POS AM: Post-effective amendment to a registration statement that is not immediately effective upon filing
Published on
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 6, 2005
REGISTRATION NO. 333-100713
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
(Exact Name of Registrant)
NEW JERSEY
(State or other jurisdiction of incorporation or organization)
22-2426091
(I.R.S. Employer Identification Number)
C/O PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-7333
(Address and telephone number of principal executive offices)
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THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name, address and telephone number
of agent for service)
Copies to:
C. CHRISTOPHER SPRAGUE
VICE PRESIDENT, CORPORATE COUNSEL
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
213 WASHINGTON STREET
NEWARK, NJ 07102-2992
(973) 802-6997
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Approximate date of commencement of proposed sale to the public--Immediately
upon effectiveness
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box .............................[X]
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* Securities are not issued in predetermined units
** Registration fee for these securities, in the amount of $18,400, was paid at
the time the securities were originally registered on Form S-3 as filed by Pruco
Life Insurance Company of New Jersey on October 24, 2002. The current amount of
registered, but unsold, securities is reported quarterly by the Registrant on
Form 10-Q and annually on Form 10-K.
Prudential Investment Management Services LLC, the principal underwriter of
these contracts under a "best efforts" arrangement, will be reimbursed by Pruco
Life Insurance Company of New Jersey for its costs and expenses incurred in
connection with the sale of these contracts.
The Risk Factors section appears in Section 9 of the Summary of the prospectus.
The exhibit index appears in Part II of this Registration Statement.
STRATEGIC PARTNERS(SM)
HORIZON ANNUITY
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PROSPECTUS: MAY 2, 2005
THIS PROSPECTUS DESCRIBES A MARKET VALUE ADJUSTED INDIVIDUAL ANNUITY CONTRACT
OFFERED BY PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW
JERSEY). PRUCO LIFE OF NEW JERSEY OFFERS SEVERAL DIFFERENT ANNUITIES WHICH YOUR
REPRESENTATIVE MAY BE AUTHORIZED TO OFFER TO YOU. EACH ANNUITY HAS DIFFERENT
FEATURES AND BENEFITS THAT MAY BE APPROPRIATE FOR YOU BASED ON YOUR FINANCIAL
SITUATION, YOUR AGE AND HOW YOU INTEND TO USE THE ANNUITY. THE DIFFERENT
FEATURES AND BENEFITS INCLUDE VARIATIONS IN DEATH BENEFIT PROTECTION AND THE
ABILITY TO ACCESS YOUR ANNUITY'S CONTRACT VALUE AND THE CHARGES THAT YOU WILL BE
SUBJECT TO IF YOU CHOOSE TO SURRENDER THE ANNUITY. THE FEES AND CHARGES UNDER
THE ANNUITY CONTRACT AND COMPENSATION PAID TO YOUR REPRESENTATIVE MAY ALSO BE
DIFFERENT BETWEEN EACH ANNUITY. IF YOU ARE PURCHASING THE CONTRACT AS A
REPLACEMENT FOR VARIABLE ANNUITY OR VARIABLE LIFE COVERAGE, YOU SHOULD CONSIDER,
AMONG OTHER THINGS, ANY SURRENDER OR PENALTY CHARGES YOU MAY INCUR WHEN
REPLACING YOUR EXISTING COVERAGE. PRUCO LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY
OWNED SUBSIDIARY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA. PRUCO LIFE OF
NEW JERSEY IS LOCATED AT 213 WASHINGTON STREET, NEWARK, NJ 07102-2992, AND CAN
BE CONTACTED BY CALLING (973) 367-1730. PRUCO LIFE OF NEW JERSEY ADMINISTERS THE
STRATEGIC PARTNERS HORIZON ANNUITY CONTRACTS (SEE FILE NO. 333-100713) AT THE
PRUDENTIAL ANNUITY SERVICE CENTER, P.O. BOX 7960, PHILADELPHIA, PA 19176. YOU
CAN CONTACT THE PRUDENTIAL ANNUITY SERVICE CENTER BY CALLING, TOLL-FREE, (888)
PRU-2888.
PLEASE READ THIS PROSPECTUS
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Please read this prospectus before purchasing a Strategic Partners Horizon
Annuity contract and keep it for future reference. The Risk Factors section
appears in Section 9 of the Summary.
