those Purchase Payments) previously
allocated or transferred to all Subaccounts and the Fixed Account
in which you have an interest, in the chronological order in
which we received such Purchase Payments in the Contract.
|_| You must request transfers in excess of $250,000 per Contract,
per day, through standard United States mail.
We reserve the right to require transfers into and out of one Subaccount in
excess of $50,000, per Contract, per day, to be requested through standard
United States mail.
Any transfer request must clearly specify the amount which is to be
transferred and the names of the Subaccounts and/or the Fixed Account that are
affected.
If you authorize a third party to transact transfers on your behalf, we
will reallocate the Contract Value pursuant to the third party's instructions.
However, we take no responsibility for any third party asset allocation or
investment advisory service or program. We may suspend, limit, or cancel
acceptance of a third party's instructions at any time and may restrict the
Investment Options available for transfer under third party authorizations.
We will make transfers pursuant to proper written or telephone instructions
to our Service Center that specify in detail the requested changes. Transfers
involving a Subaccount will be based upon the Accumulation Unit values
determined following our receipt of complete transfer instructions. If we
receive a transfer request at our Service Center before the close of business on
the Valuation Date, we will process the request based on Accumulation Unit
values determined at the end of that Valuation Date. If we receive a transfer
request at our Service Center on or after the close of business on the Valuation
Date, we will process the request based on Accumulation Unit values determined
at the end of the next Valuation Date. If you or your authorized representative
call us to request a telephone transfer but have not given instructions to us
prior to the close of business on the Valuation Date, even if due to our delay
in answering your call, we will consider your telephone transfer request to be
received after the close of business on the Valuation Date.
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We may suspend, modify or terminate the transfer provisions. If you submit
a request for a transfer that is no longer permitted, we will notify you in
writing that the transaction is not permissible.
Some of the Funds reserve the right to delay or refuse purchase requests
from the Separate Account, as may be further described in their prospectuses
and/or statements of additional information. Therefore, if you request a
transaction under your Contract that is part of a purchase request delayed or
refused by a Fund, we will be unable to process your request. In that event, we
will notify you promptly in writing or by telephone.
If you elect the GLWB Rider, we will restrict the Investment Options to
which you may transfer Contract Value. (See "Guaranteed Lifetime Withdrawal
Benefit.")
5. DISRUPTIVE TRADING.
The Contract is not designed for use by individuals, professional market
timing organizations, or other entities that engage in short-term trading,
frequent transfers, programmed transfers or transfers that are large in relation
to the total assets of a Fund (collectively, "Disruptive Trading"). These
activities may require the Fund to maintain undesirable large cash positions or
frequently buy or sell portfolio securities. Such transfers may dilute the value
of the Fund's shares, interfere with the efficient management of the Fund's
portfolio, and increase brokerage and administrative costs of the Funds. As a
result, Disruptive Trading may adversely affect a Fund's ability to invest
effectively in accordance with its investment objectives and policies, and may
harm other Contract Owners and other persons who may have an interest in the
Contract (E.G. Annuitants and Beneficiaries.)
In order to protect our Contract Owners and the Funds from potentially
harmful trading activity, we utilize certain policies and procedures that are
designed to detect and prevent disruptive trading among the Funds (the
"Disruptive Trading Procedures"). Our Disruptive Trading Procedures consider
certain factors in order to identify Disruptive Trading activity, including the
following:
- the number of transfers made over a period of time;
- the length of time between transfers;
- whether the transfers follow a pattern that appears to be designed to
take advantage of short term market fluctuations, particularly within
certain Funds;
- the dollar amount(s) requested for transfers; and
- whether the transfers are part of a group of transfers made by a third
party on behalf of several individual Contract Owners; and
- the investment objectives and/or size of the Funds.
We may increase our monitoring of Contract Owners who engage in what we
perceive to be disruptive trading, including investigating the transfer patterns
within multiple contracts owned by the same Contract Owners. We may also
investigate any patterns of disruptive trading identified by the Funds that may
not have been captured by our Disruptive Trading Procedures.
If we determine you are engaged in disruptive trading, we may take one or
more actions in an attempt to halt such trading. Your ability to make transfers
is subject to modification or restriction if we determine, in our sole opinion,
that your exercise of the transfer privilege may disadvantage or potentially
harm the rights or interests of other Contract Owners (or others having an
interest in the Contract). Our restrictions may take various forms, but under
our current Disruptive Trading Procedures will include loss of telephone, fax,
overnight mail, or Internet transfers. This means that we would accept only
written transfer requests with an original signature transmitted to us at our
Service Center and only by standard United States mail. We may also restrict the
transfer privileges of others acting on your behalf, including your agent or an
asset allocation or investment advisory service. We may also limit the number of
transfers you may make during a calendar year and we may limit the number of
times you may transfer Contract Value into particular Subaccounts during a
calendar YEAR. Subject to the terms of the Contract, we reserve the right to
impose, without prior notice, additional or alternate restrictions on
allocations and transfers that we
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determine, in our sole discretion, will disadvantage or potentially hurt the
rights or interests of other Contract Owners or other holders of the Funds. We
will reverse any transactions inadvertently processed in contravention of our
restrictions within two days of the date the inadvertently processed transaction
occurred.
Our Disruptive Trading Procedures may vary among the Subaccounts. Some of
the Funds have reserved the right to temporarily or permanently refuse payments
or transfer requests from us if, in the judgment of the Fund's investment
adviser, the Fund would be unable to invest effectively in accordance with its
investment objective or policies, or would otherwise potentially be adversely
affected. If a Fund refuses a transfer request from us, we may not be able to
effect certain allocations or transfers that a Contract Owner has requested.
Some Funds may impose redemption fees on short-term trading (i.e., redemptions
of mutual fund shares within a certain number of business days after purchase).
We reserve the right to administer and collect any such redemption fees on
behalf of the Funds.
The Funds may have adopted their own policies and procedures with respect
to excessive trading of their respective shares, and we reserve the right to
enforce these policies and procedures. The prospectuses for the Funds describe
any such policies and procedures, which may be more or less restrictive than the
policies and procedures we have adopted. You should be aware that we currently
may not have the contractual obligation or the operational capacity to apply the
Funds' excessive trading policies and procedures. However, under SEC rules, we
are required to: (1) enter into a written agreement with each Fund or its
principal underwriter that obligates us to provide to the Fund promptly upon
request certain information about the trading activity of individual Contract
Owners, and (2) execute instructions from the Fund to restrict or prohibit
further purchases or transfers by specific Contract Owners who violate the
excessive trading policies established by the Fund.
You should be aware that the purchase and redemption orders received by the
Funds generally are "omnibus" orders from intermediaries such as retirement
plans or separate accounts funding variable insurance contracts. The omnibus
orders reflect the aggregation and netting of multiple orders from individual
retirement plan participants and/or individual Owners of variable insurance
contracts. The omnibus nature of these orders may limit the Funds' ability to
apply their respective disruptive trading policies and procedures. We cannot
guarantee that the Funds (and thus our Contract Owners) will not be harmed by
transfer activity relating to the retirement plans and/or other insurance
companies that may invest in the Funds. In addition, if a Fund believes that an
omnibus order we submit may reflect one or more transfer requests from Contract
Owners engaged in disruptive trading activity, the Fund may reject the entire
omnibus order.
We will apply our Disruptive Trading Procedures consistently without
special arrangement, waiver, or exception. However, the Company's ability to
detect and deter Disruptive Trading and to consistently apply the Disruptive
Trading Procedures may be limited by operational systems and technological
limitations. Contract Owners seeking to engage in such transfer activities may
employ a variety of strategies to avoid detection. Because identifying
Disruptive Trading involves judgments that are inherently subjective, the
Company cannot provide assurances that its Disruptive Trading Procedures will
detect every Contract Owner who engages in disruptive trading. In addition, the
terms of some contracts previously issued by the Company, historical practices
or actions, litigation, or certain regulatory restrictions may limit the
Company's ability to apply transfer or other restrictions.
If we are unable to detect Disruptive Trading or are unable to restrict
Disruptive Trading because of contract provisions or other reasons, you may
experience dilution in the value of your Fund shares. There may be increased
brokerage and administrative costs within the Funds, which may result in lower
long-term returns for your investments. Additionally, because other insurance
companies and/or retirement plans may invest in the Funds, we cannot guarantee
that the Funds will not suffer harm from disruptive trading within the variable
contracts issued by other insurance companies or among Investment Options
available to retirement plan participants.
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6. WITHDRAWALS AND SURRENDERS DURING THE ACCUMULATION PERIOD.
You may make a partial withdrawal subject to the restrictions set forth
below. You also may withdraw all of the Withdrawal Value and surrender the
Contract. You should carefully consider taking partial withdrawals or
surrendering your Contract, as the following may apply:
- You may withdraw up to the Free Withdrawal Amount in any Contract Year
and we will not assess a withdrawal charge. However, if you withdraw
more than the Free Withdrawal Amount in any Contract Year, the excess
amount withdrawn may be subject to a withdrawal charge. We also may
assess a withdrawal charge upon surrender of the Contract, although we
will first apply the Free Withdrawal Amount. (See "Withdrawal
Charge.")
- Withdrawals and surrenders may be subject to federal and state income
tax and a 10% penalty tax. (See "Federal Tax Matters.")
- Partial withdrawals reduce your Contract Value and your death benefit.
(See "Death Benefits.") Certain withdrawals also may reduce the value
of the guarantees provided by the GLWB Rider. (See "Guaranteed
Lifetime Withdrawal Benefit.")
- Your ability to withdraw or surrender may be limited by the terms of a
qualified plan such as Section 403(b) plans. (See "Federal Tax
Matters.")
- We may assess the contract fee and a pro rata portion of the GLWB
Rider charge upon full surrender. (See "Contract Fee" and "GLWB Rider
Charge.")
- We may assess premium taxes on partial withdrawals and surrenders.
(See "State Premium Taxes.")
You may request a partial withdrawal subject to the following:
|_| The partial withdrawal must be at least $500 from each Investment
Option from which the withdrawal is requested, or the full amount
of the Investment Option, if smaller.
|_| You must leave at least $100 in each Investment Option after a
withdrawal unless the account is eliminated by the withdrawal.
|_| We will limit a withdrawal from the Fixed Account to an amount
that equals the Fixed Account Contract Value less Debt, less any
premium taxes and withdrawal charge that would apply to the total
withdrawal of the Fixed Account Contract Value at the time that
you make the withdrawal, and less interest for one calendar year
on any loan at the time that you make the withdrawal.
|_| At least $500 of Contract Value must remain in the Contract after
the withdrawal or we will surrender your Contract (which means
that withdrawal charges, federal and state income taxes and tax
penalties, and premium taxes may apply).
|_| Direct transfers, rollovers, and 1035 exchanges are not permitted
if there is an outstanding loan.
|_| If you request a withdrawal from a specific Subaccount or from
the Fixed Account, we will reduce Purchase Payments (and earnings
attributable to those Purchase Payments) previously allocated or
transferred to that Subaccount or to the Fixed Account, in the
chronological order in which we received such Purchase Payments
in the Contract. Otherwise, withdrawals will reduce Purchase
Payments (and earnings attributable to those Purchase Payments)
previously allocated or transferred to all Subaccounts and the
Fixed Account in which you have an interest, in the chronological
order in which we received such Purchase Payments in the
Contract.
Election to withdraw (including the withdrawal amount) shall be made in
writing to us at our Service Center and should be accompanied by the Contract if
surrender is requested. The Withdrawal Value attributable to the Subaccounts is
determined on the basis of the Accumulation Unit values calculated after we
receive the request. If we receive a withdrawal or surrender request at our
Service Center before the
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close of business on the Valuation Date, we will process the request based on
Accumulation Unit values determined at the end of that Valuation Date. If we
receive a withdrawal or surrender request at our Service Center on or after the
close of business on the Valuation Date, we will process the request based on
Accumulation Unit values determined at the end of the next Valuation Date.
A participant in the Texas Optional Retirement Program ("ORP") must obtain
a certificate of termination from the participant's employer before a Contract
can be redeemed. The Attorney General of Texas has ruled that participants in
the ORP may redeem their interest in a Contract issued pursuant to the ORP only
upon termination of employment in Texas public institutions of higher education,
or upon retirement, death or total disability. In those states adopting similar
requirements for optional retirement programs, we will follow similar
procedures. Please note that the ORP does not restrict transfers within a
Contract, and thus participants are permitted to make transfers of Contract
Value among the Investment Options.
If you elect the GLWB Rider, special withdrawal rules apply. (See
"Guaranteed Lifetime Withdrawal Benefit.")
7. DEATH BENEFITS.
The following section describes the death benefits we currently make
available under the Contract if an Owner dies before the Annuity Date. We will
calculate the death benefit on the Valuation Date we receive due proof of the
Owner's death. Any death benefit payment we make in excess of your Contract
Value is subject to our financial strength and claims-paying ability.
STANDARD DEATH BENEFIT
If you have not elected the Step-Up Death Benefit and an Owner's death
occurs prior to the older Owner's 75th birthday, the death benefit will be equal
to the greater of (A) or (B), less any premium taxes, where:
(A) = The Contract Value less Debt, on the Valuation Date we receive due
proof of death;
(B) = The Purchase Payment Value (described below) less Debt, on the
Valuation Date we receive due proof of death.
If you have not elected the Step-Up Death Benefit and an Owner's death
occurs on or after the older Owner's 75th birthday, the death benefit will be
equal to (A) above, less any premium taxes.
The Purchase Payment Value on the Date of Issue is equal to the initial
Purchase Payment , less any premium taxes. We will increase the Purchase Payment
Value by the amount of each subsequent Purchase PaymenT, less any premium taxes.
The Purchase Payment Value after a withdrawal will be equal to the lesser of:
(a) The Purchase Payment Value immediately prior to the withdrawal minus
the amount of the withdrawal (including any withdrawal charges,
premium taxes, and federal and state income taxes and penalty taxes);
or
(b) The Purchase Payment Value immediately prior to the withdrawal
multiplied by the Proportional Reduction Factor below.
The Proportional Reduction Factor is equal to (1) divided by (2),
where:
(1) is the Contract Value after the withdrawal, and
(2) is the Contract Value immediately prior to the withdrawal.
EXAMPLE:
Contract Value = $80,000
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Purchase Payment Value = $100,000
Debt = $0
If a withdrawal (including any withdrawal charges, premium taxes, and
federal and state income taxes and penalty taxes) of $20,000 is taken, we
follow the steps below to recalculate the Purchase Payment Value after the
withdrawal:
- STEP 1: We calculate the Contract Value after the withdrawal.
This is the Contract Value immediately prior the withdrawal minus
the amount of the withdrawal (including any withdrawal charges,
premium taxes, and federal and state income taxes and penalty
taxes). ($80,000 - $20,000 = $60,000)
- STEP 2: We calculate the Proportional Reduction Factor. The
Proportional Reduction Factor is the Contract Value after the
withdrawal divided by the Contract Value immediately prior to the
withdrawal.( $60,000 / $80,000 = 75%)
- STEP 3: We calculate the Purchase Payment Value after the
withdrawal. This is the lesser of:
(a) The Purchase Payment Value immediately prior to the
withdrawal minus the amount of the withdrawal (including any
withdrawal charges, premium taxes, and federal and state
income taxes and penalty taxes) = $100,000 - $20,000 =
$80,000
(b) The Purchase Payment Value immediately prior to the
withdrawal multiplied by the Proportional Reduction Factor =
$100,000 x 75% = $75,000
= Lesser of $80,000 and $75,000 = $75,000
If you elect the GLWB Rider, we may pay a death benefit in excess of the
standard death benefit. (See "Guaranteed Lifetime Withdrawal Benefit.")
STEP-UP DEATH BENEFIT
We currently offer one optional enhanced death benefit under the Contract -
the Step-Up Death Benefit. We may discontinue the offering of the Step-Up Death
Benefit at any time. The Step-Up Death Benefit may not be available in all
states.
The calculation of benefits under the Step-Up Death Benefit changes after
you attain age 81 and certain increases in benefits cease after that age.
Therefore, the Step-Up Death Benefit may not be appropriate depending on your
proximity to age 81. Prior to electing the Step-Up Death Benefit, you should
carefully consider the benefits available based on your age and consult with
your financial adviser to assist you in determining whether to elect the Step-Up
Death Benefit.
You may elect the Step-Up Death Benefit only if the older Owner is age 79
or younger at the Date of Issue. We deduct a daily charge from your Contract
Value for the Step-Up Death Benefit equal to 0.20%, on an annual basis. (See
"Step-Up Death Benefit Charge.") We do not assess a charge for the Step-Up Death
Benefit on amounts allocated to the Fixed Account. You may elect the Step-Up
Death Benefit only on the initial Contract application. You cannot elect the
Step-Up Death Benefit after the Date of Issue.
If you elect the Step-Up Death Benefit, the death benefit will be equal to
the greater of (A) or (B), less any premium taxes, where:
(A) = The Contract Value less Debt, on the Valuation Date we receive due
proof of death;
(B) = The Step-Up Value (described below) less Debt, on the Valuation Date
we receive due proof of death.
The Step-Up Value on the Date of Issue is equal to the initial Purchase
Payment, less any premium taxes. We will increase the Step-Up Value by the
amount of each subsequent Purchase Payment, less any premium taxes. The Step-Up
Value after a withdrawal will be equal to the lesser of:
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1) The Step-Up Value immediately prior to the withdrawal minus the amount
of the withdrawal (including any withdrawal charges, premium taxes,
and federal and state income taxes and penalty taxes); or
2) The Step-Up Value immediately prior to the withdrawal multiplied by
the Proportional Reduction Factor below.
The Proportional Reduction Factor is equal to (a) divided by (b),
where:
a) is the Contract Value after the withdrawal, and
b) is the Contract Value immediately prior to the withdrawal.
On each Contract Anniversary prior to the older Owner's 81st birthday, we
will recalculate the Step-Up Value to equal the greater of:
1) The Contract Value on that Contract Anniversary; and
2) The current Step-Up Value on that Contract Anniversary.
If an Owner dies prior to a Contract Anniversary and the Valuation Date we
receive due proof of death falls on or after that anniversary, we will not
recalculate the Step-Up Value on that anniversary.
See the "Standard Death Benefit" above for an example of how we adjust the
death benefit values for withdrawals.
You may not terminate the Step-Up Death Benefit once it is in effect. It
will remain in force unless it is terminated as set forth below. The Step-Up
Death Benefit will automatically terminate on the earliest of:
1. the Annuity Date;
2. the Valuation Date that we receive due proof of death of the Owner (in
the case of a spousal continuation, the spouse may elect the Step-Up
Death Benefit if we offer it at that time) ; or
3. termination or surrender of the Contract.
All charges for the Step-Up Death Benefit will cease upon termination.
If you elect the GLWB Rider, we may pay a death benefit in excess of the
Step-Up Death Benefit. (See "Guaranteed Lifetime Withdrawal Benefit.")
PAYMENT OF DEATH BENEFITS
If there is only one Owner under the Contract, we will pay the death
benefit to the Beneficiary upon the death of such Owner before the Annuity Date.
Upon the death of a joint Owner before the Annuity Date, we will pay the death
benefit to the surviving joint Owner. We will pay the death benefit upon the
first to die of any joint Owners.
If any Owner is not a natural person, we will treat each Annuitant under
the Contract as an Owner for death benefit payment purposes and we will pay the
death benefit upon the death of any Annuitant. If any Owner is not a natural
person, we will treat each Annuitant under the Contract as an Owner for death
benefit payment purposes and we will pay the death benefit of Withdrawal Value
upon the change of any Annuitant.
We will pay the death benefit to the Beneficiary (or joint Owner, if
applicable) after we receive due proof of death. We will then have no further
obligation under the Contract. The Valuation Date on which we receive all
required paperwork is the date the Contract is tendered for redemption and the
date for calculation of the benefits.
Due proof of death means our receipt of a certified death certificate and
all necessary claim paperwork, the return of the Contract and such other
information we may require to process the death
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benefit. If we receive due proof of death at our Service Center before the close
of business on the Valuation Date, we will calculate the death benefit based on
Accumulation Unit values determined at the end of that Valuation Date. If we
receive a due proof of death at our Service Center on or after the close of
business on the Valuation Date, we will calculate the death benefit based on
Accumulation Unit values determined at the end of the next Valuation Date.
When multiple Beneficiaries are involved, death benefits cannot be
determined until we receive the complete death benefit claim in good order, that
is, receipt of proper elections from all Beneficiaries as well as proof of
death.
The death benefit may be paid in a lump sum. The Beneficiary (or the
surviving joint Owner) may defer this sum for up to five years from the date of
death. Instead of a lump sum payment, the Beneficiary or the surviving joint
Owner, as the case may be, may elect to have the death benefit distributed as
stated in Annuity Option 1 for a period not to exceed the Beneficiary's (or the
surviving joint Owner's) life expectancy; or Annuity Option 2 or 3 based upon
the life expectancy of the Beneficiary (or the surviving joint Owner) provided
with respect to Annuity Option 3 that such life expectancy exceeds the certain
period of 10 years. (See "The Annuity Period" for a description of the Annuity
Options.) The Beneficiary (or the surviving joint Owner) must make this election
within 60 days of the time we receive due proof of death, and distribution under
these annuity payment options must commence within one year of the date of
death. If the death benefit is requested in a form other than a lump sum and the
death benefit is greater than the Contract Value, we will credit the amount of
the death benefit that exceeds the Contract Value to the Goldman Sachs VIT Money
Market Subaccount. If, however, the Goldman Sachs VIT Money Market Subaccount is
not available as an Investment Option under the Contract at that time, then we
will credit the death benefit among the Investment Options in the same
proportion that the value of each Investment Option bears to the total Contract
Value.
In most cases, when a death benefit is paid in a lump sum, we will pay the
death benefit by establishing an interest bearing account for the Beneficiary,
in the amount of the death benefit. We will send the Beneficiary a checkbook,
and the Beneficiary will have access to the account simply by writing a check
for all or any part of the amount of the death benefit. The account is part of
our General Account. It is not a bank account and it is not insured by the FDIC
or any other government agency. As part of our general account, it is subject to
the claims of our creditors. We receive a benefit from all amounts left in the
account.
If the Beneficiary is not a natural person, the Beneficiary must elect that
the entire death benefit be distributed within five years of your death.
If your spouse is the only Primary Beneficiary when you die, your surviving
spouse may elect to be the successor Owner of the Contract by completing the
spousal continuation section of the claim form submitted with due proof of your
death. The date of continuance of the Contract will be the Valuation Date we
receive due proof of your death. Your surviving spouse will become the Annuitant
if no Annuitant is living at the time of your death. Spousal continuation will
not satisfy minimum required distribution rules for Qualified Contracts other
than IRAs.
If your surviving spouse elects to become the successor Owner of the
Contract on your death, thereby waiving claim to the death benefit otherwise
payable, we will not pay out a death benefit on your death. Instead, we will
increase the Contract Value on the Valuation Date we receive due proof of your
death to equal the death benefit amount otherwise payable (if the death benefit
is greater than the Contract Value), subject to the following:
|_| We will credit the amount of the death benefit that exceeds the
Contract Value to the Goldman Sachs VIT Money Market Subaccount. If,
however, the Goldman Sachs VIT Money Market Subaccount is not
available as an Investment Option under the Contract at that time,
then we will credit the death benefit among the Investment Options in
the same proportion that the value of each Investment Option bears to
the total Contract Value.
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|_| We will terminate the Step-Up Death Benefit if in effect as of the
Valuation Date we receive due proof of your death.
|_| On the date of continuance, your surviving spouse may elect the
Step-Up Death Benefit or any optional enhanced death benefit then
offered by us. All such death benefits will be subject to the terms
and conditions then in effect at the time of continuance. All charges
and benefits will be calculated as if the coverage was issued to the
surviving spouse on the date of continuance and the Contract Value on
the date of continuance resulted from receipt of an initial Purchase
Payment in that amount.
|_| We will assess withdrawal charges, if any, only on Purchase Payments
(and earnings attributable to those Purchase Payments) we receive
after the date of continuance.
|_| Any subsequent spouse of the surviving spouse will not be entitled to
continue the Contract upon the death of the surviving spouse.
If any Owner dies on or after the Annuity Date, and before the entire interest
in the Contract has been distributed, any remaining portion of such interest
will be distributed at least as rapidly as under the method of distribution
being used as of the date of death.
In all events, we will pay or apply the Contract's death benefit in accordance
with Sections 72(s) or 401(a)(9) of the Code, as applicable.
8. NO WITHDRAWAL CHARGE RIDER. For an additional charge, you may elect the No
Withdrawal Charge Rider. You may elect the Rider only on the initial Contract
application. You cannot elect the Rider after the Date of Issue. You may not
cancel the Rider once it is issued. We may discontinue offering the Rider at any
time. The Rider may not be available in all states.
If you elect this Rider, we will not deduct any withdrawal charge upon
partial withdrawal or surrender of the Contract during the Accumulation Period
or upon annuitization. (See "Withdrawal Charge.") We will deduct a daily charge
for the Rider from your Contract Value, equal to 0.35%, on an annual basis.
The Rider will remain in force unless it is terminated as set forth below.
The Rider will automatically terminate on the earliest of:
1. the Valuation Date as of which the Contract is terminated; or
2. the Annuity Date.
3. the Valuation Date that we receive due proof of death of the Owner (in
the case of a spousal continuation, the spouse may elect the Rider if
we offer it at that time).
Please remember that withdrawals and surrenders will have tax consequences,
which may include the amount of the withdrawal being subject to income tax and
in some circumstances an additional 10% penalty tax. Withdrawals also reduce
your Contract Value and your death benefit. (See "Death Benefits.") Certain
withdrawals also may reduce the value of the guarantees provided by the GLWB
Rider. (See "Guaranteed Lifetime Withdrawal Benefit.") We encourage you to talk
to your agent and carefully consider whether the No Withdrawal Charge Rider is
right for you.
9. GUARANTEED LIFETIME WITHDRAWAL BENEFIT (GLWB) RIDER - GLWB PLUS FOR ONE AND
GLWB PLUS FOR TWO
The following are definitions of important terms we use in connection with
describing the Guaranteed Lifetime Withdrawal Benefit (GLWB) Rider:
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DEFINITIONS
COVERED PERSON is:
- The person (or persons in the case of GLWB Plus For Two) whose life we
use to determine the Lifetime Income Date and the duration of the
monthly Settlement Payments on and after the Benefit Phase Start Date
(if such date occurs on or after the Lifetime Income Date) or the
Maximum Annuity Date (if you elect the GLWB Rider annuitization option
on the Maximum Annuity Date). The Rider's benefits are based on the
life of the Covered Person(s). If the Contract is owned by a
non-natural person, we will treat the older Annuitant on the Date of
Issue as the older Owner for purposes of determining the Covered
Person.
MAXIMUM ANNUITY DATE means:
- The latest Valuation Date on which annuity payments may commence.
GUARANTEED WITHDRAWAL BALANCE means:
- The total amount we guarantee to be available to you (or your
Beneficiary after your death) as Non-Excess Withdrawals or as monthly
Settlement Payments if you meet the Rider's conditions.
- On the Date of Issue, the initial Guaranteed Withdrawal Balance is
equal to your initial Purchase Payment (less any premium taxes). See
"Guaranteed Amounts" below for information on how the Guaranteed
Withdrawal Balance is affected by Non-Excess and Excess Withdrawals
and additional Purchase Payments.
GUARANTEED WITHDRAWAL AMOUNT means:
- The annual amount we guarantee to make available for Non-Excess
Withdrawals each Contract Year prior to the Lifetime Income Date or to
pay in monthly installments as Settlement Payments on and after the
Benefit Phase Start Date (if such date occurs before the Lifetime
Income Date), until the Guaranteed Withdrawal Balance is reduced to
zero.
- On the Date of Issue, the initial Guaranteed Withdrawal Amount is
equal to 5% of the initial Guaranteed Withdrawal Balance. See
"Guaranteed Amounts" below for information on how the Guaranteed
Withdrawal Amount is affected by Non-Excess and Excess Withdrawals and
additional Purchase Payments.
LIFETIME INCOME BASE means:
- The amount that is used to determine the Lifetime Income Amount on and
after the Lifetime Income Date and the charge for the GLWB Rider.
- On the Date of Issue, the initial Lifetime Income Base is equal to
your initial Purchase Payment (less any premium taxes). See
"Guaranteed Amounts" below for information on how the Lifetime Income
Base is affected by Non-Excess and Excess Withdrawals, additional
Purchase Payments, and any Bonuses or Step-Ups.
LIFETIME INCOME AMOUNT means:
- The annual amount we guarantee to make available for Non-Excess
Withdrawals each Contract Year on and after the Lifetime Income Date
or to pay in monthly installments as Settlement Payments on and after
the Benefit Phase Start Date (if such date occurs on or after the
Lifetime Income Date) or the Maximum Annuity Date (if you elect the
GLWB Rider annuitization option on the Maximum Annuity Date), while a
Covered Person is living or until the Guaranteed Withdrawal Balance is
reduced to
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zero, if later.
- On the Lifetime Income Date, the initial Lifetime Income Amount is
equal to 5% of your Lifetime Income Base on that date (subject to a
maximum of $250,000). We do not calculate the Lifetime Income Amount
prior to the Lifetime Income Date. See "Guaranteed Amounts" below for
information on how the Lifetime Income Amount is affected by
Non-Excess and Excess Withdrawals, additional Purchase Payments, and
any Bonuses or Step-Ups.
LIFETIME INCOME DATE means:
- The Contract Anniversary on or after the Covered Person reaches age
65, or the Date of Issue if the Covered Person is age 65 or older at
the time of purchase of the Contract. In the case of GLWB Plus For
Two, we use the life of the older Covered Person to determine the
Lifetime Income Date. If the older Covered Person dies before the
Lifetime Income Date and the surviving Covered Person chooses to
continue the Contract, we will use the life of the surviving Covered
Person to redetermine the Lifetime Income Date.
GROSS WITHDRAWAL means:
- The amount of a partial or full withdrawal from the Contract. This
amount will be subject to any withdrawal charges, premium taxes,
federal and state income taxes and penalty taxes, and, in the case of
a full surrender, the contract fee and a pro rata portion of the GLWB
Rider charge, as applicable.
NON-EXCESS WITHDRAWAL means a Gross Withdrawal THAT:
- does not cause total Gross Withdrawals during a Contract Year
beginning PRIOR TO the Lifetime Income Date to exceed the Guaranteed
Withdrawal Amount; or
- does not cause total Gross Withdrawals during a Contract Year
beginning ON OR AFTER the Lifetime Income Date to exceed the Lifetime
Income Amount; or
- is taken under a "life expectancy" program established by us (see
"Life Expectancy Distributions" below) if no Gross Withdrawals are
taken that are not part of the program. Any Gross Withdrawals that are
taken that are not part of the program and any future "life
expectancy" program withdrawals that are taken during that Contract
Year may be considered Excess Withdrawals.
EXCESS WITHDRAWAL means a Gross Withdrawal THAT:
- causes total Gross Withdrawals during a Contract Year beginning PRIOR
TO the Lifetime Income Date to exceed the Guaranteed Withdrawal Amount
(or if such total withdrawals have already exceeded the Guaranteed
Withdrawal Amount); or
- causes total Gross Withdrawals during a Contract Year beginning ON OR
AFTER the Lifetime Income Date to exceed the Lifetime Income Amount
(or if such total withdrawals have already exceeded the Lifetime
Income Amount).
- Note: If Gross Withdrawals are currently being taken under a "life
expectancy" program established by us (see "Life Expectancy
Distributions" below), any Gross Withdrawals that are taken that are
not part of the program and any future "life expectancy" program
withdrawals
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that are taken during that Contract Year may be considered Excess
Withdrawals.
SETTLEMENT PAYMENTS mean:
- Payments we make to you on and after the Benefit Phase Start Date or
the Maximum Annuity Date (if you elect the GLWB Rider annuitization
option on the Maximum Annuity Date). These payments may be subject to
premium taxes as well as federal and state income taxes and penalty
taxes.
BENEFIT PHASE occurs:
- when the Contract Value is reduced to zero due to:
- a Non-Excess Withdrawal; or
- poor market performance; or
- the assessment of Contract fees and charges, including the GLWB
Rider charge
- AND either the Guaranteed Withdrawal Balance or the Lifetime Income
Amount immediately after any of the above occurs is greater than zero.
STEP-UP means:
- An increase in the Lifetime Income Base on certain anniversary dates
due to positive market performance as reflected in your Contract
Value.
BONUS means:
- An increase in the Lifetime Income Base if you do not take withdrawals
during a specified period of time.
CURRENTLY, THE GLWB RIDER IS ONLY AVAILABLE TO QUALIFIED CONTRACTS. YOU
SHOULD CONSULT WITH A QUALIFIED TAX ADVISER PRIOR TO ELECTING THE RIDER FOR
FURTHER INFORMATION ON TAX RULES AFFECTING QUALIFIED CONTRACTS, INCLUDING IRAS.
If you are concerned that poor investment performance in the Subaccounts
may adversely impact the amount of money you can withdraw from your Contract, we
offer for an additional charge an optional Guaranteed Lifetime Withdrawal
Benefit Rider ("GLWB Rider"). In general, and subject to certain conditions, the
GLWB Rider guarantees the following:
1. Prior to the Lifetime Income Date: We will make the GUARANTEED
WITHDRAWAL AMOUNT available for Non-Excess Withdrawals each Contract
Year or we will pay it in monthly installments as Settlement Payments
if your Contract enters the Benefit Phase before the Lifetime Income
Date, until the Guaranteed Withdrawal Balance is reduced to zero. If
you limit your withdrawals to Non-Excess Withdrawals, we will only
decrease the Guaranteed Withdrawal Balance by the amount of each
withdrawal and we will not decrease the Guaranteed Withdrawal Amount.
If you begin receiving monthly Settlement Payments, we will reduce the
Guaranteed Withdrawal Balance by the amount of each payment. Your
initial Guaranteed Withdrawal Balance is equal to your initial
Purchase Payment (less any premium taxes). Your initial Guaranteed
Withdrawal Amount is equal to 5% of your initial Guaranteed Withdrawal
Balance.
2. If your Contract Value is greater than zero on the Lifetime Income
Date: We will make the LIFETIME INCOME AMOUNT available for Non-Excess
Withdrawals each Contract Year on and after the Lifetime Income Date
(if you have not annuitized your Contract) or we will pay it in
monthly installments as Settlement Payments on and after the Maximum
Annuity Date (if you elect the GLWB Rider annuitization option on the
Maximum Annuity Date) or if your Contract
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enters the Benefit Phase prior to the Maximum Annuity Date. This
guarantee applies on and after the Lifetime Income Date, while a
Covered Person is living or until the Guaranteed Withdrawal Balance is
reduced to zero, if later. If you limit your withdrawals to Non-Excess
Withdrawals, we will only decrease the Guaranteed Withdrawal Balance
by the amount of each withdrawal and we will not decrease the Lifetime
Income Amount. If you begin receiving monthly Settlement Payments, we
will reduce the Guaranteed Withdrawal Balance by the amount of each
payment.
3. After the Covered Person's death (or the death of the last surviving
Covered Person in the case of the GLWB Plus for Two), your Beneficiary will
receive the remaining Guaranteed Withdrawal Balance as a lump sum death
benefit (if greater than the standard death benefit or any optional death
benefit you elected) in certain cases or in monthly installments as
Settlement Payments (until the Guaranteed Withdrawal Balance is reduced to
zero) in others. This guarantee applies even if the Covered Person dies (or
the last surviving Covered Person dies in the case of GLWB Plus For Two) on
or after the Maximum Annuity Date, if you elect the GLWB Rider
annuitization option on the Maximum Annuity Date.
The Guaranteed Withdrawal Amount is only available prior to the Lifetime
Income Date. The Lifetime Income Amount is only available on and after the
Lifetime Income Date (if your Contract Value is greater than zero on the
Lifetime Income Date). If you take ANY withdrawals prior to the Lifetime Income
Date, the Lifetime Income Amount may be lower than the Guaranteed Withdrawal
Amount that was previously available. If we increase the Lifetime Income Base
for a Bonus or a Step-Up, we will increase the Lifetime Income Amount and it may
be higher than the Guaranteed Withdrawal Amount that was previously available.
We will increase the Guaranteed Withdrawal Balance, Lifetime Income Base,
and Lifetime Income Amount (on or after the Lifetime Income Date) when you make
additional Purchase Payments, subject to limits. We may increase the Guaranteed
Withdrawal Amount (prior to the Lifetime Income Date) when you make additional
Purchase Payments.
We make the above guarantees subject to the rules below:
a) You limit your withdrawals each Contract Year to Non-Excess
Withdrawals.
b) You do not annuitize under one of the Annuity Options in the Contract.
c) You do not terminate or surrender the Contract.
d) There is no divorce prior to the Benefit Phase Start Date
e) In the case of the GLWB Plus For One, a Non-Qualified Contract with
joint Owners must be continued if the Owner who is not the Covered
Person dies.
f) In the case of the GLWB Plus For Two, if a Covered Person who is an
Owner dies, the other Covered Person (if living) must continue the
Contract.
THE GUARANTEED LIFETIME WITHDRAWAL BENEFIT DOES NOT GUARANTEE CONTRACT VALUE OR
THE PERFORMANCE OF ANY INVESTMENT OPTION.
IMPORTANT: We offer two coverage options: where the GLWB Rider covers one
Covered Person ("GLWB Plus For One") and where the GLWB Rider covers two Covered
Persons ("GLWB Plus For Two"). If both Owners of a Non-Qualified Contract are
spouses, or if there is one Owner and a spouse who is the sole Beneficiary, you
must choose whether there will be one or two Covered Persons. Please pay careful
attention to this designation, as it will impact the GLWB Rider charge and
whether the guarantees provided by the GLWB Rider will continue for the life of
the surviving spouse.
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IMPORTANT CONSIDERATIONS
THE ADDITION OF THE GLWB RIDER TO YOUR CONTRACT MAY NOT BE IN YOUR INTEREST
SINCE AN ADDITIONAL MONTHLY CHARGE IS IMPOSED FOR THIS BENEFIT AND THE COVERED
PERSON(S) MUST REACH THE LIFETIME INCOME DATE AND REMAIN LIVING TO RECEIVE
CERTAIN BENEFITS. SINCE THE WITHDRAWAL BENEFIT OF THE GLWB RIDER IS ACCESSED
THROUGH REGULAR NON-EXCESS WITHDRAWALS, THE GLWB RIDER MAY NOT BE APPROPRIATE
FOR OWNERS WHO DO NOT FORESEE A NEED FOR LIQUIDITY AND WHOSE PRIMARY OBJECTIVE
IS TO TAKE MAXIMUM ADVANTAGE OF THE TAX DEFERRAL ASPECT OF THE CONTRACT. CERTAIN
QUALIFIED CONTRACTS MAY HAVE WITHDRAWAL RESTRICTIONS WHICH MAY LIMIT THE BENEFIT
OF THE RIDER. YOU SHOULD CONSULT WITH YOUR TAX AND FINANCIAL PROFESSIONALS ON
THIS MATTER, AS WELL AS OTHER TAX MATTERS ASSOCIATED WITH THE GLWB RIDER, AND
DETERMINE WHETHER THE GLWB RIDER IS SUITABLE FOR YOU.
ALSO, THE GLWB RIDER LIMITS THE INVESTMENT OPTIONS OTHERWISE AVAILABLE
UNDER THE CONTRACT AND CONTAINS AGE CAPS, PURCHASE PAYMENT LIMITATIONS, AND
RESTRICTIONS ON AN OWNER'S RIGHTS AND BENEFITS AT CERTAIN AGES AND VALUES. YOU
SHOULD CAREFULLY CONSIDER EACH OF THESE FACTORS BEFORE DECIDING IF THE GLWB
RIDER IS SUITABLE FOR YOUR NEEDS, ESPECIALLY AT OLDER AGES.
Please carefully consider the following before electing the GLWB Rider:
- All withdrawals, including Non-Excess Withdrawals and Excess
Withdrawals, reduce your Contract Value and death benefit. Federal and
state income taxes may apply, as well as a 10% federal penalty tax if
a withdrawal occurs before the Owner(s) reach(es) age 59 1/2.
- You may only allocate Purchase Payments and transfer Contract Value
among certain Investment Options (see "Investment Option Restrictions"
below).
- We impose additional limitations on Purchase Payments (see "Making
Additional Purchase Payments" below).
- You may not cancel the Rider once it is issued.
- You will begin paying the GLWB Rider charge as of the first
Monthiversary following the Date of Issue, even if you do not begin
taking withdrawals for many years. If you choose not to take
withdrawals, we will not refund the GLWB Rider charge.
- Unless the sole Owner is a non-natural person, the Owner and Annuitant
must be the same individual (additional Annuitants are not permitted),
and if your Contract has joint Owners, each Owner must be an
Annuitant.
- You cannot change or add any Owner, joint Owner, Annuitant, or joint
Annuitant, unless such change is permitted by us in connection with
death or divorce. If you elect GLWB Plus For Two, or you elect GLWB
Plus For One and your Contract has joint Owners, you also cannot
change or add any Beneficiary, unless such change is permitted by us
in connection with death or divorce.
- There are restrictions regarding who may be named as an Owner, joint
Owner, Annuitant, joint Annuitant, and Beneficiary (see "Naming of
Owners, Annuitants, and Beneficiaries" below).
- Any Settlement Payments that we make are subject to our financial
strength and claims-paying ability.
YOU SHOULD NOT PURCHASE THE GLWB RIDER IF:
- you expect to take Excess Withdrawals because such Excess Withdrawals
may significantly reduce or eliminate the value of the guarantees
provided by the Rider; or
- you do not expect to begin taking Non-Excess Withdrawals before the
Annuity Date.
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PURCHASING THE GLWB RIDER
Currently, the GLWB Rider is only available to Qualified Contracts. You may
elect the Rider only on the initial Contract application. You cannot elect the
Rider after the Date of Issue.
In the case of GLWB Plus For One, you may only elect the Rider if the
Covered Person has not attained age 76. In the case of joint Owners, the age of
the older Owner determines eligibility. Where the Owner is a non-natural person,
we determine eligibility by the age of the older Annuitant on the Date of Issue.
In the case of GLWB Plus For Two, you may only elect the Rider if the older
Covered Person has not attained age 76. Also, both Covered Persons must have
birthdates less than 6 years apart from each other. For example, assume you
purchase a Contract on November 1, 2007 and you wish to select GLWB Plus For
Two:
- EXAMPLE 1: You are born July 1, 1942 and your spouse is born June 1,
1948. Since your birthdates are 5 years and 11 months apart, you may
elect GLWB Plus For Two.
- EXAMPLE 2: You are born July 1, 1942 and your spouse is born August 1,
1948. Since your birthdates are 6 years and 1 month apart, you may NOT
elect GLWB Plus For Two.
We require due proof of age before issuing the Rider. We reserve the right
to accept or refuse to issue the GLWB Rider at our sole discretion. We may
discontinue offering the Rider at any time. The Rider may not be available in
all states.
COVERED PERSONS
If both Owners of a Non-Qualified Contract are spouses, or if there is one
Owner and a spouse who is the sole Beneficiary, you must choose whether there
will be one or two Covered Persons. Please pay careful attention to this
designation, as it will impact the GLWB Rider charge and whether the guarantees
provided by the GLWB Rider will continue for the life of the surviving spouse.
You must choose either the GLWB Plus For One or the GLWB Plus For Two when you
elect the GLWB Rider.
In the case of GLWB Plus For One, the Covered Person is the person whose
life we use to determine the Lifetime Income Date and the duration of the
monthly Settlement Payments on and after the Benefit Phase Start Date (if such
date occurs on or after the Lifetime Income Date) or the Maximum Annuity Date
(if you elect the GLWB Rider annuitization option on the Maximum Annuity Date).
If there is more than one Owner, the Covered Person will be the older Owner on
the Date of Issue. If the Contract is owned by a non-natural person, we will
treat the older Annuitant on the Date of Issue as the older Owner for purposes
of determining the Covered Person.
In the case of GLWB Plus For Two, you and your spouse will be the
Covered Persons whose lives we use to determine the Lifetime Income Date and
the duration of the monthly Settlement Payments on and after the Benefit
Phase Start Date (if such date occurs on or after the Lifetime Income Date)
or the Maximum Annuity Date (if you elect the GLWB Rider annuitization option
on the Maximum Annuity Date).
We determine the Covered Person(s) at the time you elect the Rider. A
Covered Person cannot be added or changed after the Date of Issue.
NAMING OF OWNERS, ANNUITANTS, AND BENEFICIARIES
Unless the sole Owner is a non-natural person, the Owner and Annuitant must
be the same individual (additional Annuitants are not permitted), and if your
Contract has joint Owners, each Owner must be an Annuitant. If the Owner is a
non-natural person, we will treat each Annuitant as an Owner under the GLWB
Rider, and all Owner provisions and restrictions apply to such Annuitants.
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You cannot change or add any Owner, joint Owner, Annuitant, or joint
Annuitant, unless such change is permitted by us in connection with death or
divorce. If you elect GLWB Plus For Two, or you elect GLWB Plus For One and your
Contract has joint Owners, you also cannot change or add any Beneficiary, unless
such change is permitted by us in connection with death or divorce.
IF YOU DO NOT HAVE A SPOUSE ON THE DATE OF ISSUE:
- You may only elect GLWB Plus For One. You must be named as the
sole Owner, and any Beneficiary (spouse or non-spouse) may be
named. You will be the Covered Person.
IF YOU HAVE A SPOUSE ON THE DATE OF ISSUE:
For Qualified Contracts:
- Under the Code, only one spouse may be named as the sole Owner.
- If you elect GLWB Plus For One, any Beneficiary may be named
(spouse or non-spouse). The Covered Person will be the sole
Owner.
- If you elect GLWB Plus For Two, the other spouse must be named as
the sole Beneficiary. The Covered Persons will be the sole Owner
and the sole Beneficiary.
For Non-Qualified Contracts, you must choose one of the following options:
1) one spouse is named as the sole Owner
- If you elect GLWB Plus For One, any Beneficiary may be named
(spouse or non-spouse). The Covered Person will be the sole
Owner.
- If you elect GLWB Plus For Two, the other spouse must be
named as the sole Beneficiary. The Covered Persons will be
the sole Owner and the sole Beneficiary.
OR:
2) both spouses are named as joint Owners and Beneficiaries
- If you elect GLWB Plus For One, the Covered Person will be
the older Owner
- If you elect GLWB Plus For Two, the Covered Persons will be
both Owners.
A spouse must qualify as a "spouse" under the Code.
INVESTMENT OPTION RESTRICTIONS
If you elect the GLWB Rider, you may only allocate your Purchase Payments
and transfer your Contract Value among the following Investment Options:
- Goldman Sachs Balanced Strategy Portfolio (Class A)
- Goldman Sachs Growth and Income Strategy Portfolio (Class A)
- Goldman Sachs Growth Strategy Portfolio (Class A)
- Goldman Sachs VIT Money Market Fund
YOU MAY NOT ALLOCATE ANY PORTION OF YOUR PURCHASE PAYMENTS OR CONTRACT
VALUE TO ANY INVESTMENT OPTION NOT LISTED ABOVE. YOU MAY NOT ALLOCATE PURCHASE
PAYMENTS OR TRANSFER CONTRACT VALUE TO THE FIXED ACCOUNT.
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You should consult with your financial adviser to assist you in determining
whether the Investment Options available with the GLWB Rider are best suited for
your financial needs and risk tolerance. We reserve the right to impose
additional restrictions on Investment Options at any time.
GLWB RIDER CHARGE
We assess an additional monthly charge for the GLWB Rider that compensates
us for the costs and risks we assume in providing the benefits under the Rider.
- In the case of GLWB Plus For One, on the Date of Issue, the monthly
GLWB Rider charge, which we will deduct from your Contract Value on
each Monthiversary, is equal to 0.50% of the Lifetime Income Base on
that Monthiversary.
- In the case of GLWB Plus For Two, on the Date of Issue, the monthly
GLWB Rider charge, which we will deduct from your Contract Value on
each Monthiversary, is equal to 0.75% of the Lifetime Income Base on
that Monthiversary.
WE RESERVE THE RIGHT TO INCREASE THE GLWB RIDER CHARGE ON THE EFFECTIVE
DATE OF EACH STEP-UP. WE GUARANTEE, HOWEVER, THAT THE MONTHLY GLWB RIDER CHARGE
WILL NEVER EXCEED 1.00% FOR GLWB PLUS FOR ONE OR 1.50% FOR GLWB PLUS FOR TWO, of
THE LIFETIME INCOME BASE ON EACH MONTHIVERSARY. If we decide to increase the
GLWB Rider charge at the time of a Step-Up, then you will receive advance notice
and be given the opportunity of no less than 30 days to decline the automatic
Step-Up by notifying us at our Service Center in writing.
We will deduct a pro rata share of the monthly GLWB Rider charge from the
amount otherwise due:
1) If you take an Excess Withdrawal on any date other than a
Monthiversary and such withdrawal reduces the Contract Value to zero.
2) On the Annuity Date.
3) Upon surrender of the Contract.
All charges for the GLWB Rider will cease upon termination (see "Terminating the
GLWB Rider" below).
When we deduct the charge for the GLWB Rider , we will reduce Purchase
Payments (and earnings attributable to those Purchase Payments) in the
chronological order in which we received such Purchase Payments.
GUARANTEED AMOUNTS
THE GUARANTEED WITHDRAWAL BALANCE. On the Date of Issue, the initial
Guaranteed Withdrawal Balance is equal to your initial Purchase Payment (less
any premium taxes). Your Guaranteed Withdrawal Balance can never be more than $5
million. Your Guaranteed Withdrawal Balance will never be less than zero.
THE LIFETIME INCOME BASE. On the Date of Issue, the initial Lifetime Income
Base is equal to your initial Purchase Payment (less any premium taxes). The
amount of the GLWB Rider charge and the Lifetime Income Amount will increase if
the Lifetime Income Base increases. Your Lifetime Income Base can never be more
than $5 million. Your Lifetime Income Base will never be less than zero.
NOTE: The Guaranteed Withdrawal Balance and Lifetime Income Base are not cash
values or surrender values, are not available to Owners, are not minimum
returns for any Subaccount, and are not guarantees of any Contract Value.
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THE GUARANTEED WITHDRAWAL AMOUNT. On the Date of Issue, the initial
Guaranteed Withdrawal Amount is equal to 5% of the initial Guaranteed Withdrawal
Balance. Your Guaranteed Withdrawal Amount can never be more than $250,000.
THE LIFETIME INCOME AMOUNT. On the Lifetime Income Date, the initial
Lifetime Income Amount is equal to 5% of your Lifetime Income Base on that date.
We do not calculate the Lifetime Income Amount prior to the Lifetime Income
Date. Your Lifetime Income Amount can never be more than $250,000.
NOTE: If you take any withdrawals prior to the Lifetime Income Date, the initial
amount of the Lifetime Income Amount may be less than the previously
available Guaranteed Withdrawal Amount.
