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SUPPLEMENTER [THE HARTFORD LOGO]
MODIFIED GUARANTEED ANNUITY
CONTRACTS
ISSUED BY HARTFORD LIFE INSURANCE
COMPANY
This Prospectus describes participating interests in a group deferred
annuity contract designed and offered to provide retirement programs for you if
you are an eligible individual. Eligible individuals include certain persons who
are employees, retirees or the dependents of employees of employers as well as
certain persons who are members or dependents of members of trade unions, bona
fide associations and other entities who have entered into group deferred
annuity contracts with Hartford Life Insurance Company ("Hartford" or the
"Company"). Eligible individuals also include members or dependents of members
of employee organizations or customers of financial institutions that are
participating in group annuity contracts with the Company.
An individually allocated deferred annuity certificate is offered in certain
states and this certificate may be purchased to accept monies that are eligible
for rollover to an Individual Retirement Account with a value of $5,000 or more.
Participation in a Group Contract (the "Contract") will be separately
accounted for by the issuance of a Certificate evidencing your interest under
the Contract. The Certificate and Individual Annuity Certificate are hereafter
referred to as "the Certificate."
A minimum single purchase payment of at least $5,000 must accompany the
application for a Certificate. Hartford reserves the right to limit the maximum
single purchase payment amount. No additional payment is permitted on a
Certificate although eligible individuals may purchase more than one
Certificate. (See "Application and Purchase Payment")
Purchase payments become part of the general assets of Hartford. During the
period before annuity payments start, we credit interest on your account.
If you decide to become a Contract Owner or a Participant, you should keep
this Prospectus for your records.
This prospectus is filed with the Securities and Exchange Commission ("SEC")
The SEC doesn't approve or disapprove these securities or determine if the
information in this prospectus is truthful or complete. Anyone who represents
that the Securities and Exchange Commission does these things may be guilty of a
criminal offense.
This Prospectus can also be obtained from the Securities and Exchange
Commission's website (www.sec.gov).
This group deferred annuity contract IS NOT:
- - A bank deposit or obligation
- - Federally insured
- - Endorsed by any bank or governmental agency
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Prospectus Dated: May 1, 2008
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AVAILABLE INFORMATION
We are required by the Securities Exchange Act of 1934 to file reports and
other information with the SEC. You may read or copy these reports at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549. You
may call the SEC at 1-800-SEC-0330 for further information on the public
reference room. You may also obtain reports, proxy and information statements
and other information about us at the SEC's website at: www.sec.gov.
We filed a registration statement ("Registration Statement") relating to the
Contracts offered by this prospectus with the SEC under the Securities Act of
1933. This prospectus has been filed as a part of the Registration Statement and
does not contain all of the information contained in the Registration Statement.
For more information about the Contracts and us, you may obtain a copy of the
Registration Statement in the manner set forth in the preceding paragraph.
In addition, the SEC allows Hartford to "incorporate by reference"
information that Hartford files with the SEC into this prospectus, which means
that incorporated documents are considered part of this prospectus. Hartford can
disclose important information to you by referring you to those documents.
Information that Hartford files with the SEC will automatically update and
supercede the information in this prospectus.
This prospectus incorporates by reference the following documents:
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
2007;
(b) Our Quarterly Report on Form 10-Q for the period ended March 31, 2008;
and
(c) Until this offering has been completed, any future filings we will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934.
Statements in this prospectus, or in documents that we file later with the
SEC and that legally become part of this prospectus, may change or supercede
statements in other documents that are legally part of this prospectus.
Accordingly, only the statement that is changed or replaced will legally be a
part of this prospectus.
Hartford will provide without charge to each person to whom a copy of this
prospectus has been delivered, upon the written or oral request of such person,
a copy of the document referred to above which has been incorporated by
reference in this prospectus, other than exhibits to such document. Requests for
such copies should be directed to Hartford Life Insurance Company, Attn:
IPD/Retirement Plan Service Center, P.O. Box 1583, Hartford, Connecticut
06102-5085, telephone: 1-800-528-9009.
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TABLE OF CONTENTS
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SUMMARY 4
GLOSSARY OF SPECIAL TERMS 5
DESCRIPTION OF CERTIFICATES 6
A. Application and Purchase Payment 6
B. Accumulation Period 6
1. Initial and Subsequent Guarantee Periods 6
2. Establishment of Guarantee Rates and Current Rates 6
3. Surrenders 7
(a) General 7
(b) Market Value Adjustment 7
(c) Special Surrenders 7
4. Premium Taxes 8
5. Death Benefit 8
6. Payment upon Partial or Full Surrender 8
C. Annuity Period 8
1. Electing the Annuity Commencement Date and Form of Annuity 8
2. Change of Annuity Commencement Date or Annuity Option 9
3. Annuity Options 9
4. Annuity Payment 9
5. Death of Annuitant After Annuity Commencement Date 10
INVESTMENTS BY HARTFORD 10
AMENDMENT OF CERTIFICATES 11
ASSIGNMENT OF CERTIFICATES 11
DISTRIBUTION OF CERTIFICATES
FEDERAL TAX CONSIDERATIONS 13
A. General 13
B. Taxation of Hartford and the Separate Account 13
C. Diversification of the Separate Account 14
D. Tax Ownership of the Assets in the Separate Account 14
E. Non-Natural Persons as Owners 15
F. Annuity Purchases by Nonresident Aliens and Foreign Corporations 15
G. Generation Skipping Transfer Tax 15
I. Individual Retirement Annuities ("IRAs"). 16
HARTFORD LIFE INSURANCE COMPANY 23
LEGAL OPINIONS 24
EXPERTS 24
APPENDIX A (MARKET VALUE ADJUSTMENT) 25
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THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALES PERSON, OR OTHER PERSON
IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION
WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON.
THIS CERTIFICATE IS NOT AVAILABLE IN ALL STATES.
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SUMMARY
Upon application, you select an initial Guarantee Period from among those
then offered by Hartford. During this Guarantee Period, your purchase payment
earns interest at the applicable Initial Guarantee Rate as established by
Hartford. (See, "Initial and Subsequent Guarantee Periods" and "Establishment of
Guarantee Rates and Current Rates")
At the end of each Guarantee Period, a subsequent Guarantee Period of the
same duration will begin unless, within the thirty-day period preceding the end
of such Guarantee Period, you elect a different duration from among those
offered by us at that time. In no event may subsequent Guarantee Periods extend
beyond the Annuity Commencement date then in effect.
The Account Value as of the first day of each subsequent Guarantee Period
will earn interest at the Subsequent Guarantee Rate. HARTFORD'S MANAGEMENT WILL
MAKE THE FINAL DETERMINATION AS TO GUARANTEE RATES TO BE DECLARED. WE CANNOT
PREDICT NOR CAN WE GUARANTEE FUTURE GUARANTEE RATES. (See, "Initial and
Subsequent Guarantee Periods," and "Establishment of Guarantee Rates and Current
Rates")
Subject to certain restrictions, total surrenders are permitted. However,
such surrenders may be subject to a Market Value Adjustment. A full surrender
made prior to the end of a Guarantee Period will be subject to a Market Value
Adjustment. A REQUEST FOR SURRENDER AT THE END OF A GUARANTEE PERIOD MUST BE
RECEIVED IN WRITING 30 DAYS PRECEDING THE END OF THE GUARANTEE PERIOD. A MARKET
VALUE ADJUSTMENT WILL NOT BE APPLIED TO SURRENDERS MADE AT THE END OF A
GUARANTEE PERIOD.
A Market Value Adjustment will be applied to your Account Value to purchase
an annuity on the Annuity Commencement Date if the Annuity Commencement Date is
not at the end of a Guarantee Period. To elect an Annuity Option you must notify
us at least 30 days before the end of that Guarantee Period.
In addition, at the end of a Certificate Year we will send you any interest
that has been credited during the Certificate Year if you so request in writing.
No Market Value Adjustment will be imposed on such interest payments. Any such
surrender may, however, be subject to tax.
The Market Value Adjustment reflects the relationship between the Current
Rate for the duration remaining in the Guarantee Period at the time you request
the surrender and the then applicable Guarantee Rate being applied to your
Account Value. Since Current Rates are based in part upon the investment yields
available to Hartford (see "Investments by Hartford"), the effect of the Market
Value Adjustment will be closely related to the levels of such yields. It is
possible, therefore, that, should such yields increase significantly from the
time you purchased your Certificate, the amount you would receive upon a full
surrender of your Certificate may be less than your original purchase payment.
If such yields should decrease significantly, the amount you would receive upon
a full surrender may be more than your original purchase payment.
We may defer payment of a full surrender for a period not exceeding 6 months
from the date of our receipt of your written notice of surrender or the period
permitted by state insurance law, if less, but such a deferral of payment will
be for a period greater than thirty days only under highly unusual
circumstances. Interest of at least 4% per annum will be paid on any amounts
deferred for more than 30 days if Hartford chooses to exercise this deferral
right. (See, "Payment Upon Partial or Full Surrender")
On the Annuity Commencement Date specified by you, Hartford will make a
lump-sum payment or start to pay a series of payments based on the Annuity
Options selected by you. (See, "Annuity Period")
The Certificate provides for a Death Benefit. If the Participant dies before
the Annuity Commencement Date and there is no designated Contingent Annuitant
surviving, the Death Benefit will be payable to the Beneficiary as determined
under the Certificate Control Provisions. The Death Benefit is calculated as of
the date we receive written notification of Due Proof of Death at the offices of
Hartford.
If the death occurs on or prior to the Annuity Commencement Date and on or
prior to the Annuitant attaining age 65, then the Death Benefit equals the
higher of the Account Value or the Net Surrender Value as each is calculated as
of the date the Company receives written notification of Due Proof of Death. If
the death occurs prior to the Annuity Commencement Date after the Annuitant
attains age 65, then the death benefit equals the Net Surrender Value. If the
named Beneficiary is the spouse of the Participant and the Annuitant is living,
the spouse may elect, in lieu of receiving the Death Benefit, to become the
Participant and continue the Certificate. (See, "Death Benefit")
On any Certificate subject to premium tax, Hartford will pay premium taxes
at the time imposed under applicable law. At its sole discretion, Hartford may
deduct premium taxes at the time Hartford pays such taxes to the applicable
taxing authorities, at the time the Certificate is surrendered or at the time
the Certificate annuitizes. (See, "Premium Taxes")
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GLOSSARY OF SPECIAL TERMS
In this Prospectus "We," "Us" and "Our" refer to Hartford Life Insurance
Company. "You," "Yours" and "Participant" refer to a person/persons who has/have
been issued a Certificate under the group deferred annuity contract.