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE. INVESTMENT IN A MARKET VALUE ADJUSTED ANNUITY
CONTRACT IS SUBJECT TO RISK, INCLUDING THE POSSIBLE LOSS OF YOUR MONEY. AN
INVESTMENT IN STRATEGIC PARTNERS HORIZON ANNUITY IS NOT A BANK DEPOSIT AND IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
STRATEGIC PARTNERS(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ORDO1146NY
CONTENTS
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2
PART I SUMMARY
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS
3
PART I
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SUMMARY
GLOSSARY
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WE HAVE TRIED TO MAKE THIS PROSPECTUS AS EASY TO READ AND UNDERSTAND AS
POSSIBLE. BY THE NATURE OF THE CONTRACT, HOWEVER, CERTAIN TECHNICAL WORDS OR
TERMS ARE UNAVOIDABLE. WE HAVE IDENTIFIED THE FOLLOWING AS SOME OF THE KEY WORDS
OR TERMS. OTHER DEFINED TERMS ARE SET FORTH IN YOUR CONTRACT.
ACCUMULATION PHASE
The period that begins with the contract date (which we define below) and ends
when you start receiving income payments, or earlier if the contract is
terminated through a full withdrawal or payment of a death benefit.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus any
charge we impose for premium taxes, adjusted for any market value adjustment.
ANNUITANT
The person whose life determines the amount of income payments that we will pay.
If the annuitant dies before the annuity date, the co-annuitant (if any) becomes
the annuitant if the contract's requirements for changing the annuity date are
met. If, upon the death of the annuitant, there is no surviving eligible
co-annuitant, and the owner is not the annuitant, then the owner becomes the
annuitant.
ANNUITY DATE
The date when income payments are scheduled to begin. You must have our
permission to change the annuity date. If the co-annuitant becomes the annuitant
due to the death of the annuitant, and the co-annuitant is older than the
annuitant, then the annuity date will be based on the age of the co-annuitant,
provided that the contract's requirements for changing the annuity date are met
(e.g., the co-annuitant cannot be older than a specified age). If the
co-annuitant is younger than the annuitant, then the annuity date will remain
unchanged.
BENEFICIARY
The person(s) or entity you have chosen to receive a death benefit.
BUSINESS DAY
A day on which the New York Stock Exchange is open for business. Our business
day generally ends at 4:00 p.m. Eastern time.
CO-ANNUITANT
The person shown on the contract data pages who becomes the annuitant (if
eligible) upon the death of the annuitant if the requirements for changing the
annuity date are met. No co-annuitant may be designated if the owner is a
non-natural person.
CONTRACT DATE
The date we accept your initial purchase payment and all necessary paperwork in
good order at the Prudential Annuity Service Center. Contract anniversaries are
measured from the contract date. A contract year starts on the contract date or
on a contract anniversary.
CONTRACT OWNER, OWNER OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT SURRENDER VALUE
This is the total value of your contract adjusted by any market-value
adjustment, minus any withdrawal charge(s) and any premium taxes.
CONTRACT VALUE
The total value of the amount in a contract allocated to a guarantee period as
of a particular date.
DEATH BENEFIT
If a death benefit is payable, the beneficiary you designate will receive the
contract value as the death benefit. If the contract is owned by an entity (e.g.
a corporation or trust), rather than by an individual, then we will pay the
death benefit upon the death of the annuitant. See Section 4, "What Is The Death
Benefit?"
GOOD ORDER
An instruction received at the Prudential Annuity Service Center, utilizing such
forms, signatures and dating as we require, which is sufficiently clear that we
do not need to exercise any discretion to follow such instructions.
GUARANTEE PERIOD
A period of time during which your invested purchase payment earns interest at
the declared rate. We currently make available guarantee periods equal to any or
all of the following: 1 year (currently available only as a renewal option), 3
years, 5 years, 7 years, and 10 years. A guarantee period that does not exceed
five years will always be available as a renewal option.
4
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PART I
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SUMMARY
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity options.
INVESTED PURCHASE PAYMENT
Your purchase payment (which we define below) less any deduction we make for any
tax charge. In addition to the initial invested purchase payment, we allow you
to make additional purchase payments during the 30 days preceding the end of a
guarantee period.
