AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 2005
- -----------------------------------------------------------------------
REGISTRATION NO. 333-58512
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
NEW YORK 36-2608394
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
100 MOTOR PARKWAY,
HAUPPAUGE, NEW YORK 11738
1-800-256-9392
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICE)
MICHAEL J. VELOTTA, ESQUIRE
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
100 MOTOR PARKWAY,
HAUPPAUGE, NEW YORK 11738
1-800-256-9392
(NAME AND COMPLETE ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
Copies to:
ANGELA KING, ESQ. DANIEL J. FITZPATRICK, ESQ.
ALLSTATE LIFE INSURANCE COMPANY MORGAN STANLEY DW INC.
OF NEW YORK 1585 BROADWAY
3100 SANDERS ROAD, SUITE J5B NEW YORK, NY 10036.
NORTHBROOK, IL 60062
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The annuity
contracts and interests thereunder covered by this registration statement are to
be issued promptly and from time to time after the effective date of this
registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box, [X].
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
THE CUSTOM ANNUITY
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CUSTOMER SERVICE:
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142
MAILING ADDRESS: P.O. BOX 82656, LINCOLN, NE 68501-2656
TELEPHONE NUMBER: 1-800-692-4682 PROSPECTUS DATED APRIL 30, 2005
-------------------------------------------------------------------------------
Allstate Life Insurance Company of New York ("ALLSTATE NEW YORK") is offering
The Custom Annuity, an individual single premium deferred annuity contract
("CONTRACT"). This prospectus contains information about the Contract that you
should know before investing. Please keep it for future reference.
The Contract is available through financial institutions and broker-dealers who
have entered into a distribution agreement with ALFS, Inc., the principal
underwriter for the Contract.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THE SECURITIES
DESCRIBED IN THIS PROSPECTUS, NOR HAS IT PASSED
ON THE ACCURACY OR THE ADEQUACY OF THIS
PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS
IMPORTANT COMMITTING AN IMPORTANT FEDERAL CRIME.
NOTICES INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE CONTRACTS ARE AVAILABLE ONLY IN NEW YORK.
1 PROSPECTUS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Overview
- --------------------------------------------------------------------------------
Important Terms 3
- --------------------------------------------------------------------------------
The Contract At A Glance 4
- --------------------------------------------------------------------------------
How the Contract Works 5
- --------------------------------------------------------------------------------
Contract Features
- --------------------------------------------------------------------------------
The Contract 6
- --------------------------------------------------------------------------------
Purchases and Contract Value 7
- --------------------------------------------------------------------------------
Guarantee Periods 8
- --------------------------------------------------------------------------------
Expenses 9
- --------------------------------------------------------------------------------
Access To Your Money 10
- --------------------------------------------------------------------------------
Income Payments 11
- --------------------------------------------------------------------------------
Death Benefits 12
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Other Information
- --------------------------------------------------------------------------------
More Information 13
- --------------------------------------------------------------------------------
Allstate New York 13
- --------------------------------------------------------------------------------
The Contract 13
- --------------------------------------------------------------------------------
Non-Qualified Annuities/Qualified Plans 13
- --------------------------------------------------------------------------------
Legal Matters 13
- --------------------------------------------------------------------------------
Taxes 14
- --------------------------------------------------------------------------------
Annual Reports and Other Documents 20
- --------------------------------------------------------------------------------
Appendix A - Market Value Adjustment 21
- --------------------------------------------------------------------------------
2 PROSPECTUS
IMPORTANT TERMS
- --------------------------------------------------------------------------------
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
PAGE
- --------------------------------------------------------------------------------
Accumulation Phase 5
- --------------------------------------------------------------------------------
Allstate New York ("We") 13
- --------------------------------------------------------------------------------
Annuitant 6
- --------------------------------------------------------------------------------
Beneficiary 6
- --------------------------------------------------------------------------------
Cancellation Period 4
- --------------------------------------------------------------------------------
Contract 6
- --------------------------------------------------------------------------------
Contract Owner ("You") 5
- --------------------------------------------------------------------------------
Contract Value 4
- --------------------------------------------------------------------------------
Due Proof of Death 12
- --------------------------------------------------------------------------------
Guarantee Periods 4
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Income Plans 5
- --------------------------------------------------------------------------------
Issue date 5
- --------------------------------------------------------------------------------
Market Value Adjustment 4
- --------------------------------------------------------------------------------
Payout Phase 5
- --------------------------------------------------------------------------------
Payout Start Date 11
- --------------------------------------------------------------------------------
Preferred Withdrawal Amount 9
- --------------------------------------------------------------------------------
SEC 20
- --------------------------------------------------------------------------------
Settlement Value 12
- --------------------------------------------------------------------------------
Systematic Withdrawal Program 10
- --------------------------------------------------------------------------------
3 PROSPECTUS
THE CONTRACT AT A GLANCE
- --------------------------------------------------------------------------------
The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
SINGLE PAYMENT You can purchase a Contract with as little as
$1,000
(we may increase the minimum to $4,000 in the
future).
- -------------------------------------------------------------------------------
RIGHT TO CANCEL You may cancel your Contract within 10 days of
receipt ("CANCELLATION PERIOD") and receive a full
refund of your purchase payment.
- -------------------------------------------------------------------------------
EXPENSES You will bear the following expenses:
.A withdrawal charge will apply to withdrawals
made during the initial Guarantee Period.
Withdrawal charges will be the lesser of (a) the
amount withdrawn in excess of the Preferred
Withdrawal Amount times one-half of the interest
rate for the Guarantee Period, or (b) interest
earned on the amount withdrawn (certain limits
may apply to reduce this charge).The charge will
not exceed 10% of the amount withdrawn, reduced
by 1% for every year the contract is in force
times the sum of the amount withdrawn and the
Market Value Adjustment (described below).
.State premium tax (New York currently does not
impose one)
- -------------------------------------------------------------------------------
GUARANTEED INTEREST The Contract offers fixed interest rates that we
guarantee for specified periods that we call
"GUARANTEE PERIODS."To find out what the current
rates are on the Guarantee Periods, call us at
1-800-692-4682.
- -------------------------------------------------------------------------------
SPECIAL SERVICES For your convenience, we offer a SYSTEMATIC
WITHDRAWAL PROGRAM.
- -------------------------------------------------------------------------------
INCOME PAYMENTS The Contract offers three income payment plans:
. life income with guaranteed payments
.a joint and survivor life income with guaranteed
payments
. guaranteed payments for a specified period (5
to 30 years)
- -------------------------------------------------------------------------------
DEATH BENEFITS If you or the ANNUITANT dies before the PAYOUT
START DATE, we will pay the death benefit described
in the Contract.
- -------------------------------------------------------------------------------
WITHDRAWALS You may withdraw some or all of your Contract value
("CONTRACT VALUE") at anytime prior to the Payout
Start Date. If you withdraw Contract Value from a
Guarantee Period before its maturity, a withdrawal
charge, MARKET VALUE ADJUSTMENT, and taxes may
apply. Withdrawals taken prior to annuitization
(referred to in this prospectus as the Payout
Phase) are generally considered to come from the
earnings in the Contract first. If the Contract is
tax-qualified, generally all withdrawals are
treated as distributions of earnings. Withdrawals
of earnings are taxed as ordinary income and, if
taken prior to age 59 1/2, may be subject to an
additional 10% federal tax penalty.
- -------------------------------------------------------------------------------
4 PROSPECTUS
HOW THE CONTRACT WORKS
- --------------------------------------------------------------------------------
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the CONTRACT OWNER) save for
retirement because you can invest in the Contract and generally pay no federal
income taxes on any earnings until you withdraw them. You do this during what we
call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on
the date we issue your Contract (we call that date the "ISSUE DATE") and
continues until the "Payout Start Date", which is the date we apply your money
to provide income payments. You allocate your purchase payment to a Guarantee
Period that earns a fixed rate of interest that we declare periodically.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/ or for a pre-set number of years, by
selecting one of the income payment options (we call these "INCOME PLANS")
described on page 11. You receive income payments during what we call the
"PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and
continues until we make the last income payment required by the Income Plan you
select. During the Payout Phase, we guarantee the amount of your payments, which
will remain fixed. The amount of money you accumulate under your Contract during
the Accumulation Phase and apply to an Income Plan will determine the amount of
your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
Issue Payout Start
Date Accumulation Phase Date Payout Phase
- ------------------------------------------------------------------------------------------------------------>
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments income payments income payments
for a set period for life
As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if none, the
BENEFICIARY, will exercise the rights and privileges provided by the Contract.
See "THE CONTRACT." In addition, if you die before the Payout Start Date, we
will pay a death benefit to any surviving Contract Owner or, if there is none,
to your Beneficiary. See "Death Benefits."
Please call us at 1-800-692-4682 if you have any questions about how the
Contract works.
5 PROSPECTUS
THE CONTRACT
- --------------------------------------------------------------------------------
The Custom Annuity is a contract between you, the Contract Owner, and Allstate
New York, a life insurance company. As the Contract Owner, you may exercise all
of the rights and privileges provided to you by the Contract. That means it is
up to you to select or change (to the extent permitted):
.. the amount and timing of your withdrawals,
.. the programs you want to use to withdraw money,
.. the income payment plan you want to use to receive retirement income,
.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, and
.. any other rights that the Contract provides.
If you die, any surviving Contract Owner or, if none, the Beneficiary, may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living
person. The maximum age of the oldest Contract Owner and Annuitant cannot exceed
age 80 as of the date we receive the completed application.
Changing ownership of this Contract may cause adverse tax consequences and may
not be allowed under qualified plans. Please consult with a competent tax
advisor prior to making a request for a change of Contract Owner.
The Contract can also be purchased as an IRA or TSA (also known as a 403(b)).
The endorsements required to qualify these annuities under the Internal Revenue
Code of 1986, as amended, ("Code") may limit or modify your rights and
privileges under the Contract.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for
specified periods). The Contract requires that there be an Annuitant at all
times during the Accumulation Phase and on the Payout Start Date. The Annuitant
must be a living person. The maximum age of an Annuitant cannot exceed age 80 as
of the date we receive the completed application.
You initially designate an Annuitant in your application. A Contract Owner who
is a living person may change the Annuitant prior to the Payout Start Date. Once
we receive your change request, any change will be effective at the time you
sign the written notice. We are not liable for any payment we make or other
action we take before receiving any written request from you. Prior to the
Payout Start Date, you may designate a joint Annuitant, who is a second person
on whose life income payments depend. If the Annuitant dies prior to the Payout
Start Date, the new Annuitant will be the youngest Contract Owner if living,
otherwise the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract Owner subject to the Death of Owner provision if the
sole surviving Contract Owner dies before the Payout Start Date. If the sole
surviving Contract Owner dies after the Payout Start Date, the Beneficiary will
receive any guaranteed income payments scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly. If the Contract Owner is a living
person, we will determine the Beneficiary from the most recent request of the
Contract Owner.
If the Contract Owner is a non-living person, the Contract Owner is also the
Beneficiary, unless a different Beneficiary is named.
If you did not name a Beneficiary or if the named Beneficiary is no longer
living, the Beneficiary will be:
.. your spouse or, if he or she is no longer alive,
.. your surviving children equally, or if you have no surviving children,
.. your estate.
If more than one Beneficiary survives you, we will divide the death benefit
among your Beneficiaries according to your most recent written instructions. If
you have not given us written instructions, we will pay the death benefit in
equal amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only an Allstate New York officer may approve a change in or waive any provision
of the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. We will notify you of any
changes. If a provision of the Contract is inconsistent with state law, we will
follow state law.
6 PROSPECTUS
ASSIGNMENT
No Contract Owner has a right to assign any interest in a Contract as collateral
or security for a loan. However, you may otherwise assign periodic income
payments under the Contract prior to the Payout Start Date. No Beneficiary may
assign benefits under the Contract until they are due. We will not be bound by
any assignment until the assignor signs it and files it with us. We are not
responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN
ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES AND CONTRACT VALUE
- --------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENT
Your purchase payment must be at least $1,000. We may increase the minimum to
$4,000 in our sole discretion. We do not accept additional purchase payments on
existing Contracts. We reserve the right to limit the maximum amount of purchase
payment we will accept. We reserve the right to reject any application in our
sole discretion.
ALLOCATION OF PURCHASE PAYMENT
You must select a Guarantee Period for your purchase payment from among those
that we offer. A Guarantee Period is a period of years during which you will
earn a guaranteed interest rate on your money. We will apply your purchase
payment to the Guarantee Period you select within 7 days of the receipt of the
payment and required issuing information.
RIGHT TO CANCEL
You may cancel your Contract within the Cancellation Period, which is 10 days
following receipt of your Contract. If you exercise this right to cancel, the
Contract terminates and we will pay you the full amount of your purchase payment
or any greater amount state law requires.
If your Contract is qualified under Code Section 408(b), we will refund the
greater of any purchase payments or the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
purchase payment you have invested in the Guarantee Period, plus earnings
thereon, and less any amounts previously withdrawn. Your Contract uses the term
"Account Value" instead of "Contract Value."
7 PROSPECTUS
GUARANTEE PERIODS
- --------------------------------------------------------------------------------
The purchase payment you allocate to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years.
The amount that you allocate to a Guarantee Period becomes part of our general
account, which supports our insurance and annuity obligations. The general
account consists of our general assets other than those in segregated asset
accounts. We have sole discretion to invest the assets of the general account,
subject to applicable law. Any money you allocate to a Guarantee Period does not
entitle you to share in the investment experience of the general account.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular allocation until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. WE DETERMINE THE INTEREST
RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR
GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For current interest rate
information, please contact your Financial Advisor or Allstate New York at
1-800-692-4682. The interest rate will never be less than the minimum guaranteed
rate stated in the Contract.
HOW WE CREDIT INTEREST
We will credit interest to your purchase payment from the Issue Date. We will
credit interest daily to each amount allocated to a Guarantee Period at a rate
that compounds to the annual interest rate that we declared at the beginning of
the applicable Guarantee Period.
The following example illustrates how a purchase payment would grow, given an
assumed Guarantee P
Purchase Payment $10,000
.......