In addition, as used in this Prospectus, the following terms have the
indicated meanings:
ACCOUNT VALUE: As of any date, the Account Value is the sum of the purchase
payment and all interest earned to that date.
ANNUAL EFFECTIVE RATE OF INTEREST: At the beginning of a year, the rate of
return an investment will earn during that year, where interest is not paid
until the end of the year (i.e., no surrenders or interest withdrawals are made
during the year). If interest withdrawals are taken more frequently than
annually, the total interest for a given year will be less than the Annual
Effective Rate of Interest times the Account Value at the beginning of the year.
ANNUITANT: The person upon whose life the Certificate is issued. The Participant
must also be the Annuitant.
ANNUITY COMMENCEMENT DATE: The date designated in the Certificate or otherwise
by the Participant on which annuity payments are to start.
BENEFICIARY: The person entitled to receive benefits per the terms of the
Certificate in case of the death of the Participant.
CERTIFICATE: The Certificate evidencing a participating interest in the group
annuity contract as set forth in this Prospectus. Any reference in this
Prospectus to Certificate also includes the group annuity contract. Likewise,
any reference in this Prospectus to Contract includes the underlying
Certificate.
CERTIFICATE DATE: The effective date of participation under the group annuity
contract as designated in the Certificate or date of issue of an individual
annuity Certificate.
CERTIFICATE YEAR: A continuous 12 month period commencing on the Certificate
Date and each anniversary thereof.
COMPOUND INTEREST METHOD: The process of interest being reinvested to earn
additional interest on a daily basis.
CONTINGENT ANNUITANT: The spouse of the Participant, if designated by the
Participant, who upon the Annuitant's death, prior to the Annuity Commencement
Date, becomes the Annuitant and also the Participant.
CONTRACT OWNER: The employer or entity owning the Contract.
CURRENT RATE: The applicable effective annual interest rate contained in a
schedule of rates established by us from time to time for various durations.
DEPENDENT: The spouse or child of an Employee or Retiree eligible to participate
in this Certificate.
DUE PROOF OF DEATH: A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended the
deceased, or any other proof acceptable to the Company.
GROSS SURRENDER VALUE: As of any date, the Account Value specified by you for a
full surrender.
GUARANTEE PERIOD: The period for which either an Initial or Subsequent Guarantee
Rate is credited.
HOME OFFICE: Located at 200 Hopmeadow Street, Simsbury, CT 06089. The mailing
address for correspondence concerning this Contract is P.O. Box 1583, Hartford,
CT 06144-1583, except for overnight or express mail packages, which should be
sent to: Attention: IPD/ Retirement Plan Service Center, 200 Hopmeadow Street,
Simsbury, CT 06089.
INITIAL GUARANTEE RATE: The effective annual rate of interest credited and
compounded annually during the initial Guarantee Period.
IN WRITING: A written form satisfactory to us and received at our Home Office.
MARKET VALUE ADJUSTMENT: The amount payable as a partial or full surrender made
prior to the end of any Guarantee Period may be adjusted up or down by the
application of this formula.
NET SURRENDER VALUE: The amount payable to you on a full surrender under the
Certificate after the application of any Market Value Adjustment.
PARTICIPANT: A term used to describe, for record-keeping purposes, any employee
or other eligible person electing to participate in the Contract.
SUBSEQUENT GUARANTEE RATE: The effective annual rate of interest established by
us for the applicable subsequent Guarantee Period.
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DESCRIPTION OF CERTIFICATES
A. APPLICATION AND PURCHASE PAYMENT
To apply for a Certificate, you need only complete an enrollment form and
make your purchase payment. This Certificate is purchased by completing an
enrollment form and submitting it to Hartford along with your purchase payment
for its approval.
The Certificates are issued after the receipt of a properly completed
application and the payment of a single purchase payment. You may not contribute
additional purchase payments to a Certificate in the future. You may, however,
purchase additional Certificates, if you are an eligible individual, at then
prevailing Guarantee Rates and terms.
The minimum purchase payment in relation to a Certificate is $5,000.
Hartford retains the right to limit the amount of the maximum purchase payment.
Your purchase payment becomes part of our general assets and is credited to
an account we establish for you. You start earning interest on your account the
day the purchase payment is applied.
In the event that your application or an order to purchase is not properly
completed, we will attempt to contact you in writing or by telephone. We will
return the purchase payment three weeks after its receipt by us if the
application or an order to purchase has not, by that time, been properly
completed.
B. ACCUMULATION PERIOD
1. INITIAL AND SUBSEQUENT GUARANTEE PERIODS
Upon enrollment, you will select the duration of your Initial Guarantee
Period from among those durations offered by us. The duration you select and
amount of your purchase payment will determine your Initial Guarantee Rate, and
your purchase payment (less applicable premium taxes, if any) will earn interest
at this Initial Guarantee Rate which is an Annual Effective Rate of Interest.
Interest is credited daily to Your account using the Compound Interest Method.
With compound interest, the total investment of principal and interest earned to
date is invested at all times. You continue to earn interest on interest already
earned. However, when withdrawals are made during the year, interest on the
amount of the withdrawals is lost for the remainder of the year.
Unless you elect to make a full surrender or elect an annuity option (see,
"Surrenders"), a subsequent Guarantee Period will automatically commence at the
end of a Guarantee Period. Each subsequent Guarantee Period will be the same
duration as the previous Guarantee Period unless you elect in writing on any day
within the thirty day period preceding the end of the previous Guarantee Period,
a Guarantee Period of a different duration from among those offered by us at
that time.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect. For example, if you are age 62 upon the
expiration of a Guarantee Period and you have chosen age 65 as an Annuity
Commencement Date, we will provide a three year Guarantee Period to equal the
number of years remaining before your Annuity Commencement Date. Your Account
Value will then earn interest at a Guarantee Rate, which we have declared for
that duration. The Guarantee Rate for the Guarantee Period automatically applied
in these circumstances may be higher or lower than the Guarantee Rate for longer
durations.
The Account Value at the beginning of any subsequent Guarantee Period will
be equal to the Account Value at the end of the Guarantee Period just ending.
This Account Value will earn interest at the Subsequent Guarantee Rate.
Within thirty days preceding the end of a Guarantee Period, we will notify
you of the expiration of the current Guarantee Period.
2. ESTABLISHMENT OF GUARANTEE RATES AND CURRENT RATES
The Initial Guarantee Rate for the Guarantee Period you choose will be
determined on the date your Purchase Payment and enrollment form are received in
good order at the Home Office. Current Rates will be established periodically
along with the Guarantee Rates, which will be applicable to subsequent Guarantee
Periods. After the end of each Certificate Year, we will send you a confirmation
which will show (a) your Account Value as of the end of the preceding
Certificate Year, (b) your Account Value at the end of the current Certificate
Year, and (c) the rate of interest being credited to your Certificate.
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Hartford has no specific formula for determining the rate of interest that
it will declare as Current Rates or Guarantee Rates in the future. The
determination of Current Rates and Guarantee Rates will be reflective of
interest rates available on the types of debt instruments in which Hartford
intends to invest the proceeds attributable to the Certificates. (See,
"Investments by Hartford") In addition, Hartford's management may also consider
various other factors in determining Current Rates and Guarantee Rates for a
given period, including, regulatory and tax requirements; sales commissions and
administrative expenses borne by Hartford; general economic trends; and
competitive factors. HARTFORD'S MANAGEMENT WILL MAKE THE FINAL DETERMINATION AS
TO CURRENT AND GUARANTEE RATES TO BE DECLARED. WE CANNOT PREDICT NOR CAN WE
GUARANTEE FUTURE CURRENT RATES OR GUARANTEE RATES.
3. SURRENDERS
(A) GENERAL
Full surrenders may be made under a Certificate at any time and will
terminate the Certificate.
In the case of all surrenders, the Account Value will be reduced by the
Gross Surrender Value on the Surrender Date and the Net Surrender Value
will be payable to you. The Net Surrender Value equals:
(A - B) x C, where:
A = the Gross Surrender Value,
B = any unpaid premium tax,
C = the Market Value Adjustment.
Hartford will, upon request, inform you of the amount payable upon a
full surrender.
Any full or special surrender may be subject to tax. (See, "Tax
Considerations")
(B) MARKET VALUE ADJUSTMENT
The amount payable on a partial or full surrender made preceding the
end of any Guarantee Period may be adjusted up or down by the application
of the Market Value Adjustment. Where applicable, the Market Value
Adjustment is applied to Gross Surrender Value.
In the case of a full surrender, the Market Value Adjustment will
reflect the relationship between the Current Rate for the duration
remaining in the Guarantee Period at the time you request the surrender,
and the Guarantee Rate then applicable to your Certificate. Generally, if
your Guarantee Rate is lower than the applicable Current Rate, then the
application of the Market Value Adjustment will result in a lower payment
upon surrender. Similarly, if your Guarantee Rate is higher than the
applicable Current Rate, the application of the Market Value Adjustment
will result in a higher payment upon surrender.
For example, assume you purchase a Certificate and select an initial
Guarantee Period of ten years and our Guarantee Rate for that duration is
7% per annum. Assume at the end of seven years you make a total surrender.
If the three year Current Rate is then 5%, the amount payable upon
surrender will increase after the application of the Market Value
Adjustment. On the other hand, if such Current Rate is higher than your
Guarantee Rate, for example, 8%, the application of the Market Value
Adjustment will cause a decrease in the amount payable to you upon this
surrender.
Since Current Rates are based in part upon the investment yields
available to Hartford (see, "Investments By Hartford"), the effect of the
Market Value Adjustment will be closely related to the levels of such
yields. It is theoretically possible, therefore, that, should such yields
increase significantly from the time you purchased your Certificate, the
amount you would receive upon a full surrender of your Certificate could be
less than your original purchase payment.
The formula for calculating the Market Value Adjustment is set forth in
Appendix A to this Prospectus, which also contains an additional
illustration of the application of the Market Value Adjustment.
(C) SPECIAL SURRENDERS
A Market Value Adjustment will not be applied to a full surrender made
at the end of a Guarantee Period. A request for a surrender at the end of a
Guarantee Period must be received, in writing, during the 30 day period
preceding or within five business days after the end of said Guarantee
Period.
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A Market Value Adjustment will be applied to your account value to purchase
an annuity on the Annuity Commencement Date if the Annuity Commencement Date is
not at the end of a Guarantee Period. To elect an Annuity Option you must notify
us at least 30 days before the end of that Guarantee Period.