Non-Excess Withdrawals, Excess Withdrawals, additional Purchase Payments,
Bonuses, and Step-Ups may have an effect on the value of the Guaranteed
Withdrawal Balance, the Lifetime Income Base, the Guaranteed Withdrawal Amount,
and the Lifetime Income Amount, as follows:
<Table>
<Caption>
IF: THEN:
--------------------------------------- --------------------------------------------------------------
you take a Non-Excess Withdrawal - we will decrease your Guaranteed Withdrawal Balance;
- prior to the Lifetime Income Date:
- we will decrease your Lifetime Income Base; and
- we will not change your Guaranteed Withdrawal Amount;
- on or after the Lifetime Income Date:
- we will not change your Lifetime Income Base; and
- we will not change your Lifetime Income Amount.
(See "Taking Withdrawals" below.)
you take an Excess Withdrawal - we will decrease your Guaranteed Withdrawal Balance;
- we will decrease your Lifetime Income Base;
- prior to the Lifetime Income Date:
- we will decrease your Guaranteed Withdrawal Amount;
- on or after the Lifetime Income Date:
- we will decrease your Lifetime Income Amount.
(See "Taking Withdrawals" below.)
you make an additional Purchase Payment - we will increase your Guaranteed Withdrawal Balance;
- we will increase your Lifetime Income Base;
- prior to the Lifetime Income Date:
- we will recalculate your Guaranteed Withdrawal Amount;
- on or after the Lifetime Income Date:
- we will increase your Lifetime Income Amount.
(See "Making Additional Purchase Payments" below.)
we apply a Bonus and/or Step-Up - we will not change your Guaranteed Withdrawal Balance;
- we will not change your Guaranteed Withdrawal Amount;
- we will increase your Lifetime Income Base; and
</Table>
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<Table>
- on or after the Lifetime Income Date:
- we will increase your Lifetime Income Amount;
(See "Bonus" and "Step-Up" below.)
</Table>
TAKING WITHDRAWALS
IMPORTANT CONSIDERATIONS
You may be assessed charges and penalties if you take withdrawals:
- Although we currently do not assess a withdrawal charge on Non-Excess
Withdrawals, we reserve the right to do so (unless you have elected
the No Withdrawal Charge Rider for an additional charge). We will
assess a withdrawal charge on Excess Withdrawals if such withdrawals
would otherwise be subject to a withdrawal charge. If we assess a
withdrawal charge on a Non-Excess Withdrawal or an Excess Withdrawal,
we will calculate and impose the charge in the same manner that we
would for any partial withdrawal. All withdrawals, including
Non-Excess Withdrawals and Excess Withdrawals, will reduce the
remaining Free Withdrawal Amount in any Contract Year. (See
"Withdrawal Charge" and "No Withdrawal Charge Rider.")
- All withdrawals, including Non-Excess Withdrawals and Excess
Withdrawals, reduce your Contract Value and death benefit. Federal and
state income taxes may apply, as well as a 10% federal penalty tax if
a withdrawal occurs before the Owner(s) reach(es) age 59 1/2. (See
"Federal Tax Matters.")
You should carefully consider when to begin taking Non-Excess Withdrawals.
- You may reduce the value of the guarantees provided by the GLWB Rider,
depending on when you begin taking Non-Excess Withdrawals. For
example, because Non-Excess Withdrawals taken prior to the Lifetime
Income Date reduce your Lifetime Income Base, such withdrawals will
result in a lower initial Lifetime Income Amount (when calculated on
the Lifetime Income Date).
- If you delay taking Non-Excess Withdrawals, you may be paying for a
benefit you are not using.
Please consult your financial adviser as to the appropriate time for you to
begin taking Non-Excess Withdrawals.
NON-EXCESS WITHDRAWALS
IF: THEN:
--- -----
You take a Non-Excess Withdrawal 1. We will decrease the Guaranteed
prior to the Lifetime Income Date: Withdrawal Balance by the amount of the
withdrawal.
2. We will decrease the Lifetime Income
Base to equal the GREATER of:
- the Lifetime Income Base
immediately amount prior to the
withdrawal minus the of the
withdrawal; or
- the Lifetime Income Base
immediately prior to the withdrawal
multiplied by the Proportional
Reduction Factor.
3. Your Guaranteed Withdrawal Amount
will not change.
THE PROPORTIONAL REDUCTION FACTOR IS
EQUAL TO YOUR
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CONTRACT VALUE AFTER THE WITHDRAWAL
DIVIDED BY YOUR CONTRACT VALUE
IMMEDIATELY PRIOR THE WITHDRAWAL.
IF: THEN:
--- -----
You take a Non-Excess Withdrawal on 1. We will decrease the Guaranteed
or after the Lifetime Income Date: Withdrawal Balance by the amount of the
withdrawal.
2. Your Lifetime Income Base will not
change.
3. Your Lifetime Income Amount will not
change.
THE LIFETIME INCOME AMOUNT MAY BE LESS THAN THE GUARANTEED WITHDRAWAL
AMOUNT PREVIOUSLY AVAILABLE IF YOU TAKE ANY WITHDRAWALS BEFORE YOUR LIFETIME
INCOME DATE.
NOTE: If you choose to receive only a part of, or none of, your Guaranteed
Withdrawal Amount or Lifetime Income Amount, as applicable, in any given
Contract Year, you should understand that annual Non-Excess Withdrawals
are not cumulative. You cannot carry over any unused Non-Excess
Withdrawals to any future Contract Years.
EXCESS WITHDRAWALS
IF: THEN:
--- -----
You take an Excess Withdrawal prior 1. We will decrease the Guaranteed
to the Lifetime Income Date: Withdrawal Balance to equal the LESSER
of:
- the Guaranteed Withdrawal Balance
immediately prior to the withdrawal
minus the amount of the withdrawal;
or
- the Guaranteed Withdrawal Balance
immediately prior to the withdrawal
multiplied by the Proportional
Reduction Factor.
2. We will decrease the Guaranteed
Withdrawal Amount to equal the
Guaranteed Withdrawal
Amount immediately prior to the
withdrawal multiplied by the
Proportional Reduction Factor.
3. We will decrease the Lifetime
Income Base to equal the Lifetime
Income Base immediately prior to the
withdrawal multiplied by the
Proportional Reduction Factor.
THE PROPORTIONAL REDUCTION FACTOR IS
EQUAL TO YOUR CONTRACT VALUE AFTER THE
WITHDRAWAL DIVIDED BY YOUR CONTRACT
VALUE IMMEDIATELY PRIOR THE WITHDRAWAL.
IF: THEN:
--- -----
You take an Excess Withdrawal on or 1. We will decrease the Guaranteed
after the Lifetime Income Date: Withdrawal Balance to equal the LESSER
of:
- the Guaranteed Withdrawal Balance
immediately prior to the withdrawal
minus the amount of the
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withdrawal; or
- the Guaranteed Withdrawal Balance
immediately prior to the withdrawal
multiplied by the Proportional
Reduction Factor.
2. We will decrease the Lifetime Income
Base to equal the Lifetime Income Base
immediately prior to the withdrawal
multiplied by the Proportional Reduction
Factor.
3. We will decrease the Lifetime Income
Amount to equal 5% of the new Lifetime
Income Base.
THE PROPORTIONAL REDUCTION FACTOR IS
EQUAL TO YOUR CONTRACT VALUE AFTER THE
WITHDRAWAL DIVIDED BY YOUR CONTRACT
VALUE IMMEDIATELY PRIOR THE WITHDRAWAL.
THE GLWB RIDER IS DESIGNED FOR YOU TO TAKE NON-EXCESS WITHDRAWALS EACH
CONTRACT YEAR. YOU SHOULD NOT PURCHASE THE GLWB RIDER IF YOU INTEND TO TAKE
EXCESS WITHDRAWALS.
- EXCESS WITHDRAWALS COULD REDUCE YOUR GUARANTEED WITHDRAWAL BALANCE AND
LIFETIME INCOME BASE BY SUBSTANTIALLY MORE THAN THE ACTUAL AMOUNT OF
THE WITHDRAWAL. THIS MEANS THAT THE AMOUNT OF TOTAL GROSS WITHDRAWALS
YOU MAKE AND/OR MONTHLY SETTLEMENT PAYMENTS YOU RECEIVE UNDER THE
RIDER COULD BE LESS THAN THE TOTAL OF YOUR PURCHASE PAYMENTS (LESS ANY
PREMIUM TAXES).
- EXCESS WITHDRAWALS MAY REDUCE OR EVEN ELIMINATE YOUR FUTURE GUARANTEED
WITHDRAWAL AMOUNT AND FUTURE LIFETIME INCOME AMOUNT.
- WE WILL SURRENDER YOUR CONTRACT, AND YOU WILL LOSE THE GUARANTEES
PROVIDED BY THE GLWB RIDER, IF YOUR CONTRACT VALUE IS REDUCED TO ZERO
DUE TO EXCESS WITHDRAWALS. YOU WILL NOT RECEIVE ANY FURTHER BENEFITS
UNDER THE GLWB RIDER.
MAKING ADDITIONAL PURCHASE PAYMENTS
You may make additional Purchase Payments at any time prior to the earlier
of the Benefit Phase Start Date or the Covered Person's 76th birthday (or the
older Covered Person's 76th birthday in the case of GLWB Plus For Two), subject
to the limitations discussed below.
PURCHASE PAYMENTS PRIOR TO THE LIFETIME INCOME DATE. If we receive a
Purchase Payment prior to the Lifetime Income Date, we will increase the
Guaranteed Withdrawal Balance and the Lifetime Income Base by the amount of the
Purchase Payment (less any premium taxes) (subject to a maximum limit of $5
million).
We also will recalculate the Guaranteed Withdrawal Amount to equal the
greater of:
- the Guaranteed Withdrawal Amount immediately before the Purchase
Payment; or
- 5% of the Guaranteed Withdrawal Balance immediately after the
Purchase Payment.
PURCHASE PAYMENTS ON OR AFTER THE LIFETIME INCOME DATE. If we receive a
Purchase Payment on or after the Lifetime Income Date, we will increase the
Guaranteed Withdrawal Balance and the Lifetime Income Base by the amount of the
Purchase Payment (less any premium taxes) (subject to a maximum limit of $5
million).
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<Page>
On and after the Lifetime Income Date, we will increase the Lifetime Income
Amount every time we increase the Lifetime Income Base due to our receipt of a
Purchase Payment. The new Lifetime Income Amount will equal 5% of the new
Lifetime Income Base following the Purchase Payment.
PURCHASE PAYMENT LIMITATIONS. Please note the following limits on Purchase
Payments:
- We reserve the right to refuse to accept additional Purchase
Payments at any time to the extent permitted in the state we
issue your Contract.
- You must obtain our prior approval if your Contract Value
immediately following an additional Purchase Payment would exceed
$1,000,000. We will aggregate multiple Contracts you own for
purposes of the $1,000,000 limitation.
- We will not accept an additional Purchase Payment on or after the
first Contract Anniversary without our prior approval if the
total of your Purchase Payments on and after the first Contract
Anniversary would exceed $100,000. If you own a Qualified
Contract, we will waive our requirement for prior approval of any
Purchase Payments made in connection with a systematic investment
program approved by us. We will aggregate multiple Contracts you
own for purposes of the $100,000 limitation.
All other limitations on Purchase Payments, as set forth in "Purchase
Payments," also apply. We reserve the right to impose additional limitations on
Purchase Payments at any time.
BONUS
A Bonus is available for a limited time (the "Bonus Period"). The Bonus is
an incentive for you to defer taking withdrawals until after the Bonus Period.
The Bonus Period begins on the first Contract Anniversary and ends on the
earlier of:
- the 10th Contract Anniversary; or
- the Contract Anniversary immediately following the Contract Year in
which the Covered Person (or the older original Covered Person in the
case of GLWB Plus For Two) reaches age 80.
If you have never taken a withdrawal, we will increase the Lifetime
Income Base by a Bonus on each Contract Anniversary during the Bonus Period
(subject to the maximum Lifetime Income Base limit of $5 million). Each time
you qualify for a Bonus, we will increase the Lifetime Income Base by an
amount equal to 5% multiplied by total Purchase Payments (less any premium
taxes).
On and after the Lifetime Income Date, we will increase the Lifetime Income
Amount every time we increase the Lifetime Income Base due to a Bonus. The new
Lifetime Income Amount will equal 5% of the new Lifetime Income Base after the
Bonus.
We will apply any Bonus before we determine if a Step-Up applies on any
Contract Anniversary.
Once you take a withdrawal, we will not apply any future Bonuses to the
Lifetime Income Base.
NOTE: A Bonus increases the Lifetime Income Base, but it is not available in
cash and has no effect on your Contract Value.
STEP-UP
If your Contract Value on any "Step-Up Date" during the "Step-Up Period" is
greater than the Lifetime Income Base on that date, we will automatically
increase your Lifetime Income Base to equal the Contract Value (subject to the
maximum Lifetime Income Base limit of $5 million).
49
<Page>
On and after the Lifetime Income Date, we will increase the Lifetime Income
Amount every time we increase the Lifetime Income Base due to a Step-Up. The new
Lifetime Income Amount will equal 5% of the new Lifetime Income Base following
the Step-Up.
We will apply any Bonus before we determine if a Step-Up applies on any
Contract Anniversary.
STEP-UP PERIOD. The Step-Up Period begins on the Date of Issue and ends on
the Contract Anniversary immediately following the Contract Year in which the
Covered Person (or the older original Covered Person in the case of GLWB Plus
For Two) reaches age 90. NO STEP-UPS WILL OCCUR AFTER THE END OF THE STEP-UP
PERIOD.
STEP-UP DATES. During the Step-Up Period, we schedule the Step-Up Dates for
the 3rd, 6th, and 9th Contract Anniversary after the Date of Issue and every
Contract Anniversary thereafter (E.G., the 10th, 11th, 12th, etc.) while the
GLWB Rider is in effect, and on the Lifetime Income Date.
INCREASE IN GLWB RIDER CHARGE: If we Step-Up the Lifetime Income Base, we
reserve the right to increase the monthly GLWB Rider charge up to a maximum of
1.00% for GLWB Plus For One or 1.50% for GLWB Plus For Two, on an annual basis,
of the Lifetime Income Base on each Monthiversary (see "GLWB Rider charge"
above). If we decide to increase the GLWB Rider charge at the time of a Step-Up,
you will receive advance notice and be given the opportunity of no less than 30
days to decline the automatic Step-Up by notifying us at our Service Center in
writing.
If you decline an automatic Step-Up, you will have the option to elect to
Step-Up the Lifetime Income Base within 30 days of subsequent Step-Up Dates by
submitting a written request to our Service Center. If you decide to Step-Up the
Lifetime Income Base, we will thereafter resume automatic Step-Ups.
BENEFIT PHASE
The Contract enters the Benefit Phase IF:
- the Contract Value is reduced to zero due to:
- a Non-Excess Withdrawal; OR
- poor market performance; OR
- the assessment of Contract fees and charges, including the GLWB
Rider charge
- AND either the Guaranteed Withdrawal Balance or the Lifetime Income
Amount immediately after any of the above occurs is greater than zero.
The date the Contract enters the Benefit Phase is called the Benefit Phase
Start Date.
Note that the Contract will only be eligible to enter the Benefit Phase if:
- In the case of GLWB Plus For One:
1. the Covered Person was the sole Owner on the Date of Issue
and the Covered Person lives until the Benefit Phase Start
Date; OR
2. both Owners live until the Benefit Phase Start Date (in the
case of a Non-Qualified Contract with joint Owners); or
3. a Non-Qualified Contract with joint Owners is continued if
the Owner who is not a Covered Person dies, and the Covered
Person then lives until the Benefit Phase Start Date.
- In the case of GLWB Plus For Two:
1. both Covered Persons live until the Benefit Phase Start
Date; OR
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2. a Covered Person who is not an Owner dies and the surviving
Covered Person lives until the Benefit Phase Start Date; OR
3. the Contract is continued after the death of an Owner and
the surviving Covered Person then lives until the Benefit
Phase Start Date.
On the Benefit Phase Start Date we will terminate the GLWB Rider and all
other rights and benefits under the Contract, including death benefits and any
additional riders. We will not accept additional Purchase Payments and we will
not deduct the GLWB Rider charge after the Benefit Phase Start Date.
During the Benefit Phase, we will pay you monthly Settlement Payments.
Total monthly Settlement Payments received in the Benefit Phase (by you or your
Beneficiary) will not be less than the Guaranteed Withdrawal Balance on the
Benefit Phase Start Date, unless your Beneficiary chooses to commute any
remaining monthly Settlement Payments on the death of the Covered Person (or the
death of the last surviving Covered Person in the case of GLWB Plus For Two).
NOTE: If the Benefit Phase Start Date occurs before the Lifetime
Income Date, monthly Settlement Payments will continue until the
Guaranteed Withdrawal Balance is reduced to zero. You may receive
as few as one monthly Settlement Payment if the Guaranteed
Withdrawal Balance is reduced to zero after the first monthly
Settlement Payment. If the Benefit Phase Start Date occurs on or
after the Lifetime Income Date, monthly Settlement Payments will
continue while a Covered Person is living or until the Guaranteed
Withdrawal Balance is reduced to zero, if later. You may receive
as few as one monthly Settlement Payment if the Guaranteed
Withdrawal Balance is equal to zero on the Benefit Phase Start
Date (or is reduced to zero after the first monthly Settlement
Payment) and the Covered Person dies (or last surviving Covered
Person dies in the case of GLWB Plus for Two) before the next
monthly Settlement Payment.
Changes to Owners and Beneficiaries on and after the Benefit Period Start Date
are subject to the same restrictions that would apply if the Contract entered
the Annuity Period. (See "Owners, Annuitants, and Beneficiaries.")
IF THE BENEFIT PHASE START DATE OCCURS BEFORE THE LIFETIME INCOME DATE:
If the Guaranteed Withdrawal Balance on the Benefit Phase Start Date is
less than or equal to $2,000:
- The first and only Settlement Payment that we will pay you on the
Benefit Phase Start Date will be equal to the Guaranteed Withdrawal
Balance.
If the Guaranteed Withdrawal Balance on the Benefit Phase Start Date is
greater than $2,000:
- The first monthly Settlement Payment that we will pay you on the
Benefit Phase Start Date will be equal to the lesser of:
- the Guaranteed Withdrawal Amount minus total Gross Withdrawals
taken during the current Contract Year (but in no event less than
zero) plus the Guaranteed Withdrawal Amount divided by twelve; or
- the Guaranteed Withdrawal Balance.
- We will decrease the Guaranteed Withdrawal Balance by the amount of
the first monthly Settlement Payment. If the Guaranteed Withdrawal
Balance following the first monthly Settlement Payment is greater than
zero, we will pay you recurring monthly Settlement Payments (beginning
one month after the Benefit Phase Start Date) equal to the Guaranteed
Withdrawal Amount divided by twelve, and we will reduce the Guaranteed
Withdrawal Balance by the amount of each payment until the Guaranteed
Withdrawal Balance is equal to zero. If the Covered Person dies (or
the last surviving Covered Person dies in the case of GLWB Plus For
Two) and the
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Guaranteed Withdrawal Balance has not been reduced to zero, monthly
Settlement Payments will continue to the Beneficiary until the
Guaranteed Withdrawal Balance is reduced to zero. The last monthly
Settlement Payment may be less than the remaining Guaranteed
Withdrawal Amount divided by twelve.
EXAMPLE:
If: The Guaranteed Withdrawal Balance on the Benefit Phase Start Date
= $20,100
The Guaranteed Withdrawal Amount = $6,000
Total Gross Withdrawals taken during the current Contract
Year = $3,000
The first monthly Settlement Payment will be equal to $3,500 (=
Minimum ($20,100, $6,000 - $3,000 + ($6,000 / 12))). The
Guaranteed Withdrawal Balance after the first monthly Settlement
Payment will be equal to $16,600 (= $20,100 - $3,500).
Thereafter, we will pay you monthly Settlement Payments of $500
(= $6,000 / 12), and we will reduce the Guaranteed Withdrawal
Balance by $500 for each monthly Settlement Payment, until the
Guaranteed Withdrawal Balance is reduced to zero. If the Covered
Person dies (or the last surviving Covered Person dies in the
case of GLWB Plus For Two) and the Guaranteed Withdrawal Balance
has not been reduced to zero, the monthly Settlement Payments of
$500 will continue to the Beneficiary until the Guaranteed
Withdrawal Balance is reduced to zero. In this example, the
Guaranteed Withdrawal Balance will be reduced to $100 (= $20,100
- 1 x $3,500 - 33 x $500) after the 34th payment. Therefore, the
last monthly Settlement Payment (the 35th payment) will be equal
to $100.
- If you die, the Beneficiary may commute any remaining monthly
Settlement Payments at an interest rate of 5%.
IF THE BENEFIT PHASE START DATE OCCURS ON OR AFTER THE LIFETIME INCOME DATE:
- The first monthly Settlement Payment that we will pay you on the
Benefit Phase Start Date will be equal to the Lifetime Income Amount
minus total Gross Withdrawals taken during the current Contract Year
(but in no event less than zero) plus the Lifetime Income Amount
divided by twelve.
- You will then receive recurring monthly Settlement Payments (beginning
one month after the Benefit Phase Start Date) for the rest of the
Covered Person's life (or the last surviving Covered Person's life in
the case of GLWB Plus For Two) equal to the Lifetime Income Amount
divided by twelve. We will reduce the Guaranteed Withdrawal Balance by
the amount of each monthly Settlement Payment we make to you. If the
Covered Person dies (or the last surviving Covered Person dies in the
case of GLWB Plus For Two) and the Guaranteed Withdrawal Balance has
not been reduced to zero, monthly Settlement Payments will continue to
the Beneficiary until the Guaranteed Withdrawal Balance is reduced to
zero. The last monthly Settlement Payment may be less than the
Lifetime Income Amount divided by twelve.
EXAMPLE:
If: The Guaranteed Withdrawal Balance on the Benefit Phase Start Date
= $20,100
The Lifetime Income Amount = $6,000
Total Gross Withdrawals taken during the current Contract
Year = $3,000
The first monthly Settlement Payment will be equal to $3,500 (=
Minimum ($20,100, $6,000 - $3,000 + ($6,000 / 12)). The
Guaranteed Withdrawal Balance after the first monthly Settlement
Payment will be equal to $16,600 (= $20,100 - $3,500).
Thereafter, we will pay you monthly Settlement Payments of $500
(= $6,000 / 12) for the rest of the Covered Person's life (or for
the rest of the last surviving Covered Person's life in the case
of GLWB Plus For Two). We will reduce the Guaranteed Withdrawal
Balance by $500 for each of these payments as we make them. If
the Covered Person dies (or the last surviving
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Covered Person dies in the case of GLWB Plus For Two) and the
Guaranteed Withdrawal Balance has not been reduced to zero, the
monthly Settlement Payments of $500 will continue to your
Beneficiary until the Guaranteed Withdrawal Balance is reduced to
zero. In this example, the Guaranteed Withdrawal Balance will be
reduced to $100 (= $20,100 - 1 x $3,500 - 33 x $500) after the
34th payment. If the Covered Person has died (or if the last
surviving Covered Person has died in the case of GLWB Plus For
Two) before the 35th payment, the last monthly Settlement Payment
(the 35th payment) will be equal to $100, otherwise we will
continue to make monthly Settlement Payments of $500 until the
Covered Person's death (or the last surviving Covered Person's
death in the case of GLWB Plus For Two).
NOTE: Under Qualified Contracts, we may make higher monthly Settlement
Payments before the Guaranteed Withdrawal Balance is reduced to
zero, if we determine that we must do so based on our
calculations of your minimum required distribution. In this case,
after the Guaranteed Withdrawal Balance is reduced to zero, we
will make monthly Settlement Payments equal to the Lifetime
Income Amount divided by twelve, provided that a Covered Person
is still living at that time.
- If you die, the Beneficiary may commute any remaining monthly
Settlement Payments at an interest rate of 5%.
NOTE: If there is one living Covered Person on the Benefit Phase Start Date and
the Benefit Phase Start Date occurs on or after the Lifetime Income Date,
the duration of monthly Settlement Payments on and after the Benefit Phase
Start Date will be based on that Covered Person's life only, regardless of
who is named as an Annuitant. If there are two living Covered Persons on
the Benefit Phase Start Date and the Benefit Phase Start Date occurs on or
after the Lifetime Income Date, the duration of monthly Settlement
Payments on and after the Benefit Phase Start Date will be based on both
Covered Person's lives, regardless of who is named as an Annuitant.
NOTE: In the event of divorce, there are cases where we will terminate the GLWB
Rider on the Valuation Date that we receive due proof of divorce or the
Valuation Date that we receive due proof of death of the first Owner to
die. In some cases, the Contract will not be eligible to enter the Benefit
Phase after the date of divorce. See "Divorce" below.
GLWB RIDER DEATH BENEFIT
GLWB RIDER DEATH BENEFIT BEFORE THE BENEFIT PHASE START DATE
If the GLWB Rider Death Benefit is payable in the situations outlined
below, the GLWB Rider Death Benefit will be equal to the greater of (A) or (B),
less any premium taxes, where:
(A) = The Contract Value on the Valuation Date we receive due proof of
death
(B) = The Guaranteed Withdrawal Balance on the Valuation Date we receive
due proof of death
We will calculate any GLWB Rider Death Benefit on the Valuation Date we
receive due proof of death.
1) GLWB PLUS FOR ONE
If an Owner's death occurs before the Benefit Phase Start Date and the
Beneficiary elects to take the Contract death benefit as a lump sum under our
current administrative procedures, the following will apply:
IF: THEN:
--------------------------------------------------------------------------------
The Covered Person is the - We will pay the GLWB Rider Death Benefit
deceased Owner: instead of the standard death benefit or any
optional death benefit you
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elected if the GLWB Rider Death Benefit is
greater.
- We will terminate the GLWB Rider on the
Valuation Date we receive due proof of
death.
The Covered Person is NOT the - We will NOT pay the GLWB Rider Death
deceased Owner: Benefit.
NOTE: THIS SITUATION CAN ONLY - We will terminate the GLWB Rider on the
ARISE IF JOINT OWNERS ARE Valuation Date we receive due proof of
NAMED ON THE DATE OF ISSUE. death.
If an Owner's death occurs before the Benefit Phase Start Date and the
Beneficiary elects NOT to take the Contract death benefit as a lump sum, the
following will apply:
IF: THEN:
--------------------------------------------------------------------------------
The Covered Person is the - We will pay the GLWB Rider Death Benefit
deceased Owner, the instead of the standard death benefit or any
Beneficiary is the deceased optional death benefit you elected if the
Owner's surviving spouse, and GLWB Rider Death Benefit is greater.
the Beneficiary chooses NOT to
continue the Contract: - We will terminate the GLWB Rider on the
Valuation Date we receive due proof of
death.
The Covered Person is the - We will apply the GLWB Rider Death Benefit
deceased Owner, the instead of the standard death benefit or any
Beneficiary is the deceased optional death benefit you elected if the
Owner's surviving spouse, and GLWB Rider Death Benefit is greater.
the Beneficiary chooses to
continue the Contract:
- We will terminate the GLWB Rider on the
Valuation Date we receive due proof of
death.
The Covered Person is the - We will pay the GLWB Rider Death Benefit
deceased Owner and the instead of the standard death benefit or any
Beneficiary is NOT the optional death benefit you elected if the
deceased Owner's surviving GLWB Rider Death Benefit is greater.
spouse:
- We will terminate the GLWB Rider on the
Valuation Date we receive due proof of
death.
The Covered Person is NOT the - We will NOT apply the GLWB Rider Death
deceased Owner, the sole Benefit.
Beneficiary is the deceased
Owner's surviving spouse, and - We will NOT terminate the GLWB Rider - the
the Beneficiary chooses to Rider will continue unchanged.
continue the Contract:
NOTE: THIS SITUATION CAN ONLY - The surviving Owner may add or change any
ARISE IF JOINT OWNERS ARE Beneficiary (spouse or non-spouse).
NAMED ON THE DATE OF ISSUE.
The Covered Person is NOT the - We will NOT pay the GLWB Rider Death
deceased Owner, the sole Benefit.
Beneficiary is the deceased
Owner's surviving spouse, and - We will terminate the GLWB Rider on the
the Beneficiary chooses NOT to Valuation Date we receive due proof of
continue the Contract: death.
NOTE: THIS SITUATION CAN ONLY
ARISE IF JOINT OWNERS ARE
NAMED ON THE DATE OF ISSUE.
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2) GLWB PLUS FOR TWO
If an Owner's death occurs before the Benefit Phase Start Date and the
Beneficiary elects to take the Contract death benefit as a lump sum under our
current administrative procedures, the following will apply:
- If the Covered Person is the deceased Owner and the Beneficiary is not
the other Covered Person:
1. We will pay the GLWB Rider Death Benefit instead of the standard
death benefit1. or any optional death benefit you elected if the
GLWB Rider Death Benefit is greater.
2. We will terminate the GLWB Rider on the Valuation Date we receive
due proof of death.
NOTE: THIS SITUATION CAN ARISE ONLY IF BOTH OF THE COVERED PERSONS
HAVE DIED.
- Otherwise, we will not pay the GLWB Rider Death Benefit and we will
terminate the GLWB Rider on the Valuation Date we receive due proof of
death.
If an Owner's death occurs before the Benefit Phase Start Date and the
Beneficiary elects NOT to take the Contract death benefit as a lump sum, the
following will apply:
IF: THEN:
--------------------------------------------------------------------------------
The Covered Person is the - We will pay the GLWB Rider Death Benefit
deceased Owner and the instead of the standard death benefit or any
Beneficiary is not the other optional death benefit you elected if the
Covered Person: GLWB Rider Death Benefit is greater.
NOTE: THIS SITUATION CAN ARISE - We will terminate the GLWB Rider on the
ONLY IF BOTH OF THE COVERED Valuation Date we receive due proof of
PERSONS HAVE DIED. death.
A Covered Person is the - We will NOT apply the GLWB Rider Death
deceased Owner, the Benefit.
Beneficiary is the deceased
Owner's surviving spouse (and - We will NOT terminate the GLWB Rider - the
the other Covered Person), and Rider will continue unchanged.
the Beneficiary chooses to
continue the Contract: - If the Beneficiary (who is the surviving
spouse) was not an Owner of the Contract,
NOTE: THIS SITUATION CAN ARISE the Beneficiary will become the new Owner
IF ONLY ONE OF THE COVERED and new Annuitant. The new or surviving
PERSONS HAS DIED. Owner may add or change any Beneficiary
(spouse or non-spouse).
A Covered Person is the - We will NOT pay the GLWB Rider Death
deceased Owner, the Benefit.
Beneficiary is the deceased
Owner's surviving spouse (and - We will terminate the GLWB Rider on the
the other Covered Person), and Valuation Date we receive due proof of
the Beneficiary chooses NOT to death.
continue the Contract:
NOTE: THIS SITUATION CAN
ARISE IF ONLY ONE OF THE
COVERED PERSONS HAS DIED.
In the case of GLWB Plus For Two, the Rider will continue unchanged and we
will not pay the GLWB Rider Death Benefit upon the death of a Covered Person who
is not an Owner. In this case, the surviving Owner may add or change any
Beneficiary (spouse or non-spouse).
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We will pay or apply any GLWB Rider Death Benefit due upon the death of an
Owner before the Benefit Phase Start Date in the same manner that we pay or
apply the Contract death benefit when an Owner's death occurs before the Annuity
Date and, in all circumstances, in accordance with Sections 72(s) or 401(a)(9)
of the Code, as applicable. Please note that Contract continuation will not
satisfy required minimum distribution rules for Qualified Contracts other than
IRAs. Consult a tax adviser for more information.
GLWB RIDER DEATH BENEFIT ON OR AFTER THE BENEFIT PHASE START DATE
If a Covered Person (or the last surviving Covered Person, in the case of
GLWB Plus For Two) dies on or after the Benefit Phase Start Date, we will
continue to make the same recurring monthly Settlement Payments that were being
made prior to the Covered Person's death to the Beneficiary until the Guaranteed
Withdrawal Balance is reduced to zero. If the Benefit Phase Start Date occurs
before the Lifetime Income Date, then the last monthly Settlement Payment may be
less than the Guaranteed Withdrawal Amount divided by twelve. If the Benefit
Phase Start Date occurs on or after the Lifetime Income Date, then the last
monthly Settlement Payment may be less than the Lifetime Income Amount divided
by twelve.
We will pay or apply any GLWB Rider Death Benefit due upon the death of an
Owner on or after the Benefit Phase Start Date in the same manner that we pay or
apply the Contract death benefit when an Owner's death occurs on or after the
Annuity Date and, in all circumstances, in accordance with Sections 72(s) or
401(a)(9) of the Code, as applicable. In some cases, the amount of each monthly
Settlement Payment we make to the Beneficiary may be greater than the minimum
distribution that might otherwise be required.
NOTE: In the event of divorce, there are cases where we will terminate the GLWB
Rider on the Valuation Date that we receive due proof of divorce or the
Valuation Date that we receive due proof of death of the first Owner to
die. In some cases, the GLWB Rider Death Benefit will not be payable on
the death of an Owner, as outlined above, after the date of divorce. See
"Divorce" below.
ANNUITIZATION
On the Annuity Date, you must elect one of the following Options:
Option 1: Elect to surrender the Contract, and we will terminate the GLWB
Rider and pay you the Withdrawal Value (see "Withdrawals and
Surrenders During the Accumulation Period");
Option 2: Elect to receive annuity payments under your Contract, and we will
terminate the GLWB Rider and apply your Withdrawal Value as of the
Annuity Date to an Annuity Option (see "Annuity Period"); OR
Option 3: If the Maximum Annuity Date has been reached, elect to apply your
Withdrawal Value to the GLWB Rider annuitization option. Under the
GLWB Rider annuitization option, we will pay you monthly Settlement
Payments equal to the Lifetime Income Amount divided by twelve for
the rest of the Covered Person's life (or the last surviving Covered
Person's life in the case of GLWB Plus For Two), beginning on the
Maximum Annuity Date. We will reduce the Guaranteed Withdrawal
Balance by the amount of each monthly Settlement Payment we make to
you. If the Covered Person dies (or the last surviving Covered
Person dies in the case of GLWB Plus For Two) and the Guaranteed
Withdrawal Balance has not been reduced to zero, monthly Settlement
Payments will continue to the Beneficiary until the Guaranteed
Withdrawal Balance is reduced to zero. The last monthly Settlement
Payment may be less than the Lifetime Income Amount divided by
twelve.
NOTE: Total monthly Settlement Payments received on and after the
Maximum Annuity Date (by you or your Beneficiary) will not be
less than the Guaranteed Withdrawal Balance on the Maximum
Annuity Date, unless your Beneficiary
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chooses to commute any remaining monthly Settlement Payments
on the death of the Covered Person (or the death of the last
surviving Covered Person in the case of GLWB Plus For Two).
NOTE: You may receive as few as one monthly Settlement Payment if
the Guaranteed Withdrawal Balance is equal to zero on the
Maximum Annuity Date (or is reduced to zero after the first
monthly Settlement Payment) and the Covered Person dies (or
last surviving Covered Person dies in the case of GLWB Plus
for Two) before the next monthly Settlement Payment.
NOTE: Under Qualified Contracts, we may make higher monthly
Settlement Payments before the Guaranteed Withdrawal Balance
is reduced to zero, if we determine that we must do so based
on our calculations of your minimum required distribution. In
this case, after the Guaranteed Withdrawal Balance is reduced
to zero, we will make monthly Settlement Payments equal to the
Lifetime Income Amount divided by twelve, provided that a
Covered Person is still living at that time.
If you die, the Beneficiary may commute any remaining monthly
Settlement Payments at an interest rate of 5%.
EXAMPLE:
If: The Contract has reached the Maximum Annuity Date
The Withdrawal Value on the Maximum Annuity Date = $2,000
The Guaranteed Withdrawal Balance on the Maximum Annuity Date =
$17,100
The Lifetime Income Amount = $6,000
You elect Option 3 above
We will pay you monthly Settlement Payments of $500 (= $6,000 / 12)
for the rest of the Covered Person's life (or the last surviving
Covered Person's life in the case of GLWB Plus For Two). We will
reduce the Guaranteed Withdrawal Balance by $500 for each of these
payments as we make them. If the Covered Person dies (or the last
surviving Covered Person dies in the case of GLWB Plus for Two) and
the Guaranteed Withdrawal Balance has not been reduced to zero, the
monthly Settlement Payments of $500 will continue to your
Beneficiary until the Guaranteed Withdrawal Balance is reduced to
zero. In this example, the Guaranteed Withdrawal Balance will be
reduced to $100 (= $17,100 - 34 x $500) after the 34th payment. If
the Covered Person has died (or the last surviving Covered Person
has died in the case of GLWB Plus For Two) before the 35th payment,
the last monthly Settlement Payment (the 35th payment) will be equal
to $100, otherwise we will continue to make monthly Settlement
Payments of $500 until the Covered Person's death (or the last
surviving Covered Person's death in the case of GLWB Plus For Two).
Please consult your financial adviser as to which option is most
appropriate for you.
Note that you will only be eligible to elect Option 3 on the Maximum
Annuity Date if:
- In the case of GLWB Plus For One:
1. the Covered Person was the sole Owner on the Date of Issue and
the Covered Person lives until the Maximum Annuity Date; or
2. both Owners live until the Maximum Annuity Date (in the case of
a Non-Qualified Contract with joint Owners); or
3. a Non-Qualified Contract with joint Owners is continued if the
Owner who is not a Covered Person dies, and the Covered Person
then lives until the Maximum Annuity Date.
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- In the case of GLWB Plus For Two:
1. both Covered Persons live until the Maximum Annuity Date; OR
2. a Covered Person who is not an Owner dies and the surviving
Covered Person lives until the Maximum Annuity Date; or
3. the Contract is continued after the death of an Owner and the
surviving Covered Person then lives until the Maximum Annuity
Date.
If the Contract reaches the Maximum Annuity Date, and you elect Option 3
above, and there is one living Covered Person at that time, the duration of
monthly Settlement Payments on and after the Maximum Annuity Date will be based
on that Covered Person's life only, regardless of who is named as an Annuitant.
If the Contract reaches the Maximum Annuity Date, and you elect Option 3 above,
and there are two living Covered Persons at that time, the duration of monthly
Settlement Payments on and after the Maximum Annuity Date will be based on both
Covered Person's lives, regardless of who is named as an Annuitant.
We must receive written notification of your election of one of the above
Options at least 15 days before the Annuity Date. If the Maximum Annuity Date
has been reached and we have not received an election, you will be deemed to
elect the Option (Option 2 or Option 3) that would result in the higher initial
monthly payment on the Maximum Annuity Date. We will not deduct the GLWB Rider
charge after the Annuity Date.
LOANS
The Loan privilege described in the Contract is not available if you elect
the GLWB Rider.
DIVORCE
In the event of divorce, the former spouses must provide due proof of
divorce to us at our Service Center. WE MAKE A LIMITED NUMBER OF EXCEPTIONS
(IDENTIFIED BELOW) WITH RESPECT TO CHANGING AN OWNER AND/OR BENEFICIARY IN
CONNECTION WITH DIVORCE. THE COVERED PERSON (OR BOTH COVERED PERSONS IN THE CASE
OF GLWB PLUS FOR TWO) MAY LOSE GLWB RIDER BENEFITS IN THE EVENT OF DIVORCE.
1) If the date of divorce occurs prior to the Benefit Phase Start Date and the
Annuity Date:
- If due proof of divorce indicates that one of the following changes is
to be made to an Owner and/or Beneficiary (effective as of the date of
divorce), we will permit the change and the GLWB Rider will continue:
1. If the Contract has joint Owners and both Owners are Covered
Persons, we will permit one of the Owners to be removed from the
Contract.
2. If the Contract has joint Owners and only one of the Owners is a
Covered Person, we will permit the Owner who is not a Covered
Person to be removed from the Contract.
3. If the Contract has a sole Owner, we will permit the Owner to be
removed from the Contract if the sole Beneficiary who is also a
Covered Person becomes the sole Owner of the Contract.
4. If the Contract has a sole Beneficiary who is a Covered Person,
we will permit the sole Beneficiary to be removed from the
Contract.
5. If the Contract has a sole Owner, and the Owner is the only
Covered Person, we will permit the Owner to change or add any
Beneficiary (spouse or non-spouse).
After the change or removal of an Owner and/or Beneficiary, the
remaining Owner (who will be the only Covered Person) may change or
add any Beneficiary (spouse or non-spouse). Any amounts withdrawn from
the Contract in connection with or following the divorce will
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be treated as Non-Excess Withdrawals or Excess Withdrawals as the case
may be, pursuant to the above "Taking Withdrawals" provisions.
NOTE: In the case of GLWB Plus for Two, we will treat the removal of a
Covered Person in the same manner as if Covered Person had been
removed due to death.
- If due proof of divorce indicates that there are to be no changes to
an Owner and/or Beneficiary (effective as of the date of divorce):
- If the date of death of the first former spouse to die
occurs prior to the Benefit Phase Start Date, then either:
- The GLWB Rider will continue if the deceased former
spouse was not an Owner of the Contract. No GLWB Rider
Death Benefit will be payable in connection with this
death. The surviving Owner may then change or add any
Beneficiary (spouse or non-spouse).
OR:
- We will terminate the GLWB Rider on the Valuation Date
we receive due proof of death of the first former
spouse to die, if the former spouse was an Owner of the
Contract. If the first former spouse to die was the
only Covered Person on the date of death, we will pay
the GLWB Rider Death Benefit instead of the standard
death benefit or any optional death benefit elected if
the GLWB Rider Death Benefit is greater. Otherwise, no
GLWB Rider Death Benefit will be payable in connection
with this death.
- If both former spouses are still living on the Benefit
Phase Start Date, we will split the monthly Settlement
Payments according to the instructions we receive as
part of the due proof of divorce. Prior to our receipt
of due proof of divorce, we will make monthly
Settlement Payments in the manner prescribed by the
Owner pursuant to the terms of the Rider.
- If the Maximum Annuity Date has been reached, and both
former spouses are still living on that date, and you
elect the GLWB Rider annuitization option on that date,
we will split the monthly Settlement Payments according to the
instructions we receive as part of the due proof of divorce.
Prior to our receipt of due proof of divorce, we will make
monthly Settlement Payments in the manner prescribed by the Owner
pursuant to the terms of the Rider.
- If due proof of divorce indicates that an Owner and/or Annuitant
and/or Beneficiary is to be changed, added, or removed (effective as
of the date of divorce), and it is not specifically permitted above,
the Rider will terminate on the earlier of the Valuation Date we
receive due proof of divorce or the Valuation Date we receive due
proof of death of the first Owner to die. The Contract will not be
eligible to enter the Benefit Phase after the date of divorce and no
GLWB Rider Death Benefit will be payable on the death of an Owner
after the date of divorce. In this case, we will refund any GLWB Rider
charges between the date of divorce and the date that the GLWB Rider
is terminated.
2) If the date of divorce occurs on or after the Benefit Phase Start Date:
- We will split the monthly Settlement Payments according to the
instructions we receive as part of the due proof of divorce. Prior to
our receipt of due proof of divorce, we will make monthly Settlement
Payments in the manner prescribed by the Owner pursuant to the terms
of the Rider.
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3) If the date of divorce occurs on or after the Maximum Annuity Date and you
elected the GLWB Rider annuitization option on the Maximum Annuity Date:
- We will split the monthly Settlement Payments according to the
instructions we receive as part of the due proof of divorce. Prior to
our receipt of due proof of divorce, we will make monthly Settlement
Payments in the manner prescribed by the Owner pursuant to the terms
of the Rider.
OTHER PROVISIONS
If you elect the GLWB Rider, all other provisions of your Contract and this
Prospectus that do not conflict with the provisions of the GLWB Rider apply,
such as "Transfers During the Accumulation Period" and "Withdrawals and
Surrenders During the Accumulation Period."
TERMINATING THE GLWB RIDER
You may not terminate the GLWB Rider once it is in effect. However, we will
terminate the GLWB Rider automatically upon the earliest of:
- the Valuation Date that the Contract Value, the Guaranteed Withdrawal
Balance, and the Lifetime Income Amount all equal zero (we will treat
this as a surrender);
- the Annuity Date;
- the Benefit Phase Start Date;
- the Valuation Date we receive due proof of an Owner's death, in
certain circumstances (see "GLWB Rider Death Benefit" above);
- the Valuation Date we receive due proof of divorce or the Valuation
Date we receive due proof of the death of the first Owner to die after
divorce, in certain circumstances (see "Divorce" above); or
- termination or surrender of the Contract.
Once the GLWB Rider terminates, it cannot be reelected or reinstated. All
charges for the GLWB Rider will cease upon termination.
MISSTATEMENT OF AGE
If any Owner or Covered Person's age has been misstated, we may change the
Covered Person in the case of GLWB Plus for One. We will terminate the GLWB
Rider if the Contract would not have been eligible to elect the GLWB Rider on
the Date of Issue had the correct age been provided. We may also adjust the
Lifetime Income Date, Guaranteed Withdrawal Balance, Guaranteed Withdrawal
Amount, Lifetime Income Base, Lifetime Income Amount, Contract Value, the amount
of previous charges for the GLWB Rider, GLWB Rider Death Benefits, and/or the
amount of any Settlement Payments, as applicable, to the correct amount had the
correct age been provided. If there is any underpayment of monthly Settlement
Payments, we will pay the amount of the underpayment in one sum. We will deduct
any overpayment of monthly Settlement Payments from the current or succeeding
monthly Settlement Payment(s) due under the GLWB Rider. Interest not to exceed
3% compounded annually will be credited to any underpayment or charged to any
overpayment of monthly Settlement Payments.
EXAMPLES
Please refer to Appendices B, Appendix C, and Appendix D for hypothetical
examples that illustrate the benefits under the GLWB Rider.
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FEDERAL TAX ISSUES
As with any distribution from the Contract, tax consequences may apply to
GLWB Rider distributions. The application of certain tax rules, particularly
those rules relating to distributions resulting from a GLWB Rider, are not
entirely clear. In this regard, we intend to treat monthly Settlement Payments
received by you under the GLWB Rider after the Contract enters into the Benefit
Phase as annuity payments for tax purposes. (However, we intend to treat any
portion of the first monthly Settlement Payment that is in excess of the
Guaranteed Withdrawal Amount divided by twelve (if the Benefit Phase Start Date
occurs before the Lifetime Income Date) or the Lifetime Income Amount divided by
twelve (if the Benefit Phase Start Date occurs on or after the Lifetime Income
Date), as fully taxable to you. In addition, if the Benefit Phase Start Date
occurs before the Lifetime Income Date and the Guaranteed Withdrawal Balance on
the Benefit Phase Start Date is less than or equal to $2,000, we intend to treat
this Settlement Payment as a surrender payment for tax purposes.) We intend to
treat the payments made to you prior to the Benefit Phase as withdrawals for tax
purposes. (See "Federal Tax Matters - Taxation of Annuities in General.")
The GLWB Rider provides benefits that differ from those traditionally
offered under variable annuity contracts. If this Rider is in effect, the
Covered Person(s) or his or her Beneficiary may be entitled to monthly
Settlement Payments even if the Contract Value is zero. Such monthly Settlement
Payments may be fully includible in income, if the investment in the Contract
has been fully recovered.
LIFE EXPECTANCY DISTRIBUTIONS
You may request us in writing, in a form acceptable to us, to pay you
withdrawals that we determine to be part of a series of substantially equal
periodic payments over your "life expectancy" (or the joint life expectancies of
both Covered Persons, if you elected GLWB Plus For Two). For purposes of the
GLWB Rider, withdrawals under our Life Expectancy Distribution program are
distributions within a calendar year that are intended to be paid to you as
required or contemplated by Code Section 401(a)(9), Section 403(b)(10), Section
408(b)(3), or Section 408A(c), as the case may be (we sometimes refer to these
as "Required Minimum Distributions").
You may take any Required Minimum Distributions related to this Contract
from this Contract or from any other Contract you may own. Under our Life
Expectancy Distribution program, we do not consider withdrawals under other
Contracts you may own when calculating "life expectancy" distributions. In some
cases there may be other acceptable methods of calculating the required
distribution amount. You must accept our calculation of the minimum distribution
amount in order to participate in our Life Expectancy Distribution program and
to avoid potential Excess Withdrawal treatment. In some cases there may be other
acceptable methods of calculating the required distribution amount.
We reserve the right to make any changes we deem necessary to comply with
the Code and Treasury Regulations. We base our "life expectancy" calculations on
our understanding and interpretation of the requirements under tax law
applicable to required minimum distributions. You should discuss these matters
with your tax adviser prior to electing GLWB Rider.
We will treat withdrawals under our Life Expectancy Distribution program as
Non-Excess Withdrawals, if no other Gross Withdrawals are taken while the
program is in effect. Any Gross Withdrawals that are taken that are not part of
the program and any future Life Expectancy program withdrawals that are taken
during that Contract Year may be considered Excess Withdrawals. (See "Taking
Withdrawals" above).
10. LOANS.
The Owner of a Contract issued as a tax sheltered annuity under Section
403(b) of the Code or with a qualified plan under Code Section 401, may request
a loan (if permitted by the qualified plan) any time during the Accumulation
Period. Only one loan may be outstanding on a Contract at a given time. The
outstanding loan must be repaid in full before the next loan may be granted. The
requirements and limitations governing the availability of loans, including the
maximum amount that a participant may take
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as a loan, are subject to the rules in the Code, IRS regulations, and our
procedures in effect at the time a loan is made. In the case of loans made under
Contracts which are subject to the Employee Retirement Income Security Act of
1974 ("ERISA"), additional requirements and limitations will apply such as those
under the terms of the plan, Department of Labor regulations and ERISA. Because
the rules governing loans under Code Section 403(b) contracts and ERISA
qualified plans are complicated, you should consult your tax adviser before
exercising the loan privilege. Failure to meet the requirements for loans may
result in adverse income tax consequences to you. The loan agreement you sign
will describe the restrictions and limitations applicable to the loan at the
time you apply. For loans subject to ERISA, you also may wish to consult your
plan administrator.
The maximum loan available is the Fixed Account Contract Value, less any
premium taxes and withdrawal charge that would apply to the total withdrawal of
the Fixed Account Contract Value at the time that you make the loan, and less
interest for one calendar year on the loan at the time that you make the loan.
Federal tax law further restricts the total amount of your plan loans to
the lesser of (i) 50,000, reduced by the excess of the highest outstanding
balance of your loans during the one-year period preceding the date of a loan,
over the outstanding balance of your loans, or (ii) the greater of 50% of your
plan account value or $10,000. We may defer granting a loan for six months from
the date we receive the written loan request at our Service Center.
Federal tax law requires loans to be repaid in a certain manner and over a
certain period of time. For example, loans generally are required to be repaid
within five years (except in cases where the loan was used to acquire the
principal residence of the plan participant), with repayments made at least
quarterly and in substantially level amortized payments over the term of the
loan. Failure to make a loan repayment when due will result in adverse tax
income tax consequences to you.