Guarantee Period....... 5years
Annual Interest Rate... 4.50%
eriod and effective annual interest rate:
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value $10,000.00
X (1 + Annual
Interest Rate) 1.045
----------
$10,450.00
Contract Value at end
of Contract Year $10,450.00
X (1 + Annual
Interest Rate) 1.045
----------
$10,920.25
Contract Value at end
of Contract Year $10,920.25
X (1 + Annual
Interest Rate) 1.045
----------
$11,411.66
Contract Value at end
of Contract Year $11,411.66
X (1 + Annual
Interest Rate) 1.045
----------
$11,925.19
Contract Value at end
of Contract Year $11,925.19
X (1 + Annual
Interest Rate) 1.045
-----------
$12,461.82
Total Interest Credited During Guarantee Period = $2,461.82 ($12,461.82 -
$10,000)
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. THE HYPOTHETICAL INTEREST RATE
IS FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT INTENDED TO PREDICT EITHER CURRENT
OR FUTURE INTEREST RATES TO BE DECLARED UNDER THE CONTRACT. ACTUAL INTEREST
RATES DECLARED FOR AND GIVEN GUARANTEE PERIOD MAY BE MORE OR LESS THAN SHOWN
ABOVE BUT WILL NEVER BE LESS THAN THE GUARANTEED MINIMUM RATE STATED IN THE
CONTRACT.
8 PROSPECTUS
RENEWALS
At least 35 calendar days prior to the end of each Guarantee Period, we will
mail you a notice listing your renewal options. During the 10-day period after
the end of the Guarantee Period, you may:
1. Take no action. We will automatically apply your money to a one-year renewal
Guarantee Period. The new interest rate will be set at the time of renewal; or
2. Instruct us to apply your money to a new Guarantee Period from among those
that may be available. The new Guarantee Period will begin on the day the
previous Guarantee Period ends. The new interest rate will be our then current
declared rate for the new Guarantee Period; or
3. Withdraw all or a portion of your money without incurring a withdrawal
charge or a Market Value Adjustment. Amounts not withdrawn will be applied to a
new Guarantee Period of the same length as the previous Guarantee Period. The
new Guarantee Period will begin on the day the previous Guarantee Period ends.
During the first 10 days of a renewal Guarantee Period, any amount withdrawn
will not reflect any interest earned during the 10-day period.
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken during the 10
day period after a Guarantee Period expires, are subject to a Market Value
Adjustment. A Market Value Adjustment may also apply upon payment of a death
benefit under a Contract.
We will not apply the Market Value Adjustment on:
.. the Payout Start Date;
.. withdrawals you take to satisfy IRS required distribution rules for the
Contract; or
.. withdrawals within the Preferred Withdrawal Amount, described under "Expenses"
on page 9.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time the amount being withdrawn was allocated to a Guarantee Period to the
time you withdraw it from that Guarantee Period. We calculate the Market Value
Adjustment by comparing the effective annual interest crediting rate for a
period equal to the Guarantee Period at its inception to the interest crediting
rate for a period equal to the time remaining in the Guarantee Period when you
remove your money. See "Appendix A" for a more detailed description.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than your purchase payment plus interest at the minimum guaranteed interest rate
under the Contract. However, we guarantee that the amount received upon
surrender (prior to any withholding and before deduction for any applicable
premium taxes) will be at least equal to your purchase payment less any prior
partial withdrawals.
Generally, if the annual interest rate for the Guarantee Period is lower than
the applicable current annual interest rate for a period equal to the time
remaining in the Guarantee Period, then the Market Value Adjustment will result
in a lower amount payable to you. Conversely, if the annual interest rate for
the Guarantee Period is higher than the applicable current annual interest rate,
then the Market Value Adjustment will result in a higher amount payable to you.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years that has an annual interest rate of 4.50%. Assume that at the
end of 3 years, you make a partial withdrawal. If, at that later time, the
current interest rate for a 2 year Guarantee Period is 4.00%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current interest rate for the 2 year
Guarantee Period is 5.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
EXPENSES
- --------------------------------------------------------------------------------
As a Contract Owner, you will bear the charges and expenses described below.
WITHDRAWAL CHARGES
We may assess a withdrawal charge to amounts you withdraw prior to the end of
the initial Guarantee Period. During each year (as measured from the
commencement of a Guarantee Period), you can withdraw up to 10% of the amount of
the funds allocated to that Guarantee Period without paying the withdrawal
charge or a Market Value Adjustment. Unused portions of this 10% "PREFERRED
WITHDRAWAL AMOUNT" are not carried forward to future years. We will deduct
withdrawal charges, if applicable, from the amount paid.
The amount of the withdrawal charge equals the lesser of:
(a) one-half the interest crediting rate for the Guarantee Period multiplied
by the amount withdrawn in excess of the Preferred Withdrawal Amount; or
(b) interest earned on the amount withdrawn.
9 PROSPECTUS
The amount of the withdrawal charge will not exceed 10% of the withdrawal
amount, reduced by 1% for every year the Contract is in force, multiplied by the
sum of: (1) the amount withdrawn; and (2) the Market Value Adjustment.
We do not apply a withdrawal charge in the following situations:
.. withdrawals taken to satisfy IRS minimum distribution rules for the Contract;
.. on the Payout Start Date; or
.. money withdrawn within 10 days after the expiration of a Guarantee Period
which it had been allocated.
PREMIUM TAXES
Currently, we do not make deductions for premium taxes under the Contract
because New York does not charge premium taxes on annuities. We may deduct taxes
that may be imposed in the future from purchase payments or the Contract Value
when the tax is incurred or at a later time.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can withdraw some or all of your money at any time prior to the Payout Start
Date. You may not make any withdrawals or surrender your Contract once the
Payout Phase has begun.
The minimum withdrawal amount is $100.00.
MINIMUM CONTRACT VALUE
If the amount you withdraw reduces your Contract Value to less than $1,000, we
may treat it as a request to withdraw your entire Contract Value. Your contract
will terminate if you withdraw all of your Contract Value. We will however, ask
you to confirm your withdrawal request before terminating your Contract. Before
terminating any Contract whose value has been reduced by withdrawals to less
than $1,000, we would inform you in writing of our intention to terminate your
Contract and give you at least 30 days in which to make an additional purchase
payment to restore your Contract's value to the contractual minimum of $1,000.
If we terminate your Contract, we will distribute to you its Contract Value,
adjusted by any Market Value Adjustment, less withdrawal and other charges and
applicable taxes.
Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals of earnings are taxed as ordinary
income and, if taken prior to age 59 1/2, may be subject to an additional 10%
federal tax penalty. Please consult your tax advisor before taking any
withdrawal.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to 6 months from the date we receive
your withdrawal request.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $100. We will deposit
systematic withdrawal payments into the Contract Owner's bank account or an
account designated by you. Please consult with your Financial Advisor for
details.
We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
RETURN OF PURCHASE PAYMENT GUARANTEE
When you withdraw your money, a withdrawal charge and a Market Value Adjustment
may apply. However, if you decide to surrender your Contract, we guarantee that
the amount you receive upon surrender will never be less than your purchase
payment, less amounts previously withdrawn (prior to withholding and the
deduction of any taxes if applicable). Premium taxes and income tax withheld may
reduce the amount you receive on surrender to less than your purchase payment.
This guarantee does not apply to earnings on your purchase payment. The renewal
of a Guarantee Period does not in any way change this guarantee.
10 PROSPECTUS
INCOME PAYMENTS
- --------------------------------------------------------------------------------
PAYOUT START DATE
The Payout Start Date is the day we apply your Contract Value less any
applicable taxes, to an Income Plan. The Payout Start Date must be:
.. at least 30 days after the Issue Date; and occur on or before
.. the later of the 10th Contract anniversary,
.. or the Annuitant's 90th birthday.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designated. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years. After the Payout Start Date, you may not make withdrawals or change your
choice of Income Plan.
A portion of each payment will be considered taxable and the remaining portion
will be a non-taxable return of your investment in the Contract, which is also
called the "basis". Once the basis in the Contract is depleted, all remaining
payments will be fully taxable. If the Contract is tax-qualified, generally, all
payments will be fully taxable. Taxable payments taken prior to age 59 1/2, may
be subject to an additional 10% federal tax penalty.
The three Income Plans available under the Contract are:
INCOME PLAN 1 -- LIFE INCOME WITH GUARANTEED PAYMENTS.
Under this plan, we make periodic income payments for at least as long as the
Annuitant lives. If the Annuitant dies before we have made all of the guaranteed
income payments, we will continue to pay the remainder of the guaranteed income
payments as required by the Contract.
INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS.
Under this plan, we make periodic income payments for at least as long as either
the Annuitant or the joint Annuitant is alive. If both the Annuitant and the
joint Annuitant die before we have made all of the guaranteed income payments,
we will continue to pay the remainder of the guaranteed income payments as
required by the Contract.
INCOME PLAN 3 -- GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 TO 30 YEARS).
Under this plan, we make periodic income payments for the period you have
chosen. These payments do not depend on the life of the Annuitant. You may elect
to receive guaranteed payments for periods ranging from 5 to 30 years.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amount of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us. If you
choose Income Plan 1 or 2, or, if available, another Income Plan with payments
that continue for the life of the Annuitant or joint Annuitant, we may require
proof of age and sex of the Annuitant or joint Annuitant before starting income
payments, and proof that the Annuitant or joint Annuitant are alive before we
make each payment. Please note that under such Income Plans, if you elect to
take no minimum guaranteed payments, it is possible that the payee could receive
only 1 income payment if the Annuitant and any joint Annuitant both die before
the second income payment, or only 2 income payments if they die before the
third income payment, and so on.
We will apply your Contract Value, less applicable taxes, to your Income Plan on
the Payout Start Date. If the Contract Value is less than $2,000, or if your
monthly payments would be less than $20, we may:
.. pay you the Contract Value, less any applicable taxes, in a lump sum instead
of the periodic payments you have chosen, or
.. reduce the frequency of your payments so that each payment will be at least
$20.
INCOME PAYMENTS
We guarantee income payment amounts for the duration of the Income Plan. We
calculate income payments by:
1. determining your Contract Value on the Payout Start Date;
2. deducting any applicable tax; and
3. applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as we are
offering at that time.
We may defer making fixed income payments for a period of up to six months or
such shorter time state law may require. If we defer such payments for 10 days
or more, we will pay interest as required by law from the date we
11 PROSPECTUS
receive the withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age. However, we
reserve the right to use income payment tables that do not distinguish on the
basis of sex to the extent permitted by law. In certain employment-related
situations, employers are required by law to use the same income payment tables
for men and women. Accordingly, if the Contract is to be used in connection with
an employment-related retirement or benefit plan, you should consult with legal
counsel as to whether the purchase of a Contract is appropriate. For qualified
plans, where it is appropriate, we may use income payment tables that do not
distinguish on the basis of sex.
DEATH BENEFITS
- --------------------------------------------------------------------------------
The Contract offers a death benefit prior to the Payout Start Date on the
earlier of:
1. the death of any Contract Owner, or
2. the death of the Annuitant.
We will pay the death benefit to the new Contract Owner as determined
immediately after the death. The new Contract Owner would be a surviving
Contract Owner or, if none, the Beneficiary.
A claim for a distribution on death must include Due Proof of Death. We will
accept the following documentation as "DUE PROOF OF DEATH":
.. a certified copy of a death certificate;
.. a certified copy of a decree of a court of competent jurisdiction as to the
finding of death, or
.. any other proof acceptable to us.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the Death Benefit is equal to the greater of:
(1) the Contract Value, or (2) the "SETTLEMENT VALUE," which is the Contract
Value, adjusted by any market value adjustment, less withdrawal charges and
taxes. We will calculate the value of the death benefit as of the date we
receive a complete request for payment of the death benefit.
DEATH BENEFIT PAYMENTS
Upon death of the Contract Owner, the new Contract Owner generally has the
following 3 options:
1. receive the Settlement Value within 5 years of the date of death;
2. receive the death benefit in a lump sum; or
3. apply the death benefit to an Income Plan, with income payments beginning
within one year of the date of death. Income payments must be made over the life
of the new Contract Owner, or a period not to exceed the life expectancy of the
new Contract Owner.
Options 2 and 3 above are available only if you elect one of these options and
we receive Due Proof of Death within 180 days of the date of death. We reserve
the right to waive the 180 day limit on a non-discriminatory basis.
If the new Contract Owner is a non-living person, the new Contract Owner must
elect to receive the death benefit in a lump sum. If we receive Due Proof of
Death within 180 days of the date of death, we will pay a death benefit.
Otherwise, we will pay a Settlement Value.
An Annuitant is necessary to continue the Contract between the date of the
Contract Owner's death and the final distribution. If there is no Annuitant, the
new Annuitant will be the youngest new Contract Owner.
If the surviving spouse of the deceased Contract Owner is the new Contract
Owner, then the spouse may elect Options 2 or 3 listed above or may continue the
Contract in the Accumulation Phase as if the death had not occurred. If there is
no Annuitant at that time, the new Annuitant will be the surviving spouse.
If the Contract Owner is not the Annuitant and the Annuitant dies, then the
Contract Owner has the following 3 options:
1. continue the Contract as if the death had not occurred;
2. receive the death benefit in a lump sum; or
3. apply the death benefit to an Income Plan, which must begin within 1 year of
the date of death and must be for a period equal to or less than the life
expectancy of the Contract Owner.
For Options 1 and 3, the new Annuitant will be the youngest Contract Owner
unless the Contract Owner names a different Annuitant. Options 1 and 3 are not
available if the Contract Owner is a non-living person.
Options 2 and 3 above are only available if you elect one of these options and
we receive Due Proof of Death within 180 days of the date of death. We reserve
the right to waive the 180 day limit on a non-discriminatory basis.
If the Contract Owner is not the Annuitant and the Annuitant dies, the Contract
Owner has 60 days from the date we receive due proof of death to select an
Income Plan without incurring a tax on the entire gain in the Contract. If the
Contract Owner (other than a surviving spouse) elects to continue the Contract
the owner(s) will be taxed on the entire gain in the Contract computed on the
date of continuance. We are required to report such gain to the IRS as income to
the Contract Owner. An additional 10% federal tax penalty may apply if the
Contract Owner is under age 59 1/2. Any amount included
12 PROSPECTUS
in the Contract Owner's gross income as a result of a Contract continuance will
increase the investment in the Contract for future distributions.
PLEASE REFER TO YOUR CONTRACT FOR MORE DETAILS ON THE ABOVE OPTIONS.
MORE INFORMATION
- --------------------------------------------------------------------------------
ALLSTATE NEW YORK
Allstate New York is the issuer of the Contract. Allstate New York is a stock
life insurance company organized under the laws of New York. From 1967 to 1978,
Allstate New York was known as "Financial Life Insurance Company". From 1978 to
1984, Allstate New York was known as "PM Life Insurance Company." Allstate New
York is currently licensed to operate in New York. Our home office is located at
100 Motor Parkway, Hauppauge, New York 11788-5107.
Allstate New York is a wholly owned subsidiary of Allstate Life Insurance
Company ("Allstate Life"), a stock life insurance company incorporated under the
laws of the State of Illinois. Allstate Life is a wholly owned subsidiary of
Allstate Insurance Company, a stock property-liability insurance company
incorporated under the laws of the State of Illinois. All of the outstanding
capital stock of Allstate Insurance Company is owned by The Allstate
Corporation.