JOINT OWNER
The person named as the joint owner, who shares ownership rights with the owner
as defined in the contract. The joint owner may be the owner's spouse, but need
not be.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA, 19176. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The phone number is (888)
PRU-2888. Prudential's Web site is www.prudential.com.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract, as well as any
additional payment you make.
TAX DEFERRAL
This is a way to increase your assets without currently being taxed. Generally,
you do not pay taxes on your contract earnings until you take money out of your
contract. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless of whether they invest in annuity contracts. See
Section 8, "What Are The Tax Considerations Associated With The Strategic
Partners Horizon Annuity Contract?"
5
PART I
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SUMMARY
SUMMARY OF SECTIONS 1-9
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FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS HORIZON ANNUITY?
This market value adjusted annuity contract, offered by Pruco Life of New
Jersey, is a contract between you, as the owner, and us. The contract is
intended for retirement savings or other long-term investment purposes and
provides a death benefit and guaranteed income options.
While your money remains in the contract for the full guarantee period, your
principal amount is guaranteed and the interest amount that your money will earn
is guaranteed by us to be at least 3%. Payments allocated to the contract are
held as a separate pool of assets, but the income, gains or losses experienced
by these assets are not directly credited or charged against the contracts. As a
result, the strength of our guarantees under the contract are based on the
overall financial strength of Pruco Life of New Jersey.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
grow on a tax-deferred basis and are taxed as income when you make a withdrawal.
The income phase starts when you begin receiving regular payments from your
contract. The amount of money you are able to accumulate in your contract during
the accumulation phase will help determine the amount of the payments you will
receive during the income phase. Other factors will affect the amount of your
payments such as age, gender and the payout option you selected.
We may amend the contract as permitted by law. For example, we may add new
features to the contract. Subject to applicable law, we determine whether or not
to make such contract amendments available to contracts that already have been
issued.
Free Look. If you change your mind about owning Strategic Partners Horizon
Annuity, you may cancel your contract within 10 days after receiving it (or
whatever other period is required by applicable law). You can request a refund
by returning the contract either to the representative who sold it to you, or to
the Prudential Annuity Service Center at the address shown on the first page of
this prospectus. You will receive the amount your contract is worth as of the
day you submit your request.
We impose neither a withdrawal charge nor any market value adjustment if you
cancel your contract under this provision.
SECTION 2
WHAT GUARANTEE PERIODS CAN I CHOOSE?
You can allocate your initial purchase payment to one of the guarantee periods
available under the contract. We have the right under the contract to offer one
or more of the following guarantee periods: 1 year (currently available only as
a renewal option), 3 years, 5 years, 7 years, or 10 years, and we may offer
other guarantee periods in the future. At any time, we may offer any or all of
these guarantee periods. You may not allocate your purchase payment to more than
one guarantee period.
SECTION 3
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one of
several options, including guaranteed payments for the annuitant's lifetime.
Once you begin receiving regular payments, you cannot change your payment plan.
SECTION 4
WHAT IS THE DEATH BENEFIT?
If the sole owner or the first of the joint owners dies, the designated
person(s) or the beneficiary will receive the contract value as the death
benefit. If the contract is owned by an entity (e.g., a corporation or trust),
rather than by an individual, then we will pay the death benefit upon the death
of the annuitant.
SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS HORIZON ANNUITY CONTRACT?
You can purchase this contract, under most circumstances, with a minimum initial
purchase payment of $5,000, but not greater than $5 million, absent our prior
approval. We allow you to make additional
6
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PART I
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SUMMARY
purchase payments only during the 30 days immediately preceding the end of a
guarantee period. Your representative can help you fill out the proper forms.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS HORIZON ANNUITY
CONTRACT?
During the accumulation phase, if you withdraw money, you may have to pay a
withdrawal charge on all or part of the withdrawal. The withdrawal charge that
we impose depends on the guarantee period from which you are withdrawing your
money. The withdrawal charge ranges from 0%-7%. You also will be subject to a
market value adjustment if you make a withdrawal prior to the end of a guarantee
period.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. You may,
however, be subject to income tax and, if you make a withdrawal prior to age
59 1/2, an additional tax penalty as well. Each contract year after the first,
you may withdraw without charge, an amount equal to the interest you earned
during the previous contract year. Withdrawals greater than that amount will be
subject to a withdrawal charge. A market-value adjustment may also apply.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS HORIZON
ANNUITY CONTRACT?