Interest will be charged on your loan amount. If your Contract is not
subject to ERISA, the interest rate charged is 5.5%. If your Contract is subject
to ERISA, the interest rate charged is based on Moody's Corporate Bond Yield
Average--Monthly Average Corporates (rounded to the nearest 0.25%). We are not
responsible for determining whether this rate is a "reasonable interest rate" as
required by ERISA and we make no representations to that effect.
While a loan is outstanding, we will credit the value securing the loan
with interest at the daily equivalent of the annual loan interest rate charged
reduced by 2.5%, instead of the current interest rate credited to the Fixed
Account. This rate will never be lower than the minimum guaranteed Fixed Account
interest rate.
If there is an outstanding loan balance when the Contract is surrendered or
annuitized, or when a death benefit is paid, the amount payable will be reduced
by the amount of the loan outstanding plus accrued interest. In addition, loans,
whether or not repaid, will have a permanent effect on the Contract Value
because the investment results of the Investment Options will apply only to the
unborrowed portion of the Contract Value. The longer a loan is unpaid, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If investment results are greater than the rate being credited on
amounts held in your loan account while your loan is unpaid, your Contract Value
will not increase as rapidly as it would have if no loan were unpaid. If
investment results are below that rate, your Contract Value will be greater than
it would have been had no loan been outstanding. We will apply any repayment of
Debt first to reduce that part of the Debt that can be attributed to interest,
and then to that part of the Debt that can be attributed to principal.
You may repay the Debt in full or in part at any time prior to the Annuity
Date. If the Debt equals or exceeds the Fixed Account Contract Value, less any
premium taxes and withdrawal charge that would apply to the total withdrawal of
the Fixed Account Contract Value, your interest in the Fixed Account will
terminate. The termination occurs thirty-one days after we mail notice of
termination to your last known address and that of any assignee of record.
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If we receive a loan request at our Service Center before the close of
business on the Valuation Date, we will process the request based on
Accumulation Unit values determined at the end of that Valuation Date. If we
receive a loan request at our Service Center on or after the close of business
on the Valuation Date, we will process the request based on Accumulation Unit
values determined at the end of the next Valuation Date.
Please note that if you elect the GLWB Rider, the loan privilege is not
available to you. (See "Guaranteed Lifetime Withdrawal Benefit.")
11. TELEPHONE AND FACSIMILE TRANSACTIONS.
We currently permit requests for transfers to be submitted by telephone by
calling 1-800-[ ]. Before telephone transfer instructions will be honored, you
must complete a telephone transfer authorization. We also currently permit
requests for certain financial transaction to be submitted by facsimile at [ ].
We reserve the right to discontinue telephone and/or facsimile requests at any
time.
We will employ reasonable procedures to determine that these transactions
are genuine. There are risks associated with telephone and facsimile
transactions that do not occur if an original handwritten request is submitted.
Anyone authorizing or making telephone or facsimile requests bears those risks.
We will not be liable for any liability or losses resulting from unauthorized or
allegedly unauthorized telephone or facsimile requests that we believe are
genuine. We may record telephone requests.
Also, telephone and facsimile transactions may not always be available, and
telephone and facsimile systems, whether yours, your service provider's or your
agent's, can experience outages or slowdowns for a variety of reasons (such as
natural disasters, man-made disasters, or simply because of a high number of
calls or facsimiles (which is likely to occur during periods of high market
turbulence)). These outages or slowdowns may prevent or delay our receipt and/or
processing of your request. If you are experiencing problems, you should make
your request in writing to our Service Center.
CONTRACT CHARGES AND EXPENSES
We deduct the following charges and expenses:
|_| mortality and expense risk charge,
|_| contract fee,
|_| withdrawal charge,
|_| commutation charge,
|_| premium tax,
|_| administration charge,
|_| Step-Up Death Benefit Charge,
|_| GLWB Rider charge, and
|_| No Withdrawal Charge Rider fee.
We may receive compensation from the investment advisers of the Funds for
services related to the Funds. (See "The Funds.")
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Subject to certain expense limitations, investment management fees and
other Fund expenses are indirectly borne by you.
The fees and charges we deduct under the Contract may result in a profit to
us.
A. ASSET-BASED CHARGES
1. MORTALITY AND EXPENSE RISK CHARGE.
We deduct a daily charge from your Separate Account Contract Value equal to
1.15%, on an annual basis, of Separate Account Contract Value. The mortality and
expense risk charge reimburses us for mortality and expense risks. We deduct
this charge during both the Accumulation Period and the Annuity Period.
Variable Annuity payments reflect the investment experience of each
Subaccount but are not affected by changes in actual mortality experience or by
actual expenses we incur.
Our mortality risk arises from two obligations. The first obligation we
assume is to pay a standard death benefit that may be greater than the
Withdrawal Value. The second obligation we assume is to continue making annuity
payments to the Owner for the entire life of the Annuitant under Annuity Options
involving life contingencies. We assume the risk that Annuitants will live
beyond actuarial life expectancies.
We also assume the risk that all administrative expenses including Contract
maintenance costs, administrative costs, data processing costs, and costs of
other services may exceed the mortality and expense risk charge.
We expect to profit from the mortality and expense risk charge. We may use
any profits for any lawful purpose including covering distribution costs.
2. ADMINISTRATION CHARGE.
We deduct a daily charge from your Separate Account Contract Value equal to
0.15%, on an annual basis, of Separate Account Contract Value. The
administration charge reimburses us for expenses incurred for administering the
Contracts. These expenses include your inquiries, changes in allocations,
reports to you, Contract maintenance costs, and data processing costs. The
administration charge covers the average anticipated administrative expenses
incurred while the Contracts are in force. There is not necessarily a direct
relationship between the amount of the charge and the administrative costs of
the particular Contract.
3. STEP-UP DEATH BENEFIT CHARGE.
If you elect the Step-Up Death Benefit, we will deduct a daily charge
from your Contract Value equal to 0.20%, on an annual basis, of Separate Account
Contract Value. This charge covers the cost and risk of providing the benefits
guaranteed by the Step-Up Death Benefit. We do not assess a charge for the
Step-Up Death Benefit on amounts allocated to the Fixed Account.
4. GLWB RIDER CHARGE
We assess an additional monthly charge for the GLWB Rider that
compensates us for the costs and risks we assume in providing the benefits under
the Rider.
- In the case of GLWB Plus For One, the monthly GLWB Rider charge, which
we will deduct from your Contract Value on each Monthiversary, is
equal to 0.50%, on an annual basis, of the Lifetime Income Base on
that Monthiversary.
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- In the case of GLWB Plus For Two, the monthly GLWB Rider charge, which
we will deduct from your Contract Value on each Monthiversary, is
equal to 0.75%, on an annual basis, of the Lifetime Income Base on
that Monthiversary.
We reserve the right to increase the GLWB Rider charge on the effective
date of each Step-Up. We guarantee, however, that the monthly GLWB Rider charge
will never exceed 1.00% (for GLWB Plus For One) and 1.50% (for GLWB Plus For
Two), on an annual basis, of the Lifetime Income Base on each Monthiversary. We
also assess a pro rata portion of the charge upon surrender or annuitization.
5. NO WITHDRAWAL CHARGE RIDER FEE.
If you elect the No Withdrawal Charge Rider, we will deduct a daily charge
from your Contract Value equal to 0.35%, on an annual basis, of Contract Value.
We impose this charge to reimburse us for Contract sales expense, including
commissions and other distribution, promotion, and acquisition expenses.
B. CONTRACT FEE
During the Accumulation Period, we deduct a quarterly contract fee from
your Contract Value that is equal to $30, on an annual basis. We will waive this
fee for Contracts with Contract Value of $50,000 or more as of the end of each
calendar quarter we would otherwise deduct the fee.
The contract fee reimburses us for expenses incurred in establishing and
maintaining Contract records. We assess the contract fee at the end of each
calendar quarter and upon surrender or annuitization.
When we deduct the contract fee, we will reduce Purchase Payments (and
earnings attributable to those Purchase Payments) in the chronological order in
which we received such Purchase Payments.
C. WITHDRAWAL CHARGE.
We impose a withdrawal charge to reimburse us for Contract sales expense,
including commissions and other distribution, promotion, and acquisition
expenses. For purposes of calculating the withdrawal charge on partial
withdrawals and surrenders, we assume that amounts are withdrawn from Purchase
Payments (and earnings attributable to those Purchase Payments) in the
chronological order in which they were received. We apply the withdrawal charge
on each Purchase Payment (and earnings attributable to that Purchase Payment)
withdrawn or surrendered during the first 6 Contribution Years following our
receipt of the Purchase Payment. A Contribution Year is each Contract Year in
which a Purchase Payment is made and each later year measured from the start of
the Contract Year when the Purchase Payment was made. We do not impose the
withdrawal charge on any Purchase Payment (or earnings attributable to that
Purchase Payment) withdrawn or surrendered more than six Contribution Years
following our receipt of that Purchase Payment. We calculate the withdrawal
charge separately for each Purchase Payment (and earnings attributable to that
Purchase Payment). Total withdrawal charges assessed under a Contract will never
exceed 9% of the total Purchase Payments made under the Contract.
Each Contract Year we guarantee that you can withdraw up to the Free
Withdrawal Amount without incurring a withdrawal charge. We also apply the Free
Withdrawal Amount upon full surrender of the Contract. The Free Withdrawal
Amount, which will never be less than zero, is equal to (a + b) multiplied by
10% - c, where:
a) is Contract Value less Debt prior to the withdrawal or surrender ;
b) is previous partial withdrawals made during the Contract Year (whether
or not subject to withdrawal charges); and
c) is previous partial withdrawals made during the Contract Year that
were not subject to withdrawal charges.
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If you elect the GLWB Rider, Non-Excess Withdrawals and Excess Withdrawals
will reduce the remaining Free Withdrawal Amount in any Contract Year. (See
Guaranteed Lifetime Withdrawal Benefit.")
If you withdraw an amount in excess of the Free Withdrawal Amount, we may
impose a withdrawal charge on the excess. At the time of the withdrawal or
surrender, we will determine whether the amount withdrawn includes Purchase
Payments (and earnings attributable to those Purchase Payments) that were made
within the previous six Contribution Years. We will determine the withdrawal
charge percentage for each Purchase Payment and earnings attributable to that
Purchase Payment withdrawn as follows:
CONTRIBUTION YEAR WITHDRAWAL CHARGE
-------------------------------------
First 6%
Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh + 0%
WITHDRAWAL CHARGE EXAMPLE
THIS EXAMPLE ILLUSTRATES THE CALCULATION OF THE FREE WITHDRAWAL AMOUNT AND
WITHDRAWAL CHARGE
- The values shown below assume that a Contract is issued to an Owner who is
50 years old on the Date of Issue
- A initial Purchase Payment of $10,000 is received on the Date of Issue. No
additional Purchase Payments are received and no premium taxes apply
- All values shown below are beginning of year (and prior to any partial
withdrawal requested) except for Line (5) which is middle of year
<Table>
<Caption>
COLUMN (1) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
HYPOTHETICAL
CONTRACT WITHDRAWAL WITHDRAWAL CONTRACT
VALUE WITHDRAWAL FREE WITHOUT SUBJECT TO WITHDRAWAL VALUE
CONTRACT PURCHASE PARTIAL BEFORE CONTRIBUTION CHARGE WITHDRAWAL WITHDRAWAL WITHDRAWAL CHARGE AFTER
LINE YEAR PAYMENT WITHDRAWAL WITHDRAWAL YEAR (%) AMOUNT CHARGE CHARGE ($) WITHDRAWAL
------ -------- -------- ---------- ------------ ------------ ---------- ---------- ---------- ---------- ---------- ----------
(1) 1 $10,000 $10,000 1 6.00% $1,000 $10,000
(2) 2 10,300 2 5.00% 1,030 10,300
(3) 3 $1,000 10,700 3 4.00% 1,070 $1,000 $ 0 $ 0 9,700
(4) 4 500 9,800 4 3.00% 980 500 0 0 9,300
(5) 4 3,510 9,600 4 3.00% 510 510 3,000 90 6,090
(6) 5 6,300 5 2.00% 630 6,300
(7) 6 6,500 6 1.00% 650 6,500
(8) 7 7,000 7 0.00% 700 7,000
(9) 8 7,500 8 0.00% 750 7,500
(10) 9 8,000 9 0.00% 800 8,000
(11) 10 5,000 8,500 10 0.00% 850 850 4,150 0 3,500
</Table>
COLUMN NOTES:
Col (5) Includes the impact of Purchase Payments, partial withdrawals,
contract fees and charges, and investment performance
Col (6) A Contribution Year is each Contract Year in which a Purchase Payment
is made and each later year measured from the start of the Contract
Year in which the Purchase Payment was made. In a Contract with a
single Purchase Payment, Contribution Years are equal to Contract
Years.
Col (7) The withdrawal charge percentage applicable to the withdrawal of a
Purchase Payment (and earnings attributable to that Purchase Payment)
is based on the Contribution Year of the Purchase Payment (and
earnings attributable to the Purchase Payment) being withdrawn. And
for purposes of calculating the withdrawal charge on partial
withdrawals and surrenders, we assume that amounts are withdrawn from
Purchase Payments (and earnings attributable to those Purchase
Payments) in the chronological order in which they were received.
Col (8) The Free Withdrawal Amount is equal to the greater of $0 and ( [(a)
plus (b)] x 10% minus (c) ) where:
(a) = Contract Value less Debt prior to the withdrawal or surrender
(b) = previous partial withdrawals made during the Contract Year
(whether or not subject to withdrawal charges)
(c) = previous partial withdrawals made during the Contract Year that
were not subject to withdrawal charges
Col (9) is equal to the lesser of the partial withdrawal or surrender
requested and the Free Withdrawal Amount (lesser of Column (4) and
Column (8))
Col (10) is equal to the excess of the partial withdrawal or surrender
requested over the withdrawal without surrender charge (greater of $0
and (Column (4) less Column (8)). We do not impose the withdrawal
charge on any Purchase Payment (or earnings attributable to that
Purchase Payment) withdrawn or surrendered more than six Contribution
Years following our receipt of that Purchase Payment.
Col (11) is equal to the withdrawal subject to a withdrawal charge multiplied
by the applicable withdrawal charge % (Column (10) x Column (7)).
Col (12) is equal to the hypothetical contract value before withdrawal less the
amount of the partial withdrawal or surrender requested (Column (5)
less Column (4))
WITHDRAWAL CHARGE EXAMPLE - (CONTINUED)
THIS EXAMPLE ILLUSTRATES THE CALCULATION OF THE FREE WITHDRAWAL AMOUNT AND
WITHDRAWAL CHARGE
PARTIAL WITHDRAWAL #1 - EXPLANATION:
Line (3) A partial withdrawal of $1,000 is requested at the beginning of the
3rd Contract Year. The Free Withdrawal Amount is equal to $1,070 (=
the greater of $0 and ( [ $10,700 + $0 ] x 10% - $0 ) ) using the
formula for Column (8) above. The partial withdrawal requested is less
than the Free Withdrawal Amount ($1,070), so the entire partial
withdrawal is free of withdrawal charges. The Contract Value is
reduced for the amount of the partial withdrawal ($10,700 - $1,000 =
$9,700)
PARTIAL WITHDRAWAL #2 AND PARTIAL WITHDRAWAL #3 - EXPLANATION:
Line (4) A partial withdrawal of $500 is requested at the beginning of the 4th
Contract Year. The Free Withdrawal Amount is equal to $980 (= the
greater of $0 and ( [ $9,800 + $0 ] x 10% - $0 ) ) using the formula
for Column (8) above. The partial withdrawal requested is less than
the Free Withdrawal Amount ($980) so the entire partial withdrawal is
free of withdrawal charges. The Contract Value is reduced for the
amount of the partial withdrawal ($9,800 - $500 = $9,300)
Line (5) -- A partial withdrawal of $3,510 is requested in the middle of the
4th Contract Year. The Free Withdrawal Amount is equal to $510 (= the
greater of $0 and ( [$9,600 + $500] x 10% - $500) ) using the formula
for Column (8) above. In this case, the Free Withdrawal Amount is
adjusted for the partial withdrawal that occurred earlier in the same
Contract Year. Since the partial withdrawal requested exceeds the Free
Withdrawal Amount, $3,000 of the partial withdrawal request is subject
to a withdrawal charge ($3,000 = $3,510 - $510). For the purpose of
calculating the withdrawal charge, the Purchase Payment (and earnings
attributable to the Purchase Payment) from which the partial
withdrawal is being withdrawn, is in it's 4th Contribution Year.
Therefore, the applicable withdrawal charge percentage is 3% and the
withdrawal charge is equal to $90 (= 3% x $3,000). The Contract Value
is reduced for the amount of the partial withdrawal ($9,600 - $3,510 =
$6,090).
-- IF AN ADDITIONAL PURCHASE PAYMENT HAD BEEN MADE TO THE CONTRACT:
The partial withdrawal requested is less than the initial Purchase
Payment (and earnings attributable to that Purchase Payment) so the
entire partial withdrawal would have been assumed to be withdrawn from
the initial Purchase Payment (and earnings attributable to that
Purchase Payment) for purposes of calculating the withdrawal charge.
PARTIAL WITHDRAWAL #4 - EXPLANATION:
Line (9) A partial withdrawal of $5,000 is requested at the beginning of the
10th Contract Year. The Free Withdrawal Amount is equal to $850 (= the
greater of $0 and [ $8,500 + $0 ] x 10% - $0 ) ) using the formula for
Column (8) above. The partial withdrawal exceeds the Free Withdrawal
Amount. As a result, $4,150 of the partial withdrawal request is
subject to a withdrawal charge. However, because the amount being
withdrawn is taken from a Purchase Payment (and earnings attributable
to a Purchase Payment) that was made more than six Contribution Years
prior to the partial withdrawal, no withdrawal charge is assessed. The
Contract Value is reduced for the amount of the partial withdrawal
($8,500 - $5,000 = $3,500).
For purposes of calculating the withdrawal charge on partial withdrawals
and surrenders, we assume that amounts are withdrawn from Purchase Payments and
earnings attributable to those Purchase Payments in the chronological order in
which they were received.
Unless you request otherwise, we deduct any applicable withdrawal charge
from the amount of the partial withdrawal. This means that when a withdrawal is
requested and a withdrawal charge applies, you will receive a check for less
than the amount requested. If you request otherwise and a withdrawal charge
applies, we will reduce your Contract Value by the withdrawal charge in addition
to the dollar amount sent to you.
If you elect the GLWB Rider, please note that although we currently do not
assess a withdrawal charge on Non-Excess Withdrawals, we reserve the right to do
so (unless you have elected the No Withdrawal Charge Rider for an additional
charge). We will assess a withdrawal charge on Excess Withdrawals if such
withdrawals would otherwise be subject to a withdrawal charge. If we assess a
withdrawal charge on a Non-Excess Withdrawal or an Excess Withdrawal, we will
calculate and impose the charge in the same manner that we would for any partial
withdrawal. (See "Guaranteed Lifetime Withdrawal Benefit.")
Because Contribution Years are based upon the date each Purchase Payment is
made, you may be subject to a withdrawal charge even though the Contract may
have been issued many years earlier. (For additional details, see "Withdrawals
and Surrenders During the Accumulation Period.") For example:
|_| You make a $15,000 Purchase Payment in the first Contract Year.
|_| You make a $10,000 Purchase Payment in the fourth Contract year.
|_| In the fifth Contract Year, the $15,000 Purchase Payment (and
earnings attributable to that purchase payment) is in its fifth
Contribution year and the $10,000 Purchase Payment (and earnings
attributable to that purchase payment) is in its second
Contribution Year.
The Free Withdrawal Amount and withdrawal charge also generally apply at
annuitization to amounts attributable to Purchase Payments (and earnings
attributable to those Purchase Payments) in their sixth Contribution Year or
earlier. However, we do not assess a withdrawal charge upon annuitization if
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you select Annuity Option 2, 3, 4, or 5, or if payments under Annuity Option 1
are scheduled to continue for at least ten years. See "The Annuity
Period--Annuity Options" for a discussion of the Annuity Options available.
Please note that if you elect the No Withdrawal Charge Rider, we will not
assess any withdrawal charge upon partial withdrawal or surrender of the
Contract during the Accumulation Period or upon annuitization. See "No
Withdrawal Charge Rider" for a description of the Rider, including its charges
and restrictions.
Currently, we anticipate withdrawal charges will not fully cover
distribution expenses. Unrecovered distribution expenses may be recovered from
our general assets. Those assets may include proceeds from the mortality and
expense risk charge.
For Qualified Contracts, we will waive withdrawal charges on partial
withdrawals and full surrender if a Contract is surrendered in the sixth
Contract Year or later and the Owner is at least 59 1/2 years old at the time of
such surrender.
Currently, we do not assess withdrawal charges on required minimum
distributions but reserve the right to do so. If we do assess a withdrawal
charge, we will calculate and impose the charge in the same manner that we would
for any partial withdrawal.
We may reduce or eliminate the withdrawal charge if we anticipate that we
will incur lower sales expenses or perform fewer services because of economies
due to the size of a group, the average contribution per participant, or the use
of mass enrollment procedures.
Subject to certain exceptions and state approvals, withdrawal charges also
are not assessed on withdrawals:
|_| after you have been confined in a skilled health care facility or
hospital for at least 90 consecutive days and you remain confined
at the time of the request;
|_| within 45 days following your discharge from a skilled health
care facility after a confinement of at least 90 days; or
|_| if you become disabled.
The confinement must begin prior to your 75th birthday and at least two
years after the later of the Date of Issue or the date the waiver endorsement
was added to your Contract. The disability must begin prior to your 66th
birthday and at least two years after the later of the Date of Issue or the date
the waiver endorsement was added to your Contract. We must receive satisfactory
proof of your disability. The proof may be a statement from your attending
physician or any other proof satisfactory to us.
"Disability" is defined as the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or can
be expected to last for a continuous period of not less than 12 months.
Such disability or confinement must not be due to:
- substance abuse, or
- mental or personality disorder without a demonstrable
organic disease (a degenerative brain disease such as
Alzheimer's Disease is considered an organic disease).
Skilled Health Care Facility means a place which:
- is licensed by the state, or certified if your state
certifies such facilities, or operated pursuant to law if
your state neither licenses nor certifies such facilities;
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- provides skilled nursing care under the supervision of a
physician;
- has twenty-four hour a day nursing services by or under the
supervision of a licensed practical nurse (LPN) or a
registered nurse (RN); and
- keeps a medical record in accordance with accepted
professional standards and practices for each patient.
Hospital means a place that is licensed by the state as a hospital and is
operating within the scope of its license. If your state does not license
hospitals, then hospital means a place that is operated as a hospital pursuant
to law.
Restrictions and provisions related to the above withdrawal charge waiver
are described in the Contract endorsements.
D. COMMUTATION CHARGE.
We deduct a commutation charge if you request a lump sum payment with
respect to: 1) any remaining periodic payments in the certain period under
Annuity Options 1, 3 and 5 upon the death of an Annuitant during the Annuity
Period; or 2) any remaining payments under Annuity Option 1. We deduct this
charge to compensate us for any losses we might incur as a result of selling
assets we hold to make a lump sum payment to you and for administrative costs in
processing commuted values. The charge is equal to the following:
For a fixed Annuity Option:
1) the present value of any remaining guaranteed Fixed Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the interest rate used in calculating the initial income
payment; LESS
2) the present value of any remaining guaranteed Fixed Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the interest rate used in calculating the initial income
payment plus 1%.
For a variable Annuity Option:
1) the present value of any remaining guaranteed Variable Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the assumed investment rate used in calculating the
initial income payment; LESS
2) the present value of any remaining guaranteed Variable Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the assumed investment rate used in calculating the
initial income payment plus 1%.
We will determine the present value of any remaining guaranteed
Variable Annuity payments by applying the Annuity Unit value next
determined after we receive the election to commute the remaining
payments at our Service Center.
E. INVESTMENT MANAGEMENT FEES AND OTHER EXPENSES.
Each Fund's net asset value reflects the deductions of investment
management fees, Rule 12b-1 fees (if applicable), and certain general operating
expenses. Subject to limitations, you indirectly bear these fees and expenses.
Further detail is provided in the prospectuses for the Funds' statements of
additional information.
F. STATE PREMIUM TAXES.
Certain state and local governments impose a premium tax ranging from 0% to
3.50% of Purchase Payments. If we pay state premium taxes, we will deduct the
amount paid from:
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|_| Purchase Payments when we receive them, and/or
|_| Partial withdrawals or full surrender, and/or
|_| Death benefits, and/or
|_| Contract Value applied to an Annuity Option at the time annuity
payments start, and/or
|_| Annuity payments when we pay them, and/or
|_| If you have elected the GLWB Rider, monthly Settlement Payments
when we pay them (see "Guaranteed Lifetime Withdrawal Benefit").
If we deduct premium taxes from each annuity payment or each monthly
Settlement Payment when we pay them, we will reduce each payment by the premium
tax percentage multiplied by the amount of each payment until we have recovered
an amount equal to the premium tax that we paid.
In no case will we deduct a total of more than the premium tax that we
paid.
See "Appendix A--State Premium Tax Chart" in the Statement of Additional
Information.
G. REDUCTION OR ELIMINATION OF CERTAIN CHARGES.
Contracts may be available for purchase in certain group or sponsored
arrangements that qualify for reductions or eliminations of certain charges, the
time periods in which such charges apply, or both. Group arrangements include
those in which a trustee, an employer or an association purchases Contracts
covering a group of individuals. Sponsored arrangements include those in which
an employer or association allows us to offer Contracts to its employees or
members on an individual basis.
The contract fee may be reduced or eliminated if we anticipate lower
administrative expenses. In certain other circumstances, sales expenses for
Contracts purchased in certain group or sponsored arrangements may be reduced or
eliminated and the applicable withdrawal charges may be reduced or eliminated.
In determining whether a group or sponsored arrangement qualifies for
reduced or eliminated charges, we will consider among other factors:
|_| the size and type of group to which sales are to be made and
administrative services provided, and the persistency expected
from the group;
|_| the total amount of Purchase Payments to be received and the
method in which they will be remitted;
|_| any prior or existing relationship with us;
|_| the level of commission paid to selling broker-dealers;
|_| the purpose for which the Contract is being purchased, and
whether that purchase makes it likely that sales costs and
administrative expenses will be reduced; and
|_| the frequency of projected surrenders or distributions.
We make any reductions or eliminations according to objective guidelines in
effect when an application for a Contract is approved. We may change these
guidelines from time to time. Any variation in the charges will reflect
differences in costs or services and will be offered uniformly to all members of
the
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group or sponsored arrangement. In no event will a charge reduction or
elimination be permitted if it is unfairly discriminatory to any person or
prohibited by law.
THE ANNUITY PERIOD
Contracts may be fully annuitized under one of several Annuity Options,
which are available either on a fixed or variable basis. However, states may
require variations to the Contract. If a state variation applies, it will appear
in the Contract, an endorsement to the Contract, or a supplement to this
Prospectus. You may annuitize any time after the Valuation Date on or next
following one year from the Date of Issue. Annuity payments will begin on the
Annuity Date under the Annuity Option you select. You may write to us prior to
the payment of the death benefit or the first annuity payment date to request a
change of the Annuity Date. Subject to state variation, the Annuity Date may not
be after the Valuation Date on or next following the later of the original older
Owner's or Annuitant's 90th birthday. (See "Federal Tax Matters, 1. Tax Deferral
During Accumulation Period, DELAYED ANNUITY DATES".) We do not permit partial
annuitization.
If you elect the GLWB Rider and the Maximum Annuity Date has been reached,
you may choose the GLWB Rider annuitization option rather than one of the
Annuity Options below. (See "Guaranteed Lifetime Withdrawal Benefit.")
1. ANNUITY PAYMENTS.
The amount of the first annuity payment depends on:
|_| the selected Annuity Option, and
|_| the Annuity Option rates derived from the mortality tables
specified in the Contract (for Annuity options 2, 3, 4, and 5),
and
|_| the age and gender of the Annuitant, and
|_| the Withdrawal Value on the Annuity Date, and
|_| the assumed investment rate (if variable annuitization is
elected), and
|_| the guaranteed minimum interest rate for annuitizations
specified in the Contract (if fixed annuitization is elected).
The age of the Annuitant influences the amount of periodic annuity payments
because an older Annuitant is expected to have a shorter life span, resulting in
larger payments. The sex of the Annuitant influences the amount of periodic
payments, where males are expected to have a shorter life span than females,
also resulting in larger payments.
Under variable annuitization, you will receive the value of a fixed number
of Annuity Units each month. An Annuity Unit's value reflects the investment
performance of the Subaccount(s) selected. As a result, annuity payments will
vary accordingly. If the Annuity Unit Values of the Subaccount(s) in which you
invest increase, the amount of your annuity payments will increase. If the
Annuity Unit Values of the Subaccount(s) in which you invest decrease, the
amount of your annuity payments will decrease.
2. ANNUITY OPTIONS.
You may elect one of the Annuity Options. We must receive an election of an
Annuity Option in writing at our Service Center at least 15 calendar days before
the Annuity Date. If no Annuity Option is elected, monthly annuity payments will
be made in accordance with Option 3 below if there is one Annuitant on the
Annuity Date or under Option 5 if there are joint Annuitants on the Annuity
Date. You
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may change an Annuity Option before the Annuity Date. You cannot change an
Annuity Option after the first annuity payment is made. We reserve the right to
add additional Annuity Options in the future.
An election before the Annuity Date will be revoked by: 1) a subsequent
change of Beneficiary, or 2) an assignment of the Contract unless the assignment
provides otherwise.
The Annuity Option selected must result in an initial payment that is at
least equal to our minimum payment, according to our rules, at the time the
Annuity Option is chosen. If the selected Annuity Option does not produce an
initial payment which meets this minimum, we reserve the right to decrease the
payment frequency to quarterly, semi-annually, or annually to meet this minimum,
or to make a single lump sum payment.
If you die before the Annuity Date, available Annuity Options are limited.
The Annuity Options available are:
|_| Option 2 over the lifetime of the Beneficiary, or
|_| Option 1 or 3 with a specified period or certain period no longer
than the life expectancy of the Beneficiary. The life expectancy
of the Beneficiary must be at least ten years as of the date that
he or she elects Option 1 or Option 3.
The death benefit distribution must begin no later than one year from your
death, unless a later date is permitted by federal regulation.
If the Beneficiary is not an individual, the entire interest must be
distributed within five years of your death.
OPTION 1--INCOME FOR SPECIFIED PERIOD.
Option 1 provides an annuity payable monthly for ten years. If you must
take required minimum distributions from a Qualified Contract, consult a tax
advisor before selecting this Option, as it may not satisfy those requirements
in all situations.
OPTION 2--LIFE INCOME.
Option 2 provides for an annuity payable monthly over the lifetime of the
Annuitant. If Option 2 is elected, annuity payments terminate automatically and
immediately on the Annuitant's death without regard to the number or total
amount of payments made. Thus, it is possible for you to receive only one
payment if death occurred prior to the date the second payment was due.
OPTION 3--LIFE INCOME WITH INSTALLMENTS GUARANTEED.
Option 3 provides an annuity payable monthly for a certain period of 10
years and thereafter during the Annuitant's lifetime. If you must take required
minimum distributions from a Qualified Contract, consult a tax advisor before
selecting this Option, as it may not satisfy those requirements in all
situations.
OPTION 4--JOINT AND SURVIVOR ANNUITY.
Option 4 provides an annuity payable monthly while both Annuitants are
living. Upon either Annuitant's death, the monthly income payable continues over
the life of the surviving Annuitant at a percentage of the original payment. The
percentage payable must be selected at the time the Annuity Option is chosen.
The percentages available are 50%, 66 (2)/3%, 75% and 100%. Annuity payments
terminate automatically and immediately upon the surviving Annuitant's death
without regard to the number or total amount of payments received.
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OPTION 5--JOINT AND SURVIVOR ANNUITY WITH INSTALLMENTS GUARANTEED.
Option 5 provides an annuity payable monthly for a certain period of 10
years and thereafter while either Annuitant is alive. If you must take required
minimum distributions from a Qualified Contract, consult a tax advisor before
selecting this Option, as it may not satisfy those requirements in all
situations.
When you are choosing an Annuity Option, you should consider that:
|_| for younger Annuitants, selecting Option 2 - Life Income, might
result in smaller monthly payments than selecting Option 1 -
Income for Specified Period; for older Annuitants, selecting
Option 2 - Life Income, might result in larger monthly payments
than selecting Option 1 - Income for Specified Period.
|_| selecting Option 3 - Life Income with Installments Guaranteed,
will result in smaller monthly payments than selecting Option 2 -
Life Income; however, the Owner or Beneficiary may receive more
payments under Option 3 if the Annuitant dies before the end of
the certain period
|_| selecting Option 4 - Joint and Survivor Annuity, will result in
smaller monthly payments than selecting Option 2 - Life Income.
In lieu of monthly payments, you may request quarterly, semi-annual, or
annual payments, with our prior approval.
3. ALLOCATION OF ANNUITY.
Subject to state variation, when you elect an Annuity Option, you may
request that we reallocate your Contract Value on the Annuity Date among the
Investment Options you choose to arrange for payments on a fixed or variable
basis, or a combination of both. A reallocation on the Annuity Date will not be
subject to the transfer restrictions that we would normally impose. If we do not
receive an election, any Fixed Account Withdrawal Value will be annuitized on a
fixed basis and any Separate Account Withdrawal Value will be annuitized on a
variable basis.
Transfers among the Subaccounts during the Annuity Period are permitted
subject to certain limitations. We reserve the right to restrict the number of
Subaccounts available during the Annuity Period. You may not transfer to or from
the Fixed Account during the Annuity Period.
4. FIXED ANNUITY PAYMENTS
We calculate the portion of the Withdrawal Value that you elected to have
paid to you as Fixed Annuity payments. We apply an annuity factor for the
Annuity Option that you selected to this value to determine the first Fixed
Annuity payment. Each Fixed Annuity payment will be equal to the first
regardless of investment, mortality or expense experience, unless the Annuity
Option selected specifies that there is to be a reduction in payments after the
death of an Annuitant.
5. VARIABLE ANNUITY PAYMENTS
We calculate the portion of the Withdrawal Value that you elected to have
paid to you as Variable Annuity payments from each Subaccount. We apply an
annuity factor for the Annuity Option that you selected to this value for each
Subaccount to determine the first Variable Annuity payment for that Subaccount.
The first Variable Annuity payment for each Subaccount is divided by the Annuity
Unit value for that Subaccount to establish the number of Annuity Units per
payment for that Subaccount. The number of units will not change after the
initial determination unless a transfer occurs or the Annuity Option selected
specifies that there is to be a reduction in payments upon the death of an
Annuitant. Future Variable Annuity payments are determined by multiplying the
number of Annuity Units per payment for each Subaccount by the Annuity Unit
value for that Subaccount at the end of the Valuation Date that each annuity
payment is due and summing the result.
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6. BASIS OF ANNUITY OPTIONS
Your Contract will contain tables for each Annuity Option that show the
guaranteed monthly payment for each $1,000 applied to an Annuity Option. The
guaranteed monthly payments are based on an interest rate (or assumed investment
rate if variable annuitization is elected) of 2.50% per year and, where
mortality is involved, the "Annuity 2000 Table" developed by the Society of
Actuaries projected using Scale G to the year 2015. We may offer annuity rates
for Fixed Annuity payments that are more favorable than those contained in the
Contract. Any such rates will be applied uniformly to all Owners of the same
class. We may also offer Variable Annuity payment options based on assumed
investment rates other than 2.50%, but not greater than 5.00%.
The tables that we prepare for each annuity option are calculated with an
assumed investment rate of 2.50% per annum. If the actual annualized net
investment rate in a Subaccount exceeds 2.50% per annum, Variable Annuity
payments for that Subaccount will increase. Conversely, if the actual annualized
net investment rate for a Subaccount is less than 2.50% per annum, Variable
Annuity payments for that Subaccount will decrease.
ANNUITY UNIT VALUE. Annuity Unit values are determined independently for
each Subaccount. The Annuity Unit value at the end of any Valuation Period is
equal to a. multiplied by b. multiplied by c. where:
a. is the Annuity Unit value at the end of the preceding Valuation
Period
b. is the net investment experience factor for the current Valuation
Period
c. is an interest factor of 0.99993235 for each calendar day in the
current Valuation Period. The interest factor offsets the assumed
investment rate of 2.5% per annum used in the Contract's annuity
tables. A different interest factor will be used if we offer
other assumed investment rates.
The net investment experience factor for a Subaccount for the current
Valuation Period is equal to x. divided by y. where:
x. Is the Subaccount's Accumulation Unit value at the end of the
current Valuation Period
y. Is the Subaccount's Accumulation Unit value at the end of the
preceding Valuation Period
7. TRANSFERS DURING THE ANNUITY PERIOD.
During the Annuity Period, you may, by written request to our Service
Center, transfer Contract Value from one Subaccount to another Subaccount,
subject to the following limitations:
|_| Transfers among Subaccounts are prohibited during the first year
of the Annuity Period; subsequent transfers are limited to one
per year.
|_| Your interest in a Subaccount must be transferred in increments
of 25%.
|_| Your annuity payments for the Subaccount you are transferring to
must be at least $100 after the transfer. Your annuity payments
for the Subaccount you are transferring from must be at least
$100 after the transfer, unless the transfer will eliminate your
interest in the Subaccount.
|_| You may not transfer to or from the Fixed Account.
We calculate the number of Annuity Units per payment for the Subaccount you are
transferring to, as A multiplied by B divided by C, where:
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A = The number of Annuity Units per payment for the Subaccount you are
transferring from;
B = The Annuity Unit value of the Subaccount you are transferring from; and
C = The Annuity Unit value of the Subaccount you are transferring to.
TRANSFER PROCEDURES - We will make transfers pursuant to proper written or
telephone instructions to our Service Center that specify in detail the
requested changes. Transfers involving a Subaccount will be based upon the
Annuity Unit values determined following our receipt of complete transfer
instructions. If we receive a transfer request at our Service Center before the
close of business on the Valuation Date, we will process the request based on
Annuity Unit values determined at the end of that Valuation Date. If we receive
a transfer request at our Service Center on or after the close of business on
the Valuation Date, we will process the request based on Annuity Unit values
determined at the end of the next Valuation Date. If you or your authorized
representative call us to request a telephone transfer but have not given
instructions to us prior to the close of business on the Valuation Date, even if
due to our delay in answering your call, we will consider your telephone
transfer request to be received after the close of business on the Valuation
Date.
We may suspend, change or terminate the transfer privilege at any time.
8. DEATH PROCEEDS.
If the Annuitant dies, we will automatically continue any unpaid
installments for the remainder of the certain period under Annuity Options 1, 3
or 5. If the Owner elects, we will pay a lump sum payment of the present value
of the remaining payments in the certain period. The election to receive the
lump sum payment must be made within 60 days of our receipt of due proof of
death of the Annuitant or joint Annuitants.
We deduct a commutation charge if you request a lump sum payment with
respect to: 1) any remaining periodic payments in the certain period under
Annuity Options 1, 3 and 5 upon the death of an Annuitant during the Annuity
Period; or 2) any remaining payments under Annuity Option 1. The charge is equal
to the following:
For a fixed Annuity Option:
1) the present value of any remaining guaranteed Fixed Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the interest rate used in calculating the initial income
payment; LESS
2) the present value of any remaining guaranteed Fixed Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the interest rate used in calculating the initial income
payment plus 1%.
For a variable Annuity Option:
1) the present value of any remaining guaranteed Variable Annuity
payments (as of the date of calculation), using a discount rate that
is equal to the assumed investment rate used in calculating the
initial income payment; LESS
2) the present value of any remaining guaranteed Variable Annuity
payments (as of the date of calculation) , using a discount rate that
is equal to the assumed investment rate used in calculating the
initial income payment plus 1%.
We will determine the present value of any remaining guaranteed
Variable Annuity payments by applying the Annuity Unit value next
determined after we receive the election to commute the remaining
payments at our Service Center.
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If Annuity Option 2 is elected, annuity payments terminate automatically
and immediately upon the Annuitant's death without regard to the number or total
amount of payments made. Thus, it is possible that only one payment will be
received if death occurred prior to the date the second payment was due.
Under Annuity Option 4, Annuity payments terminate automatically and
immediately upon the surviving Annuitant's death without regard to the number or
total amount of payments received.
If an Owner, who is not also an Annuitant, dies after the Annuity Date, the
following provisions apply:
|_| If the Owner was the sole Owner, the remaining annuity payments
will be payable to the Beneficiary in accordance with the
provisions described above. The Beneficiary will become the Owner
of the Contract.
|_| If the Contract has joint Owners, the annuity payments will be
payable to the surviving joint Owner in accordance with the
provisions described above. Upon the death of the surviving joint
Owner, the Beneficiary becomes the Owner.
9. PROTECTION OF BENEFITS.
Unless otherwise provided in the supplementary agreement, the Owner may not
commute, anticipate, assign, alienate or otherwise hinder the receipt of any
annuity payment. Further, the proceeds of the Contract and any payment under an
Annuity Option will be exempt from the claim of creditors and from legal process
to the extent permitted by law.
10. AGE, GENDER AND SURVIVAL.
We may require satisfactory evidence of the age, gender and the continued
survival of any person on whose life the income is based.
If the Annuitant's age or gender has been misstated, the amount payable
under the Contract will be calculated as if those Purchase Payments sent to us
had been made at the correct age or gender. Interest not to exceed the lesser of
3% or the maximum allowed by state law compounded each year will be charged to
any overpayment or credited to any underpayment against future payments we may
make under the Contract.
In 1983, the United States Supreme Court held in ARIZONA GOVERNING
COMMITTEE V. NORRIS that optional annuity benefits provided under an employee's
deferred compensation plan could not, under Title VII of the Civil Rights Act of
1964, vary between men and women on the basis of sex. In addition, legislative,
regulatory, or decisional authority of some states may prohibit use of
sex-distinct mortality tables under certain circumstances. The Contracts offered
by this Prospectus are based upon actuarial tables that distinguish between men
and women and, thus, the Contract provides different benefits to men and women
of the same age. Accordingly, employers and employee organizations should
consider, in consultation with legal counsel, the impact of these authorities on
any employment-related benefits program before purchasing the Contract.
PAYMENTS TO CONTRACT OWNERS
Generally, we will make any death benefit, loan, withdrawal, surrender, or
annuity payment to you or effect any transfer within seven days after the
Valuation Date we receive your proper request at our Service Center. However, we
may suspend or postpone payments of any amount where permitted under applicable
federal or state laws, rules, or regulations.
We may suspend or defer payments or transfers involving any Subaccount:
|_| during any period when the New York Stock Exchange is closed,
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|_| when trading is restricted or the SEC determines an emergency
exists, or
|_| as the SEC by order may permit.
We also may defer any payment or transfer from the Fixed Account for the period
permitted by law. During the deferral period, we will continue to credit
interest at the current applicable interest rates. This can never be more than
six months after you send us the request.
Applicable laws designed to counter terrorism and prevent money laundering
might, in certain circumstances, require us to block your ability to make
certain transactions and thereby refuse to accept any Purchase Payment or
requests for transfers, withdrawals, surrenders, loans, annuitization, or death
benefits, until instructions are received from the appropriate regulator. We may
also be required to provide additional information about you and your Contract
to government regulators.
If you have submitted a recent check or draft that has not cleared through the
banking system, we have the right to defer payment of a transfer, death benefit,
loan, withdrawal, surrender, or annuity payment until such check or draft has
been honored.
FEDERAL TAX MATTERS
A. INTRODUCTION
This discussion is not exhaustive and is not intended as tax advice. A
qualified tax adviser should always be consulted with regard to the application
of the law to individual circumstances. This discussion is based on the Code,
Treasury Department regulations, and interpretations existing on the date of
this Prospectus. These authorities, however, are subject to change by Congress,
the Treasury Department, and the courts.
This discussion does not address state or local tax consequences, nor
federal estate or gift tax consequences, associated with buying a Contract. IN
ADDITION, WE MAKE NO GUARANTEE REGARDING ANY TAX TREATMENT--FEDERAL, STATE, OR
LOCAL--OF ANY CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
B. OUR TAX STATUS
We are taxed as a life insurance company and the operations of the Separate
Account are treated as a part of our total operations. The Separate Account is
not separately taxed as a "regulated investment company." Investment income and
capital gains of the Separate Account are not taxed to the extent they are
applied under a contract. We do not anticipate that we will incur federal income
tax liability attributable to the income and gains of the Separate Account, and
therefore we do not intend to provide for these taxes. If we are taxed on
investment income or capital gains of the Separate Account, then we may charge
the Separate Account to pay these taxes.
C. TAXATION OF ANNUITIES IN GENERAL
1. TAX DEFERRAL DURING ACCUMULATION PERIOD
Under the Code, except as described below, increases in the Contract Value
of a Non-Qualified Contract are generally not taxable to the Owner or Annuitant
until received as annuity payments or otherwise distributed. However, certain
requirements must be satisfied for this general rule to apply, including:
|_| the Contract must be owned by an individual,
|_| Separate Account investments must be "adequately diversified",
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|_| we, rather than you, must be considered the Owner of Separate
Account assets for federal tax purposes, and
|_| annuity payments must appropriately amortize Purchase Payments
and Contract earnings.
NON-NATURAL OWNER. As a general rule, deferred annuity contracts held by
"non-natural persons", such as corporations, trusts or similar entities, are not
annuity contracts for federal income tax purposes. The investment income on
these contracts is taxed each year as ordinary income received or accrued by the
non-natural Owner. There are exceptions to this general rule for non-natural
Owners. Contracts are generally treated as held by a natural person if the
nominal Owner is a trust or other entity holding the contract as an agent for a
natural person. However, this special exception does not apply to an employer
who is the nominal Owner of a contract under a non-qualified deferred
compensation plan for its employees.
Additional exceptions to this rule include:
|_| certain Contracts acquired by a decedent's estate due to the
death of the decedent,
|_| certain Qualified Contracts,
|_| certain Contracts used with structured settlement agreements, and
|_| certain Contracts purchased with a single premium when the
Annuity Date is no later than one year from Contract purchase and
substantially equal periodic payments are made at least annually.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity
for federal income tax purposes, separate account investments must be
"adequately diversified". The Treasury Secretary issued regulations prescribing
standards for adequately diversifying separate account investments. If the
Separate Account failed to comply with these diversification standards, the
contract would not be treated as an annuity contract for federal income tax
purposes and the Owner would generally be taxed on the difference between the
contract value and the Purchase Payments.
Although we do not control Fund investments, we expect that each Fund will
comply with these regulations so that each Subaccount of the Separate Account
will be considered "adequately diversified."
OWNERSHIP TREATMENT. In certain circumstances, a variable annuity contract
Owner may be considered the Owner of the assets of the separate account
supporting the contract. Then, income and gains from separate account assets are
includible in the Owner's gross income. The Internal Revenue Service ("IRS"), in
published rulings, stated that a variable contract Owner will be considered the
Owner of separate account assets if the Owner possesses the ability to exercise
investment control over the assets. As of the date of the Prospectus, no
comprehensive guidance has been issued by the IRS clarifying the circumstances
when such investment control by a variable contract Owner would exist. As a
result, your right to allocate the Contract Value among the Subaccounts may
cause you to be considered the Owner of the assets of the Separate Account.
We do not know what limits may be set forth in any guidance that the IRS
may issue, or whether any such limits will apply to existing Contracts. We
therefore reserve the right to modify the Contract as necessary to attempt to
prevent you from being considered the Owner of the Separate Account assets.
However, there is no assurance that such efforts would be successful.
PUBLICLY-AVAILABLE FUNDS. Several of the Funds offered through the Separate
Account are also available to the general public The IRS has ruled that
investing in mutual funds shares that are "publicly-available," i.e., shares of
mutual finds that can be purchased directly without purchasing a variable
annuity or life insurance contract, is incompatible with the investment control
restrictions described in the previous
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paragraph. ACCORDINGLY, IF A NON-QUALIFIED CONTRACT INVESTS IN
PUBLICLY-AVAILABLE FUNDS, IT WILL NOT BE TREATED AS AN ANNUITY CONTRACT FOR
FEDERAL INCOME TAX PURPOSES. For this purpose, a Contract purchased in
connection with a non-government sponsored 457 plan is treated as a
Non-Qualified Contract.
Publicly-Available Funds under the Separate Account are intended only for
Qualified Contracts. The IRS has ruled that most types of qualified contracts
are not subject to the restrictions against investing in publicly-available
mutual funds. We therefore believe that Qualified Contracts (other than those
issued in connection with non-government 457 plans) may invest in
publicly-available funds and remain exempt from current taxation until amounts
are distributed or deemed to be distributed from the Contract.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for
federal income tax purposes, Section 72(s) of the Code requires any
Non-Qualified Contract to contain certain provisions specifying how your
interest in the Contract will be distributed in the event of the death of an
Owner. Specifically, Section 72(s) requires that (a) if any Owner dies on or
after the Annuity Date, but prior to the time the entire interest in the
Contract has been distributed, the entire interest in the Contract will be
distributed at least as rapidly as under the method of distribution being used
as of the date of such Owner's death; and (b) if any Owner dies prior to the
Annuity Date, the entire interest in the Contract will be distributed within
five years after the date of such Owner's death. These requirements will be
considered satisfied as to any portion of a Owner's interest which is payable to
or for the benefit of a designated Beneficiary and which is distributed over the
life of such designated Beneficiary or over a period not extending beyond the
life expectancy of that Beneficiary, provided that such distributions begin
within one year of the Owner's death. The designated Beneficiary refers to a
natural person designated by the Owner as a Beneficiary and to whom ownership of
the Contract passes by reason of death. However, if the designated Beneficiary
is the surviving spouse of the deceased Owner, the Contract may be continued
with the surviving spouse as the new Owner.
The Non-Qualified Contracts contain provisions that are intended to comply
with these Code requirements, although no regulations interpreting these
requirements have yet been issued. We intend to review such provisions and
modify them if necessary to assure that they comply with the applicable
requirements when such requirements are clarified by regulation or otherwise.
Other rules may apply to Qualified Contracts.
DELAYED ANNUITY DATES. If the Annuity Date occurs (or is scheduled to
occur) when the Annuitant has reached an advanced age, E.G., past age 85, the
Contract might not be treated as an annuity for federal income tax purposes. In
that event, the income and gains under the Contract would be currently
includible in your income.
The following discussion assumes that the Contract is treated as an annuity
contract for tax purposes and that we are treated as the Owner of Separate
Account assets.
2. TAXATION OF PARTIAL AND FULL WITHDRAWALS
Partial withdrawals from a Non-Qualified Contract are includible in income
to the extent the Contract Value exceeds the "investment in the contract". This
amount is referred to as the "income on the contract". Full withdrawals are also
includible in income to the extent they exceed the "investment in the contract."