THE CONTRACT
DISTRIBUTION. ALFS, Inc. ("ALFS"), located at 3100 Sanders Road, Northbrook,
Illinois 60062, serves as principal underwriter of the Contracts. ALFS is a
wholly owned subsidiary of Allstate Life Insurance Company. ALFS is a registered
broker-dealer under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), and is a member of the NASD. The Contracts are available through
financial institutions and broker-dealers that have entered into a distribution
agreement with ALFS.
We may pay up to a maximum sales commission of 8 1/2%, both upon sales of the
Contract and upon renewal of a Guarantee Period.
Allstate New York does not pay ALFS a commission for distribution of the
Contracts. The underwriting agreement with ALFS provides that we will reimburse
ALFS for any liability to Contract Owners arising out of services rendered or
Contracts issued.
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan,
the plan may impose different or additional conditions or limitations on
withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates,
income payments, and other Contract features. In addition, adverse tax
consequences may result if qualified plan limits on distributions and other
conditions are not met. Please consult your qualified plan administrator for
more information. Allstate New York no longer issues deferred annuities to
employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of New York law pertaining to the Contracts, including the validity
of the Contracts and Allstate New York's right to issue such Contracts under New
York insurance law, have been passed upon by Michael J. Velotta, General Counsel
of Allstate New York.
13 PROSPECTUS
TAXES
- --------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE
NEW YORK MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
Allstate New York is taxed as a life insurance company under Part I of
Subchapter L of the Code.
TAXATION OF FIXED ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the Contract Owner is
a natural person.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living
Owners in this prospectus. As a general rule, annuity contracts owned by
non-natural persons such as corporations, trusts, or other entities are not
treated as annuity contracts for federal income tax purposes. The income on such
contracts does not enjoy tax deferral and is taxed as ordinary income received
or accrued by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain qualified plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax
deferral as described in the Exceptions to the Non-Natural Owner Rule section.
In accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
surviving Contract Owner. Since the trust will be the surviving Contract Owner
in all cases, the Death Benefit will be payable to the trust notwithstanding any
beneficiary designation on the annuity contract. A trust, including a grantor
trust, has two options for receiving any death benefits: 1) a lump sum payment;
or 2) payment deferred up to five years from date of death.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal
under a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a total withdrawal
under a non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.
You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of
annuity payments received from a non-Qualified Contract provides for the return
of your investment in the Contract in equal tax-free amounts over the payment
period. The balance of each payment received is taxable. For fixed annuity
payments, the amount excluded from income is determined by multiplying the
payment by the ratio of the investment in the Contract (adjusted for any refund
feature or period certain) to the total expected value of annuity payments for
the term of the Contract. The annuity payments will be fully taxable after the
total amount of the investment in the Contract is excluded using these ratios.
The federal tax treatment of annuity payments is unclear in some respects. As a
result, if the IRS should provide further guidance, it is possible that the
amount we calculate and report to the IRS as taxable could be different. If you
die, and annuity payments cease before the total amount of the investment in the
Contract is recovered, the unrecovered amount will be allowed as a deduction for
your last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.
14 PROSPECTUS
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:
.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of the Contract Owner's death;
.. if any Contract Owner dies prior to the Payout Start Date, the entire interest
in the Contract will be distributed within 5 years after the date of the
Contract Owner's death. These requirements are satisfied if any portion of the
Contract Owner's interest that is payable to (or for the benefit of) a
designated Beneficiary is distributed over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of the Beneficiary) and
the distributions begin within 1 year of the Contract Owner's death. If the
Contract Owner's designated Beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner;
.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract owned by a
non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in
income as follows:
.. if distributed in a lump sum, the amounts are taxed in the same manner as a
total withdrawal, or
.. if distributed under an Income Plan, the amounts are taxed in the same manner
as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the
taxable amount of any premature distribution from a non-Qualified Contract. The
penalty tax generally applies to any distribution made prior to the date you
attain age 59 1/2. However, no penalty tax is incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or becoming totally disabled,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made under an immediate annuity, or
.. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. A material modification does not include
permitted changes described in published IRS rulings. You should consult a
competent tax advisor prior to creating or modifying a substantially equal
periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is
a tax-free exchange of a non-qualified life insurance contract, endowment
contract or annuity contract into a non-Qualified annuity contract. The contract
owner(s) must be the same on the old and new contract. Basis from the old
contract carries over to the new contract so long as we receive that information
from the relinquishing company. If basis information is never received, we will
assume that all exchanged funds represent earnings and will allocate no cost
basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges
of annuity contracts. Under this ruling, if you take a withdrawal from a
receiving or relinquishing annuity contract within 24 months of the partial
exchange, then special aggregation rules apply for purposes of determining the
taxable amount of a distribution. The IRS has issued limited guidance on how to
aggregate and report these distributions. The IRS is expected to provide
further guidance; as a result, it is possible that the amount we calculate and
report to the IRS as taxable could be different. Your Contract may not permit
partial exchanges.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Any assignment or pledge (or agreement to assign or pledge) of the
Contract Value is taxed as a withdrawal of such amount or portion and may also
incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified
deferred annuity contracts issued by Allstate New York (or its affiliates) to
the same Contract Owner during any calendar year be aggregated
15 PROSPECTUS
and treated as one annuity contract for purposes of determining the taxable
amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate New York is required to withhold federal income tax at a
rate of 10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% of the taxable
amount. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Allstate New York is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. If no U.S. taxpayer identification number is
provided, we will automatically withhold using single with zero exemptions as
the default. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Allstate New York as a withholding
agent must withhold 30% of the taxable amounts paid to a non-resident alien. A
non-resident alien is someone other than a U.S. citizen or resident alien.
Withholding may be reduced or eliminated if covered by an income tax treaty
between the U.S. and the non-resident alien's country of residence if the payee
provides a U.S. taxpayer identification number on a fully completed Form W-8BEN.
A U.S. taxpayer identification number is a social security number or an
individual taxpayer identification number ("ITIN"). ITINs are issued by the IRS
to non-resident alien individuals who are not eligible to obtain a social
security number. The U.S. does not have a tax treaty with all countries nor do
all tax treaties provide an exclusion or lower withholding rate for annuities.
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred,
and the income from annuities held by such plans does not receive any additional
tax deferral. You should review the annuity features, including all benefits and
expenses, prior to purchasing an annuity as a TSA or IRA. Tax Qualified
Contracts are contracts purchased as or in connection with:
.. Individual Retirement Annuities (IRAs) under Code Section 408(b);
.. Roth IRAs under Code Section 408A;
.. Simplified Employee Pension (SEP IRA) under Code Section 408(k);
.. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Code Section
408(p);
.. Tax Sheltered Annuities under Code Section 403(b);
.. Corporate and Self Employed Pension and Profit Sharing Plans under Code
Section 401; and
.. State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans under Code Section 457.
Allstate New York reserves the right to limit the availability of the Contract
for use with any of the retirement plans listed above or to modify the Contract
to conform with tax requirements. If you use the Contract within an employer
sponsored qualified retirement plan, the plan may impose different or additional
conditions or limitations on withdrawals, waiver of charges, death benefits,
Payout Start Dates, income payments, and other Contract features. In addition,
adverse tax consequences may result if qualified plan limits on distributions
and other conditions are not met. Please consult your qualified plan
administrator for more information. Allstate New York no longer issues deferred
annuities to employer sponsored qualified retirement plans.
The tax rules applicable to participants with tax qualified annuities vary
according to the type of contract and the terms and conditions of the
endorsement. Adverse tax consequences may result from certain transactions such
as excess contributions, premature distributions, and, distributions that do not
conform to specified commencement and minimum distribution rules. Allstate New
York can issue an individual retirement annuity on a rollover or transfer of
proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under
which the decedent's surviving spouse is the beneficiary. Allstate New York does
not offer an individual retirement annuity that can accept a transfer of funds
for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer
sponsored qualified retirement plan.
Please refer to your Endorsement for IRAs or 403(b) plans, if applicable, for
additional information on your death settlement options. In the case of certain
qualified plans, the terms of the Qualified Plan Endorsement and the plans may
govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If
you make a partial withdrawal under a Tax Qualified Contract other than a Roth
IRA, the portion of the payment that bears the same ratio to the total payment
that the investment in the Contract (i.e., nondeductible IRA contributions)
bears to the Contract Value, is excluded from your income. We do not keep track
of nondeductible contributions, and generally all tax reporting of distributions
from Tax Qualified Contracts other than Roth IRAs will indicate that the
distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are
16 PROSPECTUS
any distributions made more than five taxable years after the taxable year of
the first contribution to any Roth IRA and which are:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made to a beneficiary after the Contract Owner's death,
.. attributable to the Contract Owner being disabled, or
.. made for a first time home purchase (first time home purchases are subject to
a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, Tax Qualified Contracts (excluding
Roth IRAs) require minimum distributions upon reaching age 70 1/2. Failure to
withdraw the required minimum distribution will result in a 50% tax penalty on
the shortfall not withdrawn from the Contract. Not all income plans offered
under the Contract satisfy the requirements for minimum distributions. Because
these distributions are required under the Code and the method of calculation is
complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.
It is also possible that certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
Owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under qualified plans, such as in connection with
a TSA or employer sponsored qualified retirement plan.
Allstate New York reserves the right to limit the availability of the Contract
for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10%
penalty tax applies to the taxable amount of any premature distribution from a
Tax Qualified Contract. The penalty tax generally applies to any distribution
made prior to the date you attain age 59 1/2. However, no penalty tax is
incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or total disability,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made after separation from service after age 55 (does not apply to IRAs),
.. made pursuant to an IRS levy,
.. made for certain medical expenses,
.. made to pay for health insurance premiums while unemployed (applies only for
IRAs),
.. made for qualified higher education expenses (applies only for IRAs), and
.. made for a first time home purchase (up to a $10,000 lifetime limit and
applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect
to Tax Qualified Contracts using substantially equal periodic payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to
a 10% penalty tax unless another exception to the penalty tax applied. The tax
for the year of the modification is increased by the penalty tax that would have
been imposed without the exception, plus interest for the years in which the
exception was used. A material modification does not include permitted changes
described in published IRS rulings. You should consult a competent tax advisor
prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate New York
is required to withhold federal income tax at a rate of 10% from all
non-annuitized distributions that are not considered "eligible rollover
distributions." The customer may elect out of withholding by completing and
signing a withholding election form. If no election is made, we will
automatically withhold the required 10% from the taxable amount. In certain
states, if there is federal withholding, then state withholding is also
mandatory. Allstate New York is required to withhold federal income tax at a
rate of 20% on all "eligible rollover distributions"
17 PROSPECTUS
unless you elect to make a "direct rollover" of such amounts to an IRA or
eligible retirement plan. Eligible rollover distributions generally include all
distributions from Tax Qualified Contracts, including TSAs but excluding IRAs,
with the exception of:
.. required minimum distributions, or,
.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,
.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,
.. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding
requirement, Allstate New York is required to withhold federal income tax using
the wage withholding rates. The customer may elect out of withholding by
completing and signing a withholding election form. If no election is made, we
will automatically withhold using married with three exemptions as the default.
If no U.S. taxpayer identification number is provided, we will automatically
withhold using single with zero exemptions as the default. In certain states,
if there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Code Section 1441 provides that Allstate New York as a withholding
agent must withhold 30% of the taxable amounts paid to a non-resident alien. A
non-resident alien is someone other than a U.S. citizen or resident alien or to
certain other 'foreign persons'. Withholding may be reduced or eliminated if
covered by an income tax treaty between the U.S. and the non-resident alien's
country of residence if the payee provides a U.S. taxpayer identification number
on a fully completed Form W-8BEN. A U.S. taxpayer identification number is a
social security number or an individual taxpayer identification number ("ITIN").
ITINs are issued by the IRS to non-resident alien individuals who are not
eligible to obtain a social security number. The U.S. does not have a tax
treaty with all countries nor do all tax treaties provide an exclusion or lower
withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Code Section 408(b) permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
retirement plans may be "rolled over" on a tax-deferred basis into an Individual
Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Code Section 408A permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The income portion of a conversion or rollover distribution is taxable
currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS). Code Section 408 permits a custodian or trustee of an Individual
Retirement Account to purchase an annuity as an investment of the Individual
Retirement Account. If an annuity is purchased inside of an Individual
Retirement Account, then the Annuitant must be the same person as the beneficial
owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract in the accumulation phase, with the Annuitant's
surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under
the Contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;
3) We receive a complete request for settlement for the death of the Annuitant;
and
4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has
continued the Individual Retirement Account pursuant to the surviving spouse's
election.
SIMPLIFIED EMPLOYEE PENSION IRA. Code Section 408(k) allows eligible employers
to establish simplified employee pension plans for their employees using
individual retirement annuities. These employers may, within specified limits,
make deductible contributions on behalf of the employees to the individual
retirement annuities. Employers intending to use the Contract in
18 PROSPECTUS
connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Code Section 408(p)
allows eligible employers with 100 or fewer employees to establish SIMPLE
retirement plans for their employees using individual retirement annuities. In
general, a SIMPLE IRA consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to purchase the Contract as a SIMPLE IRA should seek competent tax and
legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS
(TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND
YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Code Section 403(b) provides tax-deferred retirement
savings plans for employees of certain non-profit and educational organizations.
Under Section 403(b), any contract used for a 403(b) plan must provide that
distributions attributable to salary reduction contributions made after
12/31/88, and all earnings on salary reduction contributions, may be made only
on or after the date the employee:
.. attains age 59 1/2,
.. severs employment,
.. dies,
.. becomes disabled, or
.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate New York is
directed to transfer some or all of the Contract Value to another 403(b) plan.
Generally, we do not accept funds in 403(b) contracts that are subject to the
Employee Retirement Income Security Act of 1974 (ERISA).
19 PROSPECTUS
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
ALLSTATE NEW YORK'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2004 ("FORM 10-K ANNUAL REPORT") IS INCORPORATED HEREIN BY REFERENCE, WHICH
MEANS THAT IT IS LEGALLY A PART OF THIS PROSPECTUS.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the
Securities and Exchange Commission ("SEC ") under the Exchange Act are also
incorporated herein by reference, which means that they also legally become a
part of this prospectus.