In addition, we will send you any interest that has been credited during the
prior Certificate Year if you so request in writing within 30 days prior to the
end of the Certificate Year. No Market Value Adjustment will be imposed on such
interest payments. Any such surrender may, however, be subject to tax.
4. PREMIUM TAXES
A deduction is also made for premium taxes, if applicable, imposed by a
state or other governmental entity. Certain states impose a premium tax. Some
states assess the tax at the time purchase payments are made; others assess the
tax at the time of annuitization. Hartford will pay premium taxes at the time
imposed under applicable law. At its sole discretion, Hartford may deduct
premium taxes at the time Hartford pays such taxes to the applicable taxing
authorities, upon surrender, or when annuity payments commence.
5. DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant surviving, the Death Benefit will be payable to
the Beneficiary as determined under the Certificate Control Provisions. The
Death Benefit is calculated as of the date we receive written notification of
Due Proof of Death at the offices of Hartford.
If the death occurs prior to the Annuity Commencement Date and on or prior
to the Annuitant attaining age 65, then the death benefit equals the higher of
the Account Value or the Net Surrender Value as each is calculated as of the
date the Company receives written notification of Due Proof of Death. If the
death occurs prior to the Annuity Commencement Date after the Annuitant attains
age 65, then the death benefit equals the Net Surrender Value.
The Death Benefit may be taken in one sum, to be paid within six months
after the date we receive Due Proof of Death, or under any of the Annuity
Options available under the Contract, provided, however, that: (a) in the event
of the death of any Participant prior to the Annuity Commencement Date, any
Annuity Option selected must provide that any amount payable as a Death Benefit
will be distributed within 5 years of the date of death; and (b) if any
Participant or Annuitant dies on or after the Annuity Commencement Date, any
remaining interest in the Contract will be paid at least as rapidly as under the
method of distribution in effect at the time of death, or, if the benefit is
payable over a period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary, such distribution must commence
within one year of the date of death. Notwithstanding the foregoing, in the
event of the Participant's death where the sole Beneficiary is the spouse of the
Participant and the Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the Death Benefit, to be treated as the Participant.
If the Certificate is owned by a corporation or other non-individual, the
Death Benefit payable upon the death of the Annuitant preceding the Annuity
Commencement Date will be payable only as one sum or under the same Annuity
Options and in the same manner as if an individual Certificate owner died on the
date of the Annuitant's death.
6. PAYMENT UPON PARTIAL OR FULL SURRENDER
We may defer payment of a full surrender for a period not exceeding 6 months
from date of our receipt of your notice of surrender or the period permitted by
state insurance law, if less. Only under highly unusual circumstances will we
defer a surrender payment more than thirty days, and if we defer payment for
more than 30 days, we will pay interest of at least 4% per annum on the amount
deferred. While all circumstances under which we could defer payment upon
surrender may not be foreseeable at this time, such circumstances could include,
for example, a time of an unusually high surrender rate among Participants,
accompanied by a radical shift in interest rates. If we intend to withhold
payment for more than thirty days, we will notify you in writing. We will not,
however, defer payment for more than thirty days for any surrender that is to be
effective at the end of any Guarantee Period. Full or partial surrenders may be
made under a Certificate at any time. However, a Market Value Adjustment will
apply. For additional information regarding the application of the Market Value
Adjustment, please refer to section B.3. of the Description of Certificates
portion of this prospectus.
C. ANNUITY PERIOD
1. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
Upon application for a Certificate, you select an Annuity Commencement Date.
Within 30 days preceding your Annuity Commencement Date you may elect to have
all or a portion of your Net Surrender Value paid in a lump sum
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on your Annuity Commencement Date. Alternatively, or with respect to any portion
of your Net Surrender Value not paid in a lump sum, you may elect, at least 30
days preceding the Annuity Commencement Date, to have your Account Value with a
Market Value Adjustment, if applicable, (less applicable premium taxes, if any)
applied on the Annuity Commencement Date under any of the Annuity Options
described below. In the absence of such election, Account Value with a Market
Value Adjustment, if applicable, will be applied on the Annuity Commencement
Date under the Second Option to provide a life annuity with 120 monthly payments
certain.
2. CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
You may change the Annuity Commencement Date and/or the Annuity Option from
time to time, but any such change must be made in writing and received by us at
least 30 days preceding the scheduled Annuity Commencement Date. Also, the
proposed Annuity Commencement Date may not be beyond the later of the
Annuitant's 90th birthday or the end of the Initial Guarantee Period provided
such Initial Guarantee Period is 10 years or less.
3. ANNUITY OPTIONS
Any one of the following Annuity Options may be elected:
FIRST OPTION -- LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant, and
terminating with the last monthly payment due preceding the death of the
Annuitant. It would be possible under this Option for an Annuitant to receive
only one Annuity payment if he died prior to the due date of the second Annuity
payment, two payments if he died before the due date of the third Annuity
payment and so on.
SECOND OPTION -- LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS
CERTAIN
An annuity providing monthly income to the Annuitant for a fixed period of
120 months, 180 months, or 240 months (as selected), and for as long thereafter
as the Annuitant shall live.
THIRD OPTION -- CASH REFUND LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant provided
that, at the death of the Annuitant, the Beneficiary will receive an additional
payment equal to the excess, if any, of (a) over (b) where (a) is the Account
Value applied on the Annuity Commencement Date under this Option and (b) is the
dollar amount of annuity payments already paid.
FOURTH OPTION -- JOINT AND LAST SURVIVOR LIFE ANNUITY
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment preceding the death of the survivor. It
would be possible under this Option for the Annuitant, and designated second
person in the event of the common or simultaneous death of the parties, to
receive only one payment in the event of death prior to the due date for the
second payment and so on.
FIFTH OPTION -- PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected which may be from
5 to 30 years.
The Tables in the Certificate provide for guaranteed dollar amounts of
monthly payments for each $1,000 applied under the five Annuity Options. Under
the First, Second, or Third Options, the amount of each payment will depend upon
the age of the Annuitant at the time the first payment is due. Under the Fourth
Option, the amount of each payment will depend upon the age of both payees at
the time the first payment is due.
The Tables for the First, Second, Third and Fourth Options are based on the
1983a Individual Annuity Mortality Table with ages set back one year and a net
investment rate of 4% per annum. The table for the Fifth Option is based on a
net investment rate of 4% per annum. We may, from time to time, at our
discretion if mortality and interest rates justify, apply other tables, which
will result in higher monthly payments for each $1,000 applied under one or more
of the five Annuity Options.
4. ANNUITY PAYMENT
The first payment under any Annuity Option will be made on the Annuity
Commencement Date. Subsequent payments will be made on the same day of each
month in accordance with the manner of payment selected.
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The option elected must result in a payment of an amount at least equal to
the minimum payment amount according to Company rules then in effect. If at any
time payments are less than the minimum payment amount, the Company has the
right to change the frequency to an interval resulting in a payment at least
equal to the minimum. If any amount due is less than the minimum per year, the
Company may make other arrangements that are equitable to the Annuitant.
Once annuity payments have commenced, no surrender of the annuity benefit
(including benefits under the Fifth Option) can be made for the purpose of
receiving a lump sum settlement in lieu thereof.
5. DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement
Date, the present values on the date of death of the current dollar amount of
any remaining guaranteed payments will be paid in one sum to the Beneficiary
designated by you unless other provisions shall have been made and approved by
us. Calculations of such present value will be based on the interest rate that
is used by us to determine the amount of each certain payment.
INVESTMENTS BY HARTFORD
Assets of Hartford must be invested in accordance with the requirements
established by applicable state laws regarding the nature and quality of
investments that may be made by life insurance companies and the percentage of
their assets that may be committed to any particular type of investment. In
general, these laws permit investments, within specified limits and subject to
certain qualifications, in federal, state, and municipal obligations, corporate
bonds, preferred and common stocks, real estate mortgages, real estate and
certain other investments.
Contract reserves will be accounted for in a non-unitized separate account.
Contract Owners have no priority claims on assets accounted for in this separate
account. All assets of Hartford, including those accounted for in this separate
account, are available to meet the guarantees under the Contracts and are
available to meet the general obligations of Hartford.
Nonetheless, in establishing Guarantee Rates and Current Rates, Hartford
intends to take into account the yields available on the instruments in which it
intends to invest the proceeds from the Certificates. (See, "Establishment of
Guarantee Rates and Current Rates"). Hartford's investment strategy with respect
to the proceeds attributable to the Certificates will generally be to invest in
investment-grade debt instruments having durations tending to match the
applicable Guarantee Periods.
Investment-grade debt instruments in which Hartford intends to invest the
proceeds from the Certificates include:
- Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the
United States Government.
- Debt securities which have an investment grade, at the time of
purchase, within the four highest grades assigned by Moody's
Investors Services, Inc. (Aaa, Aa, A or Baa), Standard & Poor's
Corporation (AAA, AA, A or BBB) or any other nationally recognized
rating service.
- Other debt instruments, including but not limited to, issues of or
guaranteed by banks or bank holding companies and corporations, which
obligations, although not rated by Moody's or Standard & Poor's are
deemed by Hartford's management to have an investment quality
comparable to securities which may be purchased as stated above.
While the foregoing generally describes our investment strategy with respect
to the proceeds attributable to the Certificates, we are not obligated to invest
the proceeds attributable to the Certificate according to any particular
strategy, except as may be required by Connecticut and other state insurance
laws.
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AMENDMENT OF CERTIFICATES
We reserve the right to amend the Certificates to meet the requirements of
applicable federal or state laws or regulations. We will notify you in writing
of any such amendments.
ASSIGNMENT OF CERTIFICATES
Your rights as evidenced by a Certificate may be assigned as permitted by
applicable law. An assignment will not be binding upon us until we receive
notice from you in writing. We assume no responsibility for the validity or
effect of any assignment. You should consult your tax adviser regarding the tax
consequences of an assignment.
HOW CONTRACTS ARE SOLD
We have entered into a distribution agreement with our affiliate Hartford
Securities Distribution Company, Inc. ("HSD") under which HSD serves as the
principal underwriter for the Contracts, which are offered on a continuous
basis. HSD is registered with the Securities and Exchange Commission under the
1934 Act as a broker-dealer and is a member of the FINRA. The principal business
address of HSD is the same as ours. PLANCO Financial Services, Inc., a
subsidiary of Hartford Life Insurance Company, provides marketing support for
us. Woodbury Financial Services, Inc. is another affiliated broker-dealer that
sells this Contract.