Your earnings are generally not taxed until withdrawn. If you withdraw money
during the accumulation phase, the tax laws first treat the withdrawals as a
withdrawal of earnings, which are taxed as ordinary income. If you are younger
than age 59 1/2 when you withdraw money, you may be charged a 10% federal tax
penalty on the earnings in addition to ordinary taxation. A portion of the
payments you receive during the income phase is considered a partial return of
your original investment. Generally, all amounts withdrawn from an Individual
Retirement Annuity (IRA) contract are taxable and subject to the 10% penalty if
withdrawn prior to age 59 1/2.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life of New Jersey, an indirect subsidiary of
The Prudential Insurance Company of America, and sold by registered
representatives of affiliated and unaffiliated broker/dealers.
RISK FACTORS
There are various risks associated with an investment in the Strategic Partners
Horizon Annuity that we summarize below.
ISSUER RISK. Your Strategic Partners Horizon Annuity is available under a
contract issued by Pruco Life of New Jersey, and thus is backed by the financial
strength of that company. If Pruco Life of New Jersey were to experience
significant financial adversity, it is possible that Pruco Life of New Jersey's
ability to pay interest and principal under the annuity could be impaired.
RISKS RELATED TO CHANGING INTEREST RATES. You do not participate directly in
the investment experience of the bonds and other instruments that Pruco Life of
New Jersey holds to support the Strategic Partners Horizon annuities.
Nonetheless, the market value adjustment formula (which is detailed in the
appendix to this prospectus) reflects the effect that prevailing interest rates
have on those bonds and other instruments. If you need to withdraw your money
during a period in which prevailing interest rates have risen above their level
when you made your purchase, you will experience a "negative" market value
adjustment. When we impose this market value adjustment, it could result in the
loss of both the interest you have earned and a portion of your purchase
payments. Thus, before you commit to a particular guarantee period, you should
consider carefully whether you have the ability to remain invested throughout
the guarantee period. In addition, we cannot, of course, assure you that the
Strategic Partners Horizon Annuity will perform better than another investment
that you might have made.
RISKS RELATED TO THE WITHDRAWAL CHARGE. We may impose withdrawal charges that
range as high as 7%. If you anticipate needing to withdraw your money prior to
the end of a guarantee period, you should be prepared to pay the withdrawal
charge that we will impose.
7
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8
PART II SECTIONS 1-9
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS
9
PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
1:
WHAT IS THE STRATEGIC PARTNERS HORIZON
ANNUITY?
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THE STRATEGIC PARTNERS HORIZON ANNUITY IS A CONTRACT BETWEEN YOU, THE OWNER, AND
US, THE INSURANCE COMPANY, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO
LIFE OF NEW JERSEY, WE OR US).
Under our contract or agreement, in exchange for your payment to us, we promise
to pay you a guaranteed income stream that can begin any time after the first
contract anniversary. Your annuity is in the accumulation phase until you decide
to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract. (If you purchase the annuity contract in
a tax-favored plan such as an IRA, that plan generally provides tax deferral
even without investing in an annuity contract. Therefore, before purchasing an
annuity in a tax-favored plan, you should consider whether its features and
benefits beyond tax deferral meet your needs and goals. You may also want to
consider the relative features, benefits and costs of these annuities compared
with any other investment that you may use in connection with your retirement
plan or arrangement.)
Strategic Partners Horizon Annuity allows you to allocate a purchase payment
to one of several guarantee periods that we offer at the time. As the owner of
the contract, you have all of the decision-making rights under the contract. You
will also be the annuitant unless you designate someone else. The owner is the
person upon whose death during the accumulation phase, the death benefit
generally is payable. The annuitant is the person whose life is used to
determine the amount of annuity payments and how long the payments will
continue. On and after the annuity date, the annuitant may not be changed.