Statements in this prospectus, or in documents that we file later with the SEC
and that legally become a part of this prospectus, may change or supersede
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.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000839759. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of the SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at P.O. Box 82656, Lincoln ,NE 68501-2656 (telephone:
1-800-692-4682).
ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your Financial Advisor or call our customer support
unit at 1-800-692-4682.
20 PROSPECTUS
APPENDIX A MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The Market Value Adjustment is based on the following:
I = the effective annual interest crediting rate for that Guarantee
Period;
N = the number of complete days from the date of withdrawal to the end of
the Guarantee Period; and
J = the current initial or current renewal interest rate credited for a
withdrawal from an initial or renewal guarantee period, respectively,
on the date the withdrawal request is received for a Guarantee Period
of duration N. If a Guarantee Period of duration N is not currently
being offered, J will be determined by linear interpolation (weighted
average) between the two nearest periods being offered. If N is less
than or equal to 365 days, J will be the rate for a Guarantee Period
of duration 365.
For any withdrawal, if J is not available, J will be equal to the most recent
Moody's Monthly Corporate Bond Yield Average (for the applicable duration) as
published by Moody's Investor Services, Inc. In the event that the Moody's
Monthly Corporate Bond Yield Average is no longer available, a suitable
replacement index, subject to the approval of the New York Insurance Department,
would be utilized.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I - J) X (N/365)
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Preferred Withdrawal
Amount) from a Guarantee Period at any time other than during the 10 day period
after such Guarantee Period expires. The Market Value Adjustment may also be
applied to your Contract Value in determining the amount of the death benefit.
21 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
EXAMPLE 1 (ASSUMES DECLINING INTEREST RATES)
Step1.Calculate Contract Value
at End of Contract Year 3: $10,000.00 x (1.045)/3 /= $11,411.66
Step2.Calculate the Amount in Preferred Withdrawal Amount (.10 x $10,000) = $1,000
excess of the Amount in Excess: $11,411.66 -$1,000 = $10,411.66
Preferred Withdrawal Amount:
Step3.Calculate the Withdrawal .0225 (represents 1/2 of interest rate of .045) X $10,411.66 = $234.26
Charge:
Step4.Calculate the Market I=4.5%
Value Adjustment: J=4.2%
N=730days
Market Value Adjustment Factor: .9 X (I-J) X N/365
=.9 X (.045 - .042) X (730/365) = .0054
Market Value Adjustment = Market Value Adjustment Factor
X Amount Subject to Market Value Adjustment:
= -.0054X $10,411.66 = $56.22
Step5.Calculate the amount
received by a Contract
Owner as a result of full
withdrawal at the end of
Contract Year 3: $ 11,411.66 - $234.26 + $56.22 = $11,233.62
22 PROSPECTUS
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1. Calculate Contract
Value at End of Contract
Year 3: $10,000.00x (1.045)/3/ = $11,411.66
Step 2. Calculate the Amount Preferred Withdrawal Amount (.10 x $10,000) = $1,000
in excess of the Preferred Amount in Excess: $11,411.66 - $1,000 = $10,411.66
Withdrawal Amount:
Step 3. Calculate the .0225(represents 1/2 of interest rate of .045) X
Withdrawal Charge: $10,411.66 = $234.26
Step 4. Calculate the Market I = 4.5%
Value Adjustment: J = 4.8%
N = 730 days
Market Value Adjustment Factor:
.9 X (I - J) X N/365 = .9 X (.045 - .048) X (730/365) = - .0054
Market Value Adjustment = Market Value Adjustment
Factor X Amount Subject to Market Value
Adjustment:
= - .0054X $10,411.66 = - $56.22
Step 5. Calculate the amount
received by a Contract owner
as a result of full
withdrawal at the end of
Contract Year 3: $11,411.66 - $234.26 - $56.22 = $11,121.18
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
23 PROSPECTUS
THE CUSTOM ANNUITY
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
CUSTOMER SERVICE:
STREET ADDRESS: 2940 S. 84TH STREET, LINCOLN, NE 68506-4142
MAILING ADDRESS: P.O. BOX 82656, LINCOLN, NE 68501-2656
TELEPHONE NUMBER: 1-800-256-9392 PROSPECTUS DATED APRIL 30, 2005
-------------------------------------------------------------------------------
Allstate Life Insurance Company of New York ("Allstate New York") is offering
The Custom Annuity, an individual single premium deferred annuity contract
("Contract"). This prospectus contains information about the Contract that you
should know before investing. Please keep it for future reference.
The Contract is available through Morgan Stanley DW Inc., the principal
underwriter for the Contract.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR
HAS IT PASSED ON THE ACCURACY OR THE ADEQUACY OF THIS
PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING AN
IMPORTANT IMPORTANT FEDERAL CRIME.
NOTICES
INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
THE CONTRACTS ARE AVAILABLE ONLY IN NEW YORK.
1 PROSPECTUS
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Overview
- --------------------------------------------------------------------------------
Important Terms 3
- --------------------------------------------------------------------------------
The Contract at a Glance 4
- --------------------------------------------------------------------------------
How the Contract Works 5
- --------------------------------------------------------------------------------
Contract Features
- --------------------------------------------------------------------------------
The Contract 6
- --------------------------------------------------------------------------------
Purchases and Contract Value 7
- --------------------------------------------------------------------------------
Guarantee Periods 7
- --------------------------------------------------------------------------------
Expenses 9
- --------------------------------------------------------------------------------
Access to Your Money 9
- --------------------------------------------------------------------------------
Income Payments 10
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Death Benefits 11
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
More Information: 12
- --------------------------------------------------------------------------------
Allstate New York 12
- --------------------------------------------------------------------------------
The Contract 12
- --------------------------------------------------------------------------------
Non-Qualified Annuities/Qualified Plans 13
- --------------------------------------------------------------------------------
Legal Matters 13
- --------------------------------------------------------------------------------
Taxes 14
- --------------------------------------------------------------------------------
Annual Reports and Other Documents 20
- --------------------------------------------------------------------------------
Appendix A -- Market Value Adjustment 21
- --------------------------------------------------------------------------------
2 PROSPECTUS
IMPORTANT TERMS
- --------------------------------------------------------------------------------
This prospectus uses a number of important terms that you may not be familiar
with. The index below identifies the page that describes each term. The first
use of each term in this prospectus appears in highlights.
PAGE
- --------------------------------------------------------------------------------
ACCUMULATION PHASE 5
- --------------------------------------------------------------------------------
ALLSTATE NEW YORK ("WE") 12
- --------------------------------------------------------------------------------
ANNUITANT 6
- --------------------------------------------------------------------------------
BENEFICIARY 6
- --------------------------------------------------------------------------------
CANCELLATION PERIOD 4
- --------------------------------------------------------------------------------
CONTRACT 6
- --------------------------------------------------------------------------------
CONTRACT OWNER ("YOU") 5
- --------------------------------------------------------------------------------
CONTRACT VALUE 4
- --------------------------------------------------------------------------------
DUE PROOF OF DEATH 11
- --------------------------------------------------------------------------------
GUARANTEE PERIODS 4
- --------------------------------------------------------------------------------
INCOME PLANS 5
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
ISSUE DATE 5
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT 4
- --------------------------------------------------------------------------------
PAYOUT PHASE 5
- --------------------------------------------------------------------------------
PAYOUT START DATE 10
- --------------------------------------------------------------------------------
PREFERRED WITHDRAWAL AMOUNT 9
- --------------------------------------------------------------------------------
SEC 20
- --------------------------------------------------------------------------------
SETTLEMENT VALUE 11
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWAL PROGRAM 10
- --------------------------------------------------------------------------------
3 PROSPECTUS
THE CONTRACT AT A GLANCE
- --------------------------------------------------------------------------------
The following is a snapshot of the Contract. Please read the remainder of this
prospectus for more information.
SINGLE PAYMENT You can purchase a Contract with as
little as $1,000 (we may increase the minimum to
$4,000 in the future).
- ---------------------------------------------------------------------------------------
RIGHT TO CANCEL You may cancel your Contract within 10
days of receipt ("CANCELLATION PERIOD") and
receive a full refund of your purchase payment.
- ---------------------------------------------------------------------------------------
EXPENSES You will bear the following expenses:
.A withdrawal charge will apply to withdrawals
made during the initial Guarantee Period.
Withdrawal charges will be the lesser of (a)
the amount withdrawn in excess of the
Preferred Withdrawal Amount times one half of
the interest rate for the Guarantee Period, or
(b) interest earned on the amount withdrawn
(certain limits may apply to reduce this
charge). The charge will not exceed 10% of the
amount withdrawn, reduced by 1% for every year
the contract is in force times the sum of the
amount withdrawn and the Market Value
Adjustment (described below).
.State premium tax (New York currently does not
impose one)
- ---------------------------------------------------------------------------------------
GUARANTEED INTEREST The Contract offers fixed interest
rates that we guarantee for specified periods we
call "GUARANTEE PERIODS. " To find out what the
current rates are on the Guarantee Periods, call
us at 1-800-256-9392.
- ---------------------------------------------------------------------------------------
SPECIAL SERVICES For your convenience, we offer a
SYSTEMATIC WITHDRAWAL PROGRAM.
- ---------------------------------------------------------------------------------------
INCOME PAYMENTS The Contract offers three income payment plans:
. life income with guaranteed payments
.a joint and survivor life income with guaranteed
payments
. guaranteed payments for a specified period (5
to 30 years)
- ---------------------------------------------------------------------------------------
DEATH BENEFITS If you or the ANNUITANT dies before the
PAYOUT START DATE, we will pay the death benefit
described in the Contract.
- ---------------------------------------------------------------------------------------
WITHDRAWALS You may withdraw some or all of your Contract Value
("CONTRACT VALUE") at anytime prior to the Payout Start
Date. If you withdraw Contract Value from a Guarantee
Period before its maturity, a withdrawal charge, MARKET
VALUE ADJUSTMENT, and taxes may apply. Withdrawals
taken prior to annuitization (referred to in this
prospectus as the Payout Phase) are generally
considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all
withdrawals are treated as distributions of earnings.
Withdrawals of earnings are taxed as ordinary income
and, if taken prior to age 59 1/2, maybe subject to an
additional 10% federal tax penalty.
- ---------------------------------------------------------------------------------------
4 PROSPECTUS
HOW THE CONTRACT WORKS
- --------------------------------------------------------------------------------
The Contract basically works in two ways.
First, the Contract can help you (we assume you are the CONTRACT OWNER) save for
retirement because you can invest in the Contract and generally pay no federal
income taxes on any earnings until you withdraw them. You do this during what we
call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on
the date we issue your Contract (we call that date the "ISSUE DATE") and
continues until the "Payout Start Date", which is the date we apply your money
to provide income payments. You allocate your purchase payment to a Guarantee
Period that earns a fixed rate of interest that we declare periodically.
Second, the Contract can help you plan for retirement because you can use it to
receive retirement income for life and/ or for a pre-set number of years, by
selecting one of the income payment options (we call these "INCOME PLANS")
described on page 10. You receive income payments during what we call the
"PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and
continues until we make the last income payment required by the Income Plan you
select. During the Payout Phase, we guarantee the amount of your payments, which
will remain fixed. The amount of money you accumulate under your Contract during
the Accumulation Phase and apply to an Income Plan will determine the amount of
your income payments during the Payout Phase.
The timeline below illustrates how you might use your Contract.
Issue Payout Start
Date Accumulation Phase Date Payout Phase
- ------------------------------------------------------------------------------------------------------------>
You buy You save for retirement You elect to receive You can receive Or you can receive
a Contract income payments income payments income payments
for a set period for life
As the Contract Owner, you exercise all of the rights and privileges provided by
the Contract. If you die, any surviving Contract Owner or, if none, the
BENEFICIARY, will exercise the rights and privileges provided by the Contract.
See "THE CONTRACT." In addition, if you die before the Payout Start Date, we
will pay a death benefit to any surviving Contract Owner or, if there is none,
to your Beneficiary. See "Death Benefits."
Please call us at 1-800-256-9392 if you have any questions about how the
Contract works.
5 PROSPECTUS
THE CONTRACT
- --------------------------------------------------------------------------------
The Custom Annuity is a contract between you, the Contract Owner, and Allstate
New York, a life insurance company. As the Contract Owner, you may exercise all
of the rights and privileges provided to you by the Contract. That means it is
up to you to select or change (to the extent permitted):
.. the amount and timing of your withdrawals,
.. the programs you want to use to withdraw money,
.. the income payment plan you want to use to receive retirement income,
.. the Annuitant (either yourself or someone else) on whose life the income
payments will be based,
.. the Beneficiary or Beneficiaries who will receive the benefits that the
Contract provides when the last surviving Contract Owner dies, and
.. any other rights that the Contract provides.
If you die, any surviving Contract Owner or, if none, the Beneficiary, may
exercise the rights and privileges provided to them by the Contract.
The Contract cannot be jointly owned by both a non-living person and a living
person. The maximum age of the oldest Contract Owner and the Annuitant cannot
exceed age 80 as of the date we receive the completed application.
Changing ownership of this Contract may cause adverse tax consequences and may
not be allowed under qualified plans. Please consult with a competent tax
advisor prior to making a request for a change of Contract Owner.
The Contract can also be purchased as an IRA or TSA (also known as a 403(b)).
The endorsements required to qualify these annuities under the Internal Revenue
Code of 1986, as amended, ("Code") may limit or modify your rights and
privileges under the Contract.
ANNUITANT
The Annuitant is the individual whose life determines the amount and duration of
income payments (other than under Income Plans with guaranteed payments for
specified periods). The Contract requires that there be an Annuitant at all
times during the Accumulation Phase and on the Payout Start Date. The Annuitant
must be a living person. The maximum age of any Annuitant cannot exceed age 80
as of the date we receive the completed application.
You initially designate an Annuitant in your application. A Contract Owner who
is a living person may change the Annuitant prior to the Payout Start Date. Once
we receive your change request, any change will be effective at the time you
sign the written notice. We are not liable for any payment we make or other
action we take before receiving any written request from you. Prior to the
Payout Start Date, you may designate a joint Annuitant, who is a second person
on whose life income payments depend. If the Annuitant dies prior to the Payout
Start Date, the new Annuitant will be the youngest Contract Owner if living,
otherwise the youngest Beneficiary.
BENEFICIARY
The Beneficiary is the person who may elect to receive the death benefit or
become the new Contract owner subject to the Death of Owner provision if the
sole surviving Contract owner dies before the Payout Start Date. If the sole
surviving Contract Owner dies after the Payout Start Date, the Beneficiary will
receive any guaranteed income payments scheduled to continue.