HSD has entered into selling agreements with affiliated and unaffiliated
broker-dealers, and financial institutions ("Financial Intermediaries") for the
sale of the Contracts. We pay compensation to HSD for sales of the Contracts by
Financial Intermediaries. HSD, in its role as principal underwriter, did not
retain any underwriting commissions for the fiscal year ended December 31, 2007.
Contracts will be sold by individuals who have been appointed by us as insurance
agents and who are registered representatives of Financial Intermediaries
("Registered Representatives").
We list below types of arrangements that help to incentivize sales people to
sell our products. These types of arrangements could be viewed as creating
conflicts of interest.
Financial Intermediaries receive commissions (described below under
"Commissions"). Certain selected Financial Intermediaries also receive
additional compensation (described below under "Additional Payments"). All or a
portion of the payments we make to Financial Intermediaries may be passed on to
Registered Representatives according to a Financial Intermediaries' internal
compensation practices.
Affiliated broker-dealers also employ individuals called "wholesalers" in
the sales process. Wholesalers typically receive commissions based on the type
of Contract or optional benefits sold. Commissions are based on a specified
amount of Premium Payments or Contract Value.
COMMISSIONS
For individual and group Contracts, up front commissions paid to Financial
Intermediaries generally range from 1% to up to 7% of each Premium Payment you
pay for your Contract. We may pay a lower commission for sales to people over
age 80.
Commission arrangements vary from one Financial Intermediary to another. We
are not involved in determining your Registered Representative's compensation.
Under certain circumstances, your Registered Representative may be required to
return all or a portion of the commissions paid.
Check with your Registered Representative to verify whether your account is
a brokerage or an advisory account. Your interests may differ from ours and your
Registered Representative (or the Financial Intermediary with which they are
associated). Please ask questions to make sure you understand your rights and
any potential conflicts of interest. If you are an advisory client, your
Registered Representative (or the Financial Intermediary with which they are
associated) can be paid both by you and by us based on what you buy. Therefore,
profits, and your Registered Representative's (or their Financial
Intermediary's) compensation, may vary by product and over time. Contact an
appropriate person at your Financial Intermediary with whom you can discuss
these differences.
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ADDITIONAL PAYMENTS
Subject to NASD and Financial Intermediary rules, we (or our affiliates)
also pay the following types of fees to among other things encourage the sale of
this Contract. These additional payments could create an incentive for your
Registered Representative, and the Financial Intermediary with which they are
associated, to recommend products that pay them more than others, which may not
necessarily be to your benefit.
<Table>
<Caption>
ADDITIONAL
PAYMENT TYPE WHAT IT'S USED FOR
- --------------------------------------------------------------------------------------------------------------
Access Access to Registered Representatives and/or Financial Intermediaries such as
one-on-one wholesaler visits or attendance at national sales meetings or similar
events.
Gifts & Occasional meals and entertainment, tickets to sporting events and other gifts.
Entertainment
Marketing Joint marketing campaigns and/or Financial Intermediary event advertising/
participation; sponsorship of Financial Intermediary sales contests and/or promotions
in which participants (including Registered Representatives) receive prizes such as
travel awards, merchandise and recognition; client generation expenses.
Marketing Expense Pay Fund related parties for wholesaler support, training and marketing activities
Allowances for certain Funds.
Support Sales support through such things as providing hardware and software, operational and
systems integration, links to our website from a Financial Intermediary's websites;
shareholder services (including sub-accounting
sponsorship of Financial Intermediary due diligence meetings; and/or expense
allowances and reimbursements.
Targets Pay for the achievement of sales or assets under management targets.
Training Educational (due diligence), sales or training seminars, conferences and programs,
sales and service desk training, and/or client or prospect seminar sponsorships.
Visibility Inclusion of our products on a Financial Intermediary's "preferred list";
participation in, or visibility at, national and regional conferences; and/or
articles in Financial Intermediary publications highlighting our products and
services.
Volume Pay for the overall volume of their sales or the amount of money investing in our
products.
</Table>
For individual and group Contracts, as of December 31, 2007, we have entered
into ongoing contractual arrangements to make Additional Payments to the
following Financial Intermediaries for our entire suite of variable annuities:
A.G. Edwards & Sons, Inc., AIG Advisors Group, Inc., (Advantage Capital, AIG
Financial Advisors, American General, FSC Securities Corporation, Royal Alliance
Assoc., Inc.), Bancwest Investment Services, Inc., Cadaret, Grant & Co., Inc.,
Capital Analyst Inc., Centaurus Financial, Inc., Citigroup, Inc. (various
divisions and affiliates), Comerica Securities, Commonwealth Financial Network,
Compass Brokerage, Inc., Crown Capital Securities, L.P., Cuna Brokerage
Services, Inc., Cuso Financial Services, L.P., Edward D. Jones & Co., L.P., FFP
Securities, Inc., First Allied Securities, Inc., First Citizens Investor
Services, First Montauk Securities Corp., First Tennessee Bank, First Tennessee
Brokerage, Inc., Frost Brokerage Services, Inc., Great American Advisors, Inc.,
H. Beck, Inc., H.D. Vest Investment Services (subsidiary of Wells Fargo &
Company), Harbour Investments, Inc., Heim & Young Securities, Huntington
Investment Company, Independent Financial Group LLC, Infinex Financial Group,
ING Advisors Network, (Financial Network Services (or Investment) Corp., ING
Financial Partners, Multi-Financial Securities, Primevest Financial Services,
Inc.,), Investacorp, Inc., Investment Professionals, Inc., Investors Capital
Corp., J.J.B. Hilliard, James T. Borello & Co., Janney Montgomery Scott, Inc.,
Jefferson Pilot Securities Corporation, Key Investment Services, LaSalle
Financial Services, Inc., Lincoln Financial Advisors Corp. (marketing name for
Lincoln National Corp.), LPL Financial Corporation, M&T Securities, Inc.,
Merrill Lynch Pierce Fenner & Smith, Morgan Keegan & Company, Inc., Morgan
Keegan FID Division, Morgan Stanley & Co., Inc. (various divisions and
affiliates), Mutual Service Corporation, NatCity Investments, National Planning
Holdings (Invest Financial Corp., Investment Centers of America, Inc., National
Planning Corp., SII Investments, Inc.), Newbridge Securities Corp., NEXT
Financial Group, Inc., NFP Securities, Inc., Pension Planners Securities, Inc.,
Prime Capital Services, Inc., Prospera Financial Services, Inc., Raymond James &
Associates, Inc., Raymond James FID Division, Raymond James Financial Services,
RBC Dain FID Division, RBC Dain Rauscher Inc., RDM Investment Svcs Inc., Robert
W. Baird & Co. Inc., Securities America, Inc., Sigma Financial Corporation,
Sorrento Pacific, Stifel Nicolaus & Company, Incorporated, Summit Brokerage
Services Inc., Sun Trust Bank, TFS Securities, Inc.,
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The Investment Center, Inc., Thurston, Springer, Miller, Herd & Titak, Inc.,
Triad Advisors, Inc., U.S. Bancorp Investments, Inc., UBOC Investment Services,
Inc. (Union Bank of California, N.A.), UBS Financial Services, Inc., Uvest
Financial Services Group Inc., Vanderbilt Securities, LLC, Wachovia Securities,
LLC (various divisions), Walnut Street Securities, Inc., Wells Fargo Brokerage
Services, L.L.C., WaMu Investments, Inc., Woodbury Financial Services, Inc. (an
affiliate of ours), XCU Capital Corporation, Inc.
Inclusion on this list does not imply that these sums necessarily constitute
"special cash compensation" as defined by NASD Conduct Rule 2830(l)(4). We will
endeavor to update this listing annually and interim arrangements may not be
reflected. We assume no duty to notify any investor whether their Registered
Representative is or should be included in any such listing.
For individual and group Contracts, as of December 31, 2007, we have entered
into arrangements to pay Marketing Expense Allowances to the following Fund
Companies (or affiliated parties) for our entire suite of variable annuities:
AIM Advisors, Inc., AllianceBernstein Variable Products Series Funds & Alliance
Bernstein Investment Research and Management, Inc., American Variable Insurance
Series & Capital Research and Management Company, Franklin Templeton Services,
LLC, Oppenheimer Variable Account Funds & Oppenheimer Funds Distributor, Inc.,
Putnam Retail Management Limited Partnership. Marketing Expense Allowances may
vary based on the form of Contract sold and the age of the purchaser. We will
endeavor to update this listing annually and interim arrangements may not be
reflected. We assume no duty to notify you whether any Financial Intermediary is
or should be included in any such listing. You are encouraged to review the
prospectus for each Fund for any other compensation arrangements pertaining to
the distribution of Fund shares.
For individual and group Contracts, for the fiscal year ended December 31,
2007, Additional Payments did not in the aggregate exceed approximately $66.4
million (excluding corporate-sponsorship related perquisites and Marketing
Expense Allowances) or approximately 0.06% of average total individual variable
annuity assets. Marketing Expense Allowances for this period did not exceed
$15.8 million or approximately 0.25% of the Premium Payments invested in a
particular Fund during this period.
FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL
Since the federal tax law is complex, the tax consequences of purchasing
this contract will vary depending on your situation. You may need tax or legal
advice to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the
Separate Account will not be taxed as a "regulated investment company" under
Subchapter M of Chapter 1 of the Code. Investment income and any realized
capital gains on assets of the Separate Account are reinvested and taken into
account in determining the value of the Accumulation and Annuity Units. (See
"How do I know what my Participant Account is worth?"). As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the Contract.
Currently, no taxes are due on interest, dividends and short-term or
long-term capital gain earned by the Separate Account with respect to the
Contracts. Hartford is entitled to certain tax benefits related to the
investment of company assets, including assets of the Separate Account. These
tax benefits, which may include the foreign tax credit and the corporate
dividends received deduction, are not passed back to you since Hartford is the
owner of the assets from which the tax benefits are derived.
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C. DIVERSIFICATION OF THE SEPARATE ACCOUNT
The Code requires that investments supporting your Contract be adequately
diversified. Code Section 817(h) provides that a variable annuity contract will
not be treated as an annuity contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as an annuity contract, the contract
owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations under Code Section
817(h) require, among other things, that:
- no more than 55% of the value of the total assets of the segregated
asset account underlying a variable contract is represented by any
one investment,
- no more than 70% is represented by any two investments,
- no more than 80% is represented by any three investments and
- no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities
of the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the insurer
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
D. TAX OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable annuity contract to qualify for tax income deferral,
assets in the separate account supporting the contract must be considered to be
owned by the insurance company, and not by the contract owner, for tax purposes.