The beneficiary is the person(s) or entity designated to receive any death
benefit if the owner (or first to die of joint owners) dies during the
accumulation phase. You may change the beneficiary any time prior to the annuity
date by making a written request to us.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Strategic Partners Horizon Annuity, you may
cancel your contract within 10 days after receiving it (or whatever period is
required by applicable law). You can request a refund by returning the contract
either to the representative who sold it to you, or to the Prudential Annuity
Service Center at the address shown on the first page of this prospectus. You
will receive the amount your contract is worth as of the day you submit your
request, less any applicable federal and state income tax withholding.
We impose neither a withdrawal charge nor any market value adjustment if you
cancel your contract under this provision.
10
PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
2:
WHAT GUARANTEE PERIODS
CAN I CHOOSE?
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THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENT TO ONE OF
THE GUARANTEE PERIODS THAT WE ARE OFFERING AT THE TIME.
GUARANTEE PERIODS
Under each Strategic Partners Horizon Annuity contract, we have the right to
offer one or more of several guarantee periods. These guarantee periods are 1
year (currently available only as a renewal option), 3 years, 5 years, 7 years,
or 10 years in length. In the future, we may offer other guarantee periods on
substantially the same terms as described in this prospectus. We are not
obligated to offer more than one guarantee period at any time. However, we will
always make available a guarantee period not exceeding 5 years in length.
We will apply your purchase payment to the guarantee period you have chosen.
You must allocate all of your initial purchase payment to a single guarantee
period. We declare the interest rate for each available guarantee period
periodically, but we guarantee that we will declare no less than 3% interest
with respect to any guarantee period. You will earn interest on your invested
purchase payment at the rate that we have declared for the guarantee period you
have chosen.
In addition to the basic interest, we also may pay additional interest with
respect to guarantee periods other than the one year and three year periods. The
amount of the additional interest varies according to the amount of your
purchase payment. Specifically, we will pay additional interest equal to 0.50%
annually for a purchase payment of $25,000 to $74,999, and 1.00% annually for a
purchase payment of $75,000 or more.
If we grant additional interest to you, you will earn that interest only
during the first year of your contract (and during the first year of the initial
renewal guarantee period, other than the one and three year periods). We are not
obligated to offer this additional interest continuously, meaning that we
reserve the right to offer additional interest only during limited time periods
of our choosing. We also reserve the right to change the amount of the
additional interest.
We express interest rates as annual rates, although we credit interest within
each guarantee period on a daily basis. The daily interest that we credit is
equal to the pro rated portion of the interest that would be earned on an annual
basis. We credit interest from the business day on which your purchase payment
is received in good order at the Prudential Annuity Service Center until the
earliest to occur of any of the following events: (a) full surrender of the
Contract, (b) commencement of annuity payments or settlement, (c) cessation of
the guarantee period, or (d) death of the first to die of the owner and joint
owner (or annuitant, for entity-owned contracts).
During the 30-day period immediately preceding the end of a guarantee period,
we allow you to do any of the following, without the imposition of the
withdrawal charge or market value adjustment: (a) surrender the contract, in
whole or in part, (b) allocate the contract value to another guarantee period
available at that time (provided that the new guarantee period ends prior to the
contract anniversary next following the annuitant's 90th birthday (or ten years
after the contract date, if later) and that you reinvest at least $2,000), or
(c) apply the adjusted contract value to the annuity or settlement option of
your choice. If we do not receive instructions from you concerning the
disposition of the contract value in your maturing guarantee period, we will
reinvest the contract value in a guarantee period having the same duration as
the guarantee period that matured (provided that the new guarantee period ends
prior to the contract anniversary next following the annuitant's 90th birthday
(or ten years after the contract date, if later) and that you reinvest at least
$2,000). If any available new guarantee period would end on or after the
contract anniversary next following the annuitant's 90th birthday (or ten years
after the contract date, if later), or if the annuitant is 91 years old at the
end of the guarantee period, then we will make only the one year guarantee
period available as the renewal period. We will not impose a withdrawal charge
on amounts you withdraw from the one year guarantee
11
2:
WHAT GUARANTEE PERIODS CAN I CHOOSE? CONTINUED
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
period described in the immediately preceding sentence, although such a
withdrawal would be subject to a market value adjustment.