You may name one or more Beneficiaries when you apply for a Contract. You may
change or add Beneficiaries at any time, unless you have designated an
irrevocable Beneficiary. We will provide a Change of Beneficiary form to be
signed and filed with us. Any change will be effective at the time you sign the
written notice. Until we receive your written notice to change a Beneficiary, we
are entitled to rely on the most recent Beneficiary information in our files. We
will not be liable as to any payment or settlement made prior to receiving the
written notice. Accordingly, if you wish to change your Beneficiary, you should
deliver your written notice to us promptly. If the Contract Owner is a living
person, we will determine the Beneficiary from the most recent request of the
Contract Owner.
If the Contract Owner is a non-living person, the Contract Owner is also the
Beneficiary, unless a different Beneficiary is named.
If you did not name a Beneficiary or if the named Beneficiary is no longer
living, the Beneficiary will be:
.. your spouse or, if he or she is no longer alive,
.. your surviving children equally, or if you have no surviving children,
.. your estate.
If more than one Beneficiary survives you, we will divide the death benefit
among your Beneficiaries according to your most recent written instructions. If
you have not given us written instructions, we will pay the death benefit in
equal amounts to the surviving Beneficiaries.
MODIFICATION OF THE CONTRACT
Only an Allstate New York officer may approve a change in or waive any provision
of the Contract. Any change or waiver must be in writing. None of our agents has
the authority to change or waive the provisions of the Contract. We may not
change the terms of the Contract without your consent, except to conform the
Contract to applicable law or changes in the law. We will notify you of any
changes. If a provision of the Contract is inconsistent with state law, we will
follow state law.
6 PROSPECTUS
ASSIGNMENT
No Contract Owner has a right to assign any interest in a Contract as collateral
or security for a loan. However, you may otherwise assign periodic income
payments under the Contract prior to the Payout Start Date. No Beneficiary may
assign benefits under the Contract until they are due. We will not be bound by
any assignment until the assignor signs it and files it with us. We are not
responsible for the validity of any assignment. Federal law prohibits or
restricts the assignment of benefits under many types of retirement plans and
the terms of such plans may themselves contain restrictions on assignments. An
assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH AN
ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT.
PURCHASES AND CONTRACT VALUE
- --------------------------------------------------------------------------------
MINIMUM PURCHASE PAYMENT
Your purchase payment must be at least $1,000. We may increase the minimum to
$4,000 in our sole discretion. We do not accept additional purchase payments on
existing Contracts. We reserve the right to limit the maximum amount of purchase
payment we will accept. We reserve the right to reject any application in our
sole discretion.
ALLOCATION OF PURCHASE PAYMENT
You must select a Guarantee Period for your purchase payment from among those
that we offer. A Guarantee Period is a period of years during which you will
earn a guaranteed interest rate on your money. We will apply your purchase
payment to the Guarantee Period you select within 7 days of the receipt of the
payment and required issuing information.
RIGHT TO CANCEL
You may cancel your Contract within the Cancellation Period, which is 10 days
following receipt of your Contract. If you exercise this right to cancel, the
Contract terminates and we will pay you the full amount of your purchase payment
or any greater amount state law requires.
If your Contract is qualified under Code Section 408(b), we will refund the
greater of any purchase payments or the Contract Value.
CONTRACT VALUE
Your Contract Value at any time during the Accumulation Phase is equal to the
purchase payment you have invested in the Guarantee Period, plus earnings
thereon, and less any amounts previously withdrawn. Your Contract uses the term
"Account Value" instead of "Contract Value."
GUARANTEE PERIODS
- --------------------------------------------------------------------------------
The purchase payment you allocate to a Guarantee Period earns interest at a
specified rate that we guarantee for a period of years. Guarantee Periods may
range from 1 to 10 years.
The amount that you allocate to a Guarantee Period becomes part of our general
account, which supports our insurance and annuity obligations. The general
account consists of our general assets other than those in segregated asset
accounts. We have sole discretion to invest the assets of the general account,
subject to applicable law. Any money you allocate to a Guarantee Period does not
entitle you to share in the investment experience of the general account.
INTEREST RATES
We will tell you what interest rates and Guarantee Periods we are offering at a
particular time. We will not change the interest rate that we credit to a
particular allocation until the end of the relevant Guarantee Period. We may
declare different interest rates for Guarantee Periods of the same length that
begin at different times.
We have no specific formula for determining the rate of interest that we will
declare initially or in the future. We will set those interest rates based on
investment returns available at the time of the determination. In addition, we
may consider various other factors in determining interest rates including
regulatory and tax requirements, sales commissions and administrative expenses,
general economic trends, and competitive factors. WE DETERMINE THE INTEREST RATE
TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT
THOSE RATES WILL BE IN THE FUTURE. For current interest rate information, please
contact your Financial Advisor or Allstate New York at 1-800-256-9392. The
interest rate will never be less than the minimum guaranteed rate stated in the
Contract.
HOW WE CREDIT INTEREST
We will credit interest to your purchase payment from the Issue Date. We will
credit interest daily to each amount allocated to a Guarantee Period at a rate
that compounds to the annual interest rate that we declared at the beginning of
the applicable Guarantee Period.
7 PROSPECTUS
The following example illustrates how a purchase payment would grow, given an
assumed Guarantee Period and effective annual interest rate:
Purchase Payment.......................................... $10,000
Guarantee Period.......................................... 5 years
Annual Interest Rate...................................... 4.50%
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ------------
Beginning Contract
Value $10,000.00
X (1 + Annual
Interest Rate) 1.045
----------
$10,450.00
Contract Value at end
of Contract Year $10,450.00
X (1 + Annual
Interest Rate) 1.045
----------
$10,920.25
Contract Value at end
of Contract Year $10,920.25
X (1 + Annual
Interest Rate) 1.045
----------
$11,411.66
Contract Value at end
of Contract Year $11,411.66
X (1 + Annual
Interest Rate) 1.045
----------
$11,925.19
Contract Value at end
of Contract Year $11,925.19
X (1 + Annual
Interest Rate) 1.045
-----------
$12,461.82
Total Interest Credited During Guarantee Periods = $2,461.82 ($12,461.82 -
$10,000)
This example assumes no withdrawals during the entire 5 year Guarantee Period.
If you were to make a partial withdrawal, you may be required to pay a
withdrawal charge. In addition, the amount withdrawn may be increased or
decreased by a Market Value Adjustment that reflects changes in interest rates
since the time you invested the amount withdrawn. THE HYPOTHETICAL INTEREST RATE
IS FOR ILLUSTRATIVE PURPOSES ONLY AND IS NOT INTENDED TO PREDICT EITHER CURRENT
OR FUTURE INTEREST RATES TO BE DECLARED UNDER THE CONTRACT. ACTUAL INTEREST
RATES DECLARED FOR ANY GIVEN GUARANTEE PERIOD MAY BE MORE OR LESS THAN SHOWN
ABOVE BUT WILL NEVER BE LESS THAN THE GUARANTEED MINIMUM RATE STATED IN THE
CONTRACT.
RENEWALS
At least 35 calendar days prior to the end of each Guarantee Period, we will
mail you a notice listing your renewal options. During the 10-day period after
the end of the Guarantee Period, you may:
1. Take no action. We will automatically apply your money to a one-year renewal
Guarantee Period. The new interest rate will be set at the time of renewal; or
2. Instruct us to apply your money to a new Guarantee Period from among those
that may be available. The new Guarantee Period will begin on the day the
previous Guarantee Period ends. The new interest rate will be our then current
declared rate for the new Guarantee Period; or
3. Withdraw all or a portion of your money without incurring a withdrawal charge
or a Market Value Adjustment. Amounts not withdrawn will be applied to a new
Guarantee Period of the same length as the previous Guarantee Period. The new
Guarantee Period will begin on the day the previous Guarantee Period ends.
During the first 10 days of a renewal Guarantee Period, any amount withdrawn
will not reflect any interest earned during the 10-day period.
MARKET VALUE ADJUSTMENT
All withdrawals from a Guarantee Period, other than those taken during the 10
day period after a Guarantee Period expires, are subject to a Market Value
Adjustment. A Market Value Adjustment may also apply upon payment of a death
benefit under a Contract.
We will not apply the Market Value Adjustment on:
.. the Payout Start Date;
.. withdrawals you take to satisfy IRS required distribution rules for the
Contract; or
.. withdrawals within the Preferred Withdrawal Amount, described under "Expenses"
on page 9.
We apply the Market Value Adjustment to reflect changes in interest rates from
the time the amount being withdrawn was allocated to a Guarantee Period to the
time you withdraw it from that Guarantee Period. We calculate the Market Value
Adjustment by comparing the
8 PROSPECTUS
effective annual interest crediting rate for a
period equal to the Guarantee Period at its inception to the interest crediting
rate for a period equal to the time remaining in the Guarantee Period when you
remove your money. See "Appendix A" for a more detailed description.
The Market Value Adjustment may be positive or negative, depending on changes in
interest rates. As such, you bear the investment risk associated with changes in
interest rates. If interest rates increase significantly from the time you make
a purchase payment, the Market Value Adjustment, withdrawal charge, premium
taxes, and income tax withholding (if applicable) could reduce the amount you
receive upon full withdrawal of your Contract Value to an amount that is less
than your purchase payment plus interest at the minimum guaranteed interest rate
under the Contract. However, we guarantee that the amount received upon
surrender (prior to any withholding and before deduction for any applicable
premium taxes) will be at least equal to your purchase payment less any prior
partial withdrawals.
Generally, if the annual interest rate for the Guarantee Period is lower than
the applicable current annual interest rate for a period equal to the time
remaining in the Guarantee Period, then the Market Value Adjustment will result
in a lower amount payable to you. Conversely, if the annual interest rate for
the Guarantee Period is higher than the applicable current annual interest rate,
then the Market Value Adjustment will result in a higher amount payable to you.
For example, assume that you purchase a Contract and select an initial Guarantee
Period of 5 years that has an annual interest rate of 4.50%. Assume that at the
end of 3 years, you make a partial withdrawal. If, at that later time, the
current interest rate for a 2 year Guarantee Period is 4.00%, then the Market
Value Adjustment will be positive, which will result in an increase in the
amount payable to you. Conversely, if the current interest rate for the 2 year
Guarantee Period is 5.00%, then the Market Value Adjustment will be negative,
which will result in a decrease in the amount payable to you.
The formula for calculating Market Value Adjustments is set forth in Appendix A
to this prospectus, which also contains additional examples of the application
of the Market Value Adjustment.
EXPENSES
- --------------------------------------------------------------------------------
As a Contract Owner, you will bear the charges and expenses described below.
WITHDRAWAL CHARGE
We may assess a withdrawal charge to amounts you withdraw prior to the end of
the initial Guarantee Period. During each year (as measured from the
commencement of a Guarantee Period), you can withdraw up to 10% of the amount of
the funds allocated to that Guarantee Period without paying the withdrawal
charge or a Market Value Adjustment. Unused portions of this 10% "PREFERRED
WITHDRAWAL AMOUNT" are not carried forward to future years. We will deduct
withdrawal charges, if applicable, from the amount paid.
The amount of the withdrawal charge equals the lesser of:
(a)
one-half the interest crediting rate for the Guarantee Period multiplied by the
amount withdrawn in excess of the Preferred Withdrawal Amount; or
(b) interest earned on the amount withdrawn.
The amount of the withdrawal charge will not exceed 10% of the withdrawal
amount, reduced by 1% for every year the Contract is in force, multiplied by the
sum of: (1) the amount withdrawn; and (2) the Market Value Adjustment.
We do not apply a withdrawal charge in the following situations:
.. withdrawals taken to satisfy IRS minimum distribution rules for the Contract;
.. on the Payout Start Date; or
.. money withdrawn within 10 days after the expiration of a Guarantee Period to
which it had been allocated.
PREMIUM TAXES
Currently, we do not make deductions for premium taxes under the Contract
because New York does not charge premium taxes on annuities. We may deduct taxes
that may be imposed in the future from purchase payments or the Contract Value
when the tax is incurred or at a later time.
ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------
You can withdraw some or all of your money at any time prior to the Payout Start
Date. You may not make any withdrawals or surrender your Contract once the
Payout Phase has begun.
The minimum withdrawal amount is $100.00.
MINIMUM CONTRACT VALUE
If the amount you withdraw reduces your Contract Value to less than $1,000, we
may treat it as a request to withdraw your entire Contract Value. Your contract
will terminate if you withdraw all of your Contract Value. We will however, ask
you to confirm your withdrawal request
9 PROSPECTUS
before terminating your Contract. Before
terminating any Contract whose value has been reduced by withdrawals to less
than $1,000, we would inform you in writing of our intention to terminate your
Contract and give you at least 30 days in which to make an additional purchase
payment to restore your Contract's value to the contractual minimum of $1,000.
If we terminate your Contract, we will distribute to you its Contract Value,
adjusted by any Market Value Adjustment, less withdrawal charges and applicable
taxes.
Withdrawals taken prior to annuitization (referred to in this prospectus as the
Payout Phase) are generally considered to come from the earnings in the Contract
first. If the Contract is tax-qualified, generally all withdrawals are treated
as distributions of earnings. Withdrawals taken prior to annuitization (referred
to in this prospectus as the Payout Phase) are generally considered to come from
the earnings in the Contract first. If the Contract is tax-qualified, generally
all withdrawals are treated as distributions of earnings. Withdrawals of
earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be
subject to an additional 10% federal tax penalty. Please consult your tax
advisor before taking any withdrawal.
POSTPONEMENT OF PAYMENTS
We may defer payment of withdrawals for up to 6 months from the date we receive
your withdrawal request.
SYSTEMATIC WITHDRAWAL PROGRAM
You may choose to receive systematic withdrawal payments on a monthly,
quarterly, semi-annual, or annual basis at any time prior to the Payout Start
Date. The minimum amount of each systematic withdrawal is $100. We will deposit
systematic withdrawal payments into your bank account or a Morgan Stanley Active
Assets (TM) Account. Please consult with your Morgan Stanley Financial Advisor
for details.
We may modify or suspend the Systematic Withdrawal Program and charge a
processing fee for the service. If we modify or suspend the Systematic
Withdrawal Program, existing systematic withdrawal payments will not be
affected.
RETURN OF PURCHASE PAYMENT GUARANTEE
When you withdraw your money, a withdrawal charge and a Market Value Adjustment
may apply. However, if you decide to surrender your Contract, we guarantee that
the amount you receive upon surrender will never be less than your purchase
payment, less amounts previously withdrawn (prior to withholding and the
deduction of any taxes if applicable). Premium taxes and income tax withheld may
reduce the amount you receive on surrender to less than your purchase payment.