Investment in the contract equals the total of Purchase Payments minus any
amounts previously received from the Contract that were not includible in your
income. All amounts includible in income with respect to the Contract are taxed
as ordinary income.
Any assignment or pledge (or agreement to assign or pledge) of Contract
Value is treated as a withdrawal. Investment in the contract is increased by the
amount includible in income with respect to such assignment or pledge. If you
transfer a contract interest, without adequate consideration, to someone other
than your spouse (or to a former spouse incident to divorce), you will be taxed
on the income on the contract. In this case, the transferee's investment in the
contract is increased to reflect the increase in your income.
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The Contract's optional death benefits, if elected, may exceed Purchase
Payments or Contract Value. As described in the Prospectus, we impose certain
charges with respect to these death benefits. It is possible that those charges
(or some portion) could be treated as a partial withdrawal.
If your Contract contains a GLWB Rider, the application of certain tax
rules, particularly those rules relating to distributions from your Contract,
are not entirely clear. In view of this uncertainty, you should consult a tax
advisor before purchasing the GLWB Rider.
There may be special income tax issues present in situations where the
Owner and the Annuitant are not the same person and are not married to one
another. A tax adviser should be consulted in those situations.
3. TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary income
equals the payment minus the exclusion amount. The exclusion amount for Variable
Annuity payments is the "investment in the contract" allocated to the variable
Annuity Option and adjusted for any period certain or refund feature, divided by
the number of payments expected to be made. The exclusion amount for Fixed
Annuity payments is the payment times the ratio of the investment in the
contract allocated to the fixed Annuity Option and adjusted for any period
certain or refund feature, to the expected value of the Fixed Annuity payments.
Once the total amount of the investment in the contract is excluded using
these ratios, annuity payments will be fully taxable. If annuity payments stop
because the Annuitant dies before the total amount of the investment in the
contract is recovered, the unrecovered amount generally is allowed as a
deduction to the Annuitant in the last taxable year.
4. TAXATION OF DEATH BENEFITS
Amounts may be distributed upon your or the Annuitant's death. Death
benefits are includible in income and:
|_| if distributed in a lump sum are taxed like a full withdrawal, or
|_| if distributed under an Annuity Option are taxed like annuity
payments.
5. PENALTY TAX ON PREMATURE DISTRIBUTIONS
A 10% penalty tax applies to a taxable payment from a Non-Qualified
Contract unless:
|_| received on or after you reach age 59 1/2,
|_| received due to your disability,
|_| made to a Beneficiary after your death or, for non-natural
Owners, after the primary Annuitant's death,
|_| made as a series of substantially equal periodic payments (at
least annually) for your life (or life expectancy) or for the
joint lives (or joint life expectancies) of you and a designated
Beneficiary (within the meaning of the tax law),
|_| made under a Contract purchased with a single premium when the
Annuity Date is no later than one year from Contract purchase and
substantially equal periodic payments are made at least annually,
or
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|_| made with annuities used with certain structured settlement
agreements.
Other exceptions may apply.
6. AGGREGATION OF CONTRACTS
The taxable amount of an annuity payment or withdrawal from a Non-Qualified
Contract may be determined by combining some or all of the Non-Qualified
Contracts you own. For example, if you purchase a Contract and also purchase an
immediate annuity at approximately the same time, the IRS may treat the two
contracts as one contract. Similarly, if a person transfers part of his interest
in one annuity contract to purchase another annuity contract, the IRS might
treat the two contracts as one contract. In addition, if you purchase two or
more Non-Qualified deferred annuity contracts from the same company (or its
affiliates) during any calendar year, these contracts are treated as one
contract. The effects of this aggregation are not always clear. However, it
could affect the taxable amount of an annuity payment or withdrawal and the
amount which might be subject to the 10% penalty tax.
7. EXCHANGE OF ANNUITY CONTRACTS
We may issue the Contract in exchange for all or part of another annuity
contract that you own. Such an exchange will be tax free if certain requirements
are satisfied. If the exchange is tax free, your investment in the contract
immediately after the exchange will generally be the same as that of the annuity
contract exchanged, increased by any additional Purchase Payment made as part of
the exchange. Your Contract Value immediately after the exchange may exceed your
investment in the contract. That excess may be includible in income should
amounts subsequently be withdrawn or distributed from the Contract (E.G. as a
partial surrender, full surrender, annuity income payment, or death benefit). If
you exchange part of an existing annuity contract for the Contract, the IRS
might treat the two contracts as one annuity contract in certain circumstances.
(See "Aggregation of Contracts.") You should consult your tax adviser in
connection with an exchange of all or part of an annuity contract for the
Contract.
8. LOSS OF INTEREST DEDUCTION WHERE CONTRACTS ARE HELD BY OR FOR THE BENEFIT OF
CERTAIN NON-NATURAL PERSONS
For Contracts issued to a non-natural Owner, all or some portion of
otherwise deductible interest may not be deductible by the Owner. However, this
interest deduction disallowance does not affect Contracts where the Owner is
taxable each year on the investment income under the Contract. Entities
considering purchasing the Contract, or entities that will be Beneficiaries
under a Contract, should consult a tax adviser.
D. QUALIFIED PLANS
Currently, the Contracts are also available for use in connection with
retirement plans which receive favorable treatment under Sections 401, 403, 408,
408A or 457 of the Code. Contracts offered for use in connection with retirement
plans that receive favorable treatment under Sections 401, 403, 408, 408A or 457
of the Code ("Qualified Plans") are referred to as "Qualified Contracts."
Numerous special tax rules apply to the participants in Qualified Plans and to
Qualified Contracts. We make no attempt in this Prospectus to provide more than
general information about use of the Contract with the various types of
Qualified Plans. PERSONS INTENDING TO USE THE CONTRACT IN CONNECTION WITH
QUALIFIED PLANS SHOULD CONSULT A TAX ADVISER.
Under the Code, qualified plans generally enjoy tax-deferred accumulation
amounts invested in the plan. Therefore, in considering whether or not to
purchase a Contract in a qualified plan, you should consider the Contract's
features other than tax deferral, including the availability of lifetime annuity
payments and death benefit protection.
The tax rules applicable to Qualified Plans vary according to the type of
plan and the terms and conditions of the plan. For example, for both withdrawals
and annuity payments under certain Qualified
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Contracts, there may be no "investment in the contract" and the total amount
received may be taxable. Also, loans from Qualified Contracts, where allowed,
are subject to a variety of limitations, including restrictions as to the amount
that may be borrowed, the duration of the loan, the number of allowable loans
and the manner in which the loan must be repaid. (You should always consult your
tax adviser and retirement plan fiduciary prior to exercising loan privileges.)
Both the amount of the contribution that may be made, and the tax deduction or
exclusion that you may claim for such contribution, are limited under Qualified
Plans. If the Contract is used with a Qualified Plan, you and the Annuitant must
be the same individual. If a joint Annuitant is named, all distributions made
while the Annuitant is alive must be made to the Annuitant. Also, if a joint
Annuitant is named who is not the Annuitant's spouse, the Annuity Options which
are available may be limited, depending on the difference in their ages.
Furthermore, the length of any guarantee period may be limited in some
circumstances to satisfy certain minimum distribution requirements under the
Code.
Qualified Contracts are subject to special rules specifying the time at
which distributions must begin and the amount that must be distributed each
year. In the case of Individual Retirement Annuities, distributions of minimum
amounts must generally begin by April 1 of the calendar year following the
calendar year in which the Owner attains age 70 1/2. The required beginning date
for 401, 403 and 457 plans is the April 1 of the calendar year following the
later of the year in which the Owner attains age 70 1/2 or retires. There are no
required minimum distributions during the Owner's lifetime under Roth IRAs. An
excise tax is imposed for the failure to comply with the minimum distribution
requirements. This excise tax generally equals 50% of the amount by which a
minimum required distribution exceeds the actual distribution. The death benefit
or other optional benefits under your Contract may affect the amount of the
minimum required distribution that must be taken from your Contract.
A 10% penalty tax may apply to the taxable amount of payments from
Qualified Contracts. For Individual Retirement Annuities, the penalty tax does
not apply, for example, to a payment:
|_| received after you reach age 59 1/2,
|_| received after your death or because of your disability, or
|_| made as a series of substantially equal periodic payments (at
least annually) for your life (or life expectancy) or for the
joint lives (or joint life expectancies) of you and your
designated Beneficiary.
In addition, the penalty tax does not apply to certain distributions used
for qualified first time home purchases or for higher education expenses.
Special conditions must be met to qualify for these exceptions. If you wish to
take a distribution for these purposes you should consult your tax adviser.
Other exceptions may also be available.
Qualified Contracts are amended to conform to tax qualification
requirements. However, you are cautioned that the rights of any person to any
benefits under Qualified Plans may be subject to the terms and conditions of the
plans themselves, regardless of the terms and conditions of the Contract. In
addition, we are not bound by terms and conditions of Qualified Plans if they
are inconsistent with the Contract.
1. QUALIFIED PLAN TYPES
INDIVIDUAL RETIREMENT ANNUITIES. The Code permits eligible individuals to
contribute to an individual retirement annuity known as an "IRA." IRAs limit the
amounts contributed, the persons eligible and the time when distributions start.
Also, subject to direct rollover and mandatory withholding requirements,
distributions from other types of qualified plans generally may be "rolled over"
on a tax-deferred basis into an IRA. The Contract may not fund a "Coverdell
Education Savings Account" (formerly known as an "Education IRA").
SIMPLIFIED EMPLOYEE PENSIONS (SEP IRAS). The Code allows employers to
establish simplified employee pension plans, using the employees' IRAs. Under
these plans the employer may make limited
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deductible contributions on behalf of the employees to IRAs. Employers and
employees intending to use the Contract in connection with these plans should
consult a tax adviser.
SIMPLE IRAS. The Code permits certain small employers to establish "SIMPLE
retirement accounts," including SIMPLE IRAs, for their employees. Under SIMPLE
IRAs, certain deductible contributions are made by both employees and employers.
SIMPLE IRAs are subject to various requirements, including limits on the amounts
that may be contributed, the persons who may be eligible, and the time when
distributions may commence. Employers and employees intending to use the
Contract in connection with these plans should consult a tax adviser.
ROTH IRAS. The Code permits contributions to an IRA known as a "Roth IRA."
Roth IRAs differ from other IRAs in certain respects, including:
|_| Roth IRA contributions are never deductible,
|_| "qualified distributions" from a Roth IRA are excludable from
income,
|_| mandatory distribution rules do not apply before death,
|_| a rollover to a Roth IRA must be a "qualified rollover
contribution," under the Code,
|_| special eligibility requirements apply, and
|_| contributions to a Roth IRA can be made after the Owner has
reached age 70 1/2.
All or part of an IRA may be converted into a Roth IRA without taking an
actual distribution. You may convert by notifying the IRA issuer or trustee. You
must be eligible for a qualified rollover contribution to convert an IRA to a
Roth IRA. A conversion typically results in the inclusion of some or all of the
IRA value in gross income, except that the 10% penalty tax does not apply on the
conversion. Persons with adjusted gross incomes in excess of $100,000 or who are
married and file a separate return are not eligible to make a qualified rollover
contribution or a transfer in a taxable year from a non-Roth IRA to a Roth IRA.
Any "qualified distribution", as defined in Code Section 408A, from a Roth
IRA is excludible from gross income. A qualified distribution includes a
distribution made after you reach age 59 1/2, after your death, because of
your disability, or made to a first-time homebuyer. A qualified distribution can
only be made after the first five tax years after the year for which you (or
your spouse) made a contribution to any Roth IRA established for your benefit.
CORPORATE AND SELF-EMPLOYED ("H.R. 10" AND "KEOGH") PENSION AND
PROFIT-SHARING PLANS. The Code permits corporate employers to establish types of
tax-favored retirement plans for employees. The Self-Employed Individuals Tax
Retirement Act of 1962, as amended, commonly referred to as "H.R. 10" or "Keogh"
permits self-employed individuals also to establish such tax-favored retirement
plans for themselves and their employees. Such retirement plans may permit the
purchase of the Contracts in order to provide benefits under the plans. The
Contract provides a death benefit that in certain circumstances may exceed the
greater of the Purchase Payments and the Contract Value. It is possible that
such a death benefit could be characterized as an incidental death benefit.
There are limitations on the amount of incidental benefits that may be provided
under pension and profit sharing plans. In addition, the provision of such
benefits may result in current taxable income to participants. Employers
intending to use the Contract in connection with such plans should seek
competent advice.
TAX-SHELTERED ANNUITIES. Code Section 403(b) permits public school
employees and employees of certain types of charitable, educational and
scientific organizations to have their employers purchase annuity contracts for
them and, subject to certain limitations, to exclude the amount of Purchase
Payments from taxable gross income. These annuity contracts are commonly
referred to as "tax-sheltered annuities". If you purchase a Contract for such
purposes, you should seek competent advice as to eligibility, limitations
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on permissible amounts of Purchase Payments and other tax consequences
associated with the Contracts. In particular, you should consider that the
Contract provides optional death benefits that in certain circumstances may
exceed the greater of the Purchase Payments and the Contract Value (see "Death
Benefits"). It is possible that such death benefits could be characterized as
incidental death benefits. If the death benefit were so characterized, this
could result in currently taxable income to you. In addition, there are
limitations on the amount of incidental benefits that may be provided under a
tax-sheltered annuity.
Tax-sheltered annuity contracts must contain restrictions on withdrawals
of:
|_| contributions made pursuant to a salary reduction agreement in
years beginning after December 31, 1988,
|_| earnings on those contributions, and
|_| earnings after December 31, 1988 on amounts attributable to
salary reduction contributions held as of December 31, 1988.
These amounts can be paid only if you have reached age 59 1/2, severed
employment, died, or becomes disabled (within the meaning of the tax law), or in
the case of hardship (within the meaning of the tax law). Amounts permitted to
be distributed in the event of hardship are limited to actual contributions;
earnings thereon cannot be distributed on account of hardship. Amounts subject
to the withdrawal restrictions applicable to Section 403(b)(7) custodial
accounts may be subject to more stringent restrictions. (These limitations on
withdrawals generally do not apply to the extent you direct us to transfer some
or all of the Contract Value to the issuer of another tax-sheltered annuity or
into a Section 403(b)(7) custodial account.)
If you are a participant in the Texas Optional Retirement Program, you may
not take withdrawals before death, disability, retirement, or termination from
employment in the Texas public institutions of higher education, as provided in
the Texas Optional Retirement Program. (You are, however, permitted to make
transfers of Contract Value among the Investment Options.)
DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT
ORGANIZATIONS. The Code permits employees of state and local governments and
tax-exempt organizations to defer a portion of their compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. Generally, a Contract purchased by a state or local
government or a tax-exempt organization will not be treated as an annuity
contract for federal income tax purposes. Those who intend to use the Contracts
in connection with such plans should seek competent advice.
2. DIRECT ROLLOVERS
If the Contract is used with a retirement plan that is qualified under
Sections 401(a), 403(a), or 403(b) of the Code or with an eligible government
deferred compensation plan that is qualified under Section 457(b), any "eligible
rollover distribution" from the Contract will be subject to "direct rollover"
and mandatory withholding requirements. An eligible rollover distribution
generally is any distribution from such a qualified retirement plan, excluding
certain amounts such as:
- minimum distributions required under Section 401(a)(9) of the
Code,
- certain distributions for life, life expectancy, or for 10 years
or more which are part of a "series of substantially equal
periodic payments, " and
- hardship distributions.
Under these requirements, federal income tax equal to 20% of the taxable
portion of the eligible rollover distribution will be withheld from the amount
of the distribution. Unlike withholding on certain
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other amounts distributed from the Contract, discussed below, you cannot elect
out of withholding with respect to an eligible rollover distribution. However,
this 20% withholding will not apply if, instead of receiving the eligible
rollover distribution, you elect to have it directly transferred to certain
types of qualified retirement plans. Prior to receiving an eligible rollover
distribution, a notice will be provided explaining generally the direct rollover
and mandatory withholding requirements and how to avoid the 20% withholding by
electing a direct rollover.
E. FEDERAL INCOME TAX WITHHOLDING
We withhold and send to the U.S. Government a part of the taxable portion
of each distribution unless you notify us before distribution of an available
election not to have any amounts withheld. In certain circumstances, we may be
required to withhold tax. The withholding rates for the taxable portion of
periodic annuity payments are the same as the withholding rates for wage
payments. In addition, the withholding rate for the taxable portion of
non-periodic payments (including withdrawals prior to the maturity date and
conversions of, or rollovers from, non-Roth IRAs to Roth IRAs) is 10%. The
withholding rate for eligible rollover distributions is 20%.
F. OTHER TAX ISSUES
1. FEDERAL ESTATE TAXES
While no attempt is being made to discuss the federal estate tax
implications of the Contract, a purchaser should keep in mind that the value of
an annuity contract owned by a decedent and payable to a beneficiary by virtue
of surviving the decedent is included in the decedent's gross estate. Depending
on the terms of the annuity contract, the value of the annuity included in the
gross estate may be the value of the lump sum payment payable to the designated
beneficiary or the actuarial value of the payments to be received by the
beneficiary. Consult an estate planning advisor for more information.
2. GENERATION-SKIPPING TRANSFER TAX.
Under certain circumstances, the Code may impose a "generation skipping
transfer tax" when all or part of an annuity contract is transferred to, or a
death benefit is paid to, an individual two or more generations younger than the
Owner. Regulations issued under the Code may require us to deduct the tax from
your Contract, or from any applicable payment, and pay it directly to the IRS.
3. ANNUITY PURCHASES BY RESIDENTS OF PUERTO RICO
The Internal Revenue Service recently announced that income received by
residents of Puerto Rico under life insurance or annuity contracts issued by a
Puerto Rico branch of a United States life insurance company is U.S.-source
income that is generally subject to United States federal income tax.
4. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal withholding tax on taxable distributions from annuity
contracts at a 30% rate, unless a lower treaty rate applies. In addition,
purchasers may be subject to state and/or municipal taxes and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.
state, and foreign taxation with respect to an annuity contract purchase.
5. FOREIGN TAX CREDITS
We may benefit from any foreign tax credits attributable to taxes paid by
certain Funds to foreign jurisdictions to the extent permitted under federal tax
law.
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6. POSSIBLE TAX LAW CHANGES
Although the likelihood of legislative changes is uncertain, there is
always the possibility that the tax treatment of the Contract could change by
legislation or otherwise. Consult a tax adviser with respect to legislative
developments and their effect on the Contract. We have the right to modify the
contract in response to legislative changes that could otherwise diminish the
favorable tax treatment that annuity contract Owners currently receive. We make
no guarantee regarding the tax status of any contact and do not intend the above
discussion as tax advice.
G. SPECIAL TAX CONSIDERATIONS FOR OPTIONAL BENEFITS
At present, the IRS has not provided guidance as to the tax treatment of charges
for optional benefits to an annuity contract. The IRS might take the position
that each charge associated with these optional benefits is deemed a withdrawal
from the Contract subject to current income tax to the extent of any gains and,
if applicable, the 10% penalty tax for premature withdrawals.
We do not currently report charges for optional benefits as partial withdrawals,
but we may do so in the future if we believe that the IRS would require us to
report them as such. You should consult a tax adviser before electing any
optional benefit riders.
Amounts received in a partial withdrawal are taxable to the extent that the
Contract Value exceeds the investment in the Contract. There is some uncertainty
regarding the effect that certain optional benefits, e.g., the GLWB Rider, might
have on the amount that is treated as the Contract Value for this purpose. As a
result, the taxable portion of amounts received in a partial withdrawal could be
greater or less depending on how such optional benefits are treated for this
purpose.
The death benefit under a Qualified Contract, or any optional death benefit or
other optional benefit rider, may increase the amount of any required minimum
distributions. Failure to comply with minimum distribution requirements will
result in the imposition of an excise tax, generally 50% of the amount by which
the amount required to be distributed exceeds the actual distribution.
If you are considering purchasing the GLWB Rider in connection with a
Qualified Contract, in certain circumstances your ability to access the
withdrawal benefit may be limited by the terms of your plan and/or by applicable
law. Always consult your tax adviser before purchasing this Rider in connection
with a Qualified Contract.
DISTRIBUTION OF CONTRACTS
The Contracts are distributed through the principal underwriter for the
Separate Account:
[ ] ("Distributor")
[ONE NEW YORK PLAZA, NEW YORK, NY 10004
MAILING ADDRESS: 30 HUDSON ST., 27TH FLOOR, JERSEY CITY, NJ 07032]
[132 TURNPIKE ROAD, SUITE 210, SOUTHBOROUGH, MA 01772]
The Distributor is a wholly-owned subsidiary of The Goldman Sachs Group,
Inc We pay compensation to Distributor for sales of the Contracts by selling
firms. We also pay amounts to Distributor that may be used for its operating and
other expenses, including the following sales expenses: compensation and bonuses
for the Distributor's management team, advertising expenses, and other expenses
of distributing the Contracts. Distributor's management team also may be
eligible for non-cash compensation items that we may provide jointly with
Distributor. Non-cash items include conferences, seminars and trips (including
travel, lodging and meals in connection therewith), entertainment, merchandise
and other similar items.
SELLING FIRMS. We and Distributor have entered into selling agreements with
selling firms for the sale of the Contracts. All selling firms receive
commissions and some form of non-cash compensation. Selected selling firms may
receive additional compensation, including marketing allowances, persistency
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payments, preferred status fees and industry conference fees. These commissions
and other incentives or payments, if any, are not charged directly to Contract
Owners or the Separate Account. We intend to recoup commissions and other sales
expenses through fees and charges deducted under the Contract or from our
General Account. A portion of the payments made to selling firms may be passed
on to their sales representatives in accordance with their internal compensation
programs. Those programs may also include other types of cash and non-cash
compensation and other benefits.
COMPENSATION PAID TO ALL SELLING FIRMS. We and Distributor pay compensation
to all selling firms in the form of commissions and certain types of non-cash
compensation. The maximum commission payable for contract sales by selling firms
is 6.0% of Purchase Payments. Some selling firms may elect to receive a lower
commission when a Purchase Payment is made, along with annual trail commissions
up to 0.80% of Account Value (less Purchase Payments received within the
previous 12 months) for so long as the Contract remains in effect or as agreed
in the selling agreement. Distributor may also provide non-cash compensation
items that we may provide jointly with Distributor. Non-cash items include
expenses for conference or seminar trips and certain gifts.
ADDITIONAL COMPENSATION FOR SELECTED SELLING FIRMS. We and Distributor may
pay additional compensation to selected selling firms, including marketing
allowances, persistency payments, preferred status fees and industry conference
fees. Marketing allowances are periodic payments to certain selling firms based
on cumulative sales of our variable insurance contracts (including the
Contracts). Persistency payments are periodic payments based on account values
of our variable insurance contracts (including Account Values of the Contracts)
or other persistency standards. Preferred status fees are paid to obtain
preferred treatment of the Contracts in selling firms' marketing programs, which
may include marketing services and increased access to their sales
representatives. Industry conference fees are amounts paid to cover in part the
costs associated with sales conferences and educational seminars for selling
firms' sales representatives.
The additional types of compensation discussed above are not offered to all
selling firms. The terms of any particular agreement governing compensation may
vary among selling firms and the amounts may be significant. The prospect of
receiving, or the receipt of, additional compensation as described above may
provide selling firms and/or their sales representatives with an incentive to
favor sales of the Contracts over other variable annuity contracts (or other
investments) with respect to which a selling firm does not receive additional
compensation, or lower levels of additional compensation. You may wish to take
such payment arrangements into account when considering and evaluating any
recommendation relating to the contracts. For more information about any such
arrangements, ask your sales representative for further information about what
your sales representative and the selling firm for which he or she works may
receive in connection with your purchase of a contract.
VOTING RIGHTS
Proxy materials in connection with any Fund shareholder meeting are
delivered or made available to each Owner with Subaccount interests invested in
the Fund as of the record date. Proxy materials include a voting instruction
form. It is important that each Owner provide voting instructions to us because
we vote all Fund shares proportionately in accordance with instructions received
from Owners. This means that we will vote shares for which no timely
instructions are received in the same proportion as those shares for which we do
receive voting instructions. As a result, a small number of Owners may control
the outcome of a vote. We will also vote any Fund shares attributed to amounts
we have accumulated in the Subaccounts in the same proportion that Owners vote.
A Fund is not required to hold annual shareholders' meetings. Funds hold special
meetings as required or deemed desirable for such purposes as electing trustees,
changing fundamental policies or approving an investment advisory agreement.
Owners have voting rights in a Fund based upon the Owner's proportionate
interest in the corresponding Subaccount as measured by units. Owners have
voting rights before surrender, or the death of an Owner. Thereafter, the payee
entitled to receive Variable Annuity payments has voting rights. During the
Annuity Period, voting rights decrease as Annuity Units decrease.
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REPORTS TO CONTRACT OWNERS AND INQUIRIES
Each calendar quarter we send you a statement showing amounts credited to
each Subaccount and to the Fixed Account. It also shows the interest rate(s)
that we are crediting upon amounts held in the Fixed Account. In addition, if
you transfer amounts among the Investment Options or make additional Purchase
Payments, you receive written confirmation of these transactions. We will also
send a current statement upon your request. We also send you annual and
semi-annual reports for the Funds that underlie the Subaccounts in which you
invest and a list of the securities held by that Fund. Read all reports
carefully. If you find any errors, please contact us promptly to correct them.
You will have access to Contract information through the Interactive Voice
Response System (IVR) at [phone number]. You will also be able to access your
account information from our website at www.cwannuity.com.
You may direct inquiries to the selling agent or may call or write to us at
our Service Center.
DOLLAR COST AVERAGING
Under our Dollar Cost Averaging ("DCA") program, a predesignated portion of
any Subaccount is automatically transferred on a monthly, quarterly, semi-annual
or annual basis for a specified duration to other Subaccounts or from the Fixed
Account to a Subaccount or Subaccounts. If you elect this program, you cannot
elect Automatic Asset Rebalancing. There is no charge associated with our DCA
program.
The theory of a DCA program is that by investing at regular and level
increments over time, you will be able to purchase more Accumulation Units when
the Accumulation Unit value is relatively low and less Accumulation units when
the Accumulation Unit value is relatively high. DCA generally helps reduce the
risk of purchasing Accumulation Units when market prices are high and selling
when market prices are low. However, participation in the DCA program does not
assure you of greater profit from your purchases under the program, nor will it
prevent or necessarily reduce losses in a declining market. Moreover, while we
refer to this program of periodic transfers generally as Dollar Cost Averaging,
periodic transfers from a Subaccount (other than a Subaccount which maintains a
stable net asset value), are less likely to produce the desired effect of the
DCA program and may have the effect of reducing the average price of the
Subaccount shares being redeemed. If you choose to participate in this program
you should have the financial ability to continue making transfers through
periods of fluctuating markets.
The Owner may select any day of the month except for the 29th, 30th or 31st
for the DCA transfers to occur. The Dollar Cost Averaging program is available
only during the Accumulation Period. You may enroll any time by completing our
Dollar Cost Averaging form. We must receive the enrollment form at least five
business days before the transfer date.
The minimum transfer amount is $100 per Subaccount. At the time Dollar Cost
Averaging is elected, the total Contract Value in the Subaccount from which
transfers will be made must be at least equal to the amount designated to be
transferred on each transfer date times the duration selected.
Dollar Cost Averaging ends if:
|_| the number of designated monthly transfers has been completed,
|_| Contract Value in the transferring account is insufficient to
complete the next transfer; the remaining amount is transferred,
|_| we receive your written termination at our Service Center at
least five business days before the next transfer date, or
|_| the Contract is surrendered or annuitized.
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If the Fixed Account balance is at least $10,000, you may elect automatic
monthly or calendar quarter transfers of interest accrued in the Fixed Account
to one or more of the Subaccounts. Transfers are made within five business days
of the end of the month or calendar quarter, as applicable. We must receive the
enrollment form at least ten days before the end of the month or calendar
quarter, as applicable.
AUTOMATIC ASSET REBALANCING
We currently offer Automatic Asset Rebalancing on a monthly, quarterly,
semi-annual, or annual basis. If you elect this program, you cannot elect Dollar
Cost Averaging. There is currently no charge for this service.
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Under Automatic Asset Rebalancing, we will allocate your Purchase Payments
and rebalance your Separate Account Contract Value monthly, quarterly,
semi-annually, or annually to maintain the particular percentage allocation
among the Subaccounts that you select based on your investment goals and risk
tolerance. Rebalancing of your Separate Account Contract Value will occur on the
initial rebalancing date you select and then each rebalancing date thereafter.
The initial date you select cannot be earlier than 30 days from the Date of
Issue. If based on your selected date, rebalancing would occur on a date that is
not a Valuation Date, the rebalancing will occur on the Valuation Date following
your selected date. You may change the frequency of Automatic Asset Rebalancing
at any time.
We perform this periodic rebalancing to take account of:
- increases and decreases in Separate Account Contract Value in
each Subaccount due to Subaccount performance, and
- increases and decreases in Separate Account Contract Value in
each Subaccount due to withdrawals, transfers, and Purchase
Payments.
You may elect Automatic Asset Rebalancing at any time on or after the Date
of Issue by submitting a written request to our Service Center. If you elect
Automatic Asset Rebalancing, you must include all Separate Account Contract
Value in the program. We allocate all Purchase Payments paid under an automatic
investment feature and, unless you instruct us otherwise, all other Purchase
Payments in accordance with the particular percentage allocation among the
Subaccounts that you have selected. The percentages that you select under
Automatic Asset Rebalancing will override any prior percentage allocations that
you have chosen and we will allocate all future Purchase Payments. You may
change your allocations at any time. Once elected, you may instruct us, in a
form satisfactory to us, at any time to terminate the program. We reserve the
right to make changes to this program at any time.
SYSTEMATIC WITHDRAWAL PLAN
We offer a Systematic Withdrawal Plan ("SWP") allowing you to preauthorize
periodic withdrawals during the Accumulation Period. You instruct us to withdraw
selected amounts from the Fixed Account or from any of the Subaccounts on a
monthly, quarterly, semi-annual or annual basis. The SWP is available when you
request a minimum $100 periodic payment. If the amounts distributed under the
SWP exceed the Free Withdrawal Amount, we may assess the withdrawal charge on
those amounts. WITHDRAWALS TAKEN UNDER THE SWP MAY BE SUBJECT TO THE 10% TAX
PENALTY ON EARLY WITHDRAWALS AND TO INCOME TAXES AND WITHHOLDING. If you are
interested in SWP, you may obtain an application and information concerning this
program and its restrictions from us or your agent. We give thirty days' notice
if we amend the SWP. The SWP may be terminated at any time by you or us. There
is no charge associated with the SWP.
SPECIAL CONSIDERATIONS
We reserve the right to amend the Contract to meet the requirements of
federal or state laws or regulations. We will notify you in writing of these
amendments.
Your rights under a Contract may be assigned as provided by law. An
assignment will not be binding upon us until we receive a written copy of the
assignment at our Service Center. Any claim is subject to proof of interest of
the assignee. You are solely responsible for the validity or effect of any
assignment. You, therefore, should consult a qualified tax adviser regarding the
tax consequences, as an assignment may be a taxable event.
Only our President, Vice President, Secretary, or Assistant Secretaries may
change the Contract. No one else has authority to modify or waive any provision
of the Contract. Any change must be in writing. At any time, we may make such
changes to the Contract, without your consent, as required to make it conform
with any law, regulation, or ruling issued by a government agency. We will
notify you of such changes and when required will obtain approval from the
appropriate regulatory authority and you.
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LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Variable Account is a party,
or to which the assets of the Variable Account are subject. The Company and the
Distributor are not involved in any litigation that is of material importance in
relation to their total assets or that relates to the Variable Account.
On July 24, 2002, an action captioned American National Bank and Trust Company
of Chicago, as Trustee f/b/o Emerald Investments Limited Partnership, and
Emerald Investments Limited Partnership v. Allmerica Financial Life Insurance
and Annuity Company, was commenced in the United States District Court for the
Northern District of Illinois, Eastern Division. In 1999, plaintiffs purchased
two variable annuity contracts with initial premiums aggregating $5 million.
Plaintiffs, who the Company subsequently identified as engaging in frequent
transfers of significant sums between sub-accounts that in the Company's opinion
constituted "market timing", were subject to restrictions upon such trading that
the Company imposed in December 2001. Plaintiffs allege that such restrictions
constituted a breach of the terms of the annuity contracts. In December 2003,
the court granted partial summary judgment to the plaintiffs, holding that at
least certain restrictions imposed on their trading activities violated the
terms of the annuity contracts. (On September 1, 2006, Allmerica Financial Life
Insurance and Annuity Company was renamed Commonwealth Annuity and Life
Insurance Company.)
On May 19, 2004, plaintiffs filed a Brief Statement of Damages in which, without
quantifying their damage claim, they outlined a claim for (i) amounts totaling
$150,000 for surrender charges imposed on the partial surrender by plaintiffs of
the annuity contracts, (ii) loss of trading profits they expected over the
remaining term of each annuity contract, and (iii) lost trading profits
resulting from the Company's alleged refusal to process five specific transfers
in 2002 because of trading restrictions imposed on market timers. With respect
to the lost profits, plaintiffs claim that pursuant to their trading strategy of
transferring money from money market accounts to international equity accounts
and back again to money market accounts, they have been able to consistently
obtain relatively risk free returns of between 35% to 40% annually. Plaintiffs
claim that they would have been able to continue to maintain such returns on the
account values of their annuity contracts over the remaining terms of the
annuity contracts (which are based in part on the lives of the named
annuitants). The aggregate account value of plaintiffs' annuities was
approximately $12.8 million in December 2001. On February 1, 2006, the Court
issued a ruling, which, as confirmed by the Court at a status conference on
April 12, 2006, precludes plaintiffs from claiming any damages accruing beyond
July 31, 2004.
THG, on behalf of the Company, continues to vigorously defend this matter, and
regards plaintiffs' claims for lost trading profits as being speculative and, in
any case, subject to an obligation to mitigate damages. Further, in the
Company's view, these purported lost profits would not have been earned because
of various actions taken, the investment management industry and regulators, to
deter or eliminate market timing, including the implementation of "fair value"
pricing.
The outcome of this matter is not expected to be material to the Company's
annual results of operations or financial position. In addition, THG has agreed
to indemnify the Company and Goldman Sachs with respect to this litigation. A
trial was held in December 2006, resulting in an award to plaintiffs of
$1,281,757. Plaintiffs have appealed.
The Company is involved from time to time in judicial, regulatory and
arbitration proceedings concerning matters arising in connection with the
conduct of its business. THG has agreed to indemnify the Company and Goldman
Sachs with respect to certain of these matters as provided in the Stock Purchase
Agreement. Management believes, based on currently available information, that
the results of such proceedings, in the aggregate, will not have a material
adverse effect on the Company's financial condition, but may be material to the
Company's operating results for any particular period, depending, in part, upon
the operating results for such period. Given the inherent difficulty of
predicting the outcome of the Company's litigation and regulatory matters,
particularly in cases or proceeding in which substantial or indeterminate
damages or fines are sought, the Company cannot estimate losses or ranges of
losses for cases or proceedings where there is only a reasonable possibility
that a loss may be incurred.
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In addition, the Company is involved in investigations and proceedings by
governmental and self-regulatory agencies, which currently include inquiries
relating to tax reporting calculations to policyholders and others in connection
with distributions under a subset of variable annuity contracts in this
business. The Company believes that the result of these inquiries will not have
a material effect on its financial position or results of operations.
TABLE OF CONTENTS--STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information, Table of Contents is: Services to
the Separate Account; State Regulation; Experts; Financial Statements; Financial
Statements of Commonwealth Annuity and Life Insurance Company; Appendix A State
Premium Tax Chart. Please read the Statement of Additional Information in
conjunction with this Prospectus.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company at December 31, 2006
and 2005, and for each of the three years in the period ended December 31, 2006,
or for portions of such periods as disclosed in the financial statements, are
included in the Statement of Additional Information. Because the Separate
Account was not in existence as of December 31, 2006, we have not provided
financial statements for the Separate Account.
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APPENDIX A
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY DEFERRED FIXED AND VARIABLE
ANNUITY IRA, ROTH IRA AND SIMPLE IRA DISCLOSURE STATEMENT
This Disclosure Statement describes the statutory and regulatory provisions
applicable to the operation of traditional Individual Retirement Annuities
(IRAs), Roth Individual Retirement Annuities (Roth IRAs) and Simple Individual
Retirement Annuities (SIMPLE IRAs). Internal Revenue Service regulations require
that this be given to each person desiring to establish an IRA, Roth IRA or a
SIMPLE IRA. Except where otherwise indicated, IRA discussion includes Simplified
Employee Pension IRAs (SEP IRA). Further information can be obtained from
Commonwealth Annuity and Life Insurance Company and from any district office of
the Internal Revenue Service. Also, see IRS Publication 590, INDIVIDUAL
RETIREMENT ARRANGEMENTS (IRAS).
This Disclosure Statement is for your general information and is not
intended to be exhaustive or conclusive, to apply to any particular person or
situation, or to be used as a substitute for qualified legal or tax advice.
Please note that the information contained herein is based on current
federal income tax law, income tax regulations, and other guidance provided by
the IRS. Hence, this information is subject to change upon an amendment of the
law or the issuance of further regulations or other guidance. Also, you should
be aware that state tax laws may differ from federal tax laws governing such
arrangements. You should consult your tax adviser about any state tax
consequences of your IRA or Roth IRA, whichever is applicable.
A. REVOCATION
Within 7 days of the date you signed your enrollment application, you may
revoke the Contract and receive back 100% of your money by submitting your
request in writing to us at our Service Center. Notice of revocation will be
deemed mailed on the date of the postmark (or if sent by certified or registered
mail, the date of the certification or registration) if it is deposited in the
mail in the United States in an envelope, or other appropriate wrapper, first
class postage prepaid, properly addressed.
B. STATUTORY REQUIREMENTS
The Contract is intended to meet the requirements of Section 408(b) of the
Code, Section 408A of the Code for use as a Roth IRA, or of Section 408(p) of
the Code for use as a SIMPLE IRA, whichever is applicable. The Contract has not
been approved as to form for use as an IRA, Roth IRA or a SIMPLE IRA by the
Internal Revenue Service. Such approval by the Internal Revenue Service is a
determination only as to form of the Contract, and does not represent a
determination on the merits of the Contract.
1. The amount in your IRA, Roth IRA, and SIMPLE IRA, whichever is
applicable, must be fully vested at all times and the entire interest of the
Owner must be nonforfeitable.
2. The Contract must be nontransferable by the Owner.
3. The Contract must have flexible premiums.
4. For IRAs and SIMPLE IRAs, you must start receiving distributions on or
before April 1 of the year following the year in which you reach age 70 1/2 (the
required beginning date) (see "Required Distributions"). However, Section
401(a)(9)(A) of the Code (relating to minimum distributions required to commence
at age 70 1/2), and the incidental death benefit requirements of Section 401(a)
of the Code, do not apply to Roth IRAs.
If you die on or after the date required minimum distributions under
Section 401(a)(9) of the Code commence, unless otherwise permitted under
applicable law, any remaining interest in the Contract must be
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distributed at least as rapidly as under the method of distribution being used
as of the date of death. If you die before required minimum distributions
commence, unless otherwise permitted under applicable law, any remaining
interest in the Contract must be distributed to your Beneficiary by December 31
of the calendar year containing the fifth anniversary of your death; except
that: (1) if the interest is payable to an individual who is your designated
Beneficiary (within the meaning of Section 401(a)(9) of the Code), the
designated Beneficiary may receive the entire interest over his or her life, or
over a period certain not extending beyond his or her life expectancy,
commencing on or before December 31 of the calendar year immediately following
the calendar year in which you die; and (2) if the sole designated Beneficiary
is your spouse, the Contract may be treated as his or her own IRA, or, where
applicable, Roth IRA.
5. Except in the case of a rollover contribution or a direct transfer (see
"Rollovers and Direct Transfers"), or a contribution made in accordance with the
terms of a Simplified Employee Pension (SEP), all contributions to an IRA, Roth
and SIMPLE IRA must be cash contributions which do not exceed certain limits.
6. The Contract must be for the exclusive benefit of you and your
Beneficiaries.
C. ROLLOVERS AND DIRECT TRANSFERS FOR IRAS AND SIMPLE IRAS
1. A rollover is a tax-free transfer from one retirement program to another
that you cannot deduct on your tax return. There are two kinds of tax-free
rollover payments to an IRA. In one, you transfer amounts from another IRA. With
the other, you transfer amounts from a qualified plan under Section 401(a) of
the Code, a qualified annuity under Section 403(a) of the Code, a tax-sheltered
annuity or custodial account under Section 403(b) of the Code, or a governmental
plan under Section 457(b) of the Code (collectively referred to as "qualified
employee benefit plans"). Tax-free rollovers can be made from a SIMPLE IRA to a
SIMPLE Individual Retirement Account under Section 408(p) of the Code. An
individual can make a tax-free rollover to an IRA from a SIMPLE IRA, or
vice-versa, after a two-year period has expired since the individual first
participated in a SIMPLE plan.
2. You must complete the rollover by the 60th day after the day you receive
the distribution from your IRA or other qualified employee benefit plan or
SIMPLE IRA. The failure to satisfy this 60-day requirement may be waived by the
Internal Revenue Service in certain circumstances.
3. A rollover distribution may be made to you only once a year. The
one-year period begins on the date you receive the rollover distribution, not on
the date you roll it over (reinvest it).
4. A trustee-to-trustee transfer to an IRA of funds in an IRA from one
trustee or insurance company to another is not a rollover. It is a transfer that
is not affected by the one-year waiting period.
5. All or a part of the premium for the Contract used as an IRA may be paid
from a rollover from an IRA or qualified employee benefit plan or from a
trustee-to-trustee transfer from another IRA. All or part of the premium for the
Contract used as a SIMPLE IRA may be paid from a rollover from a SIMPLE
Individual Retirement Account or, to the extent permitted by law, from a direct
transfer from a SIMPLE IRA.
6. A distribution that is eligible for rollover treatment from a qualified
employee benefit plan will be subject to twenty percent (20%) withholding by the
Internal Revenue Service even if you roll the distribution over within the
60-day rollover period. One way to avoid this withholding is to make the
distribution as a direct transfer to the IRA trustee or insurance company.
D. CONTRIBUTION LIMITS AND ALLOWANCE OF DEDUCTION FOR IRAS
1. In general, the amount you can contribute each year to an IRA is the
lesser of (1) 100% of your compensation, or (2) the maximum annual contributions
under Section 219(b) of the Code, including "catch-up" contributions for certain
individuals age 50 and older. The maximum annual contribution limit for IRA
contributions is equal to $4,000 for 2007, and $5,000 for 2008. After 2008, the
limit may be
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indexed annually in $500 increments as determined by the Secretary of Treasury
to reflect cost of living increases. An individual who has attained age 50 may
make additional "catch-up" IRA contributions. The maximum annual contribution
limit for the individual is increased by $1,000 except as otherwise provided by
law. If you have more than one IRA, the limit applies to the total contributions
made to your own IRAs for the year. Generally, if you work the amount that you
earn is compensation. Wages, salaries, tips, professional fees, bonuses and
other amounts you receive for providing personal services are compensation. If
you own and operate your own business as a sole proprietor, your net earnings
reduced by your deductible contributions on your behalf to self-employed
retirement plans are compensation. If you are an active partner in a partnership
and provide services to the partnership, your share of partnership income
reduced by deductible contributions made on your behalf to qualified retirement
plans is compensation. All taxable alimony and separate maintenance payments
received under a decree of divorce or separate maintenance is compensation.
2. In the case of a married couple filing a joint return, up to the maximum
annual contribution can be contributed to each spouse's IRA, even if one spouse
has little or no compensation. This means that the total combined contributions
that can be made to both IRAs can be as much as $10,000 for 2007 ($4,000 annual
contribution for each individual, plus $1,000 for each individual who has
attained age 50).
3. In the case of a married couple with unequal compensation who file a
joint return, the limit on the deductible contributions to the IRA of the spouse
with less compensation is the smaller of:
a. The maximum annual contribution, or
b. The total compensation of both spouses, reduced by any deduction
allowed for contributions to IRAs of the spouse with more compensation.
The deduction for contributions to both spouses' IRAs may be further
limited if either spouse is covered by an employer retirement plan.
4. If either you or your spouse is an active participants in an
employer-sponsored plan and have a certain level of income, the amount of the
contribution to your IRA that is deductible is phased out, and in some cases
eliminated. If you are an active participant in an employer-sponsored plan, the
deductibility of your IRA contribution will be phased out, depending on your
adjusted gross income, or combined adjusted gross income in the case of a joint
tax return, as follows:
JOINT RETURNS: $83,000-$103,000
SINGLE TAXPAYERS: $52,000-$62,000
The phase-out range for married individuals filing separately is
$0-$10,000. If you file a joint tax return and are not an active participant in
an employer sponsored plan, but your spouse is, the amount of the deductible IRA
contribution is phased out for adjusted gross income between $156,000 and
$166,000. These amounts may be indexed for cost of living increases in future
years.
To designate a contribution as nondeductible, you must file IRS Form 8606,
NONDEDUCTIBLE IRAS. You may have to pay a penalty if you make nondeductible
contributions to an IRA and you do not file Form 8606 with your tax return, or
if you overstate the amount of nondeductible contributions on your Form 8606. If
you do not report nondeductible contributions, all of the contributions to your
traditional IRA will be treated as deductible, and all distributions from your
IRA will be taxed, unless you can show, with satisfactory evidence, that
nondeductible contributions were made.
5. Contributions to your IRA for a year can be made at any time up to April
15 of the following year. If you make the contribution between January 1 and
April 15, however, you may elect to treat the contribution as made either in
that year or in the preceding year. You may file a tax return claiming a
deduction for your IRA contribution before the contribution is actually made.
You must, however, make the contribution by the due date of your return not
including extensions.
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6. You cannot make a contribution other than a rollover or transfer
contribution to your IRA for the year in which you reach age 70 1/2 or
thereafter.
7. A taxpayer may qualify for a tax credit for contributions to an IRA, or
for a tax exempton for distributions donated to charity in 2007, depending on
the taxpayer's adjusted gross income.
E. SEP IRAS
1. SEP IRA rules concerning eligibility and contributions are governed by
Code Section 408(k). The maximum deductible contribution for a SEP IRA is the
lesser of $45,000 (may be indexed for cost-of-living increases in future years)
or 100% of compensation.
2. A SEP must be established and maintained by an employer (corporation,
partnership, sole proprietor).
F. SIMPLE IRAS
1. A SIMPLE IRA must be established with your employer using a qualified
salary reduction agreement.
2. You may elect to have your employer contribute to your SIMPLE IRA, under
a qualified salary reduction agreement, an amount (expressed as a percentage of
your compensation) not to exceed $10,500 for 2007. After 2007, the limit may be
indexed annually, except as otherwise provided by law. In addition to these
employee elective contributions, your employer is required to make each year
either (1) a matching contribution equal to up to 3 percent, and not less than 1
percent, of your SIMPLE IRA contribution for the year, or (2) a non-elective
contribution equal to 2 percent of your compensation for the year (up to
$210,000 of compensation, as may be adjusted for inflation in future years). No
other contributions may be made to a SIMPLE IRA.
3. Employee elective contributions and employer contributions (i.e.,
matching contributions and nonelective contributions) to your SIMPLE IRA are
excluded from your gross income.
4. To the extent an individual with a SIMPLE IRA is no longer participating
in a SIMPLE plan (e.g., the individual has terminated employment), and two years
have passed since the individual first participated in the plan, the individual
may treat the SIMPLE IRA as an IRA.
G. TAX STATUS OF THE CONTRACT AND DISTRIBUTIONS FOR IRAS AND SIMPLE IRAS
1. Earnings of your IRA annuity contract are not taxed until they are
distributed to you.
2. In general, taxable distributions are included in your gross income in
the year you receive them.
3. Distributions under your IRA are non-taxable to the extent they
represent a return of non-deductible contributions (if any). The non-taxable
percentage of a distribution is determined generally by dividing your total
undistributed, non-deductible IRA contributions by the value of all your IRAs
(including SEPs and rollovers).
4. You cannot choose the special five-year or ten-year averaging that may
apply to lump sum distributions from qualified employer plans.
H. REQUIRED DISTRIBUTIONS FOR IRAS AND SIMPLE IRAS
You must start receiving minimum distributions required under the Contract
and Section 401(a)(9) of the Code from your IRA and SIMPLE IRA starting with the
year you reach age 70 1/2 (your 70 1/2 year). Ordinarily, the required minimum
distribution for a particular year must be received by December 31 of
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that year. However, you may delay the required minimum distribution for the year
you reach age 70 1/2 until April 1 of the following year (i.e., the required
beginning date).
Annuity payments which begin by April 1 of the year following your 70 1/2
year satisfy the minimum distribution requirement if they provide for
non-increasing payments over your life or the lives of you and your designated
Beneficiary (within the meaning of Section 401(a)(9) of the Code), provided
that, if installments are guaranteed, the guaranty period does not exceed the
applicable life or joint expectancy.
The applicable life expectancy is your remaining life expectancy or the
remaining joint life and last survivor expectancy of you and your designated
Beneficiary, determined as set forth in applicable federal income tax
regulations.
If you have more than one IRA, you must determine the required minimum
distribution separately for each IRA; however, you can take the actual
distributions of these amounts from any one or more of your IRAs.
In addition, the after-death minimum distribution requirements described
generally in section B. STATUTORY REQUIREMENTS apply to IRAs and SIMPLE IRAs.
If the actual distribution from your Contract is less than the minimum
amount that should be distributed in accordance with the minimum distribution
requirements mentioned above, the difference generally is an excess
accumulation. There is a 50% excise tax on any excess accumulations. If the
excess accumulation is due to reasonable error, and you have taken (or are
taking) steps to remedy the insufficient distribution, you can request that this
50% excise tax be excused by filing with your tax return an IRS Form 5329,
together with a letter of explanation and the excise tax payment.
I. ROTH IRAS
1. If your Contract is a special type of individual retirement plan known
as a Roth IRA, it will be administered in accordance with the requirements of
section 408A of the Code. Roth IRAs are treated the same as other IRAs, except
as described here.
2. If your Contract is a Roth IRA, we will send you a Roth IRA endorsement
to be attached to, and to amend, your Contract. The Company reserves the right
to amend the Contract as necessary or advisable from time to time to comply with
future changes in the Code, regulations or other requirements imposed by the IRS
to obtain or maintain its approval of the annuity as a Roth IRA.
3. Earnings in your Roth IRA are not taxed until they are distributed to
you, and will not be taxed if they are paid as a "qualified distribution," as
described to you in section L, below.
4. The minimum distribution requirements that apply to IRAs do not apply to
Roth IRAs while the Owner is alive. However, after the death of a Roth IRA
Owner, the after-death minimum distribution rules that apply to IRAs also apply
to Roth IRAs as though the Roth IRA Owner died before his or her required
beginning date. You may not use your Roth IRA to satisfy minimum distribution
requirements for traditional IRAs. Nor may you use distributions from an IRA for
required distributions from a Roth IRA.