The IRS has stated in published rulings that a variable contract owner will be
considered the "owner" of separate account assets for income tax purposes if the
contract owner possesses sufficient incidents of ownership in those assets, such
as the ability to exercise investment control over the assets. In circumstances
where the variable contract owner is treated as the "tax owner" of certain
separate account assets, income and gain from such assets would be includable in
the variable contract owner's gross income. The Treasury Department indicated in
1986 that, in regulations or revenue rulings under Code Section 817(d) (relating
to the definition of a variable contract), it would provide guidance on the
extent to which contract owners may direct their investments to particular
sub-accounts without being treated as tax owners of the underlying shares.
Although no such regulations have been issued to date, the IRS has issued a
number of rulings that indicate that this issue remains subject to a facts and
circumstances test for both variable annuity and variable life insurance
contracts.
For instance, the IRS in Rev. Rul. 2003-92, amplified by Rev. Rul. 2007-7,
reiterated its position in prior rulings that, where shares in a fund offered in
an insurer's separate account are not available exclusively through the purchase
of a variable insurance contract (e.g., where such shares can be purchased
directly by the general public or others without going through such a variable
contract), such "public availability" means that such shares should be treated
as owned directly by the contract owner (and not by the insurer) for tax
purposes, as if such contract owner had chosen instead to purchase such shares
directly (without going through the variable contract). None of the shares or
other interests in the fund choices offered in our Separate Account for your
Contract are available for purchase except through an insurer's variable
contracts or by other permitted entities.
The IRS in Rev. Rul. 2003-91 also indicated that an insurer could provide as
many as 20 fund choices for its variable contract owners (each with a general
investment strategy, e.g., a small company stock fund or a special industry
fund) under certain circumstances, without causing such a contract owner to be
treated as the tax owner of any of the underlying fund assets. The ruling does
not specify the number of fund options, if any, that might prevent a variable
contract owner from receiving favorable tax treatment. As a result, we believe
that any owner of a Contract also should receive the same favorable tax
treatment. However, there is necessarily some uncertainty here as long as the
IRS continues to use a facts and circumstances test for investor control and
other tax ownership issues. Therefore, we reserve the right to modify the
Contract as necessary to prevent you from being treated as the tax owner of any
underlying assets.
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E. NON-NATURAL PERSONS AS OWNERS
Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other
than a natural person generally is not treated as an annuity contract under the
Code. Instead, such a non-natural Contract Owner generally could be required to
include in gross income currently for each taxable year the excess of (a) the
sum of the Contract Value as of the close of the taxable year and all previous
distributions under the Contract over (b) the sum of net premiums paid for the
taxable year and any prior taxable year and the amount includable in gross
income for any prior taxable year with respect to the Contract under Section
72(u). However, Section 72(u) does not apply to:
- A contract the nominal owner of which is a non-natural person but the
beneficial owner of which is a natural person (e.g., where the
non-natural owner holds the contract as an agent for the natural
person),
- A contract acquired by the estate of a decedent by reason of such
decedent's death,
- Certain contracts acquired with respect to tax-qualified retirement
arrangements,
- Certain contracts held in structured settlement arrangements that may
qualify under Code Section 130, or
- A single premium immediate annuity contract under Code Section
72(u)(4), which provides for substantially equal periodic payments
and an annuity starting date that is no later than 1 year from the
date of the contract's purchase.
A non-natural Contract Owner that is a tax-exempt entity for federal tax
purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder
Trust) generally would not be subject to federal income tax as a result of such
current gross income under Code Section 72(u). However, such a tax-exempt
entity, or any annuity contract that it holds, may need to satisfy certain tax
requirements in order to maintain its qualification for such favorable tax
treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable
Remainder Trusts.
Pursuant to Code Section 72(s), if the Contract Owner is a non-natural
person, the primary annuitant is treated as the "holder" in applying the
required distribution rules described below. These rules require that certain
distributions be made upon the death of a "holder." In addition, for a
non-natural owner, a change in the primary annuitant is treated as the death of
the "holder." However, the provisions of Code Section 72(s) do not apply to
certain contracts held in tax-qualified retirement arrangements or structured
settlement arrangements.
F. 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 income tax and withholding on taxable annuity
distributions at a 30% rate, unless a lower treaty rate applies and any required
tax forms are submitted to Hartford. If withholding applies, we are required to
withhold tax at the 30% rate, or a lower treaty rate if applicable, and remit it
to the IRS. In addition, purchasers may be subject to state premium tax, other
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 purchase.
G. 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 Hartford to deduct the tax
from your Contract, or from any applicable payment, and pay it directly to the
IRS.
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about
the federal income tax rules associated with use of a Contract by a
tax-qualified retirement plan. State income tax rules applicable to
tax-qualified retirement plans often differ from federal income tax rules, and
this summary does not describe any of these differences. Because of the
complexity of the tax rules, owners, participants and beneficiaries are
encouraged to consult their own tax advisors as to specific tax consequences.
The Contracts are available to a variety of tax-qualified retirement plans
and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and
consequences for Contracts or accounts under each type of Qualified Plan differ
from each other and from those for Non-Qualified Contracts. In addition,
individual Qualified Plans may have terms and conditions that impose additional
rules. Therefore, no attempt is made herein to provide more than general
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information about the use of the Contract with the various types of Qualified
Plans. Participants under such Qualified Plans, as well as Contract Owners,
annuitants and beneficiaries, are cautioned that the rights of any person to any
benefits under such Qualified Plans may be subject to terms and conditions of
the Plans themselves or limited by applicable law, regardless of the terms and
conditions of the Contract issued in connection therewith. Qualified Plans
generally provide for the tax deferral of income regardless of whether the
Qualified Plan invests in an annuity or other investment. You should consider if
the Contract is a suitable investment if you are investing through a Qualified
Plan.
THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS
FOR WHICH THE CONTRACTS MAY BE AVAILABLE. WE ARE NOT THE PLAN ADMINISTRATOR FOR
ANY QUALIFIED PLAN. THE PLAN ADMINISTRATOR OR CUSTODIAN, WHICHEVER IS
APPLICABLE, (BUT NOT US) IS RESPONSIBLE FOR ALL PLAN ADMINISTRATIVE DUTIES
INCLUDING, BUT NOT LIMITED TO, NOTIFICATION OF DISTRIBUTION OPTIONS,
DISBURSEMENT OF PLAN BENEFITS, HANDLING ANY PROCESSING AND ADMINISTRATION OF
QUALIFIED PLAN LOANS, COMPLIANCE REGULATORY REQUIREMENTS AND FEDERAL AND STATE
TAX REPORTING OF INCOME/DISTRIBUTIONS FROM THE PLAN TO PLAN PARTICIPANTS AND, IF
APPLICABLE, BENEFICIARIES OF PLAN PARTICIPANTS AND IRA CONTRIBUTIONS FROM PLAN
PARTICIPANTS. OUR ADMINISTRATIVE DUTIES ARE LIMITED TO ADMINISTRATION OF THE
CONTRACT AND ANY DISBURSEMENTS OF ANY CONTRACT BENEFITS TO THE OWNER, ANNUITANT
OR BENEFICIARY OF THE CONTRACT, AS APPLICABLE. OUR TAX REPORTING RESPONSIBILITY
IS LIMITED TO FEDERAL AND STATE TAX REPORTING OF INCOME/DISTRIBUTIONS TO THE
APPLICABLE PAYEE AND IRA CONTRIBUTIONS FROM THE OWNER OF A CONTRACT, AS RECORDED
ON OUR BOOKS AND RECORDS. IF YOU ARE PURCHASING A QUALIFIED CONTRACT, YOU SHOULD
CONSULT WITH YOUR PLAN ADMINISTRATOR AND/OR A QUALIFIED TAX ADVISER. YOU ALSO
SHOULD CONSULT WITH A QUALIFIED TAX ADVISER AND/OR PLAN ADMINISTRATOR BEFORE YOU
WITHDRAW ANY PORTION OF YOUR CONTRACT VALUE.
The tax rules applicable to Qualified Contracts and Qualified Plans,
including restrictions on contributions and distributions, taxation of
distributions and tax penalties, vary according to the type of Qualified Plan,
as well as the terms and conditions of the Plan itself. Various tax penalties
may apply to contributions in excess of specified limits, plan distributions
(including loans) that do not comply with specified limits, and certain other
transactions relating to such Plans. Accordingly, this summary provides only
general information about the tax rules associated with use of a Qualified
Contract in such a Qualified Plan. In addition, some Qualified Plans are subject
to distribution and other requirements that are not incorporated into our
administrative procedures. Owners, participants, and beneficiaries are
responsible for determining that contributions, distributions and other
transactions comply with applicable tax (and non-tax) law. Because of the
complexity of these rules, Owners, participants and beneficiaries are advised to
consult with a qualified tax adviser as to specific tax consequences.
We do not currently offer the Contracts in connection with all of the types
of Qualified Plans discussed below, and may not offer the Contracts for all
types of Qualified Plans in the future.
1. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS").
In addition to "traditional" IRAs governed by Code Sections 408(a) and (b)
("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP
IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section
408(p). Also, Qualified Plans under Code Section 401, 403(b) or 457(b) that
include after-tax employee contributions may be treated as deemed IRAs subject
to the same rules and limitations as Traditional IRAs. Contributions to each of
these types of IRAs are subject to differing limitations. The following is a
very general description of each type of IRA for which a Contract is available.
a. TRADITIONAL IRAS
Traditional IRAs are subject to limits on the amounts that may be
contributed each year, the persons who may be eligible, and the time when
minimum distributions must begin. Depending upon the circumstances of the
individual, contributions to a Traditional IRA may be made on a deductible or
non-deductible basis. Failure to make required minimum distributions ("RMDs")
when the Owner reaches age 70 1/2 or dies, as described below, may result in
imposition of a 50% penalty tax on any excess of the RMD amount over the amount
actually distributed. In addition, any amount received before the Owner reaches
age 59 1/2 or dies is subject to a 10% penalty tax on premature distributions,
unless a special exception applies, as described below. Under Code Section
408(e), an IRA may not be used for borrowing (or as security for any loan) or in
certain prohibited transactions, and such a transaction could lead to the
complete tax disqualification of an IRA.