This guarantee does not apply to earnings on your purchase payment. The renewal
of a Guarantee Period does not in any way change this guarantee.
INCOME PAYMENTS
- --------------------------------------------------------------------------------
PAYOUT START DATE
The Payout Start Date is the day we apply your Contract Value less any
applicable taxes, to an Income Plan. The Payout Start Date must be:
.. at least 30 days after the Issue Date; and
.. the later of the 10th Contract anniversary,
.. or the Annuitant's 90th birthday.
You may change the Payout Start Date at any time by notifying us in writing of
the change at least 30 days before the scheduled Payout Start Date. Absent a
change, we will use the Payout Start Date stated in your Contract.
INCOME PLANS
An Income Plan is a series of scheduled payments to you or someone you
designated. You may choose and change your choice of Income Plan until 30 days
before the Payout Start Date. If you do not select an Income Plan, we will make
income payments in accordance with Income Plan 1 with guaranteed payments for 10
years. After the Payout Start Date, you may not make withdrawals or change your
choice of Income Plan.
A portion of each payment will be considered taxable and the remaining portion
will be a non-taxable return of your investment in the Contract, which is also
called the "basis." Once the basis in the Contract is depleted, all remaining
payments will be fully taxable. If the Contract is tax-qualified, generally, all
payments will be fully taxable. Taxable payments taken prior to age 59 1/2, may
be subject to an additional 10% federal tax penalty.
The three Income Plans available under the Contract are:
INCOME PLAN 1 -- LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make
periodic income payments for at least as long as the Annuitant lives. If the
Annuitant dies before we have made all of the guaranteed income payments, we
will continue to pay the remainder of the guaranteed income payments as required
by the Contract.
INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. Under
this plan, we make periodic income payments for at least as long as either the
Annuitant or the joint Annuitant is alive. If both the Annuitant and the joint
Annuitant die before we have made all of the guaranteed income payments, we will
continue to pay the remainder of the guaranteed income payments as required by
the Contract.
10 PROSPECTUS
INCOME PLAN 3 -- GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD (5 TO 30 YEARS).
Under this plan, we make periodic income payments for the period you have
chosen. These payments do not depend on the life of the Annuitant. You may elect
to receive guaranteed payments for periods ranging from 5 to 30 years.
The length of any guaranteed payment period under your selected Income Plan
generally will affect the dollar amount of each income payment. As a general
rule, longer guarantee periods result in lower income payments, all other things
being equal. For example, if you choose an Income Plan with payments that depend
on the life of the Annuitant but with no minimum specified period for guaranteed
payments, the income payments generally will be greater than the income payments
made under the same Income Plan with a minimum specified period for guaranteed
payments.
We may make other Income Plans available, including ones that you and we agree
upon. You may obtain information about them by writing or calling us. If you
choose Income Plan 1 or 2, or, if available, another Income Plan with payments
that continue for the life of the Annuitant or joint Annuitant, we may require
proof of age and sex of the Annuitant or joint Annuitant before starting income
payments, and proof that the Annuitant or joint Annuitant are alive before we
make each payment. Please note that under such Income Plans, if you elect to
take no minimum guaranteed payments, it is possible that the payee could receive
only 1 income payment if the Annuitant and any joint Annuitant both die before
the second income payment, or only 2 income payments if they die before the
third income payment, and so on.
We will apply your Contract Value, less applicable taxes, to your Income Plan on
the Payout Start Date. If the Contract Value is less than $2,000, or if your
monthly payments would be less than $20, we may:
.. pay you the Contract Value, less any applicable taxes, in a lump sum instead
of the periodic payments you have chosen; or
.. reduce the frequency of your payments so that each payment will be at least
$20.
INCOME PAYMENTS
We guarantee income payment amounts for the duration of the Income Plan. We
calculate income payments by:
1. determining your Contract Value on the Payout Start Date;
2. deducting any applicable tax; and
3. applying the resulting amount to the greater of (a) the appropriate value
from the income payment table in your Contract or (b) such other value as we are
offering at that time.
We may defer making fixed income payments for a period of up to six months or
such shorter time state law may require. If we defer such payments for 10 days
or more, we will pay interest as required by law from the date we receive the
withdrawal request to the date we make payment.
CERTAIN EMPLOYEE BENEFIT PLANS
The Contracts offered by this prospectus contain income payment tables that
provide for different payments to men and women of the same age. However, we
reserve the right to use income payment tables that do not distinguish on the
basis of sex to the extent permitted by law. In certain employment-related
situations, employers are required by law to use the same income payment tables
for men and women. Accordingly, if the Contract is to be used in connection with
an employment-related retirement or benefit plan, you should consult with legal
counsel as to whether the purchase of a Contract is appropriate. For qualified
plans, where it is appropriate, we may use income payment tables that do not
distinguish on the basis of sex.
DEATH BENEFITS
- --------------------------------------------------------------------------------
The Contract offers a death benefit prior to the Payout Start Date on the
earlier of:
1. the death of any Contract Owner, or
2. the death of the Annuitant.
We will pay the death benefit to the new Contract Owner as determined
immediately after the death. The new Contract Owner would be a surviving
Contract Owner or, if none, the Beneficiary.
A claim for a distribution on death must include Due Proof of Death. We will
accept the following documentation as "Due Proof of Death":
.. a certified copy of a death certificate;
.. a certified copy of a decree of a court of competent jurisdiction as to the
finding of death, or
.. any other proof acceptable to us.
DEATH BENEFIT AMOUNT
Prior to the Payout Start Date, the death benefit is equal to the greater of:
(1) the Contract Value, or (2) the "SETTLEMENT VALUE," which is the Contract
Value, adjusted by any Market Value Adjustment, less withdrawal charges and
taxes. We will calculate the value of the death benefit as of the date we
receive a complete request for payment of the death benefit.
11 PROSPECTUS
DEATH BENEFIT PAYMENTS
Upon death of the Contract Owner, the new Contract Owner generally has the
following 3 options:
1. receive the Settlement Value within 5 years of the date of death;
2. receive the death benefit in a lump sum; or
3. apply the death benefit to an Income Plan, with income payments beginning
within one year of the date of death. Income payments must be made over the life
of the new Contract Owner, or a period not to exceed the life expectancy of the
new Contract Owner.
Options 2 and 3 above are available only if you elect one of these options and
we receive Due Proof of Death within 180 days of the date of death. We reserve
the right to waive the 180 day limit on a non-discriminatory basis.
If the new Contract Owner is a non-living person, the new Contract Owner must
elect to receive the death benefit in a lump sum. If we receive Due Proof of
Death within 180 days of the date of death, we will pay a death benefit.
Otherwise, we will pay a Settlement Value.
An Annuitant is necessary to continue the Contract between the date of the
Contract Owner's death and the final distribution. If there is no Annuitant, the
new Annuitant will be the youngest new Contract Owner.
If the surviving spouse of the deceased Contract Owner is the new Contract
Owner, then the spouse may elect Options 2 or 3 listed above or may continue the
Contract in the Accumulation Phase as if the death had not occurred. If there is
no Annuitant at that time, the new Annuitant will be the surviving spouse.
If the Contract Owner is not the Annuitant and the Annuitant dies, then the
Contract Owner has the following 3 options:
1. continue the Contract as if the death had not occurred;
2. receive the death benefit in a lump sum; or
3. apply the death benefit to an Income Plan, which must begin within 1 year of
the date of death and must be for a period equal to or less than the life
expectancy of the Contract Owner.
For Options 1 and 3, the new Annuitant will be the youngest Contract owner
unless the Contract owner names a different Annuitant. Options 1 and 3 are not
available if the Contract owner is a non-living person.
Options 2 and 3 above are only available if you elect one of these options and
we receive Due Proof of Death within 180 days of the date of death. We reserve
the right to waive the 180 day limit on a non-discriminatory basis.
If the Contract Owner is not the Annuitant and the Annuitant dies, the Contract
Owner has 60 days from the date we receive Due Proof of Death to select an
Income Plan without incurring a tax on the entire gain in the Contract. If the
Contract Owner (other than a surviving spouse) elects to continue the Contract
the Contract Owner(s) will be taxed on the entire gain in the Contract computed
on the date of continuance. We are required to report such gain to the IRS as
income to the Contract Owner. An additional 10% federal tax penalty may apply if
the Contract Owner is under age 59 1/2. Any amount included in the Contract
Owner's gross income as a result of a Contract continuance will increase the
investment in the Contract for future distributions.
PLEASE REFER TO YOUR CONTRACT FOR MORE DETAILS ON THE ABOVE OPTIONS.
MORE INFORMATION
- --------------------------------------------------------------------------------
ALLSTATE NEW YORK
Allstate New York is the issuer of the Contract. Allstate New York is a stock
life insurance company organized under the laws of New York. From 1967 to 1978,
Allstate New York was known as "Financial Life Insurance Company". From 1978 to
1984, Allstate New York was known as "PM Life Insurance Company." Allstate New
York is currently licensed to operate in New York. Our home office is located at
100 Motor Parkway, Hauppauge, New York 11788-5107.
Allstate New York is a wholly owned subsidiary of Allstate Life Insurance
Company ("Allstate Life"), a stock life insurance company incorporated under the
laws of the State of Illinois. Allstate Life is a wholly owned subsidiary of
Allstate Insurance Company, a stock property-liability insurance company
incorporated under the laws of the State of Illinois. All of the outstanding
capital stock of Allstate Insurance Company is owned by The Allstate
Corporation.
THE CONTRACT
Morgan Stanley DW Inc., located at 1585 Broadway, New York, NY 10036, serves as
principal underwriter of the Contracts. Morgan Stanley DW Inc. is a wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. Morgan Stanley DW Inc. is a
registered broker-dealer under the Securities Exchange Act of 1934, as amended
("Exchange Act") and is a member of NASD. Morgan Stanley DW Inc. is also
registered with the Securities and Exchange Commission as an investment adviser.
We may pay up to a maximum sales commission of 8% both upon sale of the Contract
and upon renewal of a Guarantee Period.
The General Agency Agreement between Allstate New York and Morgan Stanley DW
Inc. provides that Allstate New York will indemnify Morgan Stanley DW Inc. for
certain damages that may be caused by actions, statements or omissions by
Allstate New York.
12 PROSPECTUS
NON-QUALIFIED ANNUITIES HELD WITHIN A QUALIFIED PLAN
If you use the Contract within an employer sponsored qualified retirement plan,
the plan may impose different or additional conditions or limitations on
withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates,
income payments, and other Contract features. In addition, adverse tax
consequences may result if qualified plan limits on distributions and other
conditions are not met. Please consult your qualified plan administrator for
more information. Allstate New York no longer issues deferred annuities to
employer sponsored qualified retirement plans.
LEGAL MATTERS
All matters of New York law pertaining to the Contracts, including the validity
of the Contracts and Allstate New York's right to issue such Contracts under New
York insurance law, have been passed upon by Michael J. Velotta, General Counsel
of Allstate New York.
13 PROSPECTUS
TAXES
- --------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. ALLSTATE
NEW YORK MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on your individual circumstances.
If you are concerned about any tax consequences with regard to your individual
circumstances, you should consult a competent tax adviser.
TAXATION OF ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK Allstate New York is
taxed as a life insurance company under Part I of Subchapter L of the Code.
TAXATION OF FIXED ANNUITIES IN GENERAL
TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value
until a distribution occurs. This rule applies only where the Owner is a natural
person.
NON-NATURAL OWNERS. Non-natural owners are also referred to as Non Living Owners
in this prospectus. As a general rule, annuity contracts owned by non-natural
persons such as corporations, trusts, or other entities are not treated as
annuity contracts for federal income tax purposes. The income on such contracts
does not enjoy tax deferral and is taxed as ordinary income received or accrued
by the non-natural owner during the taxable year.
EXCEPTIONS TO THE NON-NATURAL OWNER RULE. There are several exceptions to the
general rule that annuity contracts held by a non-natural owner are not treated
as annuity contracts for federal income tax purposes. Contracts will generally
be treated as held by a natural person if the nominal owner is a trust or other
entity which holds the contract as agent for a natural person. However, this
special exception will not apply in the case of an employer who is the nominal
owner of an annuity contract under a non-Qualified deferred compensation
arrangement for its employees. Other exceptions to the non-natural owner rule
are: (1) contracts acquired by an estate of a decedent by reason of the death of
the decedent; (2) certain qualified contracts; (3) contracts purchased by
employers upon the termination of certain qualified plans; (4) certain contracts
used in connection with structured settlement agreements; and (5) immediate
annuity contracts, purchased with a single premium, when the annuity starting
date is no later than a year from purchase of the annuity and substantially
equal periodic payments are made, not less frequently than annually, during the
annuity period.
GRANTOR TRUST OWNED ANNUITY. Contracts owned by a grantor trust are considered
owned by a non-natural owner. Grantor trust owned contracts receive tax deferral
as described in the Exceptions to the Non-Natural Owner Rule section.
In accordance with the Code, upon the death of the annuitant, the death benefit
must be paid. According to your Contract, the Death Benefit is paid to the
surviving Contract Owner. Since the trust will be the surviving Contract Owner
in all cases, the Death Benefit will be payable to the trust notwithstanding any
beneficiary designation on the annuity contract. A trust, including a grantor
trust, has two options for receiving any death benefits: 1) a lump sum payment;
or 2) payment deferred up to five years from date of death.
TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under
a non-Qualified Contract, amounts received are taxable to the extent the
Contract Value, without regard to surrender charges, exceeds the investment in
the Contract. The investment in the Contract is the gross premium paid for the
contract minus any amounts previously received from the Contract if such amounts
were properly excluded from your gross income. If you make a full withdrawal
under a non-Qualified Contract, the amount received will be taxable only to the
extent it exceeds the investment in the Contract.
You should contact a competent tax advisor about the potential tax consequences
of a Market Value Adjustment, as no definitive guidance exists on the proper tax
treatment of Market Value Adjustments.
TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity
payments received from a non-Qualified Contract provides for the return of your
investment in the Contract in equal tax-free amounts over the payment period.
The balance of each payment received is taxable. For fixed annuity payments, the
amount excluded from income is determined by multiplying the payment by the
ratio of the investment in the Contract (adjusted for any refund feature or
period certain) to the total expected value of annuity payments for the term of
the Contract. The annuity payments will be fully taxable after the total amount
of the investment in the Contract is excluded using these ratios. The federal
tax treatment of annuity payments is unclear in some respects. As a result, if
the IRS should provide further guidance, it is possible that the amount we
calculate and report to the IRS as taxable could be different. If you die, and
annuity payments cease before the total amount of the investment in the Contract
is recovered, the unrecovered amount will be allowed as a deduction for your
last taxable year.
WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding
the taxation of any additional withdrawal received after the Payout Start Date.
It is possible that a greater or lesser portion of such a payment could be
taxable than the amount we determine.
14 PROSPECTUS
DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for
federal income tax purposes, the Contract must provide:
.. if any Contract Owner dies on or after the Payout Start Date but before the
entire interest in the Contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method of
distribution being used as of the date of the Contract Owner's death;
.. if any Contract Owner dies prior to the Payout Start Date, the entire interest
in the Contract will be distributed within 5 years after the date of the
Contract Owner's death. These requirements are satisfied if any portion of the
Contract Owner's interest that is payable to (or for the benefit of) a
designated Beneficiary is distributed over the life of such Beneficiary (or
over a period not extending beyond the life expectancy of the Beneficiary) and
the distributions begin within 1 year of the Contract Owner's death. If the
Contract Owner's designated Beneficiary is the surviving spouse of the
Contract Owner, the Contract may be continued with the surviving spouse as the
new Contract Owner;
.. if the Contract Owner is a non-natural person, then the Annuitant will be
treated as the Contract Owner for purposes of applying the distribution at
death rules. In addition, a change in the Annuitant on a Contract owned by a
non-natural person will be treated as the death of the Contract Owner.
TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income
as follows:
.. if distributed in a lump sum, the amounts are taxed in the same manner as a
full withdrawal, or
.. if distributed under an Income Plan, the amounts are taxed in the same manner
as annuity payments.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable
amount of any premature distribution from a non-Qualified Contract. The penalty
tax generally applies to any distribution made prior to the date you attain age
59 1/2. However, no penalty tax is incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or becoming totally disabled,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made under an immediate annuity, or
.. attributable to investment in the Contract before August 14, 1982.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts
using substantially equal periodic payments or immediate annuity payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the Contract Owner's attaining age 59 1/2 would be
subject to a 10% penalty tax unless another exception to the penalty tax
applied. The tax for the year of the modification is increased by the penalty
tax that would have been imposed without the exception, plus interest for the
years in which the exception was used. A material modification does not include
permitted changes described in published IRS rulings. You should consult a
competent tax advisor prior to creating or modifying a substantially equal
periodic payment stream.
TAX FREE EXCHANGES UNDER INTERNAL REVENUE CODE SECTION 1035. A 1035 exchange is
a tax-free exchange of a non-qualified life insurance contract, endowment
contract or annuity contract into a non-Qualified annuity contract. The contract
owner(s) must be the same on the old and new contract. Basis from the old
contract carries over to the new contract so long as we receive that information
from the relinquishing company. If basis information is never received, we will
assume that all exchanged funds represent earnings and will allocate no cost
basis to them.
PARTIAL EXCHANGES. The IRS has issued a ruling that permits partial exchanges of
annuity contracts. Under this ruling, if you take a withdrawal from a receiving
or relinquishing annuity contract within 24 months of the partial exchange, then
special aggregation rules apply for purposes of determining the taxable amount
of a distribution. The IRS has issued limited guidance on how to aggregate and
report these distributions. The IRS is expected to provide further guidance; as
a result, it is possible that the amount we calculate and report to the IRS as
taxable could be different. Your contract may not permit partial exchanges.
TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without
full and adequate consideration to a person other than your spouse (or to a
former spouse incident to a divorce), you will be taxed on the difference
between the Contract Value and the investment in the Contract at the time of
transfer. Any assignment or pledge (or agreement to assign or pledge) of the
Contract Value is taxed as a withdrawal of such amount or portion and may also
incur the 10% penalty tax.
AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-Qualified
deferred annuity contracts issued by Allstate New York (or its affiliates) to
the same Contract Owner during any calendar year be aggregated
15 PROSPECTUS
and treated as one annuity contract for purposes of determining the taxable
amount of a distribution.
INCOME TAX WITHHOLDING
Generally, Allstate New York is required to withhold federal income tax at a
rate of 10% from all non-annuitized distributions. The customer may elect out of
withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold the required 10% of the taxable
amount. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Allstate New York is required to withhold federal income tax using the wage
withholding rates for all annuitized distributions. The customer may elect out
of withholding by completing and signing a withholding election form. If no
election is made, we will automatically withhold using married with three
exemptions as the default. If no U.S. taxpayer identification number is
provided, we will automatically withhold using single with zero exemptions as
the default. In certain states, if there is federal withholding, then state
withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate New York as a
withholding agent must withhold 30% of the taxable amounts paid to a
non-resident alien. A non-resident alien is someone other than a U.S. citizen or
resident alien. Withholding may be reduced or eliminated if covered by an income
tax treaty between the U.S. and the non-resident alien's country of residence if
the payee provides a U.S. taxpayer identification number on a fully completed
Form W-8BEN. A U.S. taxpayer identification number is a social security number
or an individual taxpayer identification number ("ITIN"). ITINs are issued by
the IRS to non-resident alien individuals who are not eligible to obtain a
social security number. The U.S. does not have a tax treaty with all countries
nor do all tax treaties provide an exclusion or lower withholding rate for
annuities.
TAX QUALIFIED CONTRACTS
The income on tax sheltered annuity (TSA) and IRA investments is tax deferred,
and the income from annuities held by such plans does not receive any additional
tax deferral. You should review the annuity features, including all benefits and
expenses, prior to purchasing an annuity as a TSA or IRA. Tax Qualified
Contracts are contracts purchased as or in connection with:
.. Individual Retirement Annuities (IRAs) under Section 408(b) of the Code;
.. Roth IRAs under Section 408A of the Code;
.. Simplified Employee Pension (SEP IRA) under Section 408(k) of the Code;
.. Savings Incentive Match Plans for Employees (SIMPLE IRA) under Section 408(p)
of the Code;
.. Tax Sheltered Annuities under Section 403(b) of the Code;
.. Corporate and Self Employed Pension and Profit Sharing Plans under Section
401; and
.. State and Local Government and Tax-Exempt Organization Deferred Compensation
Plans under Section 457.
Allstate New York reserves the right to limit the availability of the Contract
for use with any of the retirement plans listed above or to modify the Contract
to conform with tax requirements. If you use the Contract within an employer
sponsored qualified retirement plan, the plan may impose different or additional
conditions or limitations on withdrawals, waiver of charges, death benefits,
Payout Start Dates, income payments, and other Contract features. In addition,
adverse tax consequences may result if qualified plan limits on distributions
and other conditions are not met. Please consult your qualified plan
administrator for more information. Allstate New York no longer issues deferred
annuities to employer sponsored qualified retirement plans.
The tax rules applicable to participants with tax qualified annuities vary
according to the type of contract and the terms and conditions of the
endorsement. Adverse tax consequences may result from certain transactions such
as excess contributions, premature distributions, and, distributions that do not
conform to specified commencement and minimum distribution rules. Allstate New
York can issue an individual retirement annuity on a rollover or transfer of
proceeds from a decedent's IRA, TSA, or employer sponsored retirement plan under
which the decedent's surviving spouse is the beneficiary. Allstate New York does
not offer an individual retirement annuity that can accept a transfer of funds
for any other, non-spousal, beneficiary of a decedent's IRA, TSA, or employer
sponsored qualified retirement plan.
Please refer to your Endorsement for IRAs or 403(b) plans, if applicable, for
additional information on your death settlement options. In the case of certain
qualified plans, the terms of the Qualified Plan Endorsement and the plans may
govern the right to benefits, regardless of the terms of the Contract.
TAXATION OF WITHDRAWALS FROM AN INDIVIDUALLY OWNED TAX QUALIFIED CONTRACT. If
you make a partial withdrawal under a Tax Qualified Contract other than a Roth
IRA, the portion of the payment that bears the same ratio to the total payment
that the investment in the Contract (i.e., nondeductible IRA contributions)
bears to the Contract Value, is excluded from your income. We do not keep track
of nondeductible contributions, and generally all tax reporting of distributions
from Tax Qualified Contracts other than Roth IRAs will indicate that the
distribution is fully taxable.
"Qualified distributions" from Roth IRAs are not included in gross income.
"Qualified distributions" are
16 PROSPECTUS
any distributions made more than five taxable years after the taxable year of
the first contribution to any Roth IRA and which are:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made to a beneficiary after the Contract Owner's death,
.. attributable to the Contract Owner being disabled, or
.. made for a first time home purchase (first time home purchases are subject to
a lifetime limit of $10,000).
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions.
REQUIRED MINIMUM DISTRIBUTIONS. Generally, Tax Qualified Contracts (excluding
Roth IRAs) require minimum distributions upon reaching age 70 1/2. Failure to
withdraw the required minimum distribution will result in a 50% tax penalty on
the shortfall not withdrawn from the Contract. Not all income plans offered
under the Contract satisfy the requirements for minimum distributions. Because
these distributions are required under the Code and the method of calculation is
complex, please see a competent tax advisor.
THE DEATH BENEFIT AND TAX QUALIFIED CONTRACTS. Pursuant to the Code and IRS
regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA)
may not invest in life insurance contracts. However, an IRA may provide a death
benefit that equals the greater of the purchase payments or the Contract Value.
The Contract offers a death benefit that in certain circumstances may exceed the
greater of the purchase payments or the Contract Value. We believe that the
Death Benefits offered by your Contract do not constitute life insurance under
these regulations.
It is also possible that certain death benefits that offer enhanced earnings
could be characterized as an incidental death benefit. If the death benefit were
so characterized, this could result in current taxable income to a Contract
Owner. In addition, there are limitations on the amount of incidental death
benefits that may be provided under qualified plans, such as in connection with
a 403(b) or employer sponsored qualified retirement plan.
Allstate New York reserves the right to limit the availability of the Contract
for use with any of the qualified plans listed above.
PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM TAX QUALIFIED CONTRACTS. A 10%
penalty tax applies to the taxable amount of any premature distribution from a
Tax Qualified Contract. The penalty tax generally applies to any distribution
made prior to the date you attain age 59 1/2. However, no penalty tax is
incurred on distributions:
.. made on or after the date the Contract Owner attains age 59 1/2,
.. made as a result of the Contract Owner's death or total disability,
.. made in substantially equal periodic payments over the Contract Owner's life
or life expectancy, or over the joint lives or joint life expectancies of the
Contract Owner and the Beneficiary,
.. made after separation from service after age 55 (does not apply to IRAs),
.. made pursuant to an IRS levy,
.. made for certain medical expenses,
.. made to pay for health insurance premiums while unemployed (applies only for
IRAs),
.. made for qualified higher education expenses (applies only for IRAs), and
.. made for a first time home purchase (up to a $10,000 lifetime limit and
applies only for IRAs).
During the first 2 years of the individual's participation in a SIMPLE IRA,
distributions that are otherwise subject to the premature distribution penalty,
will be subject to a 25% penalty tax.
You should consult a competent tax advisor to determine how these exceptions may
apply to your situation.
SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON TAX QUALIFIED CONTRACTS. With respect
to Tax Qualified Contracts using substantially equal periodic payments as an
exception to the penalty tax on premature distributions, any additional
withdrawal or other material modification of the payment stream would violate
the requirement that payments must be substantially equal. Failure to meet this
requirement would mean that the income portion of each payment received prior to
the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to
a 10% penalty tax unless another exception to the penalty tax applied. The tax
for the year of the modification is increased by the penalty tax that would have
been imposed without the exception, plus interest for the years in which the
exception was used. A material modification does not include permitted changes
described in published IRS rulings. You should consult a competent tax advisor
prior to creating or modifying a substantially equal periodic payment stream.
INCOME TAX WITHHOLDING ON TAX QUALIFIED CONTRACTS. Generally, Allstate New York
is required to withhold federal income tax at a rate of 10% from all
non-annuitized distributions that are not considered "eligible rollover
distributions." The customer may elect out of withholding by completing and
signing a withholding election form. If no election is made, we will
automatically withhold the required 10% from the taxable amount. In certain
states, if there is federal withholding, then state withholding is also
mandatory. Allstate New York is required to withhold federal income tax at a
rate of 20% on all "eligible rollover distributions"
17 PROSPECTUS
unless you elect to make a "direct rollover" of such amounts to an IRA or
eligible retirement plan. Eligible rollover distributions generally include all
distributions from Tax Qualified Contracts, including TSAs but excluding IRAs,
with the exception of:
.. required minimum distributions, or,
.. a series of substantially equal periodic payments made over a period of at
least 10 years, or,
.. a series of substantially equal periodic payments made over the life (joint
lives) of the participant (and beneficiary), or,
.. hardship distributions.
For all annuitized distributions that are not subject to the 20% withholding
requirement, Allstate New York is required to withhold federal income tax using
the wage withholding rates. The customer may elect out of withholding by
completing and signing a withholding election form. If no election is made, we
will automatically withhold using married with three exemptions as the default.
If no U.S. taxpayer identification number is provided, we will automatically
withhold using single with zero exemptions as the default. In certain states, if
there is federal withholding, then state withholding is also mandatory.
Election out of withholding is valid only if the customer provides a U.S.
residence address and taxpayer identification number.
Generally, Section 1441 of the Code provides that Allstate New York as a
withholding agent must withhold 30% of the taxable amounts paid to a
non-resident alien. A non-resident alien is someone other than a U.S. citizen or
resident alien or to certain other 'foreign persons'. Withholding may be reduced
or eliminated if covered by an income tax treaty between the U.S. and the
non-resident alien's country of residence if the payee provides a U.S. taxpayer
identification number on a fully completed Form W-8BEN. A U.S. taxpayer
identification number is a social security number or an individual taxpayer
identification number ("ITIN"). ITINs are issued by the IRS to non-resident
alien individuals who are not eligible to obtain a social security number. The
U.S. does not have a tax treaty with all countries nor do all tax treaties
provide an exclusion or lower withholding rate for annuities.
INDIVIDUAL RETIREMENT ANNUITIES. Section 408(b) of the Code permits eligible
individuals to contribute to an individual retirement program known as an
Individual Retirement Annuity (IRA). Individual Retirement Annuities are subject
to limitations on the amount that can be contributed and on the time when
distributions may commence. Certain distributions from other types of qualified
retirement plans may be "rolled over" on a tax-deferred basis into an Individual
Retirement Annuity.
ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible
individuals to make nondeductible contributions to an individual retirement
program known as a Roth Individual Retirement Annuity. Roth Individual
Retirement Annuities are subject to limitations on the amount that can be
contributed and on the time when distributions may commence.