J. ELIGIBILITY AND CONTRIBUTIONS FOR ROTH IRAS
1. Generally, you are eligible to establish or make a contribution to your
Roth IRA only if you meet certain income limits. No deduction is allowed for
contributions to your Roth IRA. Contributions to your Roth IRA may be made even
after you attain age 70 1/2.
2. The maximum aggregate amount of contributions for any taxable year to
all IRAs, including all Roth IRAs, maintained for your benefit (the
"contribution limit") generally is the lesser of (1) 100% of your compensation,
or (2) the maximum annual contributions under Section 219(b) of the Code,
including "catch-up" contributions for certain individuals age 50 and older (as
discussed in section D, above).
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The contribution limit for any taxable year is reduced (but not below zero)
by the amount which bears the same ratio to such amount as:
(a) the excess of (i) your adjusted gross income for the taxable year,
over (ii) the "applicable dollar amount," bears to
(b) $15,000 (or $10,000 if you are married).
For this purpose, "adjusted gross income" is determined under the Code and
(1) excludes any amount included in gross income as a result of any rollover
from, transfer from, or conversion of an IRA to a Roth IRA, and (2) is reduced
by any deductible IRA contribution. In addition, the "applicable dollar amount"
is equal to $156,000 for a married individual filing a joint return, $0 for a
married individual filing a separate return, and $99,000 for any other
individual. These amounts may be indexed for cost of living increases in future
years.
A "qualified rollover contribution" (discussed in section K, below), and a
non-taxable transfer from another Roth IRA, are not taken into account for
purposes of determining the contribution limit.
K. ROLLOVERS, TRANSFERS AND CONVERSIONS TO ROTH IRAS
1. ROLLOVERS AND TRANSFERS--A rollover may be made to a Roth IRA only if it
is a "qualified rollover contribution." A "qualified rollover contribution" is a
rollover to a Roth IRA from another Roth IRA or from an IRA, but only if such
rollover contribution also meets the rollover requirements for IRAs under
Section 408(d)(3). In addition, a transfer may be made to a Roth IRA directly
from another Roth IRA or from an IRA.
You may not make a qualified rollover contribution or transfer in a taxable
year from an IRA to a Roth IRA if (a) your adjusted gross income for the taxable
year exceeds $100,000 or (b) you are married and file a separate return.
The rollover requirements of Section 408(d)(3) are complex and should be
carefully considered before you make a rollover. One of the requirements is that
the amount received be paid into another IRA (or Roth IRA) within 60 days after
receipt of the distribution. The failure to satisfy this 60-day requirement may
be waived by the Internal Revenue Service in certain circumstances. In addition,
a rollover contribution from a Roth IRA may be made by you only once a year. The
one-year period begins on the date you receive the Roth IRA distribution, not on
the date you roll it over (reinvest it) into another Roth IRA. If you withdraw
assets from a Roth IRA, you may roll over part of the withdrawal tax free into
another Roth IRA and keep the rest of it. A portion of the amount you keep may
be included in your gross income.
2. TAXATION OF ROLLOVERS AND TRANSFERS TO ROTH IRAS--A qualified rollover
contribution or transfer from a Roth IRA maintained for your benefit to another
Roth IRA maintained for your benefit which meets the rollover requirements for
IRAs under Section 408(d)(3) is tax-free.
In the case of a qualified rollover contribution or a transfer from an IRA
maintained for your benefit to a Roth IRA maintained for your benefit, any
portion of the amount rolled over or transferred which would be includible in
your gross income were it not part of a qualified rollover contribution or a
nontaxable transfer will be includible in your gross income. However, Code
Section 72(t) (relating to the 10 percent penalty tax on premature
distributions) will not apply.
3. TRANSFERS OF EXCESS IRA CONTRIBUTIONS TO ROTH IRAS--If, before the due
date of your federal income tax return for any taxable year (not including
extensions), you transfer, from an IRA, contributions for such taxable year (and
earnings thereon) to a Roth IRA, such amounts will not be includible in gross
income to the extent that no deduction was allowed with respect to such amount.
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4. TAXATION OF CONVERSIONS OF IRAS TO ROTH IRAS--All or part of amounts in
an IRA maintained for your benefit may be converted into a Roth IRA maintained
for your benefit. The conversion of an IRA to a Roth IRA is treated as special
type of qualified rollover contribution. Hence, you must be eligible to make a
qualified rollover contribution in order to convert an IRA to a Roth IRA. A
conversion typically will result in the inclusion of some or all of your IRA's
value in gross income, as described above.
A conversion of an IRA to a Roth IRA can be made without taking an actual
distribution from your IRA. For example, an individual may make a conversion by
notifying the IRA issuer or trustee, whichever is applicable.
UNDER SOME CIRCUMSTANCES, IT MIGHT NOT BE ADVISABLE TO ROLLOVER, TRANSFER,
OR CONVERT ALL OR PART OF AN IRA TO A ROTH IRA. WHETHER YOU SHOULD DO SO WILL
DEPEND ON YOUR PARTICULAR FACTS AND CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED
TO, SUCH FACTORS AS WHETHER YOU QUALIFY TO MAKE SUCH A ROLLOVER, TRANSFER, OR
CONVERSION, YOUR FINANCIAL SITUATION, AGE, CURRENT AND FUTURE INCOME NEEDS,
YEARS TO RETIREMENT, CURRENT AND FUTURE TAX RATES, YOUR ABILITY AND DESIRE TO
PAY CURRENT INCOME TAXES WITH RESPECT TO AMOUNTS ROLLED OVER, TRANSFERRED, OR
CONVERTED, AND WHETHER SUCH TAXES MIGHT NEED TO BE PAID WITH WITHDRAWALS FROM
YOUR ROTH IRA (SEE DISCUSSION BELOW OF "NON-QUALIFIED DISTRIBUTIONS"). YOU
SHOULD CONSULT A QUALIFIED TAX ADVISER BEFORE ROLLING OVER, TRANSFERRING, OR
CONVERTING ALL OR PART OF AN IRA TO A ROTH IRA.
5. SEPARATE ROTH IRAS--Due to the complexity of, and proposed changes to,
the tax law, it may be advantageous to maintain amounts rolled over,
transferred, or converted from an IRA in separate Roth IRAs from those
containing regular Roth IRA contributions. For the same reason, you should
consider maintaining a separate Roth IRA for each amount rolled over,
transferred, or converted from an IRA. These considerations should be balanced
against the additional costs you may incur from maintaining multiple Roth IRAs.
You should consult your tax adviser if you intend to contribute rollover,
transfer, or conversion amounts to your Contract, or if you intend to roll over
or transfer amounts from your Contract to another Roth IRA maintained for your
benefit.
L. INCOME TAX CONSEQUENCES OF ROTH IRAS
1. QUALIFIED DISTRIBUTIONS--Any "qualified distribution" from a Roth IRA is
excludible from gross income. A "qualified distribution" is a payment or
distribution which satisfies two requirements. First, the payment or
distribution must be (a) made after you attain 59 1/2, (b) made after your
death, (c) attributable to your being disabled, or (d) a "qualified special
purpose distribution" (i.e., a qualified first-time homebuyer distribution under
the Code). Second, the payment or distribution must be made in a taxable year
that is at least five years after (1) the first taxable year for which a
contribution was made to any Roth IRA established for you, or (2) in the case of
a rollover from, or a conversion of, an IRA to a Roth IRA, the taxable year in
which the rollover or conversion was made if the payment or distribution is
allocable (as determined in the manner set forth in guidance issued by the IRS)
to the rollover contribution or conversion (or to income allocable thereto).
2. NONQUALIFIED DISTRIBUTIONS--A distribution from a Roth IRA which is not
a qualified distribution is taxed under Code Section 72 (relating to annuities),
except that such distribution is treated as made first from contributions to the
Roth IRA to the extent that such distribution, when added to all previous
distributions from the Roth IRA, does not exceed the aggregate amount of
contributions to the Roth IRA. For purposes of determining the amount taxed, (a)
all Roth IRAs established for you will be treated as one contract, (b) all
distributions during any taxable year from Roth IRAs established for you will be
treated as one distribution, and (c) the value of the contract, income on the
contract, and investment in the contract, if applicable, will be computed as of
the close of the calendar year in which the taxable year begins.
An additional tax of 10% is imposed on nonqualified distributions
(including amounts deemed distributed as the result of a prohibited loan or use
of your Roth IRA as security for a loan) made before the benefited individual
has attained age 59 1/2, unless one of the exceptions discussed in Section N
applies.
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M. TAX ON EXCESS CONTRIBUTIONS
1. You must pay a 6% excise tax each year on excess contributions that
remain in your Contract. Generally, an excess contribution is the amount
contributed to your Contract that is more than you can contribute. The excess is
taxed for the year of the excess contribution and for each year after that until
you correct it. If contributions to your IRA for a year are more than the
contribution limit, you can apply the excess contribution in one year to a later
year if the contributions for that later year are less than the maximum allowed
for that year.
2. You will not have to pay the 6% excise tax if you withdraw the excess
amount by the date your tax return is due including extensions for the year of
the contribution. You do not have to include in your gross income an excess
contribution that you withdraw from your Contract before your tax return is due
if the income earned on the excess was also withdrawn and no deduction was
allowed for the excess contribution. You must include in your gross income the
income earned on the excess contribution.
N. TAX ON PREMATURE DISTRIBUTIONS
There is an additional tax on premature distributions from your IRA, Roth
IRA, or SIMPLE IRA, equal to 10% of the taxable amount. For premature
distributions from a SIMPLE IRA made within the first 2 years you participate in
a SIMPLE plan, the additional tax is equal to 25% of the amount of the premature
distribution that must be included in gross income. Premature distributions are
generally amounts you withdraw before you are age 59 1/2. However, the tax on
premature distributions does not apply generally:
1. To amounts that are rolled over or transferred tax free;
2. To a distribution which is made on or after your death, or on
account of you being disabled within the meaning of Code Section 72(m)(7);
3. To a distribution which is part of a series of substantially equal
periodic payments (made at least annually) over your life or your life
expectancy or the joint life or joint life expectancy of you and your
Beneficiary;
4. To a distribution which is used for qualified first-time homebuyer
expenses, qualified higher education expenses, certain medical expenses, or
by an unemployed individual to pay health insurance premiums; or
5. To a distribution mode during a specified time period to a
reservist who is called or ordered to active duty for a period in excess of
170 days or for an indefinite period.
O. EXCISE TAX REPORTING
Use Form 5329, Additional Taxes Attributable to Qualified Retirement Plans
(Including IRAs), Annuities, and Modified Endowment Contracts, to report the
excise taxes on excess contributions, premature distributions, and excess
accumulations. If you do not owe any IRA, SIMPLE IRA or Roth IRA excise taxes,
you do not need Form 5329. Further information can be obtained from any district
office of the Internal Revenue Service.
P. BORROWING
If you borrow money against your Contract or use it as security for a loan,
the Contract will lose its classification as an IRA, Roth IRA, or SIMPLE IRA,
whichever is applicable, and you must include in gross income the fair market
value of the Contract as of the first day of your tax year. In addition, you may
be subject to the tax on premature distributions described above. (Note: The
Contract does not allow borrowings against it, nor may it be assigned or pledged
as collateral for a loan.)
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Q. REPORTING
We will provide you with any reports required by the Internal Revenue
Service.
R. ESTATE TAX
Generally, the value of your IRA, including your Roth IRA, is included in
your gross estate for federal estate tax purposes.
S. FINANCIAL DISCLOSURE
1. If on the enrollment application you indicated an allocation to a
Subaccount, this Contract will be assessed a daily charge of an amount which
will equal an aggregate of 1.30% per annum for Periodic Payment Contracts.
2. An annual Contract Fee of $30.00 will be assessed against the Separate
Account Value each Contract Year.
3. Withdrawal charges will be assessed based on the Contract Years elapsed
since the Contract was issued as described in the prospectus under the heading
"Withdrawal Charge."
4. The method used to compute and allocate the annual earnings is contained
in the Prospectus under the heading "Accumulation Unit Value" for Separate
Account Contract Value
5. The growth in value of your Contract is neither guaranteed nor projected
but is based on the investment experience of the Separate Account or rates of
interest as declared by Commonwealth Annuity.
GUARANTEED LUMP SUM TERMINATION OF DEFERRED FIXED AND VARIABLE ANNUITY
COMPLETELY ALLOCATED TO THE FIXED ACCOUNT WITH 2% GUARANTEED EACH YEAR FOR THE
FIRST TEN YEARS AND 3% THEREAFTER. (TERMINATION VALUES ARE BASED ON $1,000
ANNUAL CONTRIBUTIONS AT THE BEGINNING OF EACH YEAR.)
<Table>
<Caption>
END OF TERMINATION END OF TERMINATION END OF TERMINATION END OF TERMINATION
YEAR VALUES* YEAR VALUES* YEAR VALUES* YEAR VALUES*
------ ----------- ------ ----------- ------ ----------- ------ -----------
1 928 9 9,424 17 20,750 25 35,235
2 1,891 10 10,607 18 22,379 26 37,299
3 2,881 11 11,929 19 24,057 27 39,424
4 3,899 12 13,292 20 25,785 28 41,614
5 4,945 13 14,696 21 27,565 29 43,868
6 6,021 14 16,142 22 29,398 30 46,191
7 7,128 15 17,633 23 31,287
8 8,264 16 19,168 24 33,232
</Table>
* Includes applicable withdrawal charges
GUARANTEED LUMP SUM TERMINATION OF DEFERRED FIXED AND VARIABLE ANNUITY
COMPLETELY ALLOCATED TO THE FIXED ACCOUNT WITH 2% GUARANTEED EACH YEAR FOR THE
FIRST TEN YEARS AND 3% THEREAFTER. (TERMINATION VALUES ARE BASED ON $5,000
SINGLE PREMIUM.)
<Table>
<Caption>
END OF TERMINATION END OF TERMINATION END OF TERMINATION END OF TERMINATION
YEAR VALUES* YEAR VALUES* YEAR VALUES* YEAR VALUES*
------ ----------- ------ ----------- ------ ----------- ------ -----------
1 4,788 9 5,671 17 6,844 25 8,401
2 4,901 10 5,754 18 7,019 26 8,622
3 5,017 11 5,896 19 7,200 27 8,851
4 5,136 12 6,043 20 7,385 28 9,086
5 5,258 13 6,194 21 7,577 29 9,328
6 5,382 14 6,349 22 7,774 30 9,578
</Table>
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<Table>
7 5,509 15 6,510 23 7,976
8 5,589 16 6,675 24 8,185
</Table>
* Includes applicable withdrawal charges
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APPENDIX B
GLWB RIDER - EXAMPLE #1
THIS EXAMPLE ILLUSTRATES THE SETTING OF INITIAL AMOUNTS, THE IMPACT OF BONUSES
AND STEP-UPS, THE IMPACT OF ADDITIONAL PURCHASE PAYMENTS, THE IMPACT OF
NON-EXCESS AND EXCESS WITHDRAWALS, AND THE CALCULATION OF THE GLWB RIDER DEATH
BENEFIT
The values shown below assume that:
-- a Contract is issued with an initial Purchase Payment of $100,000 and no
premium taxes apply
-- the Covered Person (or oldest Covered Person in the case of GLWB Plus For
Two) is exact age 55 on the Date of Issue
-- the Covered Person (or both surviving Covered Persons in the case of GLWB
Plus For Two) lives until the beginning of the 17th Contract Year
-- we do not exercise our right to increase the GLWB Rider charge on the
effective date of any Step-Up of the Lifetime Income Base
The values in the shaded lines below are middle of year values (after the impact
of the each assumed transaction). All other values are beginning of the year.
<Table>
<Caption>
HYPOTHETICAL HYPOTHETICAL
CONTRACT CONTRACT
AGE OF VALUE VALUE
CONTRACT COVERED PURCHASE GROSS BEFORE AFTER
LINE YEAR PERSON PAYMENT WITHDRAWAL TRANSACTION TRANSACTION
---- -------- -------------- -------- ---------- ------------ ------------
(1) 1 55 $100,000 $0 $100,000
(2) 2 56 95,000 95,000
(3) 3 57 110,000 110,000
(4) 4 58 117,500 117,500
(5) 4 Transaction #1 25,000 110,000 135,000
(6) 5 59 130,000 130,000
(7) 6 60 115,000 115,000
(8) 7 61 110,000 110,000
(9) 7 Transaction #2 6,250 118,750 112,500
(10) 8 62 115,000 115,000
(11) 9 63 117,500 117,500
(12) 9 Transaction #3 10,000 125,000 115,000
(13) 10 64 125,000 125,000
(14) 11 65 135,000 135,000
(15) 12 66 150,000 150,000
(16) 13 67 135,000 135,000
(17) 13 Transaction #4 7,500 122,500 115,000
(18) 14 68 105,000 105,000
(19) 15 69 110,000 110,000
(20) 16 70 90,000 90,000
(21) 16 Transaction #5 10,000 75,000 65,000
(22) 17 71 80,000 80,000
<Caption>
LIFETIME CONTRACT
GUARANTEED INCOME VALUE ON LIFETIME GUARANTEED LIFETIME
WITHDRAWAL BASE STEP-UP INCOME WITHDRAWAL INCOME
LINE BALANCE BONUS DATE BASE AMOUNT AMOUNT
---- ---------- -------- -------- -------- ---------- --------
(1) $100,000 na na $100,000 $5,000 na
(2) 100,000 5,000 na 105,000 5,000 na
(3) 100,000 5,000 na 110,000 5,000 na
(4) 100,000 5,000 117,500 117,500 5,000 na
(5) 125,000 na na 142,500 6,250 na
(6) 125,000 6,250 na 148,750 6,250 na
(7) 125,000 6,250 na 155,000 6,250 na
(8) 125,000 6,250 110,000 161,250 6,250 na
(9) 118,750 na na 155,000 6,250 na
(10) 118,750 na na 155,000 6,250 na
(11) 118,750 na na 155,000 6,250 na
(12) 108,750 na na 142,600 5,750 na
(13) 108,750 na 125,000 142,600 5,750 na
(14) 108,750 na 135,000 142,600 na 7,130
(15) 108,750 na 150,000 150,000 na 7,500
(16) 108,750 na 135,000 150,000 na 7,500
(17) 101,250 na na 150,000 na 7,500
(18) 101,250 na 105,000 150,000 na 7,500
(19) 101,250 na 110,000 150,000 na 7,500
(20) 101,250 na 90,000 150,000 na 7,500
(21) 87,750 na na 130,000 na 6,500
(22) 87,750 na 80,000 130,000 na 6,500
</Table>
SETTING OF INITIAL AMOUNTS
Line (1) -- On the Date of Issue, the Contract Value is equal to the initial
Purchase Payment of $100,000. The initial Guaranteed Withdrawal
Balance and Lifetime Income Base are set equal to the initial
Purchase Payment of $100,000. The Guaranteed Withdrawal Amount is set
equal to the 5% of the Guaranteed Withdrawal Balance (5% x $100,000 =
$5,000). The Lifetime Income Amount is not calculated prior to the
Lifetime Income Date
DETERMINATION OF LIFETIME INCOME DATE
=> The Lifetime Income Date is the Contract Anniversary on or after the
Covered Person (or oldest Covered Person in the case of GLWB Plus for
Two) reaches age 65, or the Date of Issue if the Covered Person (or
oldest Covered Person in the case of GLWB Plus for Two) is age 65 or
older on the Date of Issue.
Line (14) In this example the Lifetime Income Date is the first day of the 11th
Contract Year.
102
<Page>
BONUSES & STEP-UPS
=> The Bonus Period lasts until the earlier of the 10th Contract
Anniversary or the Contract Anniversary immediately following the
Contract Year in which the Covered Person (or older original Covered
Person in the case of GLWB Plus for Two) reaches age 80. No Bonuses
will be applied after a withdrawal is taken.
=> The Step-Up Period begins on the Date of Issue and ends on the
Contract Anniversary immediately following the Contract Year
in which the Covered Person (or older original Covered Person
in the case of GLWB Plus For Two) reaches age 90. During the
Step-Up Period, Step-Up dates are scheduled for the 3rd, 6th, and
9th Contract Anniversary and everyContract Anniversary thereafter
and the Lifetime Income Date.
Line(2) Since no withdrawals have been taken and the Covered Person is within
the Bonus Period, the Lifetime Income Base is increased for a Bonus.
The Bonus is equal to 5% of total Purchase Payments (= 5% x $100,000
= $5,000). The new Lifetime Income Base after the Bonus is equal to
$105,000 (= $100,000 + $5,000). The Guaranteed Withdrawal Amount does
not change after a Bonus is applied
Line (4) The 3rd Contract Anniversary is a Step-Up Date and the Contract Value
($117,500) exceeds the Lifetime Income Base after the Bonus is
applied ($115,000), so the Lifetime Income Base is Stepped-Up to the
Contract Value. Note that the Bonus is applied before we determine if
a Step-Up applies.
Line (8) The Contract Value ($110,000) is lower than the Lifetime Income Base
after the Bonus is applied ($155,000 + $6,250 = $161,250) so the
Lifetime Income Base is not Stepped-Up.
Line (15) The Contract Value ($150,000) is higher than the Lifetime Income Base
($142,600) so the Lifetime Income Base is Stepped-Up to equal the
Contract Value. The Lifetime Income Amount is increased to equal 5%
of the new Lifetime Income Base (= 5% x $150,000 = $7,500).
TRANSACTION #1 - IMPACT OF AN ADDITIONAL PURCHASE PAYMENT
Line (5) -- We increase the Guaranteed Withdrawal Balance and Lifetime Income
Base by the amount of an additional Purchase Payment when we receive
it. The Guaranteed Withdrawal Balance after the additional Purchase
Payment is equal to $125,000 (= $100,000 + $25,000). The Lifetime
Income Base after the additional Purchase Payment equals $125,000 (=
$100,000 = $25,000)
-- The Guaranteed Withdrawal Amount is recalculated to equal the
greater of (a) the Guaranteed Withdrawal Amount immediately before
the Purchase Payment; or (b) 5% of the Guaranteed Withdrawal Balance
immediately after the Purchase Payment. This is equal to $6,250
which is the greater of (a) = $5,000 or (b) = 5% x $125,000 = $6,250
TRANSACTION #2 - IMPACT OF A NON-EXCESS WITHDRAWAL TAKEN PRIOR TO THE LIFETIME
INCOME DATE
=> Prior to the Lifetime Income Date, the Guaranteed Withdrawal Amount
is used for the purpose of determining whether a Gross Withdrawal is
a Non-Excess Withdrawal or Excess Withdrawal
Line (9) A Gross Withdrawal of $6,250 is taken in the middle of the 7th
Contract Year. Since the Gross Withdrawal does not cause total Gross
Withdrawals taken during the Contract Year to exceed the Guaranteed
Withdrawal Amount ($6,250), the Gross Withdrawal is classified as a
Non-Excess Withdrawal. According to the terms of the GLWB Rider,
amounts are adjusted for a Non-Excess Withdrawal taken prior to the
Lifetime Income Date, as follows:
-- The new Guaranteed Withdrawal Balance equals the Guaranteed
Withdrawal Balance prior to the withdrawal minus the amount of the
withdrawal ($118,750 = $125,000 - $6,250).
-- The new Lifetime Income Base is equal to the greater of (a) the
Lifetime Income Base immediately prior to the withdrawal minus the
amount of the withdrawal or (b) the Lifetime Income Base immediately
prior to the withdrawal multiplied by the Proportional Reduction
Factor*. This is equal to $155,000 which is the greater of (a) =
$161,250 - $6,250 = $155,000 or (b) = $161,250 x ($112,500 /
$118,750) = $152,763.
-- There is no change to the Guaranteed Withdrawal Amount
* The Proportional Reduction Factor is equal to the Contract Value
after the withdrawal divided by the Contract Value immediately prior
to the withdrawal (= $112,500 / $118,750)
Line (9) No future Bonuses will be applied to the Lifetime Income Base after
this withdrawal
103
<Page>
TRANSACTION #3 - IMPACT OF AN EXCESS WITHDRAWAL TAKEN PRIOR TO THE LIFETIME
INCOME DATE
Line (12) A Gross Withdrawal of $10,000 is taken in the middle of the 9th
Contract Year. Since the Gross Withdrawal exceeds the Guaranteed
Withdrawal Amount ($6,250), the Gross Withdrawal is classified as an
Excess Withdrawal. According to the terms of the GLWB Rider, amounts
are adjusted for an Excess Withdrawal taken prior to the Lifetime
Income Date, as follows:
-- The new Guaranteed Withdrawal Balance is equal to the lesser of
(a) the Guaranteed Withdrawal Balance immediately prior to the
withdrawal minus the amount of the withdrawal or (b) the Guaranteed
Withdrawal Balance immediately prior to the withdrawal multiplied by
the Proportional Reduction Factor*. This is equal to $108,750 which
is the lesser of (a) = $118,750 - $10,000 = $108,750 or (b) =
$118,750 x ($115,000 / $125,000) = $109,250.
-- The new Lifetime Income Base is equal to the Lifetime Income Base
immediately prior to the withdrawal multiplied by the Proportional
Reduction Factor ($155,000 x ($115,000 / $125,000) = $142,600). Note
that the Lifetime Income Base decreases by more than the amount of
the withdrawal.
-- The new Guaranteed Withdrawal Amount is equal to the Guaranteed
Withdrawal Amount immediately prior to the withdrawal multiplied by
the Proportional Reduction Factor ($6,250 x ($115,000 / $125,000) =
$5,750)
* The Proportional Reduction Factor is equal to the Contract Value
after the withdrawal divided by the Contract Value immediately prior
to the withdrawal (= $115,000 / $125,000)
TRANSACTION #4 - IMPACT OF A NON-EXCESS WITHDRAWAL TAKEN ON OR AFTER THE
LIFETIME INCOME DATE
=> On and after the Lifetime Income Date, the Lifetime Income Amount is
used for the purpose of determining whether a Gross Withdrawal is a
Non-Excess Withdrawal or Excess Withdrawal
Line (9) A Gross Withdrawal of $7,500 is taken in the middle of the 13th
Contract Year. Since the Gross Withdrawal does not cause total Gross
Withdrawals taken during the Contract Year to exceed the Lifetime
Income Amount ($7,500), the Gross Withdrawal is classified as a
Non-Excess Withdrawal. According to the terms of the GLWB Rider,
amounts are adjusted for a Non-Excess Withdrawal taken on or after
the Lifetime Income Date, as follows:
-- The new Guaranteed Withdrawal Balance equals the Guaranteed
Withdrawal Balance prior to the withdrawal minus the amount of the
withdrawal ($101,250 = $108,750 - $7,500).
-- There is no change to the Lifetime Income Base
-- There is no change to the Lifetime Income Amount
TRANSACTION #5 - IMPACT OF AN EXCESS WITHDRAWAL TAKEN ON OR AFTER THE LIFETIME
INCOME DATE
Line (12) A Gross Withdrawal of $10,000 is taken in the middle of the 16th
Contract Year. Since the Gross Withdrawal exceeds the Lifetime Income
Amount ($7,500), the Gross Withdrawal is classified as an Excess
Withdrawal. According to the terms of the GLWB Rider, amounts are
adjusted for an Excess Withdrawal taken on or after the Lifetime
Income Date, as follows:
-- The new Guaranteed Withdrawal Balance is equal to the lesser of
(a) the Guaranteed Withdrawal Balance immediately prior to the
withdrawal minus the amount of the withdrawal or (b) the Guaranteed
Withdrawal Balance immediately prior to the withdrawal multiplied by
the Proportional Reduction Factor*. This is equal to to $87,750 which
is the lesser of (a) = $101,250 - $10,000 = $91,250 or (b) = $101,250
x ($65,000 / $75,000) = $87,750. Note that the Guaranteed Withdrawal
Balance decreases by more than the amount of the withdrawal
-- The new Lifetime Income Base is equal to the Lifetime Income Base
immediately prior to the withdrawal multiplied by the Proportional
Reduction Factor ($150,000 x ($65,000 / $75,000) = $130,000). Note
that Lifetime Income Base decreases by more than the amount of the
withdrawal
-- The new Lifetime Income Amount is equal to 5% of the new Lifetime
Income Base (5% x $130,000 = $6,500)
* The Proportional Reduction Factor is equal to the Contract Value
after the withdrawal divided by the Contract Value immediately prior
to the withdrawal (= $65,000 / $75,000)
GLWB RIDER DEATH BENEFIT
=> The GLWB Rider Death Benefit may be payable on an Owner's death in
certain situations identified in the GLWB Rider. If the GLWB Rider
Death Benefit is payable, we will pay (or apply) the GLWB Rider Death
Benefit instead of the standard death benefit or any optional death
benefit elected, if the GLWB Rider Death Benefit is greater.
=> The GLWB Rider Death Benefit is equal to the greater of (a) or (b),
less any premium taxes, where:
(a) = the Contract Value on the Valuation Date we receive due proof
of death; and
(b) = the Guaranteed Withdrawal Balance on the Valuation Date we
receive due proof of death
Line (14) If we were to receive due proof of death of an Owner's death on the
11th Contract Anniversary AND the GLWB Rider Death Benefit is payable
on such Owner's death in a situation identified in the GLWB Rider:
-- The GLWB Rider Death Benefit would be equal to $135,000 which is
the greater of (a) the Contract Value ($135,000) or (b) the
Guaranteed Withdrawal Balance ($108,750)
Line (20) If we were to receive due proof of death of an Owner's death on
the 16th Contract Anniversary AND the GLWB Rider Death Benefit is
payable on such Owner's death in a situation identified in the GLWB
Rider:
-- The GLWB Rider Death Benefit would be equal to $101,250 which is
the greater of (a) the Contract Value ($90,000) or (b) the Guaranteed
Withdrawal Balance ($101,250)
104
<Page>
Appendix C
GLWB RIDER - EXAMPLE #2
THIS EXAMPLE ILLUSTRATES A SITUATION WHERE THE BENEFIT PHASE START DATE OCCURS
PRIOR TO THE LIFETIME INCOME DATE
The values shown below assume that:
- a Contract is issued with an initial Purchase Payment of $150,000 and no
premium taxes apply
- the Covered Person (or oldest Covered Person in the case of GLWB Plus For
Two) is exact age 55 on the Date of Issue
- the Covered Person (or both surviving Covered Persons in the case of GLWB
Plus For Two) lives until the Benefit Period Start Date
- Non-Excess Withdrawals equal to the Guaranteed Withdrawal Amount are taken
in the middle of each Contract Year
<Table>
<Caption>
BEGINNING OF YEAR VALUES
----------------------------------------------------------------------------
LIFETIME CONTRACT
AGE OF HYPOTHETICAL GUARANTEED INCOME VALUE ON LIFETIME GUARANTEED
CONTRACT COVERED PURCHASE CONTRACT WITHDRAWAL BASE STEP-UP INCOME WITHDRAWAL
LINE YEAR PERSON PAYMENT VALUE BALANCE BONUS DATE BASE AMOUNT
---- -------- ------- -------- ------------ ---------- -------- -------- -------- ----------
(1) 1 55 $150,000 $150,000 $150,000 na na $150,000 $7,500
(2) 2 56 127,000 142,500 na na 142,500 7,500
(3) 3 57 111,000 135,000 na na 135,000 7,500
(4) 4 58 95,000 127,500 na 95,000 127,500 7,500
(6) 5 59 67,000 120,000 na na 120,000 7,500
(7) 6 60 30,000 112,500 na na 112,500 7,500
(8) 7 61 18,000 105,000 na 18,000 105,000 7,500
(10) 8 62 11,000 97,500 na na 97,500 7,500
(11) 9 3,000 90,000 na na na na
(12) Benefit Period Start Date
(13) Benefit Period Start Date + 1 Month
(14) Benefit Period Start Date + 2 Months
(15) etc
<Caption>
MIDDLE OF YEAR VALUES BENEFIT PHASE
------------------------ ----------------------
HYPOTHETICAL
CONTRACT
VALUE MONTHLY GUARANTEED
BEFORE GROSS SETTLEMENT WITHDRAWAL
LINE WITHDRAWAL WITHDRAWAL PAYMENT BALANCE
---- ------------ ---------- ---------- ----------
(1) $138,500 7,500 na
(2) 119,000 7,500 na
(3) 103,000 7,500 na
(4) 81,000 7,500 na
(6) 48,500 7,500 na
(7) 24,000 7,500 na
(8) 14,500 7,500 na
(10) 10,000 7,500 na
(11) 2,300 2,300 na $87,700
(12) 5,825 81,875
(13) 625 81,250
(14) 625 80,625
(15)
</Table>
SETTING OF INITIAL AMOUNTS
Line (1) -- On the Date of Issue, the Contract value is equal to the initial
Purchase Payment of $150,000. The initial Guaranteed Withdrawal
Balance and Lifetime Income Base are set equal to the initial
Purchase Payment of $150,000. The Guaranteed Withdrawal Amount is
set equal to the 5% of the Guaranteed Withdrawal Balance (5% x
$150,000 = $7,500). The Lifetime Income Amount is not calculated
prior to the Lifetime Income Date so it is not shown above
-- In this example, the Lifetime Income Date would be the first day
of the 11th Contract Year (the Contract Anniversary on or after the
Covered Person (or oldest Covered Person in the case of GLWB Plus
for Two) reaches age 65)
BONUSES & STEP-UPS
Line (2) No Bonuses are applied to the Lifetime Income Base in this example
because a withdrawal is taken in the 1st Contract Year (no future
Bonuses are applied to the Lifetime Income Base after a withdrawal).
Line (4) The Contract Value on the 3rd Contract Anniversary (a scheduled
Step-Up Date that is within the Step-Up Period) is less than the
Lifetime Income Base so the Lifetime Income Base is not Stepped-Up.
BENEFIT PHASE START DATE
Line (11) -- A Gross Withdrawal of $2,300 is taken in the middle of the 9th
Contract Year reducing the Contract Value to zero. This withdrawal
is a Non-Excess Withdrawal because it does not cause total Gross
Withdrawals taken during the Contract Year to exceed the Guaranteed
Withdrawal Amount ($7,500). The Guaranteed Withdrawal Balance is
reduced by the amount of the Gross Withdrawal ($90,000 - $2,300 =
$87,700).
-- The Contract enters the Benefit Phase because the Contract Value
has been reduced to zero due to a Non-Excess Withdrawal and the
remaining Guaranteed Withdrawal Balance is greater than zero. The
date that the Contract enters the Benefit Phase is called the
Benefit Phase Start Date. The GLWB Rider is terminated on the
Benefit Phase Start Date; the remaining Guaranteed Withdrawal
Balance and Guaranteed Withdrawal Amount are stored for use in the
Benefit Phase. All other GLWB Rider amounts cease to exist on the
Benefit Phase Start Date because the GLWB Rider is terminated.
Line (12) -- The remaining Guaranteed Withdrawal Balance immediately following
the final Gross Withdrawal is greater than $2,000. Therefore, the
first monthly Settlement Payment is equal $5,825 which is the lesser
of (a) the Guaranteed Withdrawal Amount minus total Gross
Withdrawals taken during the current Contract Year plus the
Guaranteed Withdrawal Amount divided by twelve, ($7,500 - $2,300 +
$7,500 / 12 = $5,825) or (b) the remaining Guaranteed Withdrawal
Balance ($87,700). The remaining Guaranteed Withdrawal Balance after
the first monthly Settlement Payment is equal to remaining
Guaranteed Withdrawal Balance after the final Gross Withdrawal minus
the amount of the first monthly Settlement Payment ($81,875 =
$87,700 - $5,825)
-- Note that the total amount received on the Benefit Phase Start
Date ($8,125) is equal to the amount of the final Gross Withdrawal
($2,300) plus the first monthly Settlement Payment ($5,825)
Line (15) Monthly Settlement Payments will continue until the Guaranteed
Withdrawal Balance is reduced to zero. If the Covered Person dies
before the Guaranteed Withdrawal Balance is reduced to zero, monthly
Settlement Payments will continue to the Beneficiary until the
Guaranteed Withdrawal Balance is reduced to zero
105
<Page>
monthly Settlement Payments will continue to the Beneficiary until the
Guaranteed Withdrawal Balance is reduced to zero
106
<Page>
Appendix D
GLWB RIDER - EXAMPLE #3
THIS EXAMPLE ILLUSTRATES A SITUATION WHERE THE BENEFIT PHASE START DATE OCCURS
AFTER THE LIFETIME INCOME DATE
The values shown below assume that:
- a Contract is issued with an initial Purchase Payment of $120,000 and no
premium taxes apply
- the Covered Person (or oldest Covered Person in the case of GLWB Plus For
Two) is exact age 68 on the Date of Issue
- the Covered Person (or both surviving Covered Persons in the case of GLWB
Plus For Two) lives until the Benefit Period Start Date
- Non-Excess Withdrawals equal to the Lifetime Income Amount are taken in the
middle of each Contract Year
<Table>
<Caption>
BEGINNING OF YEAR VALUES
--------------------------------------------------------------------------
LIFETIME CONTRACT
AGE OF HYPOTHETICAL GUARANTEED INCOME VALUE ON LIFETIME LIFETIME
CONTRACT COVERED PURCHASE CONTRACT WITHDRAWAL BASE STEP-UP INCOME INCOME
LINE YEAR PERSON PAYMENT VALUE BALANCE BONUS DATE BASE AMOUNT
---- -------- ------- -------- ------------ ---------- -------- -------- -------- --------
(1) 1 68 $120,000 $120,000 $120,000 na $120,000 $120,000 $6,000
(2) 2 69 122,000 114,000 na na 120,000 6,000
(3) 3 70 111,000 108,000 na na 120,000 6,000
(4) 4 71 95,000 102,000 na 95,000 120,000 6,000
(6) 5 72 67,000 96,000 na na 120,000 6,000
(7) 6 73 30,000 90,000 na na 120,000 6,000
(8) 7 74 18,000 84,000 na 18,000 120,000 6,000
(10) 8 75 11,000 78,000 na na 120,000 6,000
(11) 9 4,000 72,000 na na na na
(12) Benefit Period Start Date
(13) Benefit Period Start Date + 1 Month
(14) Benefit Period Start Date + 2 Months
(15) etc
<Caption>
MIDDLE OF YEAR VALUES BENEFIT PHASE
------------------------ ----------------------
HYPOTHETICAL
CONTRACT
VALUE MONTHLY GUARANTEED
BEFORE GROSS SETTLEMENT WITHDRAWAL
LINE WITHDRAWAL WITHDRAWAL PAYMENT BALANCE
---- ------------ ---------- ---------- ----------
(1) $121,000 $6,000 na
(2) 116,500 6,000 na
(3) 103,000 6,000 na
(4) 81,000 6,000 na
(6) 48,500 6,000 na
(7) 24,000 6,000 na
(8) 14,500 6,000 na
(10) 10,000 6,000 na
(11) 3,800 3,800 na 68,200
(12) 2,700 65,500
(13) 500 65,000
(14) 500 64,500
(15)
</Table>
SETTING OF INITIAL AMOUNTS
Line (1) -- On the Date of Issue, the Contract Value is equal to the initial
Purchase Payment of $120,000. The initial Guaranteed Withdrawal
Balance and Lifetime Income Base are set equal to the initial
Purchase Payment of $120,000. In this example, the Lifetime Income
Date is equal to the Date of Issue as the Covered Person (or oldest
Covered Person in the case of GLWB Plus for Two) is older than age
65 on the Date of Issue. Because the Lifetime Income Date is a
Step-Up Date and the Covered Person is within the Step-Up Period,
the Contract Value is compared to the Lifetime Income Base to see if
a Step-Up applies. The Contract Value ($120,000) and the initial
Lifetime Income Base ($120,000) are the same so a Step-Up does not
occur. The Lifetime Income Amount is set equal to the 5% of the
Lifetime Income Base (5% x $120,000 = $6,000). The Guaranteed
Withdrawal Amount is not calculated on or after the Lifetime Income
Date so it is not shown above.
BONUSES & STEP-UPS
Line (2) No Bonuses are applied to the Lifetime Income Base in this example
because a withdrawal is taken in the 1st Contract Year (no future
Bonuses are applied to the Lifetime Income Base after a withdrawal).
Line (4) The Contract Value on the 3rd Contract Anniversary (a scheduled
Step-Up Date that is within the Step-Up Period) is less than the
Lifetime Income Base so the Lifetime Income Base is not Stepped-Up.
BENEFIT PHASE START DATE
Line (11) -- A Gross Withdrawal of $3,800 is taken in the middle of the 9th
Contract Year reducing the Contract Value to zero. This withdrawal
is a Non-Excess Withdrawal because it does not cause total Gross
Withdrawals taken during the Contract Year to exceed the Lifetime
Income Amount ($6,000). The Guaranteed Withdrawal Balance is reduced
by the amount of the Gross Withdrawal ($72,000 - $2,300 = $68,200).
-- The Contract enters the Benefit Phase because the Contract Value
has been reduced to zero due to a Non-Excess Withdrawal and the
Lifetime Income Amount is greater than zero. The date that the
Contract enters the Benefit Phase is called the Benefit Phase Start
Date. The GLWB Rider is terminated on the Benefit Phase Start Date;
the remaining Guaranteed Withdrawal Balance and Lifetime Income
Amount are stored for use in the Benefit Phase. All other GLWB Rider
amounts cease to exist on the Benefit Phase Start Date because the
GLWB Rider is terminated.
Line (12) -- The first monthly Settlement Payment is equal to the Lifetime
Income Amount minus total Gross Withdrawals taken during the current
Contract Year plus the Lifetime Income Amount divided by twelve.
This is equal to $2,700 (= $6,000 - $3,800 + $6,000 / 12). The
remaining Guaranteed Withdrawal Balance after the first monthly
Settlement Payment is equal to remaining Guaranteed Withdrawal
Balance after the final Gross Withdrawal minus the amount of the
first monthly Settlement Payment ($65,500 = $68,200 - $2,700)
-- Note that the total amount received on the Benefit Phase Start
Date ($6,500) is equal to the amount of the final Gross Withdrawal
($3,800) plus the first monthly Settlement Payment ($2,700)
Line (15) Monthly Settlement Payments will continue until the Covered Person
dies (or the last surviving Covered Person dies in the case of GLWB
Plus for Two). If the Covered Person dies before the Guaranteed
Withdrawal Balance is reduced to zero, monthly Settlement Payments
will continue to the Beneficiary until the Guaranteed Withdrawal
Balance is reduced to zero
107
<Page>
STATEMENT OF ADDITIONAL INFORMATION
[JULY 9], 2007
----------
FLEXIBLE PREMIUM FIXED AND VARIABLE
DEFERRED ANNUITY CONTRACTS
----------
ISSUED BY
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
IN CONNECTION WITH
COMMONWEALTH ANNUITY SEPARATE ACCOUNT A
HOME OFFICE: SERVICE CENTER MAILING ADDRESS:
132 Turnpike Road, Suite 210 P.O. Box 758550
Southborough, MA 01772 Topeka, Kansas 66675-8550
[phone number] [phone number]
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the
Prospectus of the Separate Account dated [July 9], 2007. The Prospectus may be
obtained from Commonwealth Annuity and Life Insurance Company by writing or
calling the Service Center address or telephone number listed above.
TABLE OF CONTENTS
<Table>
PAGE
----
SERVICES TO THE SEPARATE ACCOUNT 2
STATE REGULATION 2
EXPERTS 2
FINANCIAL STATEMENTS 3
FINANCIAL STATEMENTS OF COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
APPENDIX A STATE PREMIUM TAX CHART 110
</Table>
SERVICES TO THE SEPARATE ACCOUNT
Commonwealth Annuity and Life Insurance Company ("Commonwealth Annuity")
maintains the books and records of Commonwealth Annuity Separate Account A (the
"Separate Account"). Commonwealth Annuity holds the assets of the Separate
Account. The assets are kept segregated and held separate and apart from the
general funds of Commonwealth Annuity. Commonwealth Annuity maintains records of
all purchases and redemptions of shares of each Fund by each of the Subaccounts.
All expenses incurred in the operations of the Separate Account, except the
Contract fees and charges described in the Prospectus, are borne by Commonwealth
Annuity.
The independent registered public accounting firm for the Separate Account
is [accounting firm, address].
Because [Distributor] and Commonwealth Annuity Separate Account A were not
in existence as of December 31, 2006, [Distributor] did not receive any
compensation from Commonwealth Annuity Separate Account A in connection with the
sale of the Contracts.
<Page>
STATE REGULATION
Commonwealth Annuity is subject to the laws of Massachusetts governing
insurance companies and to regulation by the Massachusetts Department of
Insurance. An annual statement in a prescribed form is filed with the
Massachusetts Department of Insurance each year. Commonwealth Annuity's books
and accounts are subject to review by the Department of Insurance at all times,
and a full examination of its operations is conducted periodically. Such
regulation does not, however, involve any supervision of management or
investment practices or policies. In addition, Commonwealth Annuity is subject
to regulation under the insurance laws of other jurisdictions in which it may
operate.
EXPERTS
The financial statements of Commonwealth Annuity at December 31, 2006 and
2005, and for each of the three years in the period ended December 31, 2006,
included in this Statement of Additional Information have been audited by [name
of auditor], independent registered public accounting firm, [insert auditor's
address], as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given on the authority of such firm
as experts in accounting and auditing.
FINANCIAL STATEMENTS
This Statement of Additional Information contains financial statements for
Commonwealth Annuity. The financial statements of Commonwealth Annuity should be
considered primarily as bearing on our ability to meet our obligations under the
Contract. The Contracts are not entitled to participate in our earnings,
dividends, or surplus. They should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
Because the Separate Account was not in existence as of December 31, 2006,
we have not included in this Statement of Additional Information financial
statements for the Separate Account.
<Page>
APPENDIX A
STATE PREMIUM TAX CHART
<Table>
<Caption>
RATE OF TAX
-------------------------
QUALIFIED NON-QUALIFIED
STATE PLANS PLANS
------------- --------- -------------
California 0.50%* 2.35%*
Maine -- 2.00%
Nevada -- 3.50%*
South Dakota -- 1.25%**
West Virginia 1.00%* 1.00%*
Wyoming -- 1.00%
</Table>
----------
* Taxes will be assessed when annuity benefits commence. We reserve the right
to deduct taxes earlier if such taxes are assessed by the state.
** The Tax Rate is 0.08% on annuity considerations in excess of $500,000
<Page>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
Financial Statements Included in Part A
None
[Commonwealth Annuity and Life Insurance Company's Consolidated
Balance Sheets at December 31, 2006 and 2005]
[Commonwealth Annuity and Life Insurance Company's Consolidated
Statements of Operations for each of the three years in the
period ended December 31, 2006]
[Commonwealth Annuity and Life Insurance Company's Consolidated
Statements of Shareholders Equity for each of the three years in
the period ended December 31, 2006]
[Commonwealth Annuity and Life Insurance Company's Consolidated
Statements of Comprehensive Income (Loss) for each of the three
years in the period ended December 31, 2006]
[Commonwealth Annuity and Life Insurance Company's Consolidated
Statements of Cash Flows for each of the three years in the
period ended December 31, 2006]
[Commonwealth Annuity and Life Insurance Company's Notes to
Consolidated Financial Statements for the year ended December 31,
2006]
Financial Statements Included in Part C
None
(B) EXHIBITS
EXHIBIT 1 Vote of Board of Directors Authorizing
Establishment of Registrant dated February
9, 2007 was previously filed on March 2,
2007 in the Initial Registration Statement
(File Nos. 333-141045/811-22024), and is
incorporated by reference herein.
EXHIBIT 2 Not Applicable. Pursuant to Rule 26a-2, the
Insurance Company may hold the assets of the
Registrant not pursuant to a trust indenture
or other such instrument.
EXHIBIT 3 (a) Distribution Agreement and [Distributor] is
filed herewith. Form of Distribution
Agreement and [broker/dealer] was previously
filed on March 2, 2007 in the Initial
Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(b) Service Agreement with broker-dealers is
filed herewith. Form of Service Agreement
with broker-dealers was previously filed on
March 2, 2007 in the Initial Registration
Statement (File Nos. 333-141045/811-22024),
and is incorporated by reference herein
EXHIBIT 4 (a) Policy (3038-07) is filed herewith. Form of
Policy was previously filed on March 2, 2007
in the Initial Registration Statement (File
Nos. 333-141045/811-22024), and is
incorporated by reference herein.
<Page>
(b) No Withdrawal Charge Rider (4002-07) is
filed herewith. Form of No Withdrawal Charge
Rider was previously filed on March 2, 2007
in the Initial Registration Statement (File
Nos. 333-141045/811-22024), and is
incorporated by reference herein.
(c) Extended Care Waiver Rider (4009-07)
(Nursing Home Rider Endorsement) is filed
herewith. Form of Nursing Home Rider
Endorsement - Extended Care Waiver on
Application of Withdrawal Charges was
previously filed on March 2, 2007 in the
Initial Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(d) Disability Waiver Rider (4008-07) is filed
herewith. Form of Disability Rider was
previously filed on March 2, 2007 in the
Initial Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(e) Texas Optional Retirement Program Rider
(4010-07) is filed herewith. Form of Texas
Optional Retirement Program Rider was
previously filed on March 2, 2007 in the
Initial Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(f) Qualified Plan Rider (401a) (4011-07) is
filed herewith. Form of Qualified Plan Rider
(401a) was previously filed on March 2, 2007
in the Initial Registration Statement (File
Nos. 333-141045/811-22024), and is
incorporated by reference herein.
(g) Tax Sheltered Annuity Rider (403b) (4012-07)
is filed herewith. Form of Tax Sheltered
Annuity Rider (403b) was previously filed on
March 2, 2007 in the Initial Registration
Statement (File Nos. 333-141045/811-22024),
and is incorporated by reference herein.
(h) GLWB Rider - Single Life - Advantage IV
(4003-07) is filed herewith. Form of GLWB
Rider - Single Life - Advantage IV was
previously filed on March 2, 2007 in the
Initial Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(i) GLWB Rider - Joint Life - Advantage IV
(4004-07) is filed herewith. Form of GLWB
Rider - Joint Life - Advantage IV was
previously filed on March 2, 2007 in the
Initial Registration Statement (File Nos.
333-141045/811-22024), and is incorporated
by reference herein.
(j) ADV IV Step-Up Death Benefit Rider (4001-07)
is filed herewith. Form of Step-Up Rider for
Advantage IV was previously filed on March
2, 2007 in the Initial Registration
Statement (File Nos. 333-141045/811-22024),
and is incorporated by reference herein.
(k) 457 Rider (4013-07) is filed herewith.
EXHIBIT 5 Form of Application (Advantage IV- AD-401) is
filed herewith. Form of Application (Advantage IV
and Preferred Plus) was previously filed on March
2, 2007 in the Initial Registration Statement
(File Nos. 333-141045/811-22024), and is
incorporated by reference herein.