You (or your surviving spouse if you die) may rollover funds tax-free from
certain existing Qualified Plans (such as proceeds from existing insurance
contracts, annuity contracts or securities) into a Traditional IRA under certain
circumstances, as indicated below. However, mandatory tax withholding of 20% may
apply to any eligible rollover distribution from certain types of Qualified
Plans if the distribution is not transferred directly to the Traditional IRA. In
addition, under Code Section 402(c)(11) a non-spouse "designated beneficiary" of
a deceased Plan participant may make a tax-free "direct rollover" (in the form
of a direct transfer between Plan fiduciaries, as described below in "Rollover
Distributions") from certain Qualified Plans to a Traditional IRA for such
beneficiary, but such Traditional IRA
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must be designated and treated as an "inherited IRA" that remains subject to
applicable RMD rules (as if such IRA had been inherited from the deceased Plan
participant). In addition, such a Plan is not required to permit such a
rollover.
IRAs generally may not invest in life insurance contracts. However, an
annuity contract that is used as an IRA may provide a death benefit that equals
the greater of the premiums paid or the contract's cash value. The Contract
offers an enhanced death benefit that may exceed the greater of the Contract
Value or total premium payments. The tax rules are unclear as to what extent an
IRA can provide a death benefit that exceeds the greater of the IRA's cash value
or the sum of the premiums paid and other contributions into the IRA. Please
note that the IRA rider for the Contract has provisions that are designed to
maintain the Contract's tax qualification as an IRA, and therefore could limit
certain benefits under the Contract (including endorsement, rider or option
benefits) to maintain the Contract's tax qualification.
b. SEP IRAS
Code Section 408(k) provides for a Traditional IRA in the form of an
employer-sponsored defined contribution plan known as a Simplified Employee
Pension ("SEP") or a SEP IRA. A SEP IRA can have employer, employee and salary
reduction contributions, as well as higher overall contribution limits than a
Traditional IRA, but a SEP is also subject to special tax-qualification
requirements (e.g., on participation, nondiscrimination and withdrawals) and
sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as
for a Traditional IRA, which are described above. Please note that the IRA rider
for the Contract has provisions that are designed to maintain the Contract's tax
qualification as an IRA, and therefore could limit certain benefits under the
Contract (including endorsement, rider or option benefits) to maintain the
Contract's tax qualification.
c. SIMPLE IRAS
The Savings Incentive Match Plan for Employees of small employers ("SIMPLE
Plan") is a form of an employer-sponsored Qualified Plan that provides IRA
benefits for the participating employees ("SIMPLE IRAs"). Depending upon the
SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established
by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to
the 50% penalty tax for failure to make a full RMD, and to the 10% penalty tax
on premature distributions, as described below. In addition, the 10% penalty tax
is increased to 25% for amounts received during the 2-year period beginning on
the date you first participated in a qualified salary reduction arrangement
pursuant to a SIMPLE Plan maintained by your employer under Code Section
408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral
contributions or employer contributions, and these are subject to different tax
limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider
for the Contract has provisions that are designed to maintain the Contract's tax
qualification as an SIMPLE IRA, and therefore could limit certain benefits under
the Contract (including endorsement, rider or option benefits) to maintain the
Contract's tax qualification.
A SIMPLE Plan may designate a single financial institution (a Designated
Financial Institution) as the initial trustee, custodian or issuer (in the case
of an annuity contract) of the SIMPLE IRA set up for each eligible participant.
However, any such Plan also must allow each eligible participant to have the
balance in his SIMPLE IRA held by the Designated Financial Institution
transferred without cost or penalty to a SIMPLE IRA maintained by a different
financial institution. Absent a Designated Financial Institution, each eligible
participant must select the financial institution to hold his SIMPLE IRA, and
notify his employer of this selection.
If we do not serve as the Designated Financial Institution for your
employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you
need to provide your employer with appropriate notification of such a selection
under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer
of any amounts currently held in another SIMPLE IRA for your benefit to your
SIMPLE IRA with us.
d. ROTH IRAS
Code Section 408A permits eligible individuals to establish a Roth IRA.
Contributions to a Roth IRA are not deductible, but withdrawals of amounts
contributed and the earnings thereon that meet certain requirements are not
subject to federal income tax. In general, Roth IRAs are subject to limitations
on the amounts that may be contributed by the persons who may be eligible to
contribute, certain Traditional IRA restrictions, and certain RMD rules on the
death of the Contract Owner. Unlike a Traditional IRA, Roth IRAs are not subject
to RMD rules during the Contract Owner's lifetime. Generally, however, upon the
Owner's death the amount remaining in a Roth IRA must be distributed by the end
of the fifth year after such death or distributed over the life expectancy of a
designated beneficiary. The Owner of a Traditional IRA may convert a Traditional
IRA into a Roth IRA under certain circumstances. The conversion of a Traditional
IRA to a Roth IRA will subject the fair market value of the converted
Traditional IRA to federal income tax. In addition to the amount held in the
converted Traditional IRA, the fair market value may include the
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value of additional benefits provided by the annuity contract on the date of
conversion, based on reasonable actuarial assumptions. Tax-free rollovers from a
Roth IRA can be made only to another Roth IRA under limited circumstances, as
indicated below. After 2007, distributions from eligible Qualified Plans can be
"rolled over" directly (subject to tax) into a Roth IRA under certain
circumstances. Anyone considering the purchase of a Qualified Contract as a Roth
IRA or a "conversion" Roth IRA should consult with a qualified tax adviser.
Please note that the Roth IRA rider for the Contract has provisions that are
designed to maintain the Contract's tax qualification as a Roth IRA, and
therefore could limit certain benefits under the Contract (including
endorsement, rider or option benefits) to maintain the Contract's tax
qualification.
2. QUALIFIED PENSION OR PROFIT-SHARING PLAN OR SECTION 401(k) PLAN
Provisions of the Code permit eligible employers to establish a
tax-qualified pension or profit sharing plan (described in Section 401(a), and
Section 401(k) if applicable, and exempt from taxation under Section 501(a)).
Such a Plan is subject to limitations on the amounts that may be contributed,
the persons who may be eligible to participate, the amounts of "incidental"
death benefits, and the time when RMDs must commence. In addition, a Plan's
provision of incidental benefits may result in currently taxable income to the
participant for some or all of such benefits. Amounts may be rolled over
tax-free from a Qualified Plan to another Qualified Plan under certain
circumstances, as described below. Anyone considering the use of a Qualified
Contract in connection with such a Qualified Plan should seek competent tax and
other legal advice.
In particular, please note that these tax rules provide for limits on death
benefits provided by a Qualified Plan (to keep such death benefits "incidental"
to qualified retirement benefits), and a Qualified Plan (or a Qualified
Contract) often contains provisions that effectively limit such death benefits
to preserve the tax qualification of the Qualified Plan (or Qualified Contract).
In addition, various tax-qualification rules for Qualified Plans specifically
limit increases in benefits once RMDs begin, and Qualified Contracts are subject
to such limits. As a result, the amounts of certain benefits that can be
provided by any option under a Qualified Contract may be limited by the
provisions of the Qualified Contract or governing Qualified Plan that are
designed to preserve its tax qualification.
3. TAX SHELTERED ANNUITY UNDER SECTION 403(b) ("TSA")
Code Section 403(b) permits public school employees and employees of certain
types of charitable, educational and scientific organizations described in Code
Section 501(c)(3) to purchase a "tax-sheltered annuity" ("TSA") contract and,
subject to certain limitations, exclude employer contributions to a TSA from
such an employee's gross income. Generally, total contributions may not exceed
the lesser of an annual dollar limit (e.g., $46,000 in 2008) or 100% of the
employee's "includable compensation" for the most recent full year of service,
subject to other adjustments. The general annual elective deferral limit for a
TSA participant after 2005 is $15,000. In addition, for years after 2006 this
$15,000 limit will be indexed for cost-of-living adjustments under Code Section
402(g)(4) at $500 increments. For any such participant age 50 or older, the
contribution limit after 2005 generally is increased by an additional $5,000
under Code Section 414(v). For years after 2006 this "over-50 catch-up" $5,000
limit also will be indexed for cost-of-living adjustments under Code Section
414(v)(2)(C) at $500 increments. Special provisions may allow certain employees
different overall limitations.
A TSA is subject to a prohibition against distributions from the TSA
attributable to contributions made pursuant to a salary reduction agreement,
unless such distribution is made:
a. after the employee reaches age 59 1/2;
b. upon the employee's separation from service;
c. upon the employee's death or disability;
d. in the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed); or
e. as a qualified reservist distribution upon certain calls to active
duty.
Please note that the TSA rider for the Contract has provisions that are
designed to maintain the Contract's tax qualification as a TSA, and therefore
could limit certain benefits under the Contract (including endorsement, rider or
option benefits) to maintain the Contract's tax qualification. In particular,
please note that tax rules provide for limits on death benefits provided by a
Qualified Plan (to keep such death benefits "incidental" to qualified retirement
benefits), and a Qualified Plan (or a Qualified Contract) often contains
provisions that effectively limit such death benefits to preserve the tax
qualification of the Qualified Plan (or Qualified Contract). In addition,
various tax-qualification rules for
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Qualified Plans specifically limit increases in benefits once RMDs begin, and
Qualified Contracts are subject to such limits. As a result, the amounts of
certain benefits that can be provided by any option under a Qualified Contract
may be limited by the provisions of the Qualified Contract or governing
Qualified Plan that are designed to preserve its tax qualification. In addition,
a life insurance contract issued after September 23, 2007 is generally
ineligible to qualify as a TSA under Reg. Section 1.403(b)-8(c)(2).
Amounts may be rolled over tax-free from a TSA to another TSA or Qualified
Plan (or from a Qualified Plan to a TSA) under certain circumstances, as
described below. However, effective for TSA contract exchanges after September
24, 2007, Reg. ' 1.403(b)-10(b) allows a TSA contract of a participant or
beneficiary under a TSA Plan to be exchanged tax-free for another eligible TSA
contract under that same TSA Plan, but only if all of the following conditions
are satisfied: (1) such TSA Plan allows such an exchange, (2) the participant or
beneficiary has an accumulated benefit after such exchange that is no less than
such participant's or beneficiary's accumulated benefit immediately before such
exchange (taking into account such participant's or beneficiary's accumulated
benefit under both TSA contracts immediately before such exchange), (3) the
second TSA contract is subject to distribution restrictions with respect to the
participant that are no less stringent than those imposed on the TSA contract
being exchanged, and (4) the employer for such TSA Plan enters into an agreement
with the issuer of the second TSA contract under which such issuer and employer
will provide each other from time to time with certain information necessary for
such second TSA contract (or any other TSA contract that has contributions from
such employer) to satisfy the TSA requirements under Code Section 403(b) and
other federal tax requirements (e.g., plan loan conditions under Code Section
72(p) to avoid deemed distributions). Such necessary information could include
information about the participant's employment, information about other
Qualified Plans of such employer, and whether a severance has occurred, or
hardship rules are satisfied, for purposes of the TSA distribution restrictions.