Subject to certain limitations, a traditional Individual Retirement Account or
Annuity may be converted or "rolled over" to a Roth Individual Retirement
Annuity. The income portion of a conversion or rollover distribution is taxable
currently, but is exempted from the 10% penalty tax on premature distributions.
ANNUITIES HELD BY INDIVIDUAL RETIREMENT ACCOUNTS (COMMONLY KNOWN AS CUSTODIAL
IRAS). Internal Revenue Code Section 408 permits a custodian or trustee of an
Individual Retirement Account to purchase an annuity as an investment of the
Individual Retirement Account. If an annuity is purchased inside of an
Individual Retirement Account, then the Annuitant must be the same person as the
beneficial owner of the Individual Retirement Account.
Generally, the death benefit of an annuity held in an Individual Retirement
Account must be paid upon the death of the Annuitant. However, in most states,
the Contract permits the custodian or trustee of the Individual Retirement
Account to continue the Contract in the accumulation phase, with the Annuitant's
surviving spouse as the new Annuitant, if the following conditions are met:
1) The custodian or trustee of the Individual Retirement Account is the owner of
the annuity and has the right to the death proceeds otherwise payable under
the annuity contract;
2) The deceased Annuitant was the beneficial owner of the Individual Retirement
Account;
3) We receive a complete request for settlement for the death of the Annuitant;
and
4) The custodian or trustee of the Individual Retirement Account provides us
with a signed certification of the following:
(a) The Annuitant's surviving spouse is the sole beneficiary of the Individual
Retirement Account;
(b) The Annuitant's surviving spouse has elected to continue the Individual
Retirement Account as his or her own Individual Retirement Account; and
(c) The custodian or trustee of the Individual Retirement Account has
continued the Individual Retirement Account pursuant to the surviving spouse's
election.
SIMPLIFIED EMPLOYEE PENSION IRA. Section 408(k) of the Code allows eligible
employers to establish simplified employee pension plans for their employees
using individual retirement annuities. These employers may, within specified
limits, make deductible contributions on behalf of the employees to the
individual retirement annuities. Employers intending to use the Contract in
18 PROSPECTUS
connection with such plans should seek competent tax advice.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA). Section 408(p) of the
Code allows eligible employers with 100 or fewer employees to establish SIMPLE
retirement plans for their employees using individual retirement annuities. In
general, a SIMPLE IRA consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to purchase the Contract as a SIMPLE IRA should seek competent tax and
legal advice.
TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS
(TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND
YOUR COMPETENT TAX ADVISOR.
TAX SHELTERED ANNUITIES. Section 403(b) of the Code provides tax-deferred
retirement savings plans for employees of certain non-profit and educational
organizations. Under Section 403(b), any contract used for a 403(b) plan must
provide that distributions attributable to salary reduction contributions made
after 12/31/88, and all earnings on salary reduction contributions, may be made
only on or after the date the employee:
.. attains age 59 1/2,
.. severs employment,
.. dies,
.. becomes disabled, or
.. incurs a hardship (earnings on salary reduction contributions may not be
distributed on account of hardship).
These limitations do not apply to withdrawals where Allstate New York is
directed to transfer some or all of the Contract Value to another 403(b) plan.
Generally, we do not accept funds in 403(b) contracts that are subject to the
Employee Retirement Income Security Act of 1974 (ERISA).
19 PROSPECTUS
ANNUAL REPORTS AND OTHER DOCUMENTS
- --------------------------------------------------------------------------------
ALLSTATE NEW YORK'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2004 ("FORM 10-K ANNUAL REPORT") IS INCORPORATED HEREIN BY REFERENCE, WHICH
MEANS THAT IT IS LEGALLY A PART OF THIS PROSPECTUS.
After the date of this prospectus and before we terminate the offering of the
securities under this prospectus, all documents or reports we file with the
Securities and Exchange Commission ("SEC") under the Exchange Act are also
incorporated herein by reference, which means that they also legally become a
part of this prospectus. Statements in this prospectus, or in documents that we
file later with the SEC and that legally become a part of this prospectus, may
change or supersede 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.
We file our Exchange Act documents and reports, including our annual and
quarterly reports on Form 10-K and Form 10-Q electronically on the SEC's "EDGAR"
system using the identifying number CIK No. 0000839759. The SEC maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov. You also can view these materials at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. For more information on the operations of the SEC's Public Reference
Room, call 1-800-SEC-0330.
If you have received a copy of this prospectus, and would like a free copy of
any document incorporated herein by reference (other than exhibits not
specifically incorporated by reference into the text of such documents), please
write or call us at P.O. Box 82656, Lincoln,NE 68501-2656 (telephone:
1-800-256-9392).
ANNUAL STATEMENTS
At least once a year prior to the Payout Start Date, we will send you a
statement containing information about your Contract Value. For more
information, please contact your Morgan Stanley Financial Advisor or call our
customer support unit at 1-800-256-9392.
20 PROSPECTUS
APPENDIX A MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The Market Value Adjustment is based on the following:
I = the effective annual interest crediting rate for that Guarantee Period;
N = the number of complete days from the date of withdrawal to the end of the
Guarantee Period; and
J = the current initial or current renewal interest rate credited for a
withdrawal from an initial or renewal guarantee period, respectively, on the
date the withdrawal request is received for a Guarantee Period of duration N. If
a Guarantee Period of duration N is not currently being offered, J will be
determined by linear interpolation (weighted average) between the two nearest
periods being offered. If N is less than or equal to 365 days, J will be the
rate for a Guarantee Period of duration 365.
For any withdrawal, if J is not available, J will be equal to the most recent
Moody's Monthly Corporate Bond Yield Average (for the applicable duration) as
published by Moody's Investor Services, Inc. In the event that the Moody's
Monthly Corporate Bond Yield Average is no longer available, a suitable
replacement index, subject to the approval of the New York Insurance Department,
would be utilized.
The Market Value Adjustment factor is determined from the following formula:
.9 X (I - J) X (N/365)
To determine the Market Value Adjustment, we will multiply the Market Value
Adjustment factor by the amount withdrawn (in excess of the Preferred Withdrawal
Amount) from a Guarantee Period at any time other than during the 10 day period
after such Guarantee Period expires. The Market Value Adjustment may also be
applied to your Contract Value in determining the amount of the death benefit.
21 PROSPECTUS
EXAMPLES OF MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
Purchase Payment: $10,000 allocated to a Guarantee Period
Guarantee Period: 5 years
Interest Rate: 4.50%
Full Surrender: End of Contract Year 3
NOTE: These examples assume that premium taxes are not applicable.
Example 1 (Assume declining interest rates)
Step 1. Calculate Contract Value at End of $10,000.00 x (1.045)/3/ =
Contract Year 3: $11,411.66
Step 2. Calculate the Amount in excess of Preferred Withdrawal Amount
the (.10 x $10,000) = $1,000
Amount in Excess: $11,411.66 -
Preferred Withdrawal Amount: $1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .0225 (represents 1/2 of
interest rate of .045) X
$10,411.66 = $234.26
Step 4. Calculate the Market Value I = 4.5%
Adjustment: J = 4.2%
N = 730 days
Market Value Adjustment Factor:
.9 X (I - J) X N/365 = .9 X
(.045 - .042) X (730/365) =
.0054
Market Value Adjustment = Market
Value Adjustment Factor X Amount
Subject to Market Value
Adjustment:
= .0054 X $10,411.66 = $56.22
Step 5. Calculate the amount received by a
Contract Owner as a result of full
withdrawal at the end of Contract $11,411.66 - $234.26 + $56.22 =
Year 3: $11,233.62
22 PROSPECTUS
EXAMPLE 2: (ASSUMES RISING INTEREST RATES)
Step 1. Calculate Contract Value at End of $10,000.00 x (1.045)/3/ =
Contract Year 3: $11,411.66
Step 2. Calculate the Amount in excess of the Preferred Withdrawal Amount
Preferred Withdrawal Amount: (.10 x $10,000) = $1,000
Amount in Excess: $11,411.66 -
$1,000 = $10,411.66
Step 3. Calculate the Withdrawal Charge: .0225 (represents 1/2 of
interest rate of .045) X
$10,411.66 = $234.26
Step 4. Calculate the Market Value I = 4.5%
Adjustment: J = 4.8%
N = 730 days
Market Value Adjustment
Factor: .9 X (I - J) X N/365 =
.9 X (.045 - .048) X (730/365)
= - .0054
Market Value Adjustment =
Market Value Adjustment Factor
X Amount Subject to Market
Value Adjustment:
= - .0054 X $10,411.66 = -
$56.22
Step 5. Calculate the amount received by a
Contract Owner as a result of full
withdrawal at the end of Contract $11,411.66 - $234.26 - $56.22
Year 3: = $11,121.18
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE
ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS.
23 PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of Allstate Life Insurance Company of New York (Registrant") provide
that Registrant will indemnify all of its directors, former directors, officers
and former officers, to the fullest extent permitted under law, who were or are
a party or are threatened to be made a party to any proceeding by reason of the
fact that such persons were or are directors or officers of Registrant, against
liabilities, expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by them. The indemnity shall not be deemed exclusive of
any other rights to which directors or officers may be entitled by law or under
any articles of incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. In addition, the indemnity shall inure to
the benefit of the legal representatives of directors and officers or of their
estates, whether such representatives are court appointed or otherwise
designated, and to the benefit of the heirs of such directors and officers. The
indemnity shall extend to and include claims for such payments arising out of
any proceeding commenced or based on actions of such directors and officers
taken prior to the effectiveness of this indemnity; provided that payment of
such claims had not been agreed to or denied by Registrant before such date.
The directors and officers of Registrant have been provided liability insurance
for certain losses arising from claims or charges made against them while acting
in their capacities as directors or officers of Registrant.
ITEM 16. EXHIBITS.
Exhibit No. Description
(1)(a) Form of Underwriting Agreement with Morgan Stanley DW Inc. (Incorporated
herein by reference to Post-Effective Amendment No. 13 to Form N-4 Registration
Statement of Northbrook Variable Annuity Account II of Northbrook Life Insurance
Company (File No. 033-35412) dated December 31, 1996.)
(1)(b) Form of Principal Underwriting Agreement with ALFS, Inc. (Incorporated
herein by reference to Registrant's Pre-effective Amendment No. 1 to Form S-3
Registration Statement (File No. 333-44630) dated September 14, 2000.)
(2) None
(4) Form of Allstate Life Insurance Company of New York Single Premium Deferred
Annuity Contract and Application (Incorporated herein by reference to
Post-Effective Amendment No. 5 to Registrant's Registration Statement (File
No.033-47245) dated April 1, 1997.)
(5) Opinion of General Counsel re: Legality. (Previously filed in Registrant's
Initial Form S-3 Registration Statement (File No. 333-58512) dated April 9,
2001).
(8) None
(11) None
(12) None
(15) None
(23) Consent of Independent Registered Public Accounting Firm filed herewith
(24)(a) Powers of Attorney for Michael J. Velotta, John C. Lounds, Samuel H.
Pilch, and Patricia W. Wilson (Incorporated herein by reference to Registrant's
initial filing of its Form S-3 Registration Statement (File No. 333-44630) dated
August 28, 2000.)
(24) (b) Powers of Attorney for Vincent A. Fusco, Marcia D. Alazraki, Cleveland
Johnson, Jr., Kenneth R. O'Brien and John R. Raben, Jr. (Previously filed in
Registrant's Initial Form S-3 Registration Statement (File No. 333-58512) dated
April 9, 2001.)
(24) (c) Power of Attorney for Steven E. Shebik (Previously filed in Amendment
No. 1 to Registrant's S-3 Registration Statement (File No. 333-58512) dated
April 19, 2002.)
(24)(d) Power of Attorney for Casey J. Sylla and Phyllis Hill Slater (Previously
filed in Amendment No. 2 to Registrant's S-3 Registration Statement (File No.
333-58512) dated April 11, 2003.)
(24)(e) Power of Attorney for Kevin R. Slawin (Previously filed in
Post-Effective Amendment No. 3 to this Registration Statement (File No.
333-58512) dated April 13, 2004.)
(24)(f) Power of Attorney for John C. Pintozzi filed herewith
(25) None
(26) None
(27) Not applicable
(99)(a) Form of Resolution of Board of Directors (Incorporated herein by
reference to Post-Effective Amendment No. 5 to Registrant's Registration
Statement (File No. 033-47245) dated April 1, 1997.)
(99)(b) Experts filed herewith
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act
1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant, Allstate Life Insurance Company of New York, pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Northfield, State of Illinois on April 1, 2005.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
(REGISTRANT)
By: /s/MICHAEL J. VELOTTA
------------------
Michael J. Velotta
Vice President, Secretary and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on the 1st day of April, 2005.
*/MARCIA D. ALAZRAKI Director
- ----------------------------
Marcia D. Alazraki
*/VINCENT A. FUSCO Director and Chief Operations
- ------------------------- Officer
Vincent A. Fusco
*/CLEVELAND JOHNSON, JR. Director
- -----------------------------
Cleveland Johnson, Jr.
*/JOHN C. LOUNDS Director and Vice President
- ----------------------------
John C. Lounds
*/KENNETH R. O'BRIEN Director
- ----------------------------
Kenneth R. O'Brien
*/SAMUEL H. PILCH Controller and Group Vice
- ---------------------------- President
Samuel H. Pilch (Principal Accounting Officer)
*/JOHN C. PINTOZZI Director, Vice President and
- ---------------------------- Chief Financial Officer
John C. Pintozzi (Principal Financial Officer)
*/JOHN R. RABEN, JR. Director
- ----------------------------
John R. Raben, Jr.
*/STEVEN E. SHEBIK Director
- ----------------------------
Steven E. Shebik
*/PHYLLIS HILL SLATER Director
- ----------------------------
Phyllis Hill Slater
*/KEVIN R. SLAWIN Director
- ---------------------------
Kevin R. Slawin
*/CASEY J. SYLLA Director, Chairman of the Board
- --------------------------- and President
Casey J. Sylla (Principal Executive Officer)
/s/MICHAEL J. VELOTTA Director, Vice President, General
- ---------------------------- Counsel and Secretary
Michael J. Velotta
*/PATRICIA W. WILSON Director and Assistant Vice
- ---------------------------- President
Patricia W. Wilson
*/ By Michael J. Velotta, pursuant to Power of Attorney, filed herewith or
previously filed.
EXHIBIT LIST
The following exhibits are filed herewith:
Exhibit No. Description
(23) Consent of Independent Registered Public Accounting Firm filed herewith
(24)(f) Power of Attorney for John C. Pintozzi
(99)(b) Experts