EXHIBIT 6 Articles of Organization and Bylaws, as amended
of the Company, effective as of
<Page>
September 1, 2006 was previously filed on March
2, 2007 in the Initial Registration Statement
(File Nos. 333-141045/811-22024), and is
incorporated by reference herein:
EXHIBIT 7 Not Applicable.
EXHIBIT 8(a) Third Party Agreement (TPA) between Security
Benefit Life Insurance Co, Security Distributors,
Inc and The Goldman Sachs Group, Inc. was
previously filed on February 10, 2006 in
Registrant's Post-Effective Amendment No. 26
(Registration Statement No. 33-39702/811-6293,
and is incorporated by reference herein.
EXHIBIT 8(b) Directors' Powers of Attorney are filed herewith.
EXHIBIT 9 Opinion of Counsel is filed herewith.
EXHIBIT 10 Consent of Independent Registered Public
Accounting Firm is filed herewith.
EXHIBIT 11 None.
EXHIBIT 12 None.
EXHIBIT 13 Schedule for Computation of Performance
Quotations is not applicable.
EXHIBIT 14 Not Applicable.
EXHIBIT 15(a) Form of Amendment dated August 1, 2007 to
the AIM Participation Agreement is filed
herewith.
Amendment dated January 1, 2003 to the AIM
Participation Agreement was previously filed
on April 28, 2003 in Post-Effective
Amendment No. 23 of Registration Statement
No. 33-39702/811-6293, and is incorporated
by reference herein. Form of Amendment #7
dated May 1, 2002 to the AIM Participation
Agreement was previously filed in April 19,
2002 in Post-Effective Amendment No. 22 of
Registration Statement No.
33-39702/811-6293, and is incorporated by
reference herein. Form of Amendment #6 to
the AIM Participation Agreement was
previously filed on April 19, 2001 in
Post-Effective Amendment No. 19 of
Registration Statement No.
33-39702/811-6293, and is incorporated by
reference herein. Form of Amendment to AIM
Participation Agreement was previously filed
in April 2000 in Post-Effective Amendment
No. 19 of Registration Statement No.
33-44830/811-6293 and is incorporated by
reference herein. Participation Agreement
with AIM Variable Insurance Funds, Inc. was
previously filed on August 27, 1998 in
Post-Effective Amendment No. 3 in
Registration Statement No.
333-11377/811-7799, and is incorporated by
reference herein.
EXHIBIT 15(b) Form of Amended and Restated Participation
Agreement among Commonwealth Annuity and
Life Insurance Company, Alliance Capital
Management L.P., and Alliance Fund
Distributors, Inc. is filed herewith.
Exhibit 15(c) Form of Amendment dated August 1, 2007 and
the Amended and Restated Participation
Agreement dated September 25, 2006 with
Franklin Templeton
<Page>
Variable Insurance Products Trust,
Franklin/Templeton Distributors, Inc., and
Commonwealth Annuity and Life Insurance are
filed herewith.
EXHIBIT 15(d) Form of Amendment dated August 1, 2007 to
the Participation Agreement dated January 2,
2006 between Goldman Sachs Variable
Insurance Trust, Goldman, Sachs & Co, and
Allmerica Financial Life Insurance and
Annuity Company is filed herewith.
Participation Agreement dated January 2,
2006 between Goldman Sachs Variable
Insurance Trust, Goldman, Sachs & Co, and
Allmerica Financial Life Insurance and
Annuity Company was previously filed on
April 28, 2006 in Registrant's
Post-Effective Amendment No. 27
(Registration Statement No.
33-39702/811-6293), and is incorporated by
reference herein.
EXHIBIT 15(e) Form of Participation Agreement dated August
1, 2007 with Goldman Sachs Trust is filed
herewith.
EXHIBIT 15(f) Form of Amendment dated August 1, 2007 to
the Participation Agreement with Janus is
filed herewith.
Amendment dated February 25, 2000 to the
Participation Agreement with Janus was
previously filed in April 19, 2002 in
Post-Effective Amendment No. 22 of
Registration Statement No.
33-39702/811-6293, and is incorporated by
reference herein. Participation Agreement
with Janus was previously filed on April 21,
2000 in Post-Effective Amendment No. 1 of
Registration Statement No.
333-87099/811-6293 and is incorporated by
reference herein.
EXHIBIT 15(g) Form of Amendment dated August 1, 2007 to
the Participation Agreement with Oppenheimer
Variable Account Funds is filed herewith.
Amendment dated May 1, 2002 to the
Participation Agreement with Oppenheimer
Variable Account Funds was previously filed
on April 28, 2003 in Post-Effective
Amendment No. 23 of Registration Statement
No. 33-39702/811-6293, and is incorporated
by reference herein. Form of Amendment dated
May 1, 2002 to the Participation Agreement
with Oppenheimer Variable Account Funds was
previously filed in April 19, 2002 in
Post-Effective Amendment No. 22 of
Registration Statement No.
33-39702/811-6293, and is incorporated by
reference herein. Participation Agreement
with Oppenheimer Variable Account Funds was
previously filed on August 27, 1998 in
Post-Effective Amendment No. 3, and is
incorporated by reference herein.
EXHIBIT 15(h) Form of Participation Agreement among
Pioneer Variable Contracts Trust,
Commonwealth Annuity and Lie Insurance
Company, Pioneer Investment Management, Inc.
and Pioneer Funds Distributor, Inc. dated
August 1, 2007 is filed herewith.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The principal business address of most the following Directors and
Officers* is:
85 Broad Street
New York, NY 10004
The principal business address of the other following Directors and
Officers is:
132 Turnpike Road, Suite 210
<Page>
Southborough, MA 01772.
DIRECTORS AND PRINCIPAL OFFICERS OF THE COMPANY
NAME POSITION WITH COMPANY
---- ---------------------
Allan S. Levine* Chairman of the Board
John J. Fowler* Vice President
Michael A. Pirrello Vice President and Chief Financial Officer
Nicholas Helmuth von Moltke* Director, Vice President, and
Chief Operating Officer
J. William McMahon* Director
Donald Mullen* Director
Timothy J. O'Neill* Director
Samuel Ramos* Vice President and Secretary
Michael A. Reardon Director, President, and Chief Executive Officer
Amol Sagun Naik* Vice President and Treasurer
Jane Spanier Grosso Vice President and Controller
Alan Akihiro Yamamura* Vice President and Chief Risk Officer
Margot K. Wallin Vice President and Chief Compliance Officer
ITEM 26. PERSONS UNDER COMMON CONTROL WITH REGISTRANT
<Page>
<Table>
----------------------------
| THE GOLDMAN SACHS GROUP, |
| INC. |
| (Delaware) |
----------------------------
|
|
-----------------------------------------------------------------------------------
--------------------- | |100% | | |
| GOLDMAN, SACHS & |100%| | (a) | | | 100%
| CO. | (a)| -------------------- | ---------------------- | ----------------------------
| (New York) |----| | MLQ, L.L.C. | | | COLUMBIA CAPITAL |100%| | COMMONWEALTH |
--------------------- | | (Delaware) | | | LIFE REINSURANCE |----| | ANNUITY AND LIFE |
| -------------------- | | COMPANY | | | INSURANCE COMPANY |
| | | | (South Carolina) | | | (FORMERLY ALLMERICA |
| | | ---------------------- | | FINANCIAL LIFE INSURANCE |
| GP | | LP | | | AND ANNUITY COMPANY) |
| 1% |--------------- 99% | 100% | | (Massachusetts) |
| | | | ----------------------------
| | | |
--------------------- | -------------------- ---------------------- | ----------------------------
| GOLDMAN SACHS |100%| | MTGLQ INVESTORS, | | CHARLESTON CAPITAL | | | ARROW REINSURANCE |
| ASSET MANAGEMENT, | (a)| | L.P. | | REINSURANCE, L.L.C.| |100%| COMPANY, LIMITED |
| L.P. |----| | (Delaware) | | (South Carolina) | |----| (Bermuda) |
| (Delaware) | | -------------------- ---------------------- | ----------------------------
--------------------- | | |
| | 21.8% |
| | |
---------------------100%| -------------------- ---------------------- | ----------------------------
| GOLDMAN SACHS |(a) | | SPARTA INSURANCE | | GOLDMAN SACHS |100%|100%| ARROW REINSURANCE |
| INTERNATIONAL |----| | HOLDINGS, INC. | | RISK ADVISORS, L.P.|----|----| COMPANY, LIMITED |
| (United Kingdom) | | (Delaware) | | (Delaware) | | | (Bermuda) |
--------------------- -------------------- ---------------------- | ----------------------------
| | |
| 100% |100% |
| | |
-------------------- ---------------------- | ----------------------------
| AMERICAN | | ARROW CAPITAL RISK | |100%| PEARL STREET |
| EMPLOYERS | | SERVICES LIMITED | |----| INSURANCE |
| INSURANCE COMPANY| | (Bermuda) | | | COMPANY, INC. |
| (Massachusetts) | ---------------------- | | (Vermont) |
-------------------- | ----------------------------
|
|
|
---------------------- | ----------------------------
| GOLDMAN SACHS |100%|100%| GOLDMAN SACHS |
| RISK BROKERS, INC. |---------| RISK SERVICES L.L.C. |
| (Delaware) | | (Delaware) |
---------------------- ----------------------------
</Table>
(a) GS Group holds 100% of the equity interest in these subsidiaries through
one or more intermediary holding companies
<Page>
THE GOLDMAN SACHS GROUP, INC.
<Table>
<Caption>
SUBSIDIARY SUB NAME PARENT PARENT NAME OWNER % DOMICILE
--------------------------------------------------------------------------------------------------------------------
0001 Goldman, Sachs & Co. 0006 The Goldman, Sachs & Co. L.L.C 0.20 New York
0001 Goldman, Sachs & Co. 0009 Goldman Sachs Group, Inc. 99.80 New York
0006 The Goldman, Sachs & Co. L.L.C 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0007 The J. Aron Corporation 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0008 J. Aron Holdings, L.P. 0007 The J. Aron Corporation 0.20 Delaware
0008 J. Aron Holdings, L.P. 0009 Goldman Sachs Group, Inc. 99.80 Delaware
0027 Epoch Securities, Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0032 SCADBURY UK LIMITED 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0033 AMAGANSETT UK LIMITED 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0034 SCADBURY ASSETS 0032 SCADBURY UK LIMITED 99.00 United Kingdom
0034 SCADBURY ASSETS 0036 SCADBURY FUNDING LIMITED 1.00 United Kingdom
0035 AMAGANSETT II ASSETS 0033 AMAGANSETT UK LIMITED 100.00 United Kingdom
0036 SCADBURY FUNDING LIMITED 0032 SCADBURY UK LIMITED 100.00 United Kingdom
0037 AMAGANSETT FUNDING LIMITED 0033 AMAGANSETT UK LIMITED 100.00 United Kingdom
0038 AMAGANSETT ASSETS 0033 AMAGANSETT UK LIMITED 99.00 United Kingdom
0038 AMAGANSETT ASSETS 0037 AMAGANSETT FUNDING LIMITED 1.00 United Kingdom
0039 SCADBURY II ASSET 0032 SCADBURY UK LIMITED 100.00 United Kingdom
0041 GSFS PRINCIPAL STRATEGIES 2200 GS Financial Serv L.P. (DEL) 100.00 United Kingdom
0042 GSFS INVESTMENTS II CORP 2298 GSFS INVESTMENTS I CORP 100.00 United States
0050 GSTP LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0080 Goldman Sachs Financial Market 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0091 GSJC 50 Hudson Urban Renewal 0009 Goldman Sachs Group, Inc. 100.00 New Jersey
0092 GSJC Land L.L.C. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0093 GSJC 30 Hudson Urban Renewal 0009 Goldman Sachs Group, Inc. 100.00 New Jersey
<Caption>
SUBSIDIARY BUSINESS DESCRIPTION
-----------------------------------------------------------------------------------------------------------------------------------
0001 A registered U.S. broker-dealer and futures commission merchant engaged in investment banking, securities activities
and investment management. Trades on a proprietary basis and also provides services to a substantial and diversified
client base that inc
0001 A registered U.S. broker-dealer and futures commission merchant engaged in investment banking, securities activities
and investment management. Trades on a proprietary basis and also provides services to a substantial and diversified
client base that inc
0006 Owns 0.2% of GS & Co.
0007 Owns 0.2% of J. Aron & Company and J. Aron Holdings L.P.
0008 General partner of J. Aron & Company.
0008 General partner of J. Aron & Company.
0027 An investment bank that uses sophisticated technology to connect to individual investors in the United States.
0032 Established as part of an SSG Structured Investing Group transaction.
0033 Established as part of an SSG Structured Investing Group transaction.
0034 Established as part of an SSG Structured Investing Group transaction.
0034 Established as part of an SSG Structured Investing Group transaction.
0035 Established as part of an SSG Structured Investing Group transaction.
0036 Established as part of an SSG Structured Investing Group transaction.
0037 Established as part of an SSG Structured Investing Group transaction.
0038 Established as part of an SSG Structured Investing Group transaction.
0038 Established as part of an SSG Structured Investing Group transaction.
0039 Established as part of an SSG Structured Investing Group transaction.
0041 This entity was set up as part of an AMSSG Structured Investing Group transaction.
0042 Set up as part of the SBD Principal Investing Portfolio-to hold airplane leases.
0050 Holding entity for aircraft purchases.
0080 Owns 1% of Goldman Sachs Financial Markets, L.P.
0091 Lessee and construction agent for construction project in Jersey City.
0092 Land owner - Jersey City
0093 Owns building in Jersey City
</Table>
<Page>
<Table>
0094 GSJC Master Lessee L.L.C. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0096 MLK DRIVE URBAN RENEWAL LLC 0009 Goldman Sachs Group, Inc. 100.00 New Jersey
0097 PH PIER MANAGEMENT LLC 0092 GSJC Land L.L.C. 100.00 Delaware
0098 REP ELD Gen-Par, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
0100 Archon Group, L.P. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0100 Archon Group, L.P. 0101 Archon Gen-Par, Inc. 1.00 Delaware
0101 Archon Gen-Par, Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0102 Archon Group Italia s.r.l. 0104 Archon International, Inc. 100.00 Italy
0104 Archon International, Inc. 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
0105 Archon Group Deutschland GmbH 0104 Archon International, Inc. 100.00 Germany
0106 GS COMM MORTGAGE CAPITAL, L.P. 0107 GS COMM MORTGAGE CAPITAL, LLC 1.00 Delaware
0106 GS COMM MORTGAGE CAPITAL, L.P. 1503 MLQ Investors, L.P. 99.00 Delaware
0107 GS COMM MORTGAGE CAPITAL, LLC 1503 MLQ Investors, L.P. 100.00 Delaware
0109 SPF ONE IL, L.L.C. 1513 MTGLQ Investors, LP 100.00 Delaware
0111 GS MD80 Leasing, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0113 SAVOY ASSOCIATES, LLC 1011 REP SVY HOLDINGS REALTY, LLC 100.00 United States
0118 Goldman Sachs (Asia) L.L.C. 0250 Goldman Sachs Global Holdings 1.00 Delaware
0118 Goldman Sachs (Asia) L.L.C. 1222 Goldman Sachs (Cayman) Holding 99.00 Delaware
0120 Goldman Sachs (Asia) Securitie 0009 Goldman Sachs Group, Inc. 99.00 Hong Kong
0120 Goldman Sachs (Asia) Securitie 0250 Goldman Sachs Global Holdings 1.00 Hong Kong
0123 Goldman Sachs (Asia Pacific) L 0250 Goldman Sachs Global Holdings 1.00 Delaware
0123 Goldman Sachs (Asia Pacific) L 1222 Goldman Sachs (Cayman) Holding 99.00 Delaware
0124 SENNA INVESTMENT (IRELAND) LTD 2200 GS Financial Serv L.P. (DEL) 100.00 Ireland
0135 Goldman Sachs (China) L.L.C. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0135 Goldman Sachs (China) L.L.C. 0250 Goldman Sachs Global Holdings 1.00 Delaware
<Caption>
0094 Master lessee for building in Jersey City
0096 Lessee and construction agent for construction project in Jersey City.
0097 Entity that owns the pier in Jersey City.
0098 Established to serve as General Partner of REP ELD Real Estate, L.P.
0100 Real estate property/asset manager owned by The Goldman Sachs Group, Inc.
0100 Real estate property/asset manager owned by The Goldman Sachs Group, Inc.
0101 1% general partner of Archon Group, L.P.
0102 Provides consulting services relating to assignment, acquisition, evaluation and management of immovable assets
and/or assignment & management of credits.
0104 Holds investments in Archon Group Italia S.r.l and Archon Group International, Inc.
0105 Provides consultancy on economic and technical aspects of investment in real estate. Set up to support Archon's
activities in Germany.
0106 Limited partnership designed to invest in commercial mortgages.
0106 Limited partnership designed to invest in commercial mortgages.
0107 Acts as a general partner of Archon Financial L.P.
0109 Serves as a strategic capital planning entity.
0111 Established as part of an SSG Structured Investing Group transaction.
0113 Entity is a condominium developer that is engaged in the business of selling its developed properties.
0118 Established to assume Goldman Sachs (Asia) Securities Limited's non-exchange business in Hong Kong. Also has a
representative in Bangkok, Thailand.
0118 Established to assume Goldman Sachs (Asia) Securities Limited's non-exchange business in Hong Kong. Also has a
representative in Bangkok, Thailand.
0120 Executes agency transactions for affiliates on the Hong Kong stock exchange. Non-exchange business was transferred to
Goldman Sachs (Asia) LLC in the first quarter of fiscal 1995.
0120 Executes agency transactions for affiliates on the Hong Kong stock exchange. Non-exchange business was transferred to
Goldman Sachs (Asia) LLC in the first quarter of fiscal 1995.
0123 Investment holding company for PT Goldman Sachs Indonesia.
0123 Investment holding company for PT Goldman Sachs Indonesia.
0124 Invests in KAMCO I loans purchased from Restamove Ireland Limited.
0135 Representative offices in Beijing and Shanghai.
0135 Representative offices in Beijing and Shanghai.
</Table>
<Page>
<Table>
0137 DELMORA BANK GMBH 0104 Archon International, Inc. 100.00 Germany
0150 Goldman Sachs Canada Inc. 0009 Goldman Sachs Group, Inc. 100.00 Ontario
0154 CMLQ Investors Company 1506 MLQ L.L.C. 1.00 Nova Scotia
0154 CMLQ Investors Company 1513 MTGLQ Investors, LP 99.00 Nova Scotia
0156 Goldman Sachs Canada Finance 0009 Goldman Sachs Group, Inc. 100.00 Alberta
0157 Goldman Sachs Canada Finance 0009 Goldman Sachs Group, Inc. 99.00 Nova Scotia
0157 Goldman Sachs Canada Finance 0156 Goldman Sachs Canada Finance 1.00 Nova Scotia
0159 Goldman Sachs Canada Credit 0009 Goldman Sachs Group, Inc. 1.00 Nova Scotia
0159 Goldman Sachs Canada Credit 2220 Goldman Sachs Credit Part L.P. 99.00 Nova Scotia
0160 Goldman Sachs (Asia) Finance 0165 Goldman Sachs (Asia) Finance 99.00 Republic of Mauritius
0160 Goldman Sachs (Asia) Finance 0250 Goldman Sachs Global Holdings 1.00 Republic of Mauritius
0162 Express Investments III Privat 0160 Goldman Sachs (Asia) Finance 100.00 Malaysia
0163 NJLQ (Ireland) Ltd. 2200 GS Financial Serv L.P. (DEL) 100.00 Ireland
0164 Jade Dragon (Mauritius) Ltd 0192 Tiger Strategic Investments Lt 100.00 Republic of Mauritius
0165 Goldman Sachs (Asia) Finance 0001 Goldman, Sachs & Co. 99.00 Delaware
0165 Goldman Sachs (Asia) Finance 0250 Goldman Sachs Global Holdings 1.00 Delaware
0169 Muni Tic Toc Series Trust Cons 0001 Goldman, Sachs & Co. 100.00 United States
0170 Singel Cool One B.V. 2200 GS Financial Serv L.P. (DEL) 100.00 Netherlands
0171 Singel Cool Two B.V. 2200 GS Financial Serv L.P. (DEL) 100.00 Netherlands
0172 Archon Group (France) 0170 Singel Cool One B.V. 99.98 France
0172 Archon Group (France) 0171 Singel Cool Two B.V. 0.02 France
0173 TORIIZAKA KAIHATSU CO.,LTD. 1503 MLQ Investors, L.P. 100.00 Japan
0177 GS GLOBAL COMMODITIES(CANADA)C 0178 GS GLOB COMMODITIES(CAN)HOLDIN 100.00 Canada
0178 GS GLOB COMMODITIES(CAN)HOLDIN 0179 GS GLOB COMMODITIES(CAN)HOLDIN 1.00 United States
0178 GS GLOB COMMODITIES(CAN)HOLDIN 0250 Goldman Sachs Global Holdings 25.00 United States
0178 GS GLOB COMMODITIES(CAN)HOLDIN 2200 GS Financial Serv L.P. (DEL) 74.00 United States
0179 GS GLOB COMMODITIES(CAN)HOLDIN 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0180 REP SAN REAL ESTATE, L.P. 0009 Goldman Sachs Group, Inc. 99.80 Delaware
<Caption>
0137 ESSG related bank in Germany that held non performing loans at the time of acquisition.
0150 Toronto/Calgary - based regulated broker/dealer of fixed income, equities, and futures products.
0154 Holds a portfolio of Canadian loans.
0154 Holds a portfolio of Canadian loans.
0156 Formerly a 1% general partner of Goldman Sachs Canada Finance, L.P. Now a 1% shareholder of Goldman Sachs Canada
Finance Co. Entity is expected to be dissolved in near future.
0157 Issues commercial paper in Canada and lends the proceeds to GS affiliates in Canada.
0157 Issues commercial paper in Canada and lends the proceeds to GS affiliates in Canada.
0159 Engaged in trading of Canadian senior bank debt.
0159 Engaged in trading of Canadian senior bank debt.
0160 Based in Hong Kong and regulated by the Financial Services Commission. Primarily engaged in trading foreign
currencies, securities and other financial products.
0160 Based in Hong Kong and regulated by the Financial Services Commission. Primarily engaged in trading foreign
currencies, securities and other financial products.
0162 ASSG related entity investing in non-performing loans.
0163 Purchases non-performing loans.
0164 Established to primarily engage in trading of financial products in Asian countries.
0165 Holding company of Goldman Sachs (Asia) Finance.
0165 Holding company of Goldman Sachs (Asia) Finance.
0169 Aggregation of multiple trusts used in connection with the municipal tender option bond program (TIC TOC).
0170 Holding entity. Limited partner of Archon Group France
0171 Holding entity. Limited partner of Archon Group France
0172 Provides real estate loan and property asset management as well as underwriting services.
0172 Provides real estate loan and property asset management as well as underwriting services.
0173 TK operator of Toriizaka Kaihatsu TK.
0177 Oil and Gas commodity operating entity
0178 Holding company for GS Global Commodities (Canada) Corporation
0178 Holding company for GS Global Commodities (Canada) Corporation
0178 Holding company for GS Global Commodities (Canada) Corporation
0179 Holding entity within the structure of GS Global Commodities (Canada) Corporation
0180 REPIA entity.
</Table>
<Page>
<Table>
0180 REP SAN REAL ESTATE, L.P. 0181 REP SAN GEN PAR, LLC 0.20 Delaware
0181 REP SAN GEN PAR, LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0182 REP CHW REALTY, LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0183 REP ELD REAL ESTATE LP 0009 Goldman Sachs Group, Inc. 99.80 Delaware
0183 REP ELD REAL ESTATE LP 0098 REP ELD Gen-Par, LLC 0.20 Delaware
0185 National Healthcare Staffing 0009 Goldman Sachs Group, Inc. 100.00 United States
0186 Elbe Funding Limited 1222 Goldman Sachs (Cayman) Holding 100.00 Cayman Islands
0187 Rhys Trust 2200 GS Financial Serv L.P. (DEL) 95.00 United States
0187 Rhys Trust 2284 GS GLOBAL MARKETS INC 5.00 United States
0188 Sapien Limited 0187 Rhys Trust 100.00 United States
0189 Sargasso Limited 0188 Sapien Limited 100.00 United States
0190 GS CAP PART 2000 EMPLOYEE FUND 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0191 GS Asian Venture (Delaware)LLC 0250 Goldman Sachs Global Holdings 25.00 China
0191 GS Asian Venture (Delaware)LLC 2200 GS Financial Serv L.P. (DEL) 75.00 China
0192 Tiger Strategic Investments Lt 0191 GS Asian Venture (Delaware)LLC 100.00 China
0193 Panda Investments Ltd. 0192 Tiger Strategic Investments Lt 100.00 China
0194 MLT Investments Ltd. 0192 Tiger Strategic Investments Lt 100.00 China
0196 EUSTON ENTERPRISES LTD 0194 MLT Investments Ltd. 100.00 Hong Kong
0197 FAIRWAY ENTERPRISES LTD 0194 MLT Investments Ltd. 100.00 Hong Kong
0198 Wealth Earner Limited 6153 GS STRATEGIC INVESTMENTS (ASIA 100.00 British Virgin Islands
0201 Goldman Sachs International 0220 Goldman Sachs Holding (U.K.) 99.00 United Kingdom
0201 Goldman Sachs International 0709 Goldman Sachs Group Holdings ( 1.00 United Kingdom
0211 GS Equity Markets, L.P. (Bermu 0531 GSEM DEL LLC 99.00 Bermuda
0211 GS Equity Markets, L.P. (Bermu 0542 GSEM BERMUDA HOLDINGS, L.P. 1.00 Bermuda
0220 Goldman Sachs Holding (U.K.) 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0226 SIGNUM LIMITED 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0227 Goldman Sachs (Monaco) S.A.M. 0709 Goldman Sachs Group Holdings ( 100.00 Monaco
0230 Goldman Sachjs Europe Limited 0201 Goldman Sachs International 100.00 Isle of Jersey
0240 Goldman Sachs Asset Management 0220 Goldman Sachs Holding (U.K.) 99.00 United Kingdom
<Caption>
0180 REPIA entity.
0181 REPIA entity.
0182 REPIA entity.
0183 REPIA entity.
0183 REPIA entity.
0185 Provides temporary nurse staffing to medical institutions.
0186 Established as part of an SSG Structured Investing Group transaction.
0187 Established as part of an SSG Structured Investing Group transaction.
0187 Established as part of an SSG Structured Investing Group transaction.
0188 Established as part of an SSG Structured Investing Group transaction.
0189 Established as part of an SSG Structured Investing Group transaction.
0190 Established for purposes of consolidating multiple employee-owned merchant banking funds.
0191 Holding company for ASSG entities
0191 Holding company for ASSG entities
0192 Holding company for ASSG entities
0193 Holding company for ASSG entities
0194 Holding company for ASSG entities
0196 To hold ASSG investments in Tung Fung Development Co.
0197 To hold ASSG investments in Tung Fung Development Co.
0198 Holding ASSG Investments
0201 A U.K. broker-dealer regulated by the Financial Services Authority. Provides a wide range of financial services to
clients located worldwide and undertakes proprietary trading.
0201 A U.K. broker-dealer regulated by the Financial Services Authority. Provides a wide range of financial services to
clients located worldwide and undertakes proprietary trading.
0211 Proprietary trading of Structured Equity Products.
0211 Proprietary trading of Structured Equity Products.
0220 Non-regulated holding company for U.K. entities.
0226 Established to report all consolidated Signum variable interest entities under FIN-46R. It is not a legal entity but
set up for SPV consolidation process only.
0227 IMD/PWM business development in Monaco, Middle East and France.
0230 Employs consultants to Investment Banking Division; contracts with international advisers.
0240 London-based provider of asset management and investment advisory services, covering European and other international
asset classes.
</Table>
<Page>
<Table>
0240 Goldman Sachs Asset Management 0709 Goldman Sachs Group Holdings ( 1.00 United Kingdom
0241 GSPS Investments 0248 GSPS Strategies Corp 100.00 United Kingdom
0242 GS TRUST COMPANY OF DELAWARE 0244 Goldman Sachs Trust Company 100.00 Delaware
0244 Goldman Sachs Trust Company 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0245 Goldman Sachs Insurance Agency 0009 Goldman Sachs Group, Inc. 100.00 New York
0246 Pearl Street Insurance Company 0009 Goldman Sachs Group, Inc. 100.00 Vermont
0247 GOLDMAN SACHS BANK (USA) INC 1309 GS Bank USA Holdings LLC 100.00 Utah
0248 GSPS Strategies Corp 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
0249 (GS) GS CREDIT PARTNRS 0009 Goldman Sachs Group, Inc. 100.00 United States
0250 Goldman Sachs Global Holdings 0006 The Goldman, Sachs & Co. L.L.C 1.00 Delaware
0250 Goldman Sachs Global Holdings 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0270 Goldman Sachs Israel LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0290 Goldman Sachs Services Limited 0001 Goldman, Sachs & Co. 100.00 British Virgin Islands
0291 GS Global Funding (UK) Limited 0201 Goldman Sachs International 100.00 United Kingdom
0292 GS NEW MARKETS FUND, LLC 0009 Goldman Sachs Group, Inc. 98.00 Delaware
0292 GS NEW MARKETS FUND, LLC 0293 GS NEW MARKETS FUND PNR, INC 2.00 Delaware
0293 GS NEW MARKETS FUND PNR, INC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0302 GOLDMAN SACHS (JAPAN) LTD. 0009 Goldman Sachs Group, Inc. 100.00 British Virgin Islands
0303 GOLDMAN SACHS JAPAN CO., LTD. 0302 GOLDMAN SACHS (JAPAN) LTD. 100.00 British Virgin Islands
0307 Goldman Sachs Realty Japan Ltd 1503 MLQ Investors, L.P. 100.00 Japan
0310 A&G Investments Co, Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0313 Goldman Sachs Asset Management 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0313 Goldman Sachs Asset Management 0250 Goldman Sachs Global Holdings 1.00 Delaware
0314 Stone St PEP Tech Fund 2000 LP 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0316 GS Asset Management Co., Ltd 0009 Goldman Sachs Group, Inc. 1.00 Japan
0316 GS Asset Management Co., Ltd 0313 Goldman Sachs Asset Management 99.00 Japan
0318 Goldman Sachs Funds Management 0009 Goldman Sachs Group, Inc. 99.00 Ireland
0318 Goldman Sachs Funds Management 0250 Goldman Sachs Global Holdings 1.00 Ireland
0319 Goldman Sachs Investments Ltd. 0009 Goldman Sachs Group, Inc. 100.00 Bermuda
0320 GS Pension Management Company 0009 Goldman Sachs Group, Inc. 99.00 Cayman Islands
<Caption>
0240 London-based provider of asset management and investment advisory services, covering European and other international
asset classes.
0241 Set up to trade principal investments
0242 Established as a limited purpose trust company.
0244 A national bank providing fiduciary services in the United States subject to regulation by the Office of the Comptrolle
of Currency.
0245 Broker in the life insurance business.
0246 Insures specific hazards and operational risks of the firm.
0247 To engage in the business of credit and other financial related services, organized under the law of the state of Utah.
0248 Setup to trade private equity investments.
0249 Principal business of NEWCO is to act as subparticipant for loans originated by GSIB Milan Branch and the secondary
trading of such loans.
0250 1% general partner of various Goldman Sachs entities.
0250 1% general partner of various Goldman Sachs entities.
0270 Engaged in investment research in Israel.
0290 Employs U.K. Group personnel.
0291 Holding company for a Far East structured finance deal.
0292 Parent for UIG - Portland fund of funds investment.
0292 Parent for UIG - Portland fund of funds investment.
0293 Parent for UIG - Portland fund of funds investment.
0302 Parent of GSJCL.
0303 A Tokyo-based broker-dealer regulated by the Financial Services Agency. Engaged in a wide range of customer activities
as well as proprietary trading.
0307 Provides liaison services and other activities with respect to real estate loans, transactions in or outside of Japan,
holds leases for Japan based entities, and Japanese real estate agent services.
0310 An ASSG related entity that holds non-performing loans.
0313 U.S.-based provider of asset management and investment advisory services across a wide range of domestic and global
asset classes.
0313 U.S.-based provider of asset management and investment advisory services across a wide range of domestic and global
asset classes.
0314 Consolidated employee fund.
0316 Provides asset management and investment advisory services in Japan.
0316 Provides asset management and investment advisory services in Japan.
0318 Investment fund manager and offshore fund administrator.
0318 Investment fund manager and offshore fund administrator.
0319 Holds investments on behalf of yet-to-be formed funds.
0320 GSAM-related vehicle which is dormant.
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<Page>
<Table>
0320 GS Pension Management Company 1222 Goldman Sachs (Cayman) Holding 1.00 Cayman Islands
0321 Goldman Sachs Fund Management 0220 Goldman Sachs Holding (U.K.) 1.00 Luxembourg
0321 Goldman Sachs Fund Management 0700 Goldman Sachs (UK) L.L.C. 99.00 Luxembourg
0323 Goldman Sachs Japan Holdings, 0302 GOLDMAN SACHS (JAPAN) LTD. 100.00 Japan
0324 Palmwood Co., Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0327 GS CREDIT PARTNERS (JAPAN),LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0329 GS Strategic Invest Japan LLC 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
0330 Jupiter Investment Co. Ltd. 1503 MLQ Investors, L.P. 100.00 Japan
0331 CITRINE INVESTMENT CO.,LTD. 1503 MLQ Investors, L.P. 100.00 Japan
0332 LIME GREEN CO., LTD. 1503 MLQ Investors, L.P. 100.00 Japan
0333 CFGI CO., LTD. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0334 MERCER INVESTMENTS IV PRIVATE 0160 Goldman Sachs (Asia) Finance 100.00 Malaysia
0337 EXPRESS SECURITIZATION SPECIAL 2204 BEST INVESTMENT (DELAWARE) LLC 100.00 Korea
0340 R&G CO., LTD 0307 Goldman Sachs Realty Japan Ltd 98.33 Japan
0340 R&G CO., LTD 6001 JLQ LLC 1.67 Japan
0344 MERCER INVESTMENTS V PRIVATE L 0160 Goldman Sachs (Asia) Finance 100.00 Malaysia
0345 EXPRESS II SECURITIZATION SPEC 2204 BEST INVESTMENT (DELAWARE) LLC 100.00 Korea
0347 GAC PERSONAL CO. LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0348 PHOENIX OXNARD (DELAWARE) LLC 1503 MLQ Investors, L.P. 100.00 Delaware
0354 GSJBWere Financial Markets Pty 0009 Goldman Sachs Group, Inc. 100.00 Australia
0356 ARCHON HOSPITALITY CO. LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0357 LEAF GREEN CO. LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0358 LINDEN WOOD, LTD 1503 MLQ Investors, L.P. 100.00 Japan
0359 SOLAR WIND LTD 1503 MLQ Investors, L.P. 100.00 Japan
0360 Goldman Sachs Mitsui Marine De 0380 GSMMDPGP Inc. 1.00 Delaware
0360 Goldman Sachs Mitsui Marine De 0389 Goldman Sachs Holdings (Nether 49.00 Delaware
0361 Teibow Co.,Ltd. 0330 Jupiter Investment Co. Ltd. 100.00 Japan
0362 Nihon Hotel Investment Co., Lt 1503 MLQ Investors, L.P. 100.00 Japan
0363 Nephrite Equity Co.,Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0364 Amethyst Realty TK 0572 Amethyst Realty Co. Ltd. 100.00 Japan
0365 Omachi Onsen Kaihatsu Co. Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0366 TG Fund TK 0571 TG FUND CO.,LTD(TKO) 100.00 Japan
0367 GK SAKURAZAKA CAPITAL 0307 Goldman Sachs Realty Japan Ltd 1.00 Japan
<Caption>
0320 GSAM-related vehicle which is dormant.
0321 Management company for German Bond Fund.
0321 Management company for German Bond Fund.
0323 Established to provide management services to Japanese entities and hold the fixed assets in Japan.
0324 An ASSG related entity that holds Japanese loans/receivables.
0327 Non-regulated entity established to trade emerging market loans and senior bank loans.
0329 Invests in private and public entities in Japan, TK arrangements in Japan, and SPCs that hold investments
(equity/loans/REO) in Japan.
0330 Holds Haseko and MyPrint shares and other equities.
0331 Holds a hotel in Osaka, Japan.
0332 Purchases and sells loans.
0333 ASSG related entity that owns hotels and shopping mall in Japan.
0334 ASSG related entity that has an investment in the Cho Hung Bank deal.
0337 Holds investment in Cho Hung bank deal.
0340 Invests in non-performing loans.
0340 Invests in non-performing loans.
0344 ASSG related entity that invests in non performing loans.
0345 Holds investment in Cho Hung bank deal.
0347 An ASSG related entity that purchased residential loans from Chiyoda Life.
0348 Holds certain mortgage properties for liquidation.
0354 Member of GSJBWere group of companies, focused on the Australian/NZ markets.
0356 Holding company in Asia for certain hotel entities.
0357 TK operator for Leaf Green TK
0358 TK operator of Linden Wood TK.
0359 TK operator of Solar Wind TK.
0360 AAA rated company established to provide credit rating enhancement to derivative product trading. All trades to third
parties are back to back with affiliates.
0360 AAA rated company established to provide credit rating enhancement to derivative product trading. All trades to third
parties are back to back with affiliates.
0361 Consolidation of Japan entity. To purchase equity. Manufacturer of pen-head.
0362 Consolidation of Japan entity. To hold hotels in Japan.
0363 To hold TK investment in Amethyst Realty (REO Equity).
0364 To hold real estate in Japan
0365 To hold Onsen hotels.
0366 To hold real estate in Japan.
0367 To invest in private/public equity of various operating companies of Japan.
</Table>
<Page>
<Table>
0367 GK SAKURAZAKA CAPITAL 1503 MLQ Investors, L.P. 99.00 Japan
0368 YOSHINO HOSPITALITY CO.,LTD. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0369 REAL ESTATE CREATION FUND2 CO. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0370 Nagasaka Kaihatsu Co.,Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0371 YOSHINO KAIHATSU CO.,LTD. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0372 Star gate Realty Co.,Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0373 REC INVESTMENTS2 CO.,LTD. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0374 PIA Holdings Cayman Tokyo Br. 1503 MLQ Investors, L.P. 100.00 Japan
0375 GS PIA HOLDINGS GK 0374 PIA Holdings Cayman Tokyo Br. 1.00 Japan
0375 GS PIA HOLDINGS GK 1503 MLQ Investors, L.P. 99.00 Japan
0380 GSMMDPGP Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0382 GS GESTION S.G.I.I.C.,SA 0690 Goldman Sachs (Netherlands) B. 100.00 Spain
0385 GSPS ASIA LTD 0191 GS Asian Venture (Delaware)LLC 100.00 Mauritius
0389 Goldman Sachs Holdings (Nether 0009 Goldman Sachs Group, Inc. 100.00 Netherlands
0390 Goldman Sachs (India) L.L.C. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0390 Goldman Sachs (India) L.L.C. 0250 Goldman Sachs Global Holdings 1.00 Delaware
0391 GS INDIA HOLDINGS (DELAWARE) L 0009 Goldman Sachs Group, Inc. 100.00 United States
0392 GS India Holdings L.P. 0009 Goldman Sachs Group, Inc. 74.99 United States
0392 GS India Holdings L.P. 0250 Goldman Sachs Global Holdings 25.00 United States
0392 GS India Holdings L.P. 0391 GS INDIA HOLDINGS (DELAWARE) L 0.01 United States
0396 VANTAGE MARKETPLACE HOLDINGS, 0009 Goldman Sachs Group, Inc. 100.00 United States
0397 EMBARGO LLC 1513 MTGLQ Investors, LP 100.00 Delaware
0398 REC INVESTMENTS TK 1998 ReC Investments Co., Ltd 100.00 Japan
0399 REAL ESTATE CREATION FUND TK 1997 Real Estate Creation Fund Co. 100.00 Japan
0401 SHIRE II ASSETS 0404 SHIRE UK LIMITED 100.00 United Kingdom
0402 SHIRE FUNDING LIMITED 0404 SHIRE UK LIMITED 100.00 United Kingdom
0403 SHIRE ASSETS 0402 SHIRE FUNDING LIMITED 1.00 United Kingdom
0403 SHIRE ASSETS 0404 SHIRE UK LIMITED 99.00 United Kingdom
0404 SHIRE UK LIMITED 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0406 Bay Wind Realty Finance(Cayman 1503 MLQ Investors, L.P. 100.00 Japan
0408 Prime Equity Co., LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0409 MG Partners Co., LTD 2313 SOLAR WIND TK 100.00 Japan
0410 Minerva L.P. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0410 Minerva L.P. 0411 Minerva Inc. 1.00 Delaware
<Caption>
0367 To invest in private/public equity of various operating companies of Japan.
0368 To hold partial ownership of commercial building, Tokyo, Japan.
0369 To hold partial ownership of commercial building, Tokyo, Japan.
0370 To hold partial ownership of commercial building, Tokyo, Japan.
0371 To hold partial ownership of commercial building, Tokyo, Japan.
0372 To hold partial ownership of commercial building, Tokyo, Japan.
0373 To hold partial ownership of commercial building, Tokyo, Japan.
0374 To Invest in GS PIA Holdings GK
0375 To Invest in Equities of PIA Entities.
0375 To Invest in Equities of PIA Entities.
0380 1% corporate general partner of Goldman Sachs Mitsui Marine Derivative Products, L.P.
0382 Entity set-up to manage Spanish SICAVs and offer PWM services in Spain - entity run by PWM Iberian team.
0385 GBC2 Mauritius Entity estab. To hold GSPS Investments
0389 Entity established to own GS limited partnership in GSMMDP.
0390 Representative office in India.
0390 Representative office in India.
0391 Holding company for investments into India.
0392 Holding company for investments into India.
0392 Holding company for investments into India.
0392 Holding company for investments into India.
0396 Entity set up to house experts who will help clients who have contracted the expert's services on specific
questions / topics.
0397 To purchase portfolios of credit cards receivables.
0398 An ASSG related entity that invests in loans.
0399 Purchases Resona loans.
0401 Established as part of an SSG Structured Investing Group transaction.
0402 Established as part of an SSG Structured Investing Group transaction.
0403 Established as part of an SSG Structured Investing Group transaction.
0403 Established as part of an SSG Structured Investing Group transaction.
0404 Established as part of an SSG Structured Investing Group transaction.
0406 ASSG related entity engaged in real estate development in Japan.
0408 Invests in real estate.
0409 Invests in real estate.
0410 Established as part of an SSG Structured Investing Group transaction.
0410 Established as part of an SSG Structured Investing Group transaction.
</Table>
<Page>
<Table>
0411 Minerva Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0412 Amagansett Financing 0709 Goldman Sachs Group Holdings ( 100.00 Cayman Islands
0413 Laffitte Participation 10 2331 Chiltern Trust 100.00 France
0413 Laffitte Participation 10 2331 Chiltern Trust 100.00 France
0414 Laffitte Participation 12 0413 Laffitte Participation 10 100.00 France
0414 Laffitte Participation 12 0413 Laffitte Participation 10 100.00 France
0415 GS Longport Investment Corp 0414 Laffitte Participation 12 100.00 United States
0415 GS Longport Investment Corp 0414 Laffitte Participation 12 100.00 United States
0416 GS Oceanside Investment LLC 0415 GS Longport Investment Corp 100.00 United States
0416 GS Oceanside Investment LLC 0415 GS Longport Investment Corp 100.00 United States
0417 Normandy Funding Corporation 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0417 Normandy Funding Corporation 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0426 SARC Srl 0102 Archon Group Italia s.r.l. 2.00 Italy
0426 SARC Srl 1503 MLQ Investors, L.P. 98.00 Italy
0429 Hull Trading GMBH Frankfurt 0431 The Hull Group, L.L.C. 100.00 Germany
0430 GS Hull Holding, Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0431 The Hull Group, L.L.C. 0009 Goldman Sachs Group, Inc. 22.79 Illinois
0431 The Hull Group, L.L.C. 0430 GS Hull Holding, Inc. 77.21 Illinois
0432 SLK - Hull Derivatives LLC 0431 The Hull Group, L.L.C. 100.00 Delaware
0434 Hull Trading (UK) Limited 0431 The Hull Group, L.L.C. 100.00 United Kingdom
0435 Hull Trading Asia, Limited 0191 GS Asian Venture (Delaware)LLC 100.00 Hong Kong
0440 Frankfurter Mobilien Limited 2200 GS Financial Serv L.P. (DEL) 100.00 Isle of Jersey
0441 Akteas S.R.L. 0762 ELQ INVESTORS, LTD 100.00 Italy
<Caption>
0411 Established as part of an SSG Structured Investing Group transaction.
0412 Established as part of an SSG Structured Investing Group transaction.
0413 Established as part of an SSG Structured Investing Group transaction.
0413 Established as part of an SSG Structured Investing Group transaction.
0414 Established as part of an SSG Structured Investing Group transaction.
0414 Established as part of an SSG Structured Investing Group transaction.
0415 Established as part of an SSG Structured Investing Group transaction.
0415 Established as part of an SSG Structured Investing Group transaction.
0416 Established as part of an SSG Structured Investing Group transaction.
0416 Established as part of an SSG Structured Investing Group transaction.
0417 Established as part of an SSG Structured Investing Group transaction.
0417 Established as part of an SSG Structured Investing Group transaction.
0426 Purchases non-performing Italian mortgage and consumer loan portfolios and then securitizes them.
0426 Purchases non-performing Italian mortgage and consumer loan portfolios and then securitizes them.
0429 Proprietary trading firm; Entity was liquidated in Nov/Dec 2005 and is in the process of dissolution.
0430 Holding company within the Hull family of entities
0431 Managing member for SLK Hull Derivatives LLC, Hull Trading GmbH, Hull Trading UK & Hull Trading Asia.
0431 Managing member for SLK Hull Derivatives LLC, Hull Trading GmbH, Hull Trading UK & Hull Trading Asia.
0432 Registered broker-dealer that operates as a market-maker and trader on various securities and futures exchanges.
0434 A market-maker in equity derivatives and equity securities at the time of acquisition in 1999. Business has since been
moved into other entities.
0435 A market-maker in equity derivatives and equity securities at the time of acquisition in 1999. Business has since been
moved into other entities.
0440 An ESSG entity that holds leases in Germany.
0441 ESSG related entity established for potential acquisition of real estate.
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<Page>
<Table>
0442 Northern Electric (Peaking)LTD 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0443 South Wales Investments TPL LT 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0444 Western Power Investments LTD 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0445 Yellow Acquisition Ltd. 2400 GS EUROPEAN OPP FUND BV 100.00 Germany
0446 GS Capital Funding (Cayman) 0453 GS CAPITAL FUNDING UK II 100.00 Cayman Islands
0447 GS Capital Funding, Inc 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0448 GS Capital Funding UK 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0449 GSFS (Cayman) 2002-A Limited 2200 GS Financial Serv L.P. (DEL) 100.00 Cayman Islands
0452 CONRAD P4 LTD. 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0453 GS CAPITAL FUNDING UK II 0447 GS Capital Funding, Inc 100.00 United Kingdom
0454 SUNE SOLAR FUND I LLC 2329 GS Solar Power I, LLC 100.00 United States
0462 Ruby Realty Co.,Ltd. 1503 MLQ Investors, L.P. 100.00 Japan
0470 GK KAZAHANA 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0471 Archon Japan Branch 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0472 Funabiki Co.,Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0473 GK Gekko 0330 Jupiter Investment Co. Ltd. 100.00 Japan
0474 GK Sayama 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0475 GK ARISUGAWA FINANCE 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0476 ARISUGAWA FINANCE TK 0475 GK ARISUGAWA FINANCE 100.00 Japan
0477 GK ASUKA 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0478 SHINING PARTNERS TK2 0479 SHINING PARTNERS LTD(TKO) 100.00 Japan
0479 SHINING PARTNERS LTD(TKO) 1503 MLQ Investors, L.P. 100.00 Japan
0482 SLK Global Markets Ltd 0495 GS EXECUTION AND CLEARING, L.P 100.00 United Kingdom
0484 SLK Index Specialists, L.L.C. 0495 GS EXECUTION AND CLEARING, L.P 100.00 New York
0485 Spear, Leeds & Kellogg Special 0495 GS EXECUTION AND CLEARING, L.P 100.00 New York
0487 SLK LLC 0009 Goldman Sachs Group, Inc. 99.00 New York
0487 SLK LLC 0488 SLK Acquisition Holdings Inc. 1.00 New York
0488 SLK Acquisition Holdings Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0495 GS EXECUTION AND CLEARING, L.P 0487 SLK LLC 100.00 New York
<Caption>
0442 Established to hold an investment in a power company.
0443 ESSG related entity established to hold an investment in a power company.
0444 An ESSG related entity established to hold an investment in a power company.
0445 To hold a portfolio of non performing loans.
0446 The entity is setup as part of an upcoming Structured Investment Group (SSG) transaction.
0447 The entity is setup as part of an upcoming Structured Investment Group (SSG) transaction.
0448 The entity is setup as part of an upcoming Structured Investment Group (SSG) transaction.
0449 Set up as part of a Structured Investing Group transaction. The entity will be capitalised by GS Financial Services LP
It's purpose will purely be to sell a third party a put option over the third parties' minority interest in a GS
controlled Unit Trus
0452 Entity set-up to hold portfolio of non-performing German loans.
0453 Set-up as part of a Structured Investing Group Transaction.
0454 Company founded to support the installation of solar electric systems.
0462 Holds commercial buildings in Tokyo, Japan.
0470 To purchase a shopping center Joy park Kakogawa
0471 To set up Archon Japan (division of GSRJL) with ots own enity code. Initially set up as Shell Entity 8.
0472 To Hold Onsen Hotels
0473 To Hold Equity Investments
0474 To hold Shinjuku retail building
0475 To Invest in Loan and Preferred Shares of AP8, a SPC created by Advantage Partners, a well known MBO fund in Japan
0476 To Invest in Loan and Preferred Shares of AP8, a SPC created by Advantage Partners, a well known MBO fund in Japan
0477 To provide load to Hunet, a small real estate developer.
0478 Consolidation of Japan Entity (to hold SPL portfolio)
0479 TK operator for Shining Partners TK
0482 Introduces foreign customer trades to Spear, Leeds & Kellogg, LP on a fully-disclosed basis.
0484 Specialist and market-maker in various Exchange Traded Funds (ETFs) and options on ETFs which are traded on the AMEX.
0485 NYSE stock specialist firm.
0487 Holding company for Goldman Sachs Execution and Clearing, L.P. and other SLK entities.
0487 Holding company for Goldman Sachs Execution and Clearing, L.P. and other SLK entities.
0488 Holding company owning 1% membership interest in SLK LLC.
0495 A registered U.S. broker-dealer that provides execution, clearing and prime brokerage services to institutions and
broker-dealers.