MARKET VALUE ADJUSTMENT
When you allocate a purchase payment to a guarantee period, we use that money to
buy and sell securities and other instruments to support our obligation to pay
interest. Generally, we buy bonds for this purpose. The duration of the bonds
and other instruments that we buy with respect to a particular guarantee period
is influenced significantly by the length of the guarantee period. Thus, for
example, we typically would acquire longer-duration bonds with respect to the 10
year guarantee period than we do for the 3 year guarantee period. The value of
these bonds is affected by changes in interest rates, among other factors. The
market value adjustment that we assess against your contract value if you
withdraw prior to the end of a guarantee period involves our attributing to you
a portion of our investment experience on these bonds and other instruments. For
example, if you make a full withdrawal when interest rates have risen since the
time of your investment, the bonds and other investments in the guarantee period
likely would have decreased in value, meaning that we would impose a "negative"
market value adjustment on you (i.e., one that results in a reduction of the
withdrawal proceeds that you receive). For a partial withdrawal, we would deduct
a negative market value adjustment from your remaining contract value.
Conversely, if interest rates have decreased, the market value adjustment could
be positive.
Other things you should know about the market value adjustment include the
following:
- - We determine the market value adjustment according to a mathematical formula,
which is set forth at the end of this prospectus under the heading
"Market-Value Adjustment Formula." In that section of the prospectus, we also
provide hypothetical examples of how the formula works.
- - A negative market value adjustment could cause you to lose not only the
interest you have earned but also a portion of your principal.
- - You may withdraw (after the first contract year), without the imposition of
any market value adjustment, an amount equal to the interest earned under
your contract during the immediately preceding contract year.
- - In addition to imposing a market value adjustment on withdrawals, we also
will impose a market value adjustment on the contract value you apply to an
annuity or settlement option, except if you annuitize or settle during the
30-day period preceding the end of a guarantee period (See Section 3 for
details).
YOU SHOULD REALIZE, HOWEVER, THAT APART FROM THE MARKET VALUE ADJUSTMENT, THE
VALUE OF THE BENEFITS UNDER YOUR CONTRACT DOES NOT DEPEND ON THE INVESTMENT
PERFORMANCE OF THE BONDS AND OTHER INSTRUMENTS THAT WE HOLD WITH RESPECT TO YOUR
GUARANTEE PERIOD. APART FROM THE EFFECT OF ANY MARKET VALUE ADJUSTMENT, WE DO
NOT PASS THROUGH TO YOU THE GAINS OR LOSSES ON THE BONDS AND OTHER INSTRUMENTS
THAT WE HOLD IN CONNECTION WITH A GUARANTEE PERIOD.
12
PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
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PAYMENT PROVISIONS
We can begin making annuity payments any time after the first contract
anniversary. Annuity payments must begin no later than the contract anniversary
coinciding with or next following the annuitant's 90th birthday (or ten years
after the contract date, if later). If you begin annuity payments or commence a
settlement option at a time other than the 30-day period prior to the end of a
guarantee period, then we will impose a market value adjustment.
We make the income plans described below available before the annuity date.
These plans are called annuity options. You must choose an annuity option at
least 30 days in advance of the annuity date. If you do not, we will select
Option 2 below on your behalf unless prohibited by applicable law. During the
income phase, all of the annuity options under this contract are fixed annuity
options. GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, THE ANNUITY OPTION CANNOT
BE CHANGED AND YOU CANNOT MAKE WITHDRAWALS.
If the annuitant dies or assigns the contract, and the new annuitant is older
than the original annuitant, then the annuity date will be based on the new
annuitant's age. If the annuitant dies or assigns the contract, and the new
annuitant is younger than the original annuitant, then the annuity date will
remain unchanged. In no event, however, may an original or revised annuity date
be later than the contract anniversary next following the annuitant's 90th
birthday (or ten years after the contract date, if later).
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for the period chosen, up to 25
years (but no less than 10 years). The annuity payments may be made monthly,
quarterly, semi-annually, or annually, as you choose, for the fixed period. If
the annuitant dies during the income phase, a lump sum payment generally will be
made to the beneficiary. The amount of the lump sum payment is determined by
calculating the present value of the unpaid future payments. This is done by
using the interest rate used to compute the actual payments. The interest rate
will be at least 3% a year.