Consequently, you are advised to consult with a qualified tax advisor before
attempting any such TSA exchange, particularly because it requires an agreement
between the employer and issuer to provide each other with certain information.
In addition, after September 24, 2007 we are no longer accepting any incoming
exchange request, or new contract application, for any individual TSA contract.
4. DEFERRED COMPENSATION PLANS UNDER SECTION 457 ("SECTION 457 PLANS")
Certain governmental employers, or tax-exempt employers other than a
governmental entity, can establish a Deferred Compensation Plan under Code
Section 457. For these purposes, a "governmental employer" is a State, a
political subdivision of a State, or an agency or an instrumentality of a State
or political subdivision of a State. A Deferred Compensation Plan that meets the
requirements of Code Section 457(b) is called an "Eligible Deferred Compensation
Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of
contributions that can be made to an Eligible Deferred Compensation Plan on
behalf of a participant. Generally, the limitation on contributions is the
lesser of (1) 100% of a participant's includible compensation or (2) the
applicable dollar amount, equal to $15,000 for 2006 and thereafter. The $15,000
limit will be indexed for cost-of-living adjustments at $500 increments. The
Plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age. In addition, with an eligible Deferred Compensation Plan for a
governmental employer, the contribution limitation may be increased under Code
Section 457(e)(18) to allow certain "catch-up" contributions for individuals who
have attained age 50, but only one "catch-up" may be used in a particular year.
In addition, under Code Section 457(d) a Section 457(b) Plan may not make
amounts available for distribution to participants or beneficiaries before (1)
the calendar year in which the participant attains age 70 1/2, (2) the
participant has a severance from employment (including death), or (3) the
participant is faced with an unforeseeable emergency (as determined in
accordance with regulations).
Under Code Section 457(g) all of the assets and income of an Eligible
Deferred Compensation Plan for a governmental employer must be held in trust for
the exclusive benefit of participants and their beneficiaries. For this purpose,
annuity contracts and custodial accounts described in Code Section 401(f) are
treated as trusts. This trust requirement does not apply to amounts under an
Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer.
In addition, this trust requirement does not apply to amounts held under a
Deferred Compensation Plan of a governmental employer that is not a Section
457(b) Plan. However, where the trust requirement does not apply, amounts held
under a Section 457 Plan must remain subject to the claims of the employer's
general creditors under Code Section 457(b)(6).
5. TAXATION OF AMOUNTS RECEIVED FROM QUALIFIED PLANS
Except under certain circumstances in the case of Roth IRAs, amounts
received from Qualified Contracts or Plans generally are taxed as ordinary
income under Code Section 72, to the extent that they are not treated as a
tax-free recovery of after-tax contributions or other "investment in the
contract." For annuity payments and other amounts
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received after the Annuity Commencement Date from a Qualified Contract or Plan,
the tax rules for determining what portion of each amount received represents a
tax-free recovery of "investment in the contract" are generally the same as for
Non-Qualified Contracts, as described above.
For non-periodic amounts from certain Qualified Contracts or Plans, Code
Section 72(e)(8) provides special rules that generally treat a portion of each
amount received as a tax-free recovery of the "investment in the contract,"
based on the ratio of the "investment in the contract" over the Contract Value
at the time of distribution. However, in determining such a ratio, certain
aggregation rules may apply and may vary, depending on the type of Qualified
Contract or Plan. For instance, all Traditional IRAs owned by the same
individual are generally aggregated for these purposes, but such an aggregation
does not include any IRA inherited by such individual or any Roth IRA owned by
such individual.
In addition, penalty taxes, mandatory tax withholding or rollover rules may
apply to amounts received from a Qualified Contract or Plan, as indicated below,
and certain exclusions may apply to certain distributions (e.g., distributions
from an eligible Government Plan to pay qualified health insurance premiums of
an eligible retired public safety officer). Accordingly, you are advised to
consult with a qualified tax adviser before taking or receiving any amount
(including a loan) from a Qualified Contract or Plan.
6. PENALTY TAXES FOR QUALIFIED PLANS
Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal
penalty taxes not just on premature distributions, but also on excess
contributions and failures to make required minimum distributions ("RMDs").
Penalty taxes on excess contributions can vary by type of Qualified Plan and
which person made the excess contribution (e.g., employer or an employee). The
penalty taxes on premature distributions and failures to make timely RMDs are
more uniform, and are described in more detail below.
a. PENALTY TAXES ON PREMATURE DISTRIBUTIONS
Code Section 72(t) imposes a penalty income tax equal to 10% of the taxable
portion of a distribution from certain types of Qualified Plans that is made
before the employee reaches age 59 1/2. However, this 10% penalty tax does not
apply to a distribution that is either:
(i) made to a beneficiary (or to the employee's estate) on or after the
employee's death;
(ii) attributable to the employee's becoming disabled under Code Section
72(m)(7);
(iii) part of a series of substantially equal periodic payments (not
less frequently than annually -- "SEPPs") made for the life (or
life expectancy) of the employee or the joint lives (or joint life
expectancies) of such employee and a designated beneficiary ("SEPP
Exception"), and for certain Qualified Plans (other than IRAs)
such a series must begin after the employee separates from
service;
(iv) (except for IRAs) made to an employee after separation from service
after reaching age 55 (or made after age 50 in the case of a
qualified public safety employee separated from certain government
plans);
(v) (except for IRAs) made to an alternate payee pursuant to a
qualified domestic relations order under Code Section 414(p) (a
similar exception for IRAs in Code Section 408(d)(6) covers certain
transfers for the benefit of a spouse or ex-spouse);
(vi) not greater than the amount allowable as a deduction to the
employee for eligible medical expenses during the taxable year; or
(vii) certain qualified reservist distributions under Code Section
72(t)(2)(G) upon a call to active duty.
In addition, the 10% penalty tax does not apply to a distribution from an
IRA that is either:
(viii) made after separation from employment to an unemployed IRA owner
for health insurance premiums, if certain conditions are met;
(ix) not in excess of the amount of certain qualifying higher education
expenses, as defined by Code Section 72(t)(7); or
(x) for a qualified first-time home buyer and meets the requirements of
Code Section 72(t)(8).
If the taxpayer avoids this 10% penalty tax by qualifying for the SEPP
Exception and later such series of payments is modified (other than by death or
disability), the 10% penalty tax will be applied retroactively to all the prior
periodic
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payments (i.e., penalty tax plus interest thereon), unless such modification is
made after both (a) the employee has reached age 59 1/2 and (b) 5 years have
elapsed since the first of these periodic payments.
For any premature distribution from a SIMPLE IRA during the first 2 years
that an individual participates in a salary reduction arrangement maintained by
that individual's employer under a SIMPLE Plan, the 10% penalty tax rate is
increased to 25%.
b. RMDS AND 50% PENALTY TAX
If the amount distributed from a Qualified Contract or Plan is less than the
amount of the required minimum distribution ("RMD") for the year, the
participant is subject to a 50% penalty tax on the amount that has not been
timely distributed.
An individual's interest in a Qualified Plan generally must be distributed,
or begin to be distributed, not later than the Required Beginning Date.
Generally, the Required Beginning Date is April 1 of the calendar year following
the later of --
(i) the calendar year in which the individual attains age 70 1/2, or
(ii) (except in the case of an IRA or a 5% owner, as defined in the
Code) the calendar year in which a participant retires from service
with the employer sponsoring a Qualified Plan that allows such a
later Required Beginning Date.
The entire interest of the individual must be distributed beginning no later
than the Required Beginning Date over --
(a) the life of the individual or the lives of the individual and a
designated beneficiary (as specified in the Code), or
(b) over a period not extending beyond the life expectancy of the
individual or the joint life expectancy of the individual and a
designated beneficiary.
If an individual dies before reaching the Required Beginning Date, the
individual's entire interest generally must be distributed within 5 years after
the individual's death. However, this RMD rule will be deemed satisfied if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of such beneficiary). If such beneficiary is the individual's
surviving spouse, distributions may be delayed until the deceased individual
would have attained age 70 1/2.
If an individual dies after RMDs have begun for such individual, any
remainder of the individual's interest generally must be distributed at least as
rapidly as under the method of distribution in effect at the time of the
individual's death.
The RMD rules that apply while the Contract Owner is alive do not apply with
respect to Roth IRAs. The RMD rules applicable after the death of the Owner
apply to all Qualified Plans, including Roth IRAs. In addition, if the Owner of
a Traditional or Roth IRA dies and the Owner's surviving spouse is the sole
designated beneficiary, this surviving spouse may elect to treat the Traditional
or Roth IRA as his or her own.
The RMD amount for each year is determined generally by dividing the account
balance by the applicable life expectancy. This account balance is generally
based upon the account value as of the close of business on the last day of the
previous calendar year. RMD incidental benefit rules also may require a larger
annual RMD amount. RMDs also can be made in the form of annuity payments that
satisfy the rules set forth in Regulations under the Code relating to RMDs.
In addition, in computing any RMD amount based on a contract's account
value, such account value must include the actuarial value of certain additional
benefits provided by the contract. As a result, electing an optional benefit
under a Qualified Contract may require the RMD amount for such Qualified
Contract to be increased each year, and expose such additional RMD amount to the
50% penalty tax for RMDs if such additional RMD amount is not timely
distributed.
7. TAX WITHHOLDING FOR QUALIFIED PLANS
Distributions from a Qualified Contract or Qualified Plan generally are
subject to federal income tax withholding requirements. These federal income tax
withholding requirements, including any "elections out" and the rate at which
withholding applies, generally are the same as for periodic and non-periodic
distributions from a Non-Qualified Contract, as described above, except where
the distribution is an "eligible rollover distribution" (described below in
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"ROLLOVER DISTRIBUTIONS"). In the latter case, tax withholding is mandatory at a
rate of 20% of the taxable portion of the "eligible rollover distribution," to
the extent it is not directly rolled over to an IRA or other Eligible Retirement
Plan (described below in "ROLLOVER DISTRIBUTIONS"). Payees cannot elect out of
this mandatory 20% withholding in the case of such an "eligible rollover
distribution."
Also, special withholding rules apply with respect to distributions from
non-governmental Section 457(b) Plans, and to distributions made to individuals
who are neither citizens nor resident aliens of the United States.