</Table>
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<Table>
0499 Kansai Realty Co., LTD 0409 MG Partners Co., LTD 100.00 Japan
0501 Hyogo Wide Service Co., LTD 2309 GAC PERSONAL TK 100.00 Japan
0502 Midori Data Co., LTD 2309 GAC PERSONAL TK 100.00 Japan
0503 Wakaba Hoken Daiko Co., LTD 2309 GAC PERSONAL TK 100.00 Japan
0504 Minami Aoyama Kaihatsu Co.,LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0506 GS AYCO HOLDINGS LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0507 THE AYCO COMPANY, L.P. 0506 GS AYCO HOLDINGS LLC 99.00 Delaware
0507 THE AYCO COMPANY, L.P. 0509 SARATOGA SPRINGS LLC 1.00 Delaware
0508 HAMBRE, INC 0506 GS AYCO HOLDINGS LLC 100.00 Delaware
0509 SARATOGA SPRINGS LLC 0506 GS AYCO HOLDINGS LLC 100.00 Delaware
0511 AYCO SERVICES AGENCY, L.P. 0506 GS AYCO HOLDINGS LLC 1.00 Delaware
0511 AYCO SERVICES AGENCY, L.P. 0507 THE AYCO COMPANY, L.P. 99.00 Delaware
0512 MERCAY CORPORATION 0511 AYCO SERVICES AGENCY, L.P. 100.00 Delaware
0513 MERCER ALLIED COMPANY, L.P. 0506 GS AYCO HOLDINGS LLC 1.00 Delaware
0513 MERCER ALLIED COMPANY, L.P. 0507 THE AYCO COMPANY, L.P. 99.00 Delaware
0514 JUST OPTIONS LLC 0495 GS EXECUTION AND CLEARING, L.P 100.00 United States
0530 GSEM DEL INC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0531 GSEM DEL LLC 0542 GSEM BERMUDA HOLDINGS, L.P. 100.00 Delaware
0532 GS PRIME HOLDINGS LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0533 FEDERAL BOULEVARD, LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0534 GS POWER HOLDINGS LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0535 AMERICAN GAS ROYALTY TRUST 0001 Goldman, Sachs & Co. 100.00 Delaware
0536 Site 26 Holdings Inc. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0537 GS Headquarters LLC 0009 Goldman Sachs Group, Inc. 99.80 Delaware
0537 GS Headquarters LLC 0536 Site 26 Holdings Inc. 0.20 Delaware
0541 GSEM (DEL) HOLDINGS, L.P. 0250 Goldman Sachs Global Holdings 25.00 United States
0541 GSEM (DEL) HOLDINGS, L.P. 0530 GSEM DEL INC 75.00 United States
0542 GSEM BERMUDA HOLDINGS, L.P. 0250 Goldman Sachs Global Holdings 1.00 Other Americas
<Caption>
0499 ASSG entity engaged in real estate activities in Japan.
0501 Guarantees loans purchased from RCC.
0502 Guarantees loans purchased from RCC.
0503 An ASSG related entity that guarantees loan purchased from RCC.
0504 An ASSG related entity that is engaged in real estate investing.
0506 Parent company to The Ayco Company, LP, Saratoga Springs, LLC, also is a General Partner for the Ayco Services Agency
LP.
0507 Provides financial counseling to individuals employed by corporations.
0507 Provides financial counseling to individuals employed by corporations.
0508 Entity whose employees support Ayco Company LP and Ayco Services Agency LP.
0509 General partners for the Ayco Company LP.
0511 Provides personal insurance needs and administration services (estate planning) for clients.
0511 Provides personal insurance needs and administration services (estate planning) for clients.
0512 Holding company for two entities that were established to provide insurance services in particular states.
0513 Broker/dealer established as part of the Ayco acquisition.
0513 Broker/dealer established as part of the Ayco acquisition.
0514 Just Options is a joint venture between Peak 6 and GSEC where we are currently taking a majority share in the company's
net losses. Accounting Policy is mandating that we treat this as a consolidating VIE until the situation changes.
0530 General partner for GS Equity Market, L.P. (Bermuda).
0531 Holding company for GS Equity Market, L.P. (Bermuda).
0532 Acquired as part of the Linden Venture.
0533 Data center in New Jersey.
0534 Holding company for power generation assets obtained in the firm's acquisition of Cogentrix Energy, Inc. and National
Energy & Gas Transmission, Inc.
0535 Part of the VPP Dominion Transaction.
0536 Partial owner of GS Headquarters LLC.
0537 Engaged in the construction of the new world headquarter in lower Manhattan.
0537 Engaged in the construction of the new world headquarter in lower Manhattan.
0541 As part of the GSEM L.P. restructuring, entity is being formed as part of the holding company structure for GSEM L.P.
0541 As part of the GSEM L.P. restructuring, entity is being formed as part of the holding company structure for GSEM L.P.
0542 As part of the GSEM L.P. restructuring, entity is being formed as part of the holding company structure for GSEM L.P.
</Table>
<Page>
<Table>
0542 GSEM BERMUDA HOLDINGS, L.P. 0541 GSEM (DEL) HOLDINGS, L.P. 99.00 Other Americas
0543 MEP GS INVESTOR L.P. 0250 Goldman Sachs Global Holdings 1.00 United Kingdom
0543 MEP GS INVESTOR L.P. 1513 MTGLQ Investors, LP 99.00 United Kingdom
0545 GSFS INVESTMENTS III, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0546 GS DIRECT MEZZANINE 2006, L.P. 0009 Goldman Sachs Group, Inc. 100.00 United States
0547 Pinnacle Partners Group, LP 0009 Goldman Sachs Group, Inc. 100.00 United States
0552 SOUTH WIND REALTY FINANCE (CAY 1503 MLQ Investors, L.P. 100.00 Japan
0554 GS Capital Opportunities LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0555 GS Financing Opportunities LLC 0554 GS Capital Opportunities LLC 100.00 United States
0561 LDT, Inc. 0009 Goldman Sachs Group, Inc. 100.00 New York
0564 LDT Partners 0001 Goldman, Sachs & Co. 49.00 Delaware
0564 LDT Partners 0195 PBC Holdings Limited 50.00 Delaware
0564 LDT Partners 0561 LDT, Inc. 1.00 Delaware
0571 TG FUND CO.,LTD(TKO) 0572 Amethyst Realty Co. Ltd. 100.00 Japan
0572 Amethyst Realty Co. Ltd. 1503 MLQ Investors, L.P. 100.00 Japan
0573 Excellent Equity Co., Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0574 Blue Daisy Co., Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0575 Dandelion Investments Co., Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0576 Green Mountain One Co., Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0578 Fukuoka Toshi Kaihatsu Co. Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0579 GK Taiyo Kaihatsu 1503 MLQ Investors, L.P. 100.00 Japan
0620 Goldman Sachs DO Brasil Banco 0009 Goldman Sachs Group, Inc. 99.90 Brazil
0620 Goldman Sachs DO Brasil Banco 0250 Goldman Sachs Global Holdings 0.10 Brazil
0630 GS REPRESENTACOES LTDA. 0001 Goldman, Sachs & Co. 1.00 Brazil
0630 GS REPRESENTACOES LTDA. 0009 Goldman Sachs Group, Inc. 99.00 Brazil
0652 Goldman Sachs Group y Compania 0009 Goldman Sachs Group, Inc. 99.00 Mexico
0652 Goldman Sachs Group y Compania 0250 Goldman Sachs Global Holdings 1.00 Mexico
0653 Goldman Sachs Mexico Casa de B 0009 Goldman Sachs Group, Inc. 99.99 Mexico
0653 Goldman Sachs Mexico Casa de B 0250 Goldman Sachs Global Holdings 0.01 Mexico
0660 Goldman Sachs Argentina LLC 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0660 Goldman Sachs Argentina LLC 0250 Goldman Sachs Global Holdings 1.00 Delaware
0683 GS Hedge Fund Strategies LLC 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0683 GS Hedge Fund Strategies LLC 0313 Goldman Sachs Asset Management 1.00 Delaware
0686 GS LIQUID TRDNG OPPORTUNITIES 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0690 Goldman Sachs (Netherlands) B. 0009 Goldman Sachs Group, Inc. 100.00 Netherlands
0691 GS A320 LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0692 GS RJX Leasing LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
<Caption>
0542 As part of the GSEM L.P. restructuring, entity is being formed as part of the holding company structure for GSEM L.P.
0543 Limited Partner in an Investment Fund
0543 Limited Partner in an Investment Fund
0545 To hold five operating leases for the SBD Principal Investing Desk.
0546 To consolidate the GS Direct Mezzanine Fund
0547 To consolidate GS Pinnacle Partners, LP
0552 An ASSG related entity that holds golf courses and related assets in Japan.
0554 Established as part of an SSG Structured Investing Group transaction.
0555 Established as part of an SSG Structured Investing Group transaction.
0561 General partner of LDT Partners and 1% ownership in LDT Partners.
0564 General partner of LDT Partners & 1% ownership in LDT Partners.
0564 General partner of LDT Partners & 1% ownership in LDT Partners.
0564 General partner of LDT Partners & 1% ownership in LDT Partners.
0571 TK operator for TG Fund TK
0572 TK Operator of Amethsyt Realty TK
0573 TK Operator of Excellent Equity TK
0574 TK operator of Blue Daisy TK.
0575 TK Operator of Dandelion Investments TK
0576 TK Operator of Green mountain One TK
0578 TK Operator of Fukuoka Toshi Kaihatsu TK
0579 To hold Shibuya Lu82 building in Shibuya udagawacho, Japan. REO deal
0620 Brazilian bank.
0620 Brazilian bank.
0630 Representative office in Sao Paulo, Brazil.
0630 Representative office in Sao Paulo, Brazil.
0652 IBD Rep office in Mexico.
0652 IBD Rep office in Mexico.
0653 Broker/dealer that is in the process of liquidation.
0653 Broker/dealer that is in the process of liquidation.
0660 Representative office in Buenos Aires.
0660 Representative office in Buenos Aires.
0683 Registered as a commodity pool operator and a commodity trading advisor with the Commodity Futures Trading Commission.
0683 Registered as a commodity pool operator and a commodity trading advisor with the Commodity Futures Trading Commission.
0686 Facilitates the consolidation of the GSAM fund seed investments.
0690 Owns the GS limited partnership interest in GSMMDP.
0691 Established as part of a Private Finance Group Leasing Transaction.
0692 Established as part of a Private Finance Group Leasing Transaction.
</Table>
<Page>
<Table>
0700 Goldman Sachs (UK) L.L.C. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0705 Fleet Trade & Transport Limit 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0706 Fleet Trade & Transport (U.S. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0709 Goldman Sachs Group Holdings ( 0700 Goldman Sachs (UK) L.L.C. 100.00 United Kingdom
0714 Goldman Sachs Trust Company (T 0009 Goldman Sachs Group, Inc. 100.00 New York
0715 Goldman Sachs (Cayman) Trust, 0250 Goldman Sachs Global Holdings 1.00 Cayman Islands
0715 Goldman Sachs (Cayman) Trust, 1222 Goldman Sachs (Cayman) Holding 99.00 Cayman Islands
0730 Goldman Sachs International Ba 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
0740 Goldman Sachs Property Managem 0009 Goldman Sachs Group, Inc. 100.00 United Kingdom
0746 GS Municipal Products L.L.C. 0001 Goldman, Sachs & Co. 1.00 Delaware
0746 GS Municipal Products L.L.C. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0752 CER HOLDINGS LP 0541 GSEM (DEL) HOLDINGS, L.P. 99.00 United Kingdom
0752 CER HOLDINGS LP 0755 CER Holdings GP 1.00 United Kingdom
0753 CER INVESTMENT 1 0752 CER HOLDINGS LP 100.00 United Kingdom
0754 GSPS (Del) LP 0248 GSPS Strategies Corp 75.00 United States
0754 GSPS (Del) LP 0250 Goldman Sachs Global Holdings 25.00 United States
0755 CER Holdings GP 0250 Goldman Sachs Global Holdings 100.00 United Kingdom
0760 Goldman Sachs Overseas Finance 0009 Goldman Sachs Group, Inc. 99.00 Delaware
0760 Goldman Sachs Overseas Finance 0115 Goldman Sachs (France) Finance 1.00 Delaware
0761 EXCELLENT EQUITY TK 0573 Excellent Equity Co., Ltd. 100.00 Japan
0762 ELQ INVESTORS, LTD 1513 MTGLQ Investors, LP 100.00 United Kingdom
0763 RESIMARNE SAS 0762 ELQ INVESTORS, LTD 100.00 France
0766 PERCIER FINANCE SAS 0762 ELQ INVESTORS, LTD 100.00 France
0767 Fleet Properties 0762 ELQ INVESTORS, LTD 99.00 Portugal
0767 Fleet Properties 1513 MTGLQ Investors, LP 1.00 Portugal
0768 Mont Blanc Acquisition LTD 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0769 Matterhorn Acquisitions Ltd 2400 GS EUROPEAN OPP FUND BV 100.00 United Kingdom
0773 MB Acquisitions BV 0762 ELQ INVESTORS, LTD 100.00 Netherlands
0774 Portfolio Acquisitions 1 Ltd. 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
0775 Goldman Sachs Power L.L.C. 0008 J. Aron Holdings, L.P. 99.00 Delaware
<Caption>
0700 Non-regulated holding company for Goldman Sachs Group Holdings (U.K.)
0705 Undertakes commodities trading in oil and shipping operations, principally vessel chartering.
0706 Non-regulated petroleum shipping entity.
0709 Holding company which owns 100% of Fleet Trade; 100% of Goldman Sachs International Bank; and minority interest in a
number of UK entities.
0714 A limited purpose trust company which provides clearing, trust, investment management and other fiduciary services.
0715 Trust company; acts as offshore fund administrator.
0715 Trust company; acts as offshore fund administrator.
0730 London based bank involved in loan origination, secondary dealing in bank loans and related activities.
0740 UK-based entity with building-related assets and expenses pertaining to GS' London operations.
0746 Holds sponsor certificates issued in tender option programs.
0746 Holds sponsor certificates issued in tender option programs.
0752 Set up to own various SPVs that will hold carbon emmission certificates
0752 Set up to own various SPVs that will hold carbon emmission certificates
0753 SPV set up to hold carbon emmission certificates
0754 Set up to hold an entity holding illiquid investments.
0754 Set up to hold an entity holding illiquid investments.
0755 Will own various SPVs set up to hold carbon emmission certificates
0760 Non-regulated Delaware limited partnership formed to issue debt notes in back to back relationships with affiliates.
0760 Non-regulated Delaware limited partnership formed to issue debt notes in back to back relationships with affiliates.
0761 Kamata kosan (Residential); Excellent to purchase 2 retail store buildings, 1 hotel plus parking area (land), 1
residential and 5 lands
0762 Holding company for non-performing debt investments.
0763 An ESSG related entity established to acquire buildings on the Euro Disney campus.
0766 An ESSG related entity that functions as an investment company.
0767 Vehicle for potential acquisitions of real estate from PMF-1 Ltd.
0767 Vehicle for potential acquisitions of real estate from PMF-1 Ltd.
0768 An ESSG related entity that invests in non performing loans.
0769 An ESSG related entity that invests in non performing loans.
0773 An ESSG related entity that invests in non performing loans.
0774 To purchase and originate real estate debt
0775 Established to serve as the exclusive advisor to Constellation Power Source Inc. (CPSI - a subsidiary of Baltimore Gas
and Electric) for power trading and risk management and will license to CPSI software related to power trading and
risk management.
</Table>
<Page>
<Table>
0775 Goldman Sachs Power L.L.C. 0801 J. Aron & Company 1.00 Delaware
0777 Alkas Realty Private Limited 6152 Baekdu Investments Limited 100.00 Singapore
0778 Exchange Realty SRL 6152 Baekdu Investments Limited 100.00 Barbados
0779 Case RM, LLC 1513 MTGLQ Investors, LP 100.00 United States
0785 GS Leasing Engines II, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0786 Goldman Sachs Futures (Asia) L 0250 Goldman Sachs Global Holdings 1.00 Hong Kong
0786 Goldman Sachs Futures (Asia) L 0801 J. Aron & Company 99.00 Hong Kong
0789 TRIUMPH INVESTMENTS (IRELAND) 6150 Best II Investments (Delaware) 100.00 Ireland
0791 Nihon Endeavor Fund Co., LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0792 GS 767 Leasing LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0793 Blossom Holding III BV 2400 GS EUROPEAN OPP FUND BV 100.00 Germany
0794 GS Leasing (N506MC), LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
0795 REP FSB Real Estate, L.L.C 0009 Goldman Sachs Group, Inc. 100.00 United States
0796 GS LPII Phase I Realty LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
0797 Mars Equity Co., Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
0798 OOO Goldman Sachs 0847 GS RBD Holdings LP 100.00 Russia
0799 GCN CE Holdings Corp 2200 GS Financial Serv L.P. (DEL) 100.00 United States
0801 J. Aron & Company 0007 The J. Aron Corporation 0.20 New York
0801 J. Aron & Company 0008 J. Aron Holdings, L.P. 99.80 New York
0802 J. Aron & Company (Singapore) 0805 Goldman Sachs Foreign Exchange 100.00 Singapore
0804 Goldman Sachs (Singapore) PTE 0805 Goldman Sachs Foreign Exchange 100.00 Singapore
<Caption>
0775 Established to serve as the exclusive advisor to Constellation Power Source Inc. (CPSI - a subsidiary of Baltimore Gas
and Electric) for power trading and risk management and will license to CPSI software related to power trading and
risk management.
0777 The entity is a SPC which will purchase DBS tower as a rental property in Singapore.
0778 Holding the Exchange Tower in Beijing
0779 The entity will own and service several consumer auto loan portfolios (Remark Capital Group LLC is management company
of this entity.)
0785 To hold 6 operating leases to Mesaba Aviations guaranteed by 6 engines.
0786 Conducts Hong Kong Futures Exchange (HKFE) business for affiliates through an outside broker. HKFE member and
commodities dealer; registered with the Hong Kong Securities and Futures Commission.
0786 Conducts Hong Kong Futures Exchange (HKFE) business for affiliates through an outside broker. HKFE member and
commodities dealer; registered with the Hong Kong Securities and Futures Commission.
0789 Established primarily to hold ASSG positions in Korean assets.
0791 Established to purchase loans (SMBC Rivival Fund).
0792 Established as part of an SSG Structured Investing Group transaction.
0793 GS European Opportunities Fund BV subsidiary for Ihr Platz Investment.
0794 Established to hold an aircraft.
0795 REPIA entity.
0796 REPIA entity.
0797 This entity was set up to invest in equity shares of Japanese corporation Sanyo Electric Credit.
0798 This entity was set up as part of an AMSSG Structured Investing Group transaction
0799 The entity will own several micro-ticket machine leases throughout the US and Canada.
0801 International commodities dealer trading in various commodities including electricity, natural gas, precious metals,
base metals, currencies, crude oil, and petroleum products.
0801 International commodities dealer trading in various commodities including electricity, natural gas, precious metals,
base metals, currencies, crude oil, and petroleum products.
0802 Singapore-based entity that deals in commodities in the spot, forward and future markets.
0804 Singapore based broker, fund manager and investment banking advisor.
</Table>
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<Table>
0805 Goldman Sachs Foreign Exchange 0001 Goldman, Sachs & Co. 24.85 Singapore
0805 Goldman Sachs Foreign Exchange 0009 Goldman Sachs Group, Inc. 15.76 Singapore
0805 Goldman Sachs Foreign Exchange 0801 J. Aron & Company 59.39 Singapore
0807 Goldman Sachs Futures PTE Ltd 0805 Goldman Sachs Foreign Exchange 100.00 Singapore
0808 River North Technologies, INC. 0009 Goldman Sachs Group, Inc. 100.00 United States
0809 RAINBOW CAPITAL SRL 6152 Baekdu Investments Limited 100.00 China
0810 J. Aron & Company (U.K.) 0220 Goldman Sachs Holding (U.K.) 99.00 United Kingdom
0810 J. Aron & Company (U.K.) 0709 Goldman Sachs Group Holdings ( 1.00 United Kingdom
0812 GS INVSTMT STRATEGIES(SINGAPOR 0805 Goldman Sachs Foreign Exchange 100.00 Asia
0822 Goldman Sachs (Mauritius) L.LC 0392 GS India Holdings L.P. 100.00 Republic of Mauritius
0823 Goldman Sachs Investments (Mau 2200 GS Financial Serv L.P. (DEL) 100.00 Republic of Mauritius
0825 J. Aron & Company (Bullion) 0220 Goldman Sachs Holding (U.K.) 50.00 United Kingdom
0825 J. Aron & Company (Bullion) 0709 Goldman Sachs Group Holdings ( 50.00 United Kingdom
0828 Euro-splitter B.V. 0801 J. Aron & Company 100.00 Netherlands Antilles
0831 GSCS Holdings I, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
0832 GSCS HOLDINGS II, LLC 0831 GSCS Holdings I, LLC 100.00 United States
0833 GSPS BERMUDA CORPORATION 0754 GSPS (Del) LP 100.00 Bermuda
0839 GS SERVICES PRIVATE LTD. 0160 Goldman Sachs (Asia) Finance 1.00 India
0839 GS SERVICES PRIVATE LTD. 0822 Goldman Sachs (Mauritius) L.LC 99.00 India
0840 Goldman Sachs International Fi 0220 Goldman Sachs Holding (U.K.) 100.00 United Kingdom
0842 GS TRADING & CLEARING SERVICES 0008 J. Aron Holdings, L.P. 0.25 Netherlands
0842 GS TRADING & CLEARING SERVICES 0801 J. Aron & Company 99.75 Netherlands
0843 European Power Source Company 0009 Goldman Sachs Group, Inc. 100.00 Netherlands
0844 European Powere Source (U.K.) 0843 European Power Source Company 100.00 United Kingdom
0845 Patterson Capital Markets, Ltd 0009 Goldman Sachs Group, Inc. 100.00 United States
0846 GS (INDIA) SECURITIES PVT.LTD. 0822 Goldman Sachs (Mauritius) L.LC 100.00 India
0847 GS RBD Holdings LP 0848 GS RBD HOLDINGS I CORP 99.00 United States
<Caption>
0805 Foreign exchange dealer in the forward, option, futures and spot markets.
0805 Foreign exchange dealer in the forward, option, futures and spot markets.
0805 Foreign exchange dealer in the forward, option, futures and spot markets.
0807 Executes, clears and carries financial and fuel oil futures for affiliated entities on the Singapore Exchange
Derivatives Clearing Limited ("SGX-DC"); transacts only on behalf of affiliates.
0808 IT services firm that supports electronic trading.
0809 Holds a residential building in Shanghai, China.
0810 U.K. dealer in commodities; registered with The Financial Services Authority.
0810 U.K. dealer in commodities; registered with The Financial Services Authority.
0812 To act as a sub-adviser / manager to another US entity, who in turn will advice/manage a hedge fund.
0822 Invests in Kotak Mahindra Capital Co., Kotak Securities JVs and GS entities in India.
0823 Special purpose unregulated vehicle formed to deal in Indian shares.
0825 Bullion market-making; precious metals trader (ceased to trade in 2001).
0825 Bullion market-making; precious metals trader (ceased to trade in 2001).
0828 Established to invest in a condensate splitter (oil refinery) in Rotterdam. Being considered for liquidation.
0831 Holding Company of GSCS Holdings II, LLC which in turn holds GS Capital Strategies LLC
0832 Holding Company of GS Capital Strategies LLC
0833 Set up to hold an illiquid investment in bermuda for tax reasons. Investment is in a shipping company.
0839 Provides IT & IT enabled services to other GS entities.
0839 Provides IT & IT enabled services to other GS entities.
0840 London based foreign exchange dealer in the spot and forward market (ceased to trade in 2002) registered with the
Bank of England.
0842 Employs traders in Rotterdam.
0842 Employs traders in Rotterdam.
0843 Holding company for power trading subsidiaries.
0844 Trades power in the UK / NETA Environment.
0845 Futures introducing broker.
0846 Carry out securities, banking and asset management business in India.
0847 To be a Holding Company of 000 Goldman Sachs, the firm's new broker/ dealer in Russia.
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<Page>
<Table>
0847 GS RBD Holdings LP 0849 GS RBD Holdings II Corp 1.00 United States
0848 GS RBD HOLDINGS I CORP 0009 Goldman Sachs Group, Inc. 100.00 United States
0849 GS RBD Holdings II Corp 0009 Goldman Sachs Group, Inc. 100.00 United States
0851 Goldman Sachs Paris Inc. Et Ci 0001 Goldman, Sachs & Co. 99.00 France
0851 Goldman Sachs Paris Inc. Et Ci 0250 Goldman Sachs Global Holdings 1.00 France
0854 GS SITE 25 HOTEL HOLDING, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
0855 GS SITE 25 RETAIL LLC 0856 GS SITE 25 RETAIL HOLDING LLC 100.00 United States
0856 GS SITE 25 RETAIL HOLDING LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
0857 GS SITE 25 HOTEL, LLC 0854 GS SITE 25 HOTEL HOLDING, LLC 100.00 United States
0860 Goldman Sachs (UK) L.L.C. III 0700 Goldman Sachs (UK) L.L.C. 99.00 Delaware
0860 Goldman Sachs (UK) L.L.C. III 0709 Goldman Sachs Group Holdings ( 1.00 Delaware
0862 Goldman Sachs Asset Management 0860 Goldman Sachs (UK) L.L.C. III 100.00 United Kingdom
0863 CIN Management 0862 Goldman Sachs Asset Management 100.00 United Kingdom
0865 PT Goldman Sachs Indonesia 0118 Goldman Sachs (Asia) L.L.C. 10.00 Indonesia
0865 PT Goldman Sachs Indonesia 0123 Goldman Sachs (Asia Pacific) L 90.00 Indonesia
0920 Goldman Sachs Services (B.V.I. 1001 Goldman Sachs Global ServiceII 100.00 British Virgin Islands
0936 Distressed Opportunities Inter 0009 Goldman Sachs Group, Inc. 100.00 Delaware
0940 Restamove Ireland Limited 2200 GS Financial Serv L.P. (DEL) 100.00 Ireland
0948 GS LINDEN POWER HOLDINGS LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1000 Goldman Sachs Global Services1 0009 Goldman Sachs Group, Inc. 100.00 Cayman Islands
1001 Goldman Sachs Global ServiceII 0250 Goldman Sachs Global Holdings 1.00 Cayman Islands
1001 Goldman Sachs Global ServiceII 1222 Goldman Sachs (Cayman) Holding 99.00 Cayman Islands
1002 WALL STREET ON DEMAND, INC. 0009 Goldman Sachs Group, Inc. 100.00 United States
1010 Goldman Sachs Housing and Heal 0009 Goldman Sachs Group, Inc. 99.00 New York
<Caption>
0847 To be a Holding Company of 000 Goldman Sachs, the firm's new broker/ dealer in Russia.
0848 To be a partner in GS RBD HOLDINGS, L.P.
0849 To be a partner in GS RBD HOLDINGS, L.P.
0851 Established to facilitate activities in IBD, Equities, GSAM and derivatives with Mexican counterparts.
0851 Established to facilitate activities in IBD, Equities, GSAM and derivatives with Mexican counterparts.
0854 Entity to house the holding company for Embassy Suite Hotel Acquisition
0855 Entity to house Embassy Suite Retail Acquisition
0856 Entity to house holding company for the Embassy Suite Retail Acquisition
0857 Entity to house the entity for the Embassy Suite Hotel Acquisition
0860 Holding company which owns Goldman Sachs Asset Management Holdings.
0860 Holding company which owns Goldman Sachs Asset Management Holdings.
0862 Holding company formed in connection with CIN Management.
0863 U.K. based asset management company for British Coal pension funds. Company has ceased to trade and is
awaiting liquidation.
0865 Carries out investment banking and broker-dealer business in Indonesia.
0865 Carries out investment banking and broker-dealer business in Indonesia.
0920 Expatriate and TCN dual contract employment vehicle.
0936 Joint venture with Caisse Depot to purchase assets.
0940 Established primarily to hold proprietary positions in Korean bonds and equities; all activity is limited to affiliates
and Korean broker/dealers.
0948 Entity related to the Linden Power Plant operations.
1000 Entity which employs U.S. citizens or green card holders in various foreign offices.
1001 Entity that employs U.S. citizens or green card holders in various foreign offices.
1001 Entity that employs U.S. citizens or green card holders in various foreign offices.
1002 WSOD offers a managed software service whereby clients in the financial services industry can outsource the design,
development and maintenance of their on-line information portals to WSOD. WSOD is a Boulder,
CO based private company which
1010 Government National Mortgage Association (GNMA) issuer/servicer and a non-supervised mortgagee under FHA regulations to
originate, process and service FHA insured mortgages.
</Table>
<Page>
<Table>
1010 Goldman Sachs Housing and Heal 1020 Goldman Sachs Housing Capital 1.00 New York
1011 REP SVY HOLDINGS REALTY, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1012 GSUIG, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1020 Goldman Sachs Housing Capital 0009 Goldman Sachs Group, Inc. 100.00 New York
1021 GS CALIC 0009 Goldman Sachs Group, Inc. 100.00 United States
1022 Comm. Ann. and Life Ins. Co 0009 Goldman Sachs Group, Inc. 100.00 United States
1023 Arrow Capital Reinsurance Comp 0009 Goldman Sachs Group, Inc. 100.00 Bermuda
1024 Eastport Capital Corporation 0009 Goldman Sachs Group, Inc. 100.00 United States
1025 EPF Financial, LLC. 1024 Eastport Capital Corporation 100.00 United States
1026 GS RE HOLDINGS INC. 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1027 LIFE SETTLEMENTS SOLUTIONS INC 1030 LONGMORE CAPITAL, LLC 100.00 United States
1028 LIFE PREMIUM SOLUTIONS, LLC 1029 LIFE SOLUTIONS INTERNATIONAL, 100.00 United States
1029 LIFE SOLUTIONS INTERNATIONAL, 1030 LONGMORE CAPITAL, LLC 100.00 United States
1030 LONGMORE CAPITAL, LLC 1026 GS RE HOLDINGS INC. 100.00 United States
1031 Longmore Credit Services, LLC 1026 GS RE HOLDINGS INC. 100.00 United States
1032 GS INVESTMENT STRATEGIES, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1050 goldman sachs risk advisors,lp 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1050 goldman sachs risk advisors,lp 1051 GS Risk Advisors, Inc. 1.00 Delaware
1051 GS Risk Advisors, Inc. 0009 Goldman Sachs Group, Inc. 100.00 United States
1052 Arrow Capital Risk Services Li 1050 goldman sachs risk advisors,lp 100.00 Bermuda
1053 Goldman Sachs Risk Advisors (E 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
<Caption>
1010 Government National Mortgage Association (GNMA) issuer/servicer and a non-supervised mortgagee under FHA regulations to
originate, process and service FHA insured mortgages.
1011 Entity is the holding company that owns Savoy (0113).
1012 Entity created for Urban Investment Group's corporate investments.
1020 Originates and services Federal Housing Administration (FHA) insured mortgages; general partner in Goldman Sachs Housin
and Health Care Funding Company.
1021 This is an insurance company organized under the laws of Massachusetts. The Company manages blocks of variable annuity
variable universal life and minor blocks of group retirement products.
1022 This is an insurance company organized under the laws of Massachusetts. The Company manages blocks of variable annuity
variable universal life and minor blocks of group retirement products.
1023 Bermuda insurance company that will assume and cede property catastrophe risks.
1024 Management company for the Life Settlements business. This will be the employing entity for the business and is the
parent of Eastport Financial, L.L.C.
1025 The company is a SPV that will purchase and hold life insurance contracts. It is a wholly owned subsidiary of Eastport
Capital Corporation, which is owned by GS.
1026 SPE set up as a Holding entity for Life Settlement Solutions, Inc.
1027 Operating entity that will act in an agency capacity to source and service life settlement contracts
for capital providers
1028 Licensed insurance entity that facilitates the life settlements agency business,including the premium finance business.
1029 Administration entity for agency based life settlements in San Diego
1030 Holding company for agency based life settlements business in San Diego. Entity holds intellectual property
acquired in acquisition.
1031 Operating entity that will be used to originate premium finance loans
1032 Asset Management Company
1050 Licensed re-insurance intermediary in NY that can act as re-insurance broker.
1050 Licensed re-insurance intermediary in NY that can act as re-insurance broker.
1051 General Partner of GS Risk Advisors, L.P.
1052 Maintains Insurance Broker's license in Bermuda; reinsurance intermediary that can act as reinsurance broker.
1053 Involved in the insurance and reinsurance products business (entity is currently dormant).
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1207 GS Bank Zurich 0009 Goldman Sachs Group, Inc. 100.00 Switzerland
1209 GSCO BETEILIGUNGS GMBH 1220 Goldman, Sachs & Co. oHG 100.00 Germany
1210 Goldman, Sachs & Co Finanz Gmb 0009 Goldman Sachs Group, Inc. 100.00 Germany
1220 Goldman, Sachs & Co. oHG 1210 Goldman, Sachs & Co Finanz Gmb 1.00 Germany
1220 Goldman, Sachs & Co. oHG 1222 Goldman Sachs (Cayman) Holding 99.00 Germany
1222 Goldman Sachs (Cayman) Holding 0009 Goldman Sachs Group, Inc. 97.00 Cayman Islands
1222 Goldman Sachs (Cayman) Holding 0250 Goldman Sachs Global Holdings 3.00 Cayman Islands
1223 GOLDMAN SACHS MANAGEMENT GP 1220 Goldman, Sachs & Co. oHG 100.00 Germany
1225 GS Verwaltungs GmbH 1220 Goldman, Sachs & Co. oHG 100.00 Germany
1240 Goldman Sachs (AO) L.L.C. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1240 Goldman Sachs (AO) L.L.C. 0250 Goldman Sachs Global Holdings 1.00 Delaware
1244 Killingholme Power Group Ltd 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
1245 Killingholme Generation Ltd 1247 Killingholme Holdings Limited 0.00 United Kingdom
1245 Killingholme Generation Ltd 1318 Amagansett Funding Limited 13.37 United Kingdom
1245 Killingholme Generation Ltd 1323 Scadbury II Assets 50.32 United Kingdom
1245 Killingholme Generation Ltd 1326 Shire Funding Limited 36.31 United Kingdom
1246 Killingholme Power Limited 1245 Killingholme Generation Ltd 100.00 United Kingdom
1247 Killingholme Holdings Limited 1244 Killingholme Power Group Ltd 100.00 United Kingdom
1248 GS KILLINGHOLME CAYMAN INVESME 1246 Killingholme Power Limited 100.00 United Kingdom
1253 Goldman Sachs S.G.R. S.P.A. 0220 Goldman Sachs Holding (U.K.) 1.00 Italy
1253 Goldman Sachs S.G.R. S.P.A. 0700 Goldman Sachs (UK) L.L.C. 99.00 Italy
1254 VEICOLO ACQUISIZIONE PORTAFOGL 1506 MLQ L.L.C. 50.00 Italy
1254 VEICOLO ACQUISIZIONE PORTAFOGL 1513 MTGLQ Investors, LP 50.00 Italy
<Caption>
1207 Provides auxiliary services which include Swiss franc clearing and derivatives sales and trading, including trading on
the electronic Swiss exchanges and SOFFEX.
1209 Established to buy preferred shares in NetJets, a Swiss based company.
1210 Managing general partner of Goldman, Sachs & Co. oHG.
1220 Provides investment banking services, fixed income trading services, equity agency services, capital markets and
futures services.
1220 Provides investment banking services, fixed income trading services, equity agency services, capital markets
and futures services.
1222 Holding company for Goldman, Sachs & Co. oHG, Goldman, Sachs & Co. Bank, Goldman Sachs (Cayman) Trust Limited, GS Asia
LLC, Goldman Sachs Global Services II Limited, and GS Asia Pacific LLC.
1222 Holding company for Goldman, Sachs & Co. oHG, Goldman, Sachs & Co. Bank, Goldman Sachs (Cayman) Trust Limited, GS Asia
LLC, Goldman Sachs Global Services II Limited, and GS Asia Pacific LLC.
1223 General Partner of GS Capital Partners 2000 GmbH & Co. Beteiligungs KG.
1225 Trustee function for Rhein-Donau and Capital Partners.
1240 Investment banking entity based in Russia.
1240 Investment banking entity based in Russia.
1244 Established as part of an SSG Structured Investing Group transaction.
1245 Established as part of an SSG Structured Investing Group transaction.
1245 Established as part of an SSG Structured Investing Group transaction.
1245 Established as part of an SSG Structured Investing Group transaction.
1245 Established as part of an SSG Structured Investing Group transaction.
1246 Established as part of an SSG Structured Investing Group transaction.
1247 Established as part of an SSG Structured Investing Group transaction.
1248 Is a part of the structured investing trade and will enter into Swaps.
1253 Assets management company.
1253 Assets management company.
1254 Special purpose vehicle for securitization deal.
1254 Special purpose vehicle for securitization deal.
</Table>
<Page>
<Table>
1260 Goldman, Sachs & Co. Wertpapie 0009 Goldman Sachs Group, Inc. 100.00 Germany
1280 Goldman Sachs (Espana), S.A. 0690 Goldman Sachs (Netherlands) B. 100.00 Italy
1305 CPV Germany 0009 Goldman Sachs Group, Inc. 99.00 United States
1305 CPV Germany 1223 GOLDMAN SACHS MANAGEMENT GP 1.00 United States
1306 GSSM Holding II LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1307 GSSM Holding II Corp 1306 GSSM Holding II LLC 100.00 United States
1308 GS LS Leasing LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
1309 GS Bank USA Holdings LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1311 REP KBY Realty,LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
1312 BEESTON INVESTMENTS LIMITED 0123 Goldman Sachs (Asia Pacific) L 100.00 Hong Kong
1313 CORNWALL INVESTMENTS LIMITED 0165 Goldman Sachs (Asia) Finance 100.00 Hong Kong
1317 Amagansett Assets 1318 Amagansett Funding Limited 1.00 United Kingdom
1317 Amagansett Assets 1320 Amagansett UK Limited 99.00 United Kingdom
1318 Amagansett Funding Limited 1320 Amagansett UK Limited 100.00 United Kingdom
1319 Amagansett II Assets 1320 Amagansett UK Limited 100.00 United Kingdom
1320 Amagansett UK Limited 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
1321 Scadbury Assets 1322 Scadbury Funding Limited 1.00 United Kingdom
1321 Scadbury Assets 1324 Scadbury UK Limited 99.00 United Kingdom
1322 Scadbury Funding Limited 1324 Scadbury UK Limited 100.00 United Kingdom
1323 Scadbury II Assets 1324 Scadbury UK Limited 100.00 United Kingdom
1324 Scadbury UK Limited 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
1325 Shire Assets 1326 Shire Funding Limited 1.00 United Kingdom
1325 Shire Assets 1328 Shire UK Limited 99.00 United Kingdom
1326 Shire Funding Limited 1328 Shire UK Limited 100.00 United Kingdom
1327 Shire II Assets 1328 Shire UK Limited 100.00 United Kingdom
1328 Shire UK Limited 0709 Goldman Sachs Group Holdings ( 100.00 United Kingdom
1329 FAIRWAY RESOURCES L.P. 1513 MTGLQ Investors, LP 100.00 United States
<Caption>
1260 Non-regulated Frankfurt based entity that issues warrants through GS oHG and purchases offsetting OTC options in the
fixed income, equity, commodity and currency markets.
1280 Engaged in financial advisory/investment banking entity in Spain.
1305 This entity was set up to invest in principal investments.
1305 This entity was set up to invest in principal investments.
1306 To act as a holding company for GSSM Holding II Corp
1307 To hold the Sumitomo preferred shares
1308 For PFG leasing business
1309 Holding Company (Single Member LL) to hold GS Group Investment in GS Bank USA
1311 Real Estate investment
1312 Trading Company for Korean Futures
1313 Changed from non-consolidating to consolidating
1317 This entity was set up as part of an AMSSG Structured Investing Group transaction
1317 This entity was set up as part of an AMSSG Structured Investing Group transaction
1318 This entity was set up as part of an AMSSG Structured Investing Group transaction
1319 This entity was set up as part of an AMSSG Structured Investing Group transaction
1320 This entity was set up as part of an AMSSG Structured Investing Group transaction
1321 This entity was set up as part of an AMSSG Structured Investing Group transaction
1321 This entity was set up as part of an AMSSG Structured Investing Group transaction
1322 This entity was set up as part of an AMSSG Structured Investing Group transaction
1323 This entity was set up as part of an AMSSG Structured Investing Group transaction
1324 This entity was set up as part of an AMSSG Structured Investing Group transaction
1325 This entity was set up as part of a Structured Investing Group transaction
1325 This entity was set up as part of a Structured Investing Group transaction
1326 This entity was set up as part of a Structured Investing Group transaction
1327 This entity was set up as part of a Structured Investing Group transaction
1328 This entity was set up as part of a Structured Investing Group transaction
1329 Partnership focused on oil and gas production and ownership of lease acreage.
</Table>
<Page>
<Table>
1330 PRNP, LLC 1513 MTGLQ Investors, LP 100.00 Puerto Rico
1331 KRETA ACQUISTIONS LTD. 2406 GS European Opportunities F II 100.00 United Kingdom
1332 GS MEZZANINE PARTNERS 2006 0009 Goldman Sachs Group, Inc. 100.00 United States
1333 Asama Onsen Kaihatsu Co.,Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
1334 KAKEGAWA HOLDINGS CO.,LTD. 0358 LINDEN WOOD, LTD 100.00 Japan
1335 GS Hony Holdings I Ltd 0191 GS Asian Venture (Delaware)LLC 100.00 Cayman Islands
1336 GS Hony Holdings II Ltd 0191 GS Asian Venture (Delaware)LLC 100.00 Cayman Islands
1337 GS Capital Partners Auto Glass 0009 Goldman Sachs Group, Inc. 100.00 Mauritius
1338 GS Capital Partners Aurum Hold 0009 Goldman Sachs Group, Inc. 100.00 Mauritius
1341 GS UNIT TRUST ADMNSTR LIMITED 0709 Goldman Sachs Group Holdings ( 100.00 Cayman Islands
1342 GS Unit Trust Investments Limi 0709 Goldman Sachs Group Holdings ( 100.00 Cayman Islands
1343 GS Leasing Investments 0201 Goldman Sachs International 98.95 Cayman Islands
1343 GS Leasing Investments 1342 GS Unit Trust Investments Limi 1.05 Cayman Islands
1344 GS Leasing Limited Partneship 1345 GS Leasing No. 1 Limited 5.00 United Kingdom
1344 GS Leasing Limited Partneship 1346 GS Leasing No. 2 Limited 95.00 United Kingdom
1345 GS Leasing No. 1 Limited 1317 Amagansett Assets 100.00 Cayman Islands
1346 GS Leasing No. 2 Limited 1317 Amagansett Assets 100.00 Cayman Islands
1347 GS Leasing Holdings Limited 0709 Goldman Sachs Group Holdings ( 100.00 Cayman Islands
1348 BIRCHFIELD ESTATES LTD. 0009 Goldman Sachs Group, Inc. 100.00 United Kingdom
1350 Asset Funding Company IV 2200 GS Financial Serv L.P. (DEL) 100.00 United States
1351 Amagansett FX 2200 GS Financial Serv L.P. (DEL) 100.00 United Kingdom
<Caption>
1330 The entity is holding non-performing loans or "distressed" loans that were originated in Puerto Rico.
1331 To purchase and originate publicly and privately issued fixed income securities
Non performing loan portfolio investments.
1332 Consolidation of PIA's Mezz 2006 Fund
1333 Owns two hot-spring hotels in Japan.
1334 Owns a hotel in Kakegawa, Japan.
1335 Investment vehicle for the firm's interest in Hony Capital fund III LP
1336 Investment vehicle for the firm's interest in Hony Capital fund III LP
1337 Investement in Auto Glass company in China, economics will be swapped to GS Capital partners VI Funds
1338 Investement in white electronic goods company in China, economics will be swapped to GS Capital partners VI Funds
1341 Entity purely acts as an administrator for GS Leasing Investments. The entity will purely have a tiny amount
of capital and cash.
1342 Entity will invest as a minority unit holder in GS Leasing Investments. It will be capitalized by an existing GS
entity.
1343 Unauthorized unit trust that will act as a limited partner in GS Leasing Limited Partnership. It will invest in the
partnership in return for its share of the leasing the leasing income.
1343 Unauthorized unit trust that will act as a limited partner in GS Leasing Limited Partnership. It will invest in the
partnership in return for its share of the leasing the leasing income.
1344 Entity is a partnerships set up to enter into a finance lease with Tesco Plc. It will acquire assets from Tesco and the
lease them back in the form of the finance lease. As such the fixed assets do not go on the GS balance sheet.
Instead there is a lease
1344 Entity is a partnerships set up to enter into a finance lease with Tesco Plc. It will acquire assets from Tesco and the
lease them back in the form of the finance lease. As such the fixed assets do not go on the GS balance sheet.
Instead there is a lease
1345 Entity set up to be the general partner (controlling interest) in GS Leasing Limited Partnership. It will invest in
the partnership in return for its share of the leasing income.
1346 Entity is set up to purchase the limited partnership interest from GS Leasing Investments once the structure and
subsequent sale of the lease rentals to a third party is complete.
1347 Entity set up to act as trustee for GS Leasing Investments. The entity will purely have a tiny amount of
capital and cash.
1348 SPV for building a new London Offsite Data Centre
1350 Part of structured investing trade which will enter into swaps and repos
1351 Part of structured investing trade which will enter into contracts and options
</Table>
<Page>
<Table>
1491 Ares (Real Estate) B.V. 2200 GS Financial Serv L.P. (DEL) 100.00 Netherlands
1493 Ares Finance S.R.L. 0009 Goldman Sachs Group, Inc. 100.00 Italy
1494 PNW, LLC 6117 SSIG SPF One LQ, LLC 100.00 United States
1501 Goldman Sachs Real Estate Fund 0009 Goldman Sachs Group, Inc. 100.00 New York
1502 Goldman Sachs Mortgage Company 0009 Goldman Sachs Group, Inc. 99.00 New York
1502 Goldman Sachs Mortgage Company 1501 Goldman Sachs Real Estate Fund 1.00 New York
1503 MLQ Investors, L.P. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1503 MLQ Investors, L.P. 1506 MLQ L.L.C. 1.00 Delaware
1505 CL Investments Limited 0009 Goldman Sachs Group, Inc. 100.00 Cayman Islands
1506 MLQ L.L.C. 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1506 MLQ L.L.C. 0250 Goldman Sachs Global Holdings 1.00 Delaware
1510 Main Street Mortgage Co, LP 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1512 GS Mortgage Securities Corp II 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1513 MTGLQ Investors, LP 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1513 MTGLQ Investors, LP 1506 MLQ L.L.C. 1.00 Delaware
1515 Strategic Mortgage Holdings LP 0009 Goldman Sachs Group, Inc. 99.00 Delaware
1515 Strategic Mortgage Holdings LP 1516 Strategic Mortgage Holding INC 1.00 Delaware
1516 Strategic Mortgage Holding INC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1517 SOPAC LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1518 Southern Pacific Funding Co 0009 Goldman Sachs Group, Inc. 100.00 California
1520 GSSLQ LLC 1513 MTGLQ Investors, LP 100.00 Delaware
1521 GRMT, LTD 1502 Goldman Sachs Mortgage Company 100.00 United States
1522 SCLQ, S. de R.L de C.V. 1513 MTGLQ Investors, LP 100.00 Mexico
1523 CDV-1 Holding Co Gen-Par LLC 1513 MTGLQ Investors, LP 100.00 Delaware
1524 CDV-1 Ltd 1525 CDV-1 Holding Company LP 100.00 United Kingdom
1525 CDV-1 Holding Company LP 1513 MTGLQ Investors, LP 99.78 Delaware
1525 CDV-1 Holding Company LP 1523 CDV-1 Holding Co Gen-Par LLC 0.22 Delaware
1526 SHM II LLC 1515 Strategic Mortgage Holdings LP 100.00 United States
<Caption>
1491 ESSG related entity established to hold real estate assets from loan workouts in Ares Finance S.r.l.
1493 A securitization vehicle formed in Italy that holds sub-performing assets.
1494 A utilities supplier of energy and energy-related products.
1501 1% corporate general partner of Goldman Sachs Mortgage Company.
1502 Purchases and sells residential and commercial mortgage loans or participation interests in such loans, primarily in
connection with securitizations. Provides warehouse financing to mortgage originators.
1502 Purchases and sells residential and commercial mortgage loans or participation interests in such loans, primarily in
connection with securitizations. Provides warehouse financing to mortgage originators.
1503 Holds certain mortgage properties for liquidation.
1503 Holds certain mortgage properties for liquidation.
1505 AMSSG related entity established to invest in an entity that holds a consumer loan portfolio.
1506 1% general partner of MLQ Investors, L.P. and MTGLQ Investors, L.P.
1506 1% general partner of MLQ Investors, L.P. and MTGLQ Investors, L.P.
1510 Established to service mortgage portfolios.
1512 Florida-based subsidiary acquired to service mortgage portfolios.
1513 Invests in and holds non-performing real estate assets and loans.
1513 Invests in and holds non-performing real estate assets and loans.
1515 Holds debt and equity interests in a Canadian broker business.
1515 Holds debt and equity interests in a Canadian broker business.
1516 General partner of Strategic Mortgage Holdings, LP.
1517 An AMSSG related entity that purchases securities from S. Pacific Liquidators.
1518 Purchase of S. Pacific Funding Corp. and residuals.
1520 40% equity owner of SLQ S. de R.L. de C.V., which is purchasing servicing rights in a portfolio of non-performing
Mexican loans from Banco Union.
1521 Established to purchase a performing sub-prime pool of residential mortgage loans.
1522 Established to purchase a portfolio of non-performing Mexican loans from Banco International, S.A. Institution de
Banca multiple, Grupo Financiero (Bital).
1523 General partner for CDV-1 Holding Company, LP.
1524 An ESSG related entity that holds non-performing loans.
1525 Established as a partnership to own CDV-1, Ltd.
1525 Established as a partnership to own CDV-1, Ltd.
1526 Established to facilitate structured financing.
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<Table>
1527 DEERWOOD CORP 0009 Goldman Sachs Group, Inc. 100.00 United States
1528 CDV-2 Ltd 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
1529 PRALQ LLC 6117 SSIG SPF One LQ, LLC 100.00 Delaware
1531 ARLO LLC 6117 SSIG SPF One LQ, LLC 100.00 Delaware
1532 MIL Phase I Dallas Gen-Par, LL 1513 MTGLQ Investors, LP 100.00 Delaware
1533 MIL PHASE I DALLAS, L.P. 0100 Archon Group, L.P. 2.00 Delaware
1533 MIL PHASE I DALLAS, L.P. 1513 MTGLQ Investors, LP 97.80 Delaware
1533 MIL PHASE I DALLAS, L.P. 1532 MIL Phase I Dallas Gen-Par, LL 0.20 Delaware
1534 GS ASSET BACKED SECURITIES CO 0009 Goldman Sachs Group, Inc. 100.00 Delaware
1535 REP DER GEN-PAR, LLC 1513 MTGLQ Investors, LP 100.00 United States
1536 REP DER REAL ESTATE LP 1513 MTGLQ Investors, LP 99.90 United States
1536 REP DER REAL ESTATE LP 1535 REP DER GEN-PAR, LLC 0.10 United States
1537 REP MCR REALTY, LLC 1513 MTGLQ Investors, LP 100.00 United States
1539 DUNVEGAN INVESTMENTS, LTD 0220 Goldman Sachs Holding (U.K.) 100.00 Cayman Islands
1540 Rio Negro Assessoria LTDA 1513 MTGLQ Investors, LP 100.00 Brazil
1540 Rio Negro Assessoria LTDA 2200 GS Financial Serv L.P. (DEL) 0.00 Brazil
1541 RIO TOCURUI CLA SECURITIZADORA 1513 MTGLQ Investors, LP 100.00 Brazil
1542 ReMark Capital Group, LLC 1513 MTGLQ Investors, LP 100.00 United States
1543 MLQ-MLL, LLC 1513 MTGLQ Investors, LP 100.00 United States
1545 Rio Parana CLA Securitizadora 1513 MTGLQ Investors, LP 99.99 Brazil
1545 Rio Parana CLA Securitizadora 2200 GS Financial Serv L.P. (DEL) 0.01 Brazil
1546 AMC REO LLC 1513 MTGLQ Investors, LP 100.00 United States
1547 JUPITER-APX, LP 1513 MTGLQ Investors, LP 100.00 United States
1560 AMC of America LLC 1513 MTGLQ Investors, LP 100.00 United States
1561 AMC of America LP 1513 MTGLQ Investors, LP 99.00 United States
1561 AMC of America LP 1560 AMC of America LLC 1.00 United States
1565 DAC HOLDING I, L.L.C. 6117 SSIG SPF One LQ, LLC 100.00 Delaware
1902 Goldman Sachs London PL 0009 Goldman Sachs Group, Inc. 100.00 United Kingdom
1940 BEIJING GAO HUA SEC CL 1942 BEIJING GAO WANG VCCL 33.33 China
1940 BEIJING GAO HUA SEC CL 1943 BEIJING DE SHANG VCCL 33.33 China
<Caption>
1527 To hold and sell manufactured housing loans.
1528 An ESSG related entity that holds a portfolio of non performing loans in Czech Republic.
1529 AMSSG related entity that holds a portfolio of consumer receivables, primarily auto loans.
1531 AMSSG related entity that holds non-performing loans.
1532 Established to invest 0.2% interest in and serve as general partner of MIL Phase I Dallas, L.P.
1533 An AMSSG related entity engaged in real estate investing.
1533 An AMSSG related entity engaged in real estate investing.
1533 An AMSSG related entity engaged in real estate investing.
1534 Facilitates distribution of asset backed securitizations
1535 REPIA entity.
1536 Established to acquire and hold a non-performing real estate secured loan (Deerfield asset).
1536 Established to acquire and hold a non-performing real estate secured loan (Deerfield asset).
1537 REPIA entity.
1539 Investment company (dormant).
1540 Invests in distressed assets in Brazil.
1540 Invests in distressed assets in Brazil.
1541 Invests in non-performing loan portfolios in Brazil.
1542 An AMSSG related entity that manages and services portfolios of consumer auto loans.
1543 Established to originate and purchase Mezzanine loans on real estate investments.
1545 Invests in non-performing loan portfolios in Brazil. Entity owns 1% interest in Archon Financial L.P., SPV in order to
hold Brazilian loan portfolios.
1545 Invests in non-performing loan portfolios in Brazil. Entity owns 1% interest in Archon Financial L.P., SPV in order to
hold Brazilian loan portfolios.
1546 To hold real estate obligations.
1547 To hold the firm's equity investment in APX Holdings, LLC.
1560 Set up to own 1% interest in Asset Management Company of America L.P.
1561 Capital restructure.
1561 Capital restructure.
1565 Holding company for 6 other special purpose partnerships involved in leveraged lease transactions.
1902 Holds land that is intended to be developed for future use within the group.
1940 Chinese entity engaged in underwriting and proprietary trading of securities as well as providing
financial advisory services.
1940 Chinese entity engaged in underwriting and proprietary trading of securities as well as providing
financial advisory services.
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<Page>
<Table>
1940 BEIJING GAO HUA SEC CL 1944 BEIJING HOU FENG VCCL 33.33 China
1941 GS GAO HUA SECURITIES CO. LTD 0118 Goldman Sachs (Asia) L.L.C. 33.00 China
1941 GS GAO HUA SECURITIES CO. LTD 1940 BEIJING GAO HUA SEC CL 67.00 China
1942 BEIJING GAO WANG VCCL 0165 Goldman Sachs (Asia) Finance 100.00 China
1943 BEIJING DE SHANG VCCL 0165 Goldman Sachs (Asia) Finance 100.00 China
1944 BEIJING HOU FENG VCCL 0165 Goldman Sachs (Asia) Finance 100.00 China
1990 Keyakizaka Finance Co., LTD 2200 GS Financial Serv L.P. (DEL) 100.00 Japan
1991 Goldman Sachs Japan Finance KK 2200 GS Financial Serv L.P. (DEL) 100.00 Japan
1993 CMA Co., Ltd 1994 Linden Wood II S TK 100.00 Japan
1994 Linden Wood II S TK 1995 Linden Wood IIS Ltd 100.00 Japan
1995 Linden Wood IIS Ltd 1503 MLQ Investors, L.P. 100.00 Japan
1996 Merchant Support Co,. Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
1997 Real Estate Creation Fund Co. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
1998 ReC Investments Co., Ltd 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2001 GS Wind Holdings, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
2002 GS Macro Investments LLC 0009 Goldman Sachs Group, Inc. 11.11 United States
2002 GS Macro Investments LLC 1513 MTGLQ Investors, LP 88.89 United States
2003 Kawasaki Holdings Co, LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2005 White Ocean Co, LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2006 Merchant Capital Co. Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2007 GSGF Investments Inc. 2223 GS Global Funding, Inc. 100.00 United States
2008 GS Macro Investments 2006 LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
2009 GS Macro Investments II LLC 2002 GS Macro Investments LLC 100.00 United States
2010 GS Macro Investments I LLC 2002 GS Macro Investments LLC 100.00 United States
2011 Forres LLC 0220 Goldman Sachs Holding (U.K.) 100.00 United States
2012 Ellon LLC 2011 Forres LLC 100.00 United States
2013 AYCO Services Insurance Agency 0512 MERCAY CORPORATION 100.00 United States
2014 Sakurazaka Kaihatsu Co. LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2015 Blue Daisy TK 0574 Blue Daisy Co., Ltd. 100.00 Japan
<Caption>
1940 Chinese entity engaged in underwriting and proprietary trading of securities as well as providing
financial advisory services.
1941 Chinese entity engaged in underwriting of shares and bonds, brokerage of foreign investment shares, brokerage and
proprietary trading of bonds, other activities.
1941 Chinese entity engaged in underwriting of shares and bonds, brokerage of foreign investment shares, brokerage and
proprietary trading of bonds, other activities.
1942 Invests in Beijing Gao Hua Securities Company Limited.
1943 Investor in Beijing Gao Hua Securities Company Limited.
1944 Invests in Beijing Gao Hua Securities Company Limited.
1990 ASSG entity that acts in a lending related capacity in Asia.
1991 Acts in lending related capacity in Japan.
1993 Established to facilitate mortgage loan financing.
1994 An ASSG related entity that invests in distressed loans.
1995 TK operator of Linden Wood IIS TK.
1996 Merchant joint venture.
1997 TK operator of Real Estate Creation Fund TK.
1998 TK operator of REC Investments TK.
2001 Holding company for acquisition of Zilkha Renewable Energy.
2002 Established as part of an SSG Structured Investing Group transaction.
2002 Established as part of an SSG Structured Investing Group transaction.
2003 TK operator of Kawasaki Holdings TK.
2005 Purchases loans from Resona (RCC/ Resona securitization deal).
2006 An ASSG related entity engaged in activities related to credit card factoring.
2007 Established as part of an SSG Structured Investing Group transaction.
2008 Formed to facilitate a SALG trading program
2009 Established as part of an SSG Structured Investing Group transaction.
2010 Established as part of an SSG Structured Investing Group transaction.
2011 Established as part of an SSG Structured Investing Group transaction.
2012 Established as part of an SSG Structured Investing Group transaction.
2013 Insurance related entity that is part of the AYCO suite of advisory services.
2014 An ASSG related entity established in connection with the TRS with Aozora.
2015 Blue Daisy is a vehicle to invest in recruit through its participation in the secondary shares acquired by Nochu.
</Table>
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<Table>
2020 GS Macro Investments III LLC 2002 GS Macro Investments LLC 100.00 United States
2021 GS Macro Investments IV LLC 2002 GS Macro Investments LLC 100.00 United States
2022 Liberty Harbor, LLC. 0831 GSCS Holdings I, LLC 1.00 United States
2022 Liberty Harbor, LLC. 0832 GSCS HOLDINGS II, LLC 99.00 United States
2023 DANDELION INVESTMENTS TK 0575 Dandelion Investments Co., Ltd 100.00 Japan
2024 GREEN MOUNTAIN TK 0576 Green Mountain One Co., Ltd. 100.00 Japan
2026 Ashitaba Creation Co. Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2027 JAPAN HOTEL & RESORT K.K. 1503 MLQ Investors, L.P. 100.00 Japan
2028 Hanamizuki Kaihatsu Co.,Ltd. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2029 Shining Partners TK 0479 SHINING PARTNERS LTD(TKO) 100.00 Japan
2030 FUKUOKA TOSHI KAIHATSU TK 0578 Fukuoka Toshi Kaihatsu Co. Ltd 100.00 Japan
2031 KINMIRAI CREATE CO. LTD. 1503 MLQ Investors, L.P. 100.00 Japan
2032 GS MACRO INVESTMENTS V LLC 2002 GS Macro Investments LLC 100.00 United States
2200 GS Financial Serv L.P. (DEL) 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2201 Mortgage Asset Management Corp 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2202 GS Mortgage Securities Corp 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2204 BEST INVESTMENT (DELAWARE) LLC 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2208 Goldman Sachs Invest Mgmt Gmbh 1220 Goldman, Sachs & Co. oHG 100.00 Germany
2209 Goldman Sachs Cap Market L.L.C 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2210 Goldman Sachs Cap Markets, L.P 2200 GS Financial Serv L.P. (DEL) 99.00 Delaware
2210 Goldman Sachs Cap Markets, L.P 2209 Goldman Sachs Cap Market L.L.C 1.00 Delaware
2212 VANTAGE MARKET PLACE LLC 0396 VANTAGE MARKETPLACE HOLDINGS, 100.00 United States
2220 Goldman Sachs Credit Part L.P. 2350 GSCP (Del) Inc 99.90 Bermuda
2220 Goldman Sachs Credit Part L.P. 2351 GSCP (Del) LLC 0.10 Bermuda
2221 Special Situations Invest Grou 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2223 GS Global Funding, Inc. 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
<Caption>
2020 Established as part of an SSG Structured Investing Group transaction.
2021 Established as part of an SSG Structured Investing Group transaction.
2022 Trading / Fund Entity
2022 Trading / Fund Entity
2023 Dandelion has made investments in Green mountain to acquire non-performing loans from Linden Wood an existing
SPC of the ASSG business.
2024 It has been set up jointly with Dandelion Investmenst YK ("Dandelion") and Mizuho Security, a third party, to acquire
nonperforming loans from LindenWood, an existing SPC of the ASSG business.
2026 To purchase distressed loans
2027 This entity was set up to provide asset management, financing, and reporting services to Japan Hotel &
Resort Toushi Hojin.
2028 Investment in equity shares
2029 Consolidation of Japan Entity (to hold SPL portfolio)
2030 Consolidation of Japan Entity (REO acquisition). To hold Real Estate.
2031 Consolidation of Japan Entity (REO acquisition). To hold Real Estate.
2032 Established as part of an SSG Structured Investing Group transaction.
2200 Financing and holding company for various GS entities.
2201 Performs administrative services related to issuance of collateralized mortgage obligations.
2202 Issues bonds and/or forms trusts to issue bonds collateralized by pools of mortgage related securities.
2204 Holding company for Express Securitization Specialty L.L.C. and Express II Securitization Specialty L.L.C.
2208 GSAM operations in Germany.
2209 Restructured entity replacing GSCM; holds 1% interest in Goldman Sachs Capital Markets Partners, L.P.
2210 Primarily engaged in trading interest rate and FX derivatives.
2210 Primarily engaged in trading interest rate and FX derivatives.
2212 As part of Goldman Sachs' independent research platform, Vantage Marketplace LLC's subject matter experts will
consult with clients who have contracted the expert's services on specific questions/topics.
2220 Engaged in the origination and trading of corporate loans.
2220 Engaged in the origination and trading of corporate loans.
2221 Established primarily to buy and sell bank debt; additionally, the entity does trade in some securities.
2223 Established as part of an SSG Structured Investing Group transaction.
</Table>
<Page>
<Table>
2224 GS Global Funding (Cayman) Ltd 2223 GS Global Funding, Inc. 100.00 Cayman Islands
2225 Hechshire Limited (form Mudchu 1328 Shire UK Limited 100.00 United Kingdom
2226 Cheshire Holdings Europe Limit 0009 Goldman Sachs Group, Inc. 100.00 Jersey, Channel Islands
2228 Luge LLC 2234 Mehetia Holdings Inc. 100.00 Delaware
2229 Madison/Special Situations Val 2221 Special Situations Invest Grou 100.00 Delaware
2230 RTV Ventures LLC 2220 Goldman Sachs Credit Part L.P. 100.00 Texas
2231 GSGF Mortgage I, Co. 2200 GS Financial Serv L.P. (DEL) 19.00 Delaware
2231 GSGF Mortgage I, Co. 2223 GS Global Funding, Inc. 81.00 Delaware
2232 GSGF Mortgage II, Co. 2231 GSGF Mortgage I, Co. 100.00 Delaware
2233 GS Mortgage I, Partners 1502 Goldman Sachs Mortgage Company 95.00 Delaware
2233 GS Mortgage I, Partners 2279 GS MORTGAGE I HOLDINGS LLC 5.00 Delaware
2234 Mehetia Holdings Inc. 2235 GS Mehetia Corp 20.00 Delaware
2234 Mehetia Holdings Inc. 2236 GS Mehetia LLC 50.00 Delaware
2234 Mehetia Holdings Inc. 2237 GS Mehetia Partnership LP 30.00 Delaware
2235 GS Mehetia Corp 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2236 GS Mehetia LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
2237 GS Mehetia Partnership LP 2235 GS Mehetia Corp 1.00 Delaware
2237 GS Mehetia Partnership LP 2236 GS Mehetia LLC 99.00 Delaware
2238 Mehetia Inc 2234 Mehetia Holdings Inc. 100.00 Delaware
2239 Carrera2 LLC 2234 Mehetia Holdings Inc. 100.00 Delaware
2240 GS Global Funding Services I L 0823 Goldman Sachs Investments (Mau 100.00 China
2241 GS Global Funding Serv II Limi 0823 Goldman Sachs Investments (Mau 100.00 China
2242 GS Global Funding Hong Kong I 0009 Goldman Sachs Group, Inc. 99.00 China
2242 GS Global Funding Hong Kong I 2200 GS Financial Serv L.P. (DEL) 1.00 China
<Caption>
2224 Established as part of an SSG Structured Investing Group transaction.
2225 Established as part of an SSG Structured Investing Group transaction.
2226 Established as part of an SSG Structured Investing Group transaction.
2228 Established as part of an SSG Structured Investing Group transaction.
2229 Joint venture specializing in bankruptcy trade claims.
2230 Established to service an existing loan portfolio.
2231 Established as part of an SSG Structured Investing Group transaction.
2231 Established as part of an SSG Structured Investing Group transaction.
2232 Established as part of an SSG Structured Investing Group transaction.
2233 Established as part of an SSG Structured Investing Group transaction.
2233 Established as part of an SSG Structured Investing Group transaction.
2234 Established as part of an SSG Structured Investing Group transaction.
2234 Established as part of an SSG Structured Investing Group transaction.
2234 Established as part of an SSG Structured Investing Group transaction.
2235 Established as part of an SSG Structured Investing Group transaction.
2236 Established as part of an SSG Structured Investing Group transaction.
2237 Established as part of an SSG Structured Investing Group transaction.
2237 Established as part of an SSG Structured Investing Group transaction.
2238 Established as part of an SSG Structured Investing Group transaction.
2239 Established as part of an SSG Structured Investing Group transaction.
2240 Established as part of an SSG Structured Investing Group transaction.
2241 Established as part of an SSG Structured Investing Group transaction.
2242 Established as part of an SSG Structured Investing Group transaction.
2242 Established as part of an SSG Structured Investing Group transaction.
</Table>
<Page>
<Table>
2243 GS Global Funding Hong Kong II 0009 Goldman Sachs Group, Inc. 99.00 China
2243 GS Global Funding Hong Kong II 2200 GS Financial Serv L.P. (DEL) 1.00 China
2244 GS Glob Fund Hong Kong Trust I 0160 Goldman Sachs (Asia) Finance 100.00 China
2245 GS Glob Fund Hong KongTrust II 0160 Goldman Sachs (Asia) Finance 100.00 China
2246 GS Glob Funding Hong Kong Part 2245 GS Glob Fund Hong KongTrust II 100.00 China
2247 GS Global Funding II Co. 2223 GS Global Funding, Inc. 100.00 Delaware
2248 GS Global Funding III Co. 2247 GS Global Funding II Co. 100.00 Delaware
2249 GS Global Funding IV, LLC 2248 GS Global Funding III Co. 100.00 Delaware
2250 GS Global Investments Co. 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2251 GS Global Investments II, Ltd 2252 GS Global Investments III Trus 100.00 Cayman Islands
2252 GS Global Investments III Trus 2250 GS Global Investments Co. 100.00 Delaware
2253 COUNTY ASSETS LIMITED 2254 COUNTY FUNDING LIMITED 100.00 Cayman Islands
2254 COUNTY FUNDING LIMITED 2255 COUNTY UK LIMITED 100.00 United Kingdom
2255 COUNTY UK LIMITED 2256 GS GLOBAL INVESTMENTS UK, INC 100.00 Cayman Islands
2256 GS GLOBAL INVESTMENTS UK, INC 2250 GS Global Investments Co. 100.00 Delaware
2257 MADISON/SPECIAL SITUATIONS VAL 2221 Special Situations Invest Grou 100.00 Delaware
2258 GS GLOBAL PARTNERS LLC 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2270 GS Wind Power II LLC 2298 GSFS INVESTMENTS I CORP 100.00 Delaware
2271 GS RAFT RIVER I HOLDINGS, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
2272 RAFT RIVER ENERGY I, LLC 2271 GS RAFT RIVER I HOLDINGS, LLC 100.00 United States
2273 BRIDGEWATER ODC, LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
2279 GS MORTGAGE I HOLDINGS LLC 1502 Goldman Sachs Mortgage Company 100.00 Delaware
2280 Synfuel Solutions Holdings LLC 0009 Goldman Sachs Group, Inc. 99.99 Delaware
2280 Synfuel Solutions Holdings LLC 2200 GS Financial Serv L.P. (DEL) 0.01 Delaware
2282 GS V-1 Holdings, L.P. 0009 Goldman Sachs Group, Inc. 1.00 Bermuda
<Caption>
2243 Established as part of an SSG Structured Investing Group transaction.
2243 Established as part of an SSG Structured Investing Group transaction.
2244 Established as part of an SSG Structured Investing Group transaction.
2245 Established as part of an SSG Structured Investing Group transaction.
2246 Established as part of an SSG Structured Investing Group transaction.
2247 Established as part of an SSG Structured Investing Group transaction.
2248 Established as part of an SSG Structured Investing Group transaction.
2249 Established as part of an SSG Structured Investing Group transaction.
2250 Established as part of an SSG Structured Investing Group transaction.
2251 Established as part of an SSG Structured Investing Group transaction.
2252 Established as part of an SSG Structured Investing Group transaction.
2253 Established as part of an SSG Structured Investing Group transaction.
2254 Established as part of an SSG Structured Investing Group transaction.
2255 Established as part of an SSG Structured Investing Group transaction.
2256 Established as part of an SSG Structured Investing Group transaction.
2257 Joint venture partner to purchase small bankruptcy trade clients.
2258 Established as part of an SSG Structured Investing Group transaction.
2270 Established as part of an SSG Structured Investing Group transaction.
2271 Established as part of an SSG Structured Investing Group transaction.
2272 Established as part of an SSG Structured Investing Group transaction.
2273 Entity to house a proposed new uS data centre property
2279 Established as part of an SSG Structured Investing Group transaction.
2280 Holding company for Synfuel Solutions LLC.
2280 Holding company for Synfuel Solutions LLC.
2282 Established as part of an SSG Structured Investing Group transaction.
</Table>
<Page>
<Table>
2282 GS V-1 Holdings, L.P. 0250 Goldman Sachs Global Holdings 99.00 Bermuda
2283 GS WIND LLC 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2284 GS GLOBAL MARKETS INC 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2285 GS CAPITAL INVESTMENTS LIMITED 2200 GS Financial Serv L.P. (DEL) 100.00 United Kingdom
2286 GS CAPITAL INVESTMENTS II LTD 2285 GS CAPITAL INVESTMENTS LIMITED 100.00 United Kingdom
2287 CAP INVESTMENTS (US) III LLC 2286 GS CAPITAL INVESTMENTS II LTD 100.00 Delaware
2290 GSFS Investor Inc. 0009 Goldman Sachs Group, Inc. 100.00 Hong Kong
2291 Minerva Investment Partnership 0410 Minerva L.P. 1.00 United Kingdom
2291 Minerva Investment Partnership 0411 Minerva Inc. 99.00 United Kingdom
2298 GSFS INVESTMENTS I CORP 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2299 ENERGY CENTER HOLDINGS LLC 2298 GSFS INVESTMENTS I CORP 100.00 Delaware
2300 MINATO DEBT COLLECTION KK 1503 MLQ Investors, L.P. 100.00 Japan
2301 GS 737 CLASSICS LEASING LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
2302 GS FUNDING OPPORTUNITIES 2303 GS FUNDING OPPORTUNITIES II 100.00 Delaware
2303 GS FUNDING OPPORTUNITIES II 2200 GS Financial Serv L.P. (DEL) 100.00 Delaware
2304 FLURET TRUST 2200 GS Financial Serv L.P. (DEL) 95.00 Delaware
2304 FLURET TRUST 2303 GS FUNDING OPPORTUNITIES II 5.00 Delaware
2305 FLURET LIMITED 2304 FLURET TRUST 100.00 Delaware
2309 GAC PERSONAL TK 0347 GAC PERSONAL CO. LTD 100.00 Japan
2311 LINDEN WOOD TK 0358 LINDEN WOOD, LTD 100.00 Japan
2312 LEAF GREEN TK 0357 LEAF GREEN CO. LTD 100.00 Japan
2313 SOLAR WIND TK 0359 SOLAR WIND LTD 100.00 Japan
2314 NIHON ENDEAVOR FUND TK 0791 Nihon Endeavor Fund Co., LTD 100.00 Japan
2315 KYUSHU HOTEL MGT CO., LTD 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2320 GS Diversified Investments Ltd 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2321 GS Diversified Holdings Ltd 2322 GS Diversified Funding LLC 100.00 Cayman Islands
<Caption>
2282 Established as part of an SSG Structured Investing Group transaction.
2283 Established as part of an SSG Structured Investing Group transaction.
2284 Established as part of an SSG Structured Investing Group transaction.
2285 Established as part of an SSG Structured Investing Group transaction.
2286 Established as part of an SSG Structured Investing Group transaction.
2287 Established as part of an SSG Structured Investing Group transaction.
2290 Established as part of an SSG Structured Investing Group transaction.
2291 Established as part of an SSG Structured Investing Group transaction.
2291 Established as part of an SSG Structured Investing Group transaction.
2298 Established as part of an SSG Structured Investing Group transaction.
2299 Established as part of an SSG Structured Investing Group transaction.
2300 An ASSG related entity that acts as core servicer for loan and real estate SPCs in Japan.
2301 Established as part of an SSG Structured Investing Group transaction.
2302 Established as part of an SSG Structured Investing Group transaction.
2303 Established as part of an SSG Structured Investing Group transaction.
2304 Established to facilitate structured financing.
2304 Established to facilitate structured financing.
2305 Established as part of an SSG Structured Investing Group transaction.
2309 An ASSG related entity that purchased residential loans from Chiyoda Life.
2311 An ASSG related entity that invests in distressed loans.
2312 An ASSG related entity that holds non-performing loans.
2313 An ASSG related entity that invests in distressed loans.
2314 An ASSG related entity that invests in distressed loans
2315 ASSG related entity engaged in hotel management.
2320 Established as part of an SSG Structured Investing Group transaction.
2321 Established as part of an SSG Structured Investing Group transaction.
</Table>
<Page>
<Table>
2322 GS Diversified Funding LLC 0009 Goldman Sachs Group, Inc. 100.00 United States
2323 Wyndham Investments I Ltd 2200 GS Financial Serv L.P. (DEL) 86.67 Cayman Islands
2323 Wyndham Investments I Ltd 2322 GS Diversified Funding LLC 13.33 Cayman Islands
2324 Wyndham Investments II Ltd 2323 Wyndham Investments I Ltd 100.00 Cayman Islands
2325 Rothmill Investment Company 2320 GS Diversified Investments Ltd 100.00 Cayman Islands
2326 501-2 Investment Partnership 2325 Rothmill Investment Company 100.00 Australia
2327 201-2 Investment Partnership 2325 Rothmill Investment Company 100.00 Australia
2328 ACP Partnership Services 2324 Wyndham Investments II Ltd 100.00 Cayman Islands
2329 GS Solar Power I, LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
2330 Lorraine Funding Limited 1222 Goldman Sachs (Cayman) Holding 100.00 Cayman Islands
2331 Chiltern Trust 2200 GS Financial Serv L.P. (DEL) 95.00 Isle of Jersey
2331 Chiltern Trust 2284 GS GLOBAL MARKETS INC 5.00 Isle of Jersey
2343 GS Diversified Finance I LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2344 GS Diversified Finance II LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2345 GS Diversified Finance III LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2346 GS Diversified Finance IV LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2347 GS Diversified Finance V LLC 2200 GS Financial Serv L.P. (DEL) 100.00 United States
2349 GS Diversified Holdings II LLC 2200 GS Financial Serv L.P. (DEL) 99.99 Delaware
2349 GS Diversified Holdings II LLC 2345 GS Diversified Finance III LLC 0.01 Delaware
2350 GSCP (Del) Inc 0009 Goldman Sachs Group, Inc. 100.00 United States
2351 GSCP (Del) LLC 2350 GSCP (Del) Inc 100.00 United States
2353 FJT (HK) LIMITED 0165 Goldman Sachs (Asia) Finance 100.00 Hong Kong
2354 Linden Wood II, Ltd. 1503 MLQ Investors, L.P. 100.00 Japan
2355 Shiga (Delaware) LLC 0165 Goldman Sachs (Asia) Finance 100.00 United States
2356 Kiri (Delaware) LLC 0165 Goldman Sachs (Asia) Finance 100.00 United States
2357 BAY WIND II LTD 1503 MLQ Investors, L.P. 100.00 Japan
<Caption>
2322 Established as part of an SSG Structured Investing Group transaction.
2323 Established as part of an SSG Structured Investing Group transaction.
2323 Established as part of an SSG Structured Investing Group transaction.
2324 Established as part of an SSG Structured Investing Group transaction.
2325 Established as part of an SSG Structured Investing Group transaction.
2326 Established as part of an SSG Structured Investing Group transaction.
2327 Established as part of an SSG Structured Investing Group transaction.
2328 Established as part of an SSG Structured Investing Group transaction.
2329 Established as part of an SSG Structured Investing Group transaction.
2330 Established as part of an SSG Structured Investing Group transaction.
2331 Established in connection with a third party funding transaction.
2331 Established in connection with a third party funding transaction.
2343 Established as part of an SSG Structured Investing Group transaction.
2344 Established as part of an SSG Structured Investing Group transaction.
2345 Established as part of an SSG Structured Investing Group transaction.
2346 Established as part of an SSG Structured Investing Group transaction.
2347 Established as part of an SSG Structured Investing Group transaction.
2349 Established as part of an SSG Structured Investing Group transaction.
2349 Established as part of an SSG Structured Investing Group transaction.
2350 Established to act as general partner and regular partner in GSCP.
2351 Established to act as limited partners for GSCP.
2353 ASSG related entity holding a hotel property in China.
2354 TK operator of Linden Wood II TK.
2355 This entity, a TK investor, was set up to provide equity financing to SPCs which invests in non-performing loans and
real estates.
2356 Pass-through entity used in connection with TK investing structures.
2357 This entity is a SPC which purchases golf course operators as a facility similar to Southwind structure.
</Table>
<Page>
<Table>
2358 GS Leasing (KCSR 2005-1) LLC 2298 GSFS INVESTMENTS I CORP 100.00 United States
2359 MINATOMARU HOTEL HOLDINGS CO. 0307 Goldman Sachs Realty Japan Ltd 100.00 Japan
2398 PMF-1 (BES III) 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
2399 PMF-2 (BES III), LTD 2400 GS EUROPEAN OPP FUND BV 100.00 United Kingdom
2400 GS EUROPEAN OPP FUND BV 0762 ELQ INVESTORS, LTD 100.00 Netherlands
2400 GS EUROPEAN OPP FUND BV 1513 MTGLQ Investors, LP 0.00 Netherlands
2401 GS EUROPEAN OPPORTUNITY FUND, 1513 MTGLQ Investors, LP 100.00 Delaware
2402 DEMAC FINANCIAL SERVICES S.R.O 1513 MTGLQ Investors, LP 100.00 Czech Republic
2403 PMF - 1, LTD 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
2404 PMF-2 LTD 2400 GS EUROPEAN OPP FUND BV 100.00 United Kingdom
2405 GS European Investment Grp II 2406 GS European Opportunities F II 100.00 United Kingdom
2406 GS European Opportunities F II 0762 ELQ INVESTORS, LTD 100.00 United Kingdom
6001 JLQ LLC 2200 GS Financial Serv L.P. (DEL) 100.00 Cayman Islands
6007 NASU URBANE PROPERTIES CO., LT 6001 JLQ LLC 100.00 Japan
6021 Arrow Reinsurance Company Lim 0009 Goldman Sachs Group, Inc. 100.00 Bermuda
6051 Goldman Sachs Financial MarkLP 0009 Goldman Sachs Group, Inc. 99.00 Delaware
6051 Goldman Sachs Financial MarkLP 0080 Goldman Sachs Financial Market 1.00 Delaware
6100 Goldman Sachs Europe - BGA 0220 Goldman Sachs Holding (U.K.) 99.00 United Kingdom
6100 Goldman Sachs Europe - BGA 0709 Goldman Sachs Group Holdings ( 1.00 United Kingdom
6103 William Street Commitment 0009 Goldman Sachs Group, Inc. 100.00 Delaware
6104 William Street Equity 2210 Goldman Sachs Cap Markets, L.P 100.00 Delaware
6105 William Street Funding 6104 William Street Equity 100.00 Delaware
6107 GOLDMAN SACHS (JERSEY) LTD 0201 Goldman Sachs International 100.00 Isle of Jersey
6108 WILLIAM STREET CREDIT CORPORAT 0009 Goldman Sachs Group, Inc. 100.00 Delaware
<Caption>
2358 The entity is an equity holder in a leverage lease transaction where the assets are locomotives.
2359 Holds hotels in Narita, Naha and Chitose, Japan.
2398 It is not a true legal entity. PMF 1 (2403) has a non performing porfolio for which the desk needs separate reporting
and entity 2398 has been set up to facilitate this.
2399 It is not a true legal entity. PMF 2 (2404) has a non performing porfolio for which the desk needs separate reporting
and entity 2399 has been set up to facilitate this.
2400 Established to purchase through its subsidiaries fixed income securities and maintain a portfolio of investments.
2400 Established to purchase through its subsidiaries fixed income securities and maintain a portfolio of investments.
2401 Established to provide funding to GS European Strategic Investment Group BV.
2402 Incorporated to provide debt servicing and administrative services for CDV-1, Ltd.'s loan assets.
2403 Incorporated to provide debt servicing and administrative services for CDV-1, Ltd.'s loan assets.
2404 Established for the purpose of acquiring a 95% participation in a portfolio of non-performing Portuguese mortgages from
PMF-1, Ltd.
2405 To purchase and originate publicly and privately issued fixed income securities
2406 Holding company
6001 An ASSG related entity that invests in loans.
6007 An ASSG related entity that holds property of Japanese style hotel, "Ouan".
6021 Established to support catastrophe reinsurance business.
6051 A registered U.S. broker-dealer whose business consists of dealer activities in eligible OTC derivative instruments,
together with related cash management and portfolio management activities.
6051 A registered U.S. broker-dealer whose business consists of dealer activities in eligible OTC derivative instruments,
together with related cash management and portfolio management activities.
6100 Engaged in agency stock lending business.
6100 Engaged in agency stock lending business.
6103 Extends unfunded loan commitments to investment-grade customers of Goldman Sachs Group, Inc.
6104 Invests in William Street Funding Corporation in exchange for equity and mezzanine securities.
6105 Provides liquidity for potential funding of loan commitments originated by William Street Commitment Corporation.
6107 Acts as an issuer of securitized derivatives in the UK market
6108 Issues commitments (both funded and unfunded) under the William Street program that will not for various reasons be
issued by WS Commitment Corp.
</Table>
<Page>
<Table>
6109 GSSM HOLDING UK 0009 Goldman Sachs Group, Inc. 100.00 United Kingdom
6110 GSSM HOLDING CORP 0009 Goldman Sachs Group, Inc. 100.00 Delaware
6111 GS EURO STRATEGIC INVST GRP BV 2400 GS EUROPEAN OPP FUND BV 100.00 Netherlands
6112 GS EUROPEAN INVESTMENT GRP BV 0762 ELQ INVESTORS, LTD 100.00 Netherlands
6113 GS EURO MEZZANINE INVST GRP BV 0762 ELQ INVESTORS, LTD 100.00 Netherlands
6114 GS EUROPEAN PERFORMANCE FUND 0009 Goldman Sachs Group, Inc. 100.00 Ireland
6115 GS Multi-Curr Euro Performance 0009 Goldman Sachs Group, Inc. 100.00 Ireland
6116 GS Specialty Lending Holdings 0009 Goldman Sachs Group, Inc. 100.00 Delaware
6117 SSIG SPF One LQ, LLC 1513 MTGLQ Investors, LP 100.00 Delaware
6118 GS Specialty Lending HoldingII 0009 Goldman Sachs Group, Inc. 100.00 United States
6119 Remark Funding Co, LLC. 1513 MTGLQ Investors, LP 100.00 United States
6120 GS Spec. Lending CLO-I LTD 6118 GS Specialty Lending HoldingII 100.00 United States
6121 Charleston Reinsurance LLC 6122 Columbia Capital Life Reins Co 100.00 South Carolina
6122 Columbia Capital Life Reins Co 0009 Goldman Sachs Group, Inc. 100.00 South Carolina
6136 Triumph Investments II (Irel) 0191 GS Asian Venture (Delaware)LLC 100.00 Ireland
6137 Triumph III Inv (Ireland) Ltd 6150 Best II Investments (Delaware) 100.00 Ireland
6138 GS Structured Products (Asia) 0160 Goldman Sachs (Asia) Finance 100.00 Cayman Islands
6150 Best II Investments (Delaware) 2200 GS Financial Serv L.P. (DEL) 100.00 Ireland
6151 Astoria Investment Ventures, I 0160 Goldman Sachs (Asia) Finance 100.00 Philippines
6152 Baekdu Investments Limited 2200 GS Financial Serv L.P. (DEL) 100.00 Cayman Islands
6153 GS STRATEGIC INVESTMENTS (ASIA 0194 MLT Investments Ltd. 100.00 Delaware
6155 GS India Venture Capital Limit 0164 Jade Dragon (Mauritius) Ltd 100.00 Hong Kong
<Caption>
6109 Established to hold firm's investments in SMFG convertible preferreds - As of 11-25-05, it no longer held the shares of
GSSM Hldg Corp.
6110 Established to hold firm's investments in SMFG convertible preferreds - As of 11-25-05, the SMFG Pref's were held
by GS Group,
6111 Primarily invests in non investment grade securities and loans of European companies.
6112 Established to purchase and originate publicly and privately issued fixed income securities.
6113 Established to purchase and originate publicly and privately issued fixed income securities.
6114 Primarily invests in investment grade debt instruments of European companies.
6115 Established to hold USD, GDP and Euro notes from the GS European Performance Fund Limited and issue single currency
Euro notes to the Investor.
6116 Originates (or purchases) loans made to middle market borrowers that cannot sufficiently access the market through
traditional senior bank debt lenders.
6117 Actively managed opportunity fund which invests in distressed credit.
6118 Originates (or purchases) loans made to middle market borrowers that cannot sufficiently access the market through
traditional senior bank debt lenders.
6119 General purpose entity for the PFG consumer business to invest in portfolios of consumer loans.
6120 Established to be an actively managed performance fund engaged in par credit investing.
6121 To pursue various opportunities in the reinsurance business.
6122 Established to pursue various opportunities in the reinsurance business.
6136 Established primarily to hold ASSG positions in Korean assets.
6137 Established to hold an array of Dong Ah Construction Ltd. Claims with a portion guaranteed by Korea Express Co.
("KorEx") and certain direct claim of KorEx.
6138 Established for issuance of Hong Kong listed warrants.
6150 Owns Triumph Investments (Ireland) Limited and Triumph III Investments (Ireland) Limited.
6151 Owns approximately 18.6% of the ERP shares issued by a Philippine metro operating company.
6152 A holding company that owns 30% of Alkas Realty Pte. Ltd., which in turn, owns the DBS Building (a 862,810 sq ft. Grade
A office complex comprising of 2 adjacent towers) in Singapore.
6153 To hold ASSG investments
6155 Will hold ASSG assets.
</Table>
<Page>
<Table>
6156 GS STRATEGIC HOLDINGS LIMITED 0193 Panda Investments Ltd. 100.00 Mauritius
6157 COUGAR INVESTMENTS (MAURITIUS) 0193 Panda Investments Ltd. 100.00 Mauritius
6158 TUNG FUNG DEVELOPMENT CO. 0196 EUSTON ENTERPRISES LTD 50.00 Hong Kong
6158 TUNG FUNG DEVELOPMENT CO. 0197 FAIRWAY ENTERPRISES LTD 50.00 Hong Kong
6159 GOLDMAN SACHS LLC 0435 Hull Trading Asia, Limited 100.00 Hong Kong
6160 GS Strategic Investments (Dela 0196 EUSTON ENTERPRISES LTD 50.00 Delaware
6160 GS Strategic Investments (Dela 0197 FAIRWAY ENTERPRISES LTD 50.00 Delaware
6163 GRAND STEEL STRATEGIC INVESTMT 6153 GS STRATEGIC INVESTMENTS (ASIA 100.00 Cayman Islands
6164 GLOBAL TECHNOLOGIES INTERNATIO 0194 MLT Investments Ltd. 100.00 British Virgin Islands
6165 GS CHINA VENTURE I(MAURITIUS) 0164 Jade Dragon (Mauritius) Ltd 100.00 Mauritius
6166 GS CHINA VENTURE II (MAURITIUS 0164 Jade Dragon (Mauritius) Ltd 100.00 Mauritius
6167 Jade Dragon Venture Inv Limite 6165 GS CHINA VENTURE I(MAURITIUS) 60.00 China
6167 Jade Dragon Venture Inv Limite 6166 GS CHINA VENTURE II (MAURITIUS 40.00 China
6168 ELEVATECH LIMITED 0198 Wealth Earner Limited 100.00 Hong Kong
9868 REP PEB REALTY, LLC 6117 SSIG SPF One LQ, LLC 100.00 Delaware
9869 REP PRK Realty, LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
9870 REP ALX Realty, LLC 0009 Goldman Sachs Group, Inc. 100.00 Delaware
<Caption>
6156 To hold ASSG positions in Mengxi Cement
6157 To hold ASSG positions in Indian private equities.
6158
6158
6159 To hold our investment in ICBC.
6160 Potentially holding ASSG positions
6160 Potentially holding ASSG positions
6163 To hold investments in Jianlong, a steel Manufacturer in China
6164 Holding 20% of APPH (a Philippines Co) and 20 % of APPCo. APPH and APPCo are engaged in real estate contruction and
development business
6165 Holding Co of Jade Dragon Venture Investment Limited
6166 Holding Co of Jade Dragon Venture Investment Limited
6167 TO hold China Investments in future
6167 TO hold China Investments in future
6168 Holding ASSG investments
9868 REPIA entity.
9869 REPIA entity.
9870 REPIA entity.
</Table>
<Page>
These entities are directly or indirectly controlled by or under common control
with the Company.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of May 31, 2007, there were 0 Contract Owners of qualified Contracts and
0 Contract Owners of non-qualified Contracts.
As of May 31, 2007, there were no Contract Form A3038-07 Owners since sales
had not yet begun.
ITEM 28. INDEMNIFICATION
<Page>
RULE 484 UNDERTAKING - Article VI of the Bylaws of the Company states: The
Corporation shall indemnify to the full extent permitted by applicable law any
person made or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person's testator or intestate is or was a director, officer or
employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a director, officer or employee. Expenses,
including attorneys' fees, incurred by any such person in defending any such
action, suit or proceeding shall be paid or reimbursed by the Corporation
promptly upon receipt by it of an undertaking of such person to repay such
expenses if such person if finally adjudicated not to have acted in good faith
in the reasonable belief that his or her action was in the best interest of the
Corporation or other enterprise. The Corporation shall accept such undertaking
without reference to the financial ability of such person to make repayment.
Notwithstanding the foregoing, no indemnification shall be provided for any
person with respect to any matter as to which such person shall have been
finally adjudicated not to have acted in good faith in the reasonable belief
that the action was in best interests of the Corporation or other enterprise. No
matter disposed of by settlement, compromise, the entry of a consent decree or
the entry of any plea in a criminal proceeding, shall of itself be deemed an
adjudication of not having acted in good faith in the reasonable belief that the
action was in the best interest of the Corporation. The rights provided to any
person by this by-law shall be enforceable against the Corporation by such
person who shall be presumed to have relied upon it in serving or continuing to
serve as director, officer or employee as provided above. No amendment of this
by-law shall impair the rights of any person arising at any time with respect to
events occurring prior to such amendment.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) [Distributor] also acts as principal underwriter for the
following:
- Commonwealth Annuity Separate Account A
(b) The Principal Business Address of each of the following Directors and
Officers of [Distributor] is:
132 Turnpike Rd., Suite 210
Southborough, MA 01772
NAME POSITION OR OFFICE WITH UNDERWRITER
---- -----------------------------------
[ ]
(c) As indicated in Part B (Statement of Additional Information) in
response to Item 20(c), the [Distributor] did not received
any commission in connection with the sale of the Contracts funded by
the Registrant because the [Distributor] was not in existence
as of December 31, 2006. No other commissions or other compensation
was received by the principal underwriter, directly or indirectly,
from the Registrant during the Registrant's last fiscal year.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Each account, book or other document required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3
thereunder are maintained for the Company by Security Benefit Life
Insurance Company at One Security Benefit Place, Topeka, Kansas.
ITEM 31. MANAGEMENT SERVICES
The Company provides daily unit value calculations and related services for
the Company's separate accounts.
<Page>
ITEM 32. UNDERTAKINGS
(a) The Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure
that the audited financial statements in the registration statement
are never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted.
(b) The Registrant hereby undertakes to include as part of the application
to purchase a Contract a space that the applicant can check to request
a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver a Statement of Additional
Information and any financial statements promptly upon written or oral
request, according to the requirements of Form N-4.
(d) Insofar as indemnification for liability arising under the 1933 Act
may be permitted to Directors, Officers and Controlling Persons of
Registrant under any registration statement, underwriting agreement or
otherwise, Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Director, Officer or Controlling Person of
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, 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 1933 Act and will be
governed by the final adjudication of such issue.
(e) Commonwealth Annuity and Life Insurance Company hereby represents that
the aggregate fees and charges deducted under the Contracts are
reasonable in relation to the services rendered, expenses expected to
be incurred, and risks assumed by the Company.
ITEM 33. REPRESENTATIONS CONCERNING WITHDRAWAL RESTRICTIONS ON SECTION 403(B)
PLANS AND UNDER THE TEXAS OPTIONAL RETIREMENT PROGRAM
Registrant, a separate account of Commonwealth Annuity and Life Insurance
Company ("Company"), states that it is (a) relying on Rule 6c-7 under the
1940 Act with respect to withdrawal restrictions under the Texas Optional
Retirement Program ("Program") and (b) relying on the "no-action" letter
(Ref. No. IP-6-88) issued on November 28, 1988 to the American Council of
Life Insurance, in applying the withdrawal restrictions of Internal Revenue
Code Section 403(b)(11). Registrant has taken the following steps in
reliance on the letter:
1. Appropriate disclosures regarding the redemption withdrawal
restrictions imposed by the Program and by Section 403(b)(11) have
been included in the prospectus of each registration statement used in
connection with the offer of the Company's variable contracts.
2. Appropriate disclosures regarding the redemption withdrawal
restrictions imposed by the Program and by Section 403(b)(11) have
been included in sales literature used in connection with the offer of
the Company's variable contracts.
3. Sales Representatives who solicit participants to purchase the
variable contracts have been instructed to specifically bring the
redemption withdrawal restrictions imposed by the Program and by
Section 403(b)(11) to the attention of potential participants.
<Page>
4. A signed statement acknowledging the participant's understanding of
(i) the restrictions on redemption withdrawal imposed by the Program
and by Section 403(b)(11) and (ii) the investment alternatives
available under the employer's arrangement will be obtained from each
participant who purchases a variable annuity contract prior to or at
the time of purchase.
Registrant hereby represents that it will not act to deny or limit a
transfer request except to the extent that a Service-Ruling or written
opinion of counsel, specifically addressing the fact pattern involved and
taking into account the terms of the applicable employer plan, determines
that denial or limitation is necessary for the variable annuity contracts
to meet the requirements of the Program or of Section 403(b). Any transfer
request not so denied or limited will be effected as expeditiously as
possible.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Pre-Effective Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Southborough, and
Commonwealth of Massachusetts, on the 15th day of June, 2007.
COMMONWEALTH ANNUITY SEPARATE ACCOUNT A OF
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
[By: /s/ Samuel Ramos,]
------------------------------------
Samuel Ramos, Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Pre-Effective Amendment No. 1 to the Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
[/s/ Michael A. Pirrello] Vice President and [June , 2007]
---------------------------- Chief Financial Officer
Michael A. Pirrello
Allan S. Levine* Chairman of the Board
----------------------------
Nicholas Helmuth von Moltke* Director, Vice President,
---------------------------- and Chief Operating Officer
Donald Mullen* Director
----------------------------
J. William McMahon* Director
----------------------------
John W. McMahon* Director
---------------------------
Timothy J. O'Neill* Director
----------------------------
Michael A. Reardon* Director, President, and
---------------------------- Chief Executive Officer
John J. Fowler* Vice President
----------------------------
[/s/ Samuel Ramos] Vice President and Secretary
----------------------------
Samuel Ramos
Amol Sagun Naik* Vice President and Treasurer
----------------------------
Jane Spanier Grosso* Vice President and Controller
----------------------------
Margot K. Wallin* Vice President and
---------------------------- Chief Compliance Officer
Alan Akihiro Yamamura* Vice President and
---------------------------- Chief Risk Officer
*Jon-Luc Dupuy, by signing his name hereto, does hereby sign this document on
behalf of each of the above-named Directors and Officers of the Registrant
pursuant to the Powers of Attorney dated June 8, 2007 duly executed by such
persons.
[/s/ Jon-Luc Dupuy]
----------------------------
Jon-Luc Dupuy, Attorney-in-Fact (Advantage IV)
<Page>
EXHIBIT TABLE
<Table>
Exhibit (3)(a) Distribution Agreement between the Company and [Distributor]
Exhibit (3)(b) Sales Agreement with broker-dealers
Exhibit (4)(a) Policy (3038-07)
Exhibit (4)(b) No Withdrawal Charge Rider (4002-07)
Exhibit (4)(c) Extended Care Waiver Rider (4009-07) (Nursing Home Rider Endorsement)
Exhibit (4)(d) Disability Waiver Rider (4008-07)
Exhibit (4)(e) Texas Optional Retirement Program Rider (4010-07)
Exhibit (4)(f) Qualified Plan Rider (401a) (4011-07)
Exhibit (4)(g) Tax Sheltered Annuity Rider (403b) (4012-07)
Exhibit (4)(h) GLWB Rider - Single Life - Advantage IV (4003-07)
Exhibit (4)(i) GLWB Rider - Joint Life - Advantage IV (4004-07)
Exhibit (4)(j) ADV IV Step-Up Death Benefit Rider (4001-07)
Exhibit (4)(k) 457 Rider (4013-07)
Exhibit 5 Form of Application (Advantage IV- AD-401)
Exhibit 8(b) Directors' Powers of Attorney
Exhibit 9 Opinion of Counsel
Exhibit 10 Consent of Independent Registered Public Accounting Firm
Exhibit 15(a) Form of Amendment dated August 1, 2007 to the AIM Participation Agreement
Exhibit 15(b) Form of Amended and Restated Participation Agreement among Commonwealth Annuity and Life Insurance Company,
Alliance Capital Management L.P., and Alliance Fund Distributors, Inc.
Exhibit 15(c) Form of Amendment dated August 1, 2007 and the Amended and Restated Participation Agreement dated
September 25, 2006 with Franklin Templeton Variable Insurance Products Trust, Franklin/Templeton
Distributors, Inc., and Commonwealth Annuity and Life Insurance
Exhibit 15(d) Form of Amendment dated August 1, 2007 to the Participation Agreement dated January 2, 2006 between Goldman
Sachs Variable Insurance Trust, Goldman, Sachs & Co, and Allmerica Financial Life Insurance and Annuity Company
Exhibit 15(e) Form of Participation Agreement dated August 1, 2007 with Goldman Sachs Trust
</Table>
<Page>
<Table>
Exhibit 15(f) Form of Amendment dated August 1, 2007 to the Participation Agreement with Janus
Exhibit 15(g) Form of Amendment dated August 1, 2007 to the Participation Agreement with Oppenheimer Variable Account Funds
Exhibit 15(h) Form of Participation Agreement among Pioneer Variable Contracts Trust, Commonwealth Annuity and Lie Insurance
Company, Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc. dated August 1, 2007
</Table>