Regardless of any "election out" (or any actual amount of tax actually
withheld) on an amount received from a Qualified Contract or Plan, the payee is
generally liable for any failure to pay the full amount of tax due on the
includable portion of such amount received. A payee also may be required to pay
penalties under estimated income tax rules, if the withholding and estimated tax
payments are insufficient to satisfy the payee's total tax liability.
8. ROLLOVER DISTRIBUTIONS
The current tax rules and limits for tax-free rollovers and transfers
between Qualified Plans vary according to (1) the type of transferor Plan and
transferee Plan, (2) whether the amount involved is transferred directly between
Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed
first to a participant or beneficiary who then transfers that amount back into
another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the
distribution is made to a participant, spouse or other beneficiary. Accordingly,
we advise you to consult with a qualified tax adviser before receiving any
amount from a Qualified Contract or Plan or attempting some form of rollover or
transfer with a Qualified Contract or Plan.
For instance, generally any amount can be transferred directly from one type
of Qualified Plan (e.g., a TSA) to the same type of Plan for the benefit of the
same individual, without limit (or federal income tax), if the transferee Plan
is subject to the same kinds of restrictions as the transferor Plan (e.g., a TSA
that is subject to the same kinds of salary reduction restrictions) and certain
other conditions to maintain the applicable tax qualification are satisfied
(e.g., as described above for TSA exchanges after September 24, 2007). Such a
"direct transfer" between the same kinds of Plan is generally not treated as any
form of "distribution" out of such a Plan for federal income tax purposes.
By contrast, an amount distributed from one type of Plan (e.g., a TSA) into
a different type of Plan (e.g., a Traditional IRA) generally is treated as a
"distribution" out of the first Plan for federal income tax purposes, and
therefore to avoid being subject to such tax, such a distribution must qualify
either as a "direct rollover" (made directly to another Plan fiduciary) or as a
"60-day rollover." The tax restrictions and other rules for a "direct rollover"
and a "60-day rollover" are similar in many ways, but if any "eligible rollover
distribution" made from certain types of Qualified Plan is not transferred
directly to another Plan fiduciary by a "direct rollover," then it is subject to
mandatory 20% withholding, even if it is later contributed to that same Plan in
a "60-day rollover" by the recipient. If any amount less than 100% of such a
distribution (e.g., the net amount after the 20% withholding) is transferred to
another Plan in a "60-day rollover", the missing amount that is not rolled over
remains subject to normal income tax plus any applicable penalty tax.
Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover
distribution" (which is both eligible for rollover treatment and subject to 20%
mandatory withholding absent a "direct rollover") is generally any distribution
to an employee of any portion (or all) of the balance to the employee's credit
in any of the following types of "Eligible Retirement Plan": (1) a Qualified
Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified
annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a TSA
under Code Section 403(b), or (4) a governmental Section 457(b) Plan. However,
an "eligible rollover distribution" does not include any distribution that is
either --
a. an RMD amount;
b. one of a series of substantially equal periodic payments (not less
frequently than annually) made either (i) for the life (or life
expectancy) of the employee or the joint lives (or joint life
expectancies) of the employee and a designated beneficiary, or (ii)
for a specified period of 10 years or more; or
c. any distribution made upon hardship of the employee.
Before making an "eligible rollover distribution," a Plan administrator
generally is required under Code Section 402(f) to provide the recipient with
advance written notice of the "direct rollover" and "60-day rollover" rules and
the distribution's exposure to the 20% mandatory withholding if it is not made
by "direct rollover." Generally, under Code Sections 402(c), 403(b)(8) and 457
(e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover
distribution" can be made to a Traditional IRA or to another Eligible Retirement
Plan that agrees to accept such a rollover. However, the maximum amount of an
"eligible rollover distribution" that can qualify for a tax-free "60-day
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rollover" is limited to the amount that otherwise would be includable in gross
income. By contrast, a "direct rollover" of an "eligible rollover distribution"
can include after-tax contributions as well, if the direct rollover is made
either to a Traditional IRA or to another form of Eligible Retirement Plan that
agrees to account separately for such a rollover, including accounting for such
after-tax amounts separately from the otherwise taxable portion of this
rollover. Separate accounting also is required for all amounts (taxable or not)
that are rolled into a governmental Section 457(b) Plan from either a Qualified
Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when
later distributed from the governmental Section 457(b) Plan, are subject to any
premature distribution penalty tax applicable to distributions from such a
"predecessor" Qualified Plan.
Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and
408A(d)(3) also vary according to the type of transferor IRA and type of
transferee IRA or other Plan. For instance, generally no tax-free "direct
rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional,
SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth
IRA, or a "conversion" of a NonRoth IRA to a Roth IRA, is subject to special
rules. In addition, generally no tax-free "direct rollover" or "60-day rollover"
can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and
an IRA set up by that same individual as the original owner. Generally, any
amount other than an RMD distributed from a Traditional or SEP IRA is eligible
for a "direct rollover" or a "60-day rollover" to another Traditional IRA for
the same individual. Similarly, any amount other than an RMD distributed from a
Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to
another Roth IRA for the same individual. However, in either case such a
tax-free 60-day rollover is limited to 1 per year (365-day period); whereas no
1-year limit applies to any such "direct rollover." Similar rules apply to a
"direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to
another SIMPLE IRA or a Traditional IRA, except that any distribution of
employer contributions from a SIMPLE IRA during the initial 2-year period in
which the individual participates in the employer's SIMPLE Plan is generally
disqualified (and subject to the 25% penalty tax on premature distributions) if
it is not rolled into another SIMPLE IRA for that individual. Amounts other than
RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial
2-year period) also are eligible for a "direct rollover" or a "60-day rollover"
to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but
any such rollover is limited to the amount of the distribution that otherwise
would be includable in gross income (i.e., after-tax contributions are not
eligible).
Special rules also apply to transfers or rollovers for the benefit of a
spouse (or ex-spouse) or a nonspouse designated beneficiary, Plan distributions
of property, and obtaining a waiver of the 60-day limit for a tax-free rollover
from the IRS. The Katrina Emergency Tax Relief Act of 2005 (KETRA) allows
certain amounts to be recontributed within three years as a rollover
contribution to a plan from which a KETRA distribution was taken.
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is the issuer of the Contract. Hartford Life
Insurance Company is a life insurance company organized under the laws of
Connecticut. Our Home Office is located at 200 Hopmeadow Street, Simsbury, CT
06089.
Hartford Life Insurance Company and its subsidiaries ("Hartford Life
Insurance Company" or the "Company"), is a direct subsidiary of Hartford Life
and Accident Insurance Company ("HLA"), a wholly owned subsidiary of Hartford
Life, Inc. ("Hartford Life"). Hartford Life is an indirect subsidiary of The
Hartford Financial Services Group, Inc. ("The Hartford"). The Company, together
with HLA, provides (i) retail and institutional investment products, including
variable annuities, fixed market value adjusted ("MVA") annuities, private
placement life insurance, which includes life insurance products purchased by a
company on the lives of its employees, and retirement plan services for the
savings and retirement needs of over 5.0 million customers, (ii) life insurance
for wealth protection, accumulation and transfer needs for approximately 738,000
customers, (iii) group benefits products such as group life and group disability
insurance for the benefit of millions of individuals and (iv) fixed annuity
products through its international operations. The Company is one of the largest
sellers of individual variable annuities, variable universal life insurance and
group disability insurance in the United States. The Company's strong position
in each of its core businesses provides an opportunity to increase the sale of
the Company's products and services as individuals increasingly save and plan
for retirement, protect themselves and their families against the financial
uncertainties associated with disability or death and engage in estate planning.
Hartford Life Insurance Company is licensed to operate in the District of
Columbia and all jurisdictions. We intend to offer the Contract in any
jurisdictions in which we are licensed.
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<Page>
LEGAL OPINIONS
The validity of the interests in the Contracts described in this Prospectus
will be passed upon for Hartford by Christopher M. Grinnell, Assistant General
Counsel and Assistant Vice President of Hartford.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 2007 have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their report dated February 20, 2008, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 2008 and 2007 which is incorporated herein by reference,
Deloitte & Touche LLP, an independent registered public accounting firm, have
applied limited procedures in accordance with the standards of the Public
Company Accounting Oversight Board (United States) for a review of such
information. However, as stated in their report included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their report on the unaudited interim financial information because
that report is not a "report" or a "part" of the registration statement prepared
or certified by an accountant within the meaning of Sections 7 and 11 of the
Act.
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<Page>
APPENDIX A
MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market Value Adjustment is:
[(1 + I)/(1 + J)]TO THE POWER OF (N/12)
I = The Guarantee Rate in effect for the Current Guarantee Period
(expressed as a decimal, e.g., 1% = .01)
J = The Current Rate plus 0.25% (expressed as a decimal, e.g., 1% = .01)
ineffect for durations equal to the number of years remaining in the
current Guarantee Period (years are rounded to the next highest
number of years). If not available, the Company will utilize a rate
equal to the most recent Moody's Corporate Bond Yield Average --
Monthly Average Corporate for the applicable duration plus 0.25% as
Published by Moody's Investors Service, Inc.
N = The number of complete months from the surrender date to the end of
the current Guarantee Period.
- - Example of Market Value Adjustment
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 7.5% per annum
Full Surrender: Middle of Certificate Year 3
</Table>
- - Example 1:
<Table>
Gross Surrender Value at = 50,000 (1.075)TO THE POWER OF (2.5)
middle of Certificate Year =59,908.86
3
Net Surrender Value at = [59,908.86] x Market Value Adjustment
middle of Certificate Year
3
Market Value Adjustment
I = .075
J = .08
N = 30
Market Value Adjustment = [(1 + I)/(1 +J)]TO THE POWER OF (N/12)
= (1.075/1.08)TO THE POWER OF (30/12)
= 0.988466
Net Surrender Value at = $59,908.86 x 0.988466
middle of Certificate Year
3
= $59,217.87
</Table>
- - Example of Market Value Adjustment
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 7.5% per annum
Full Surrender: Middle of Certificate Year 3
</Table>
25
<Page>
- - Example 2:
<Table>
Gross Surrender Value at = 50,000 (1.075)TO THE POWER OF (2.5)
middle of Certificate Year =59,908.86
3
Net Surrender Value at = [59,908.86] x Market Value Adjustment
middle of Certificate Year
3
Market Value Adjustment
I = .075
J = .07
N = 30
Market Value Adjustment = [(1 + I)/(1 + J)]TO THE POWER OF (N/12)
= (1.075/1.07)TO THE POWER OF (30/12)
= 1.011723
Net Surrender Value at = $59,908.86 x 1.011723
middle of Certificate Year
3
= $60,611.18
</Table>
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