OPTION 2
LIFE ANNUITY WITH 120 PAYMENTS (10 YEARS)
Under this option, we will make annuity payments monthly, quarterly,
semi-annually, or annually as long as the annuitant is alive. If the annuitant
dies before we have made 10 years worth of payments, we will pay the beneficiary
in one lump sum the present value of the annuity payments scheduled to have been
made over the remaining portion of that 10 year period, unless we were
specifically instructed that such remaining annuity payments continue to be paid
to the beneficiary. The present value of the remaining annuity payments is
calculated by using the interest rate used to compute the amount of the original
120 payments. The interest rate will be at least 3% a year.
OPTION 3
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time annuity payments are chosen, we may make available to you any of the
fixed annuity options that are offered at your annuity date.
TAX CONSIDERATIONS
If your contract is held under a tax-favored plan, you should consider the
minimum distribution requirements when selecting your annuity option.
For certain contracts held in connection with "qualified" retirement plans
(such as a Section 401(k) plan), please note that if you are married at the time
your payments commence, you may be required by federal law to choose an income
option that provides at least a 50 percent joint and survivor annuity to your
spouse, unless your spouse waives that right. Similarly, if you are married at
the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. For more information, consult the terms of your retirement
arrangement.
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4:
WHAT IS THE
DEATH BENEFIT?
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BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before the owner or last surviving owner
dies. However, if the contract is jointly owned, the owner must name the joint
owner and the joint owner must name the owner as the beneficiary.
CALCULATION OF THE DEATH BENEFIT
If the owner (or first to die of the owner and joint owner) dies during the
accumulation phase, we will, upon receiving appropriate proof of death and any
other needed documentation in good order (proof of death), pay a death benefit
to the beneficiary designated by the deceased owner or joint owner. If the
contract is owned by an entity (e.g., a corporation or trust), rather than by an
individual, then we will pay the death benefit upon the death of the annuitant.
We require proof of death to be submitted promptly. The beneficiary will receive
a death benefit equal to the contract value (less any applicable premium tax) as
of the date that proof of death is received in good order at the Prudential
Annuity Service Center.
Instead of asking us to pay a death benefit, the surviving spouse may opt to
continue the contract, as discussed below. Generally, we impose no withdrawal
charge or market value adjustment when we pay the death benefit.
JOINT OWNERSHIP RULES
If the contract has an owner and a joint owner and they are spouses, then upon
the first to die of the owner and joint owner, the surviving spouse has the
choice of the following:
- - The contract can continue, with the surviving spouse as the sole owner of the
contract. In this case, the contract held by the surviving spouse will
continue to be subject to the withdrawal charge and market value adjustment;
or
- - The surviving spouse can receive the death benefit and the contract will end.
If the surviving spouse wishes to receive the death benefit, he or she must
make that choice within the first 60 days following our receipt of proof of
death. Otherwise, the contract will continue with the surviving spouse as the
sole owner.
If the contract has an owner and a joint owner, and they are not spouses, the
contract will not continue. Instead, the beneficiary will receive the death
benefit.
The death benefit payout options are:
Choice 1. Lump sum.
Choice 2. Payment of the entire death benefit within 5 years of the date of
death of the first to die. Under this choice, we will impose a
market value adjustment upon any withdrawal made during the 5 year
period (unless the withdrawal is made during the 30-day period
immediately preceding the end of a guarantee period).
Choice 3. Payment under an annuity or settlement option over the lifetime of
the beneficiary or over a period not extending beyond the life
expectancy of the beneficiary with distribution beginning within
one year of the date of death of the first to die.
The tax consequences to the beneficiary may vary among the three death
benefit payout options. See Section 8, "What Are The Tax Considerations
Associated With The Strategic Partners Horizon Annuity Contract?"
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS HORIZON
ANNUITY CONTRACT?
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PURCHASE PAYMENT
A purchase payment is the amount of money you give us to purchase the contract.
The minimum initial purchase payment is $5,000, and may not exceed $5 million
absent prior approval, unless we are prohibited under applicable state law from
insisting on such prior approval. You can allocate subsequent purchase payments
to a guarantee period only during the 30-day period immediately preceding the
end of a guarantee period, provided that any such purchase payment is at least
$1,000.
Generally, your initial purchase payment consists of a single sum. However,
with respect to an exchange or roll-over, your purchase payment can consist of
multiple sums that you identify at the time of application. With respect to the
latter:
- - we will aggregate each sum for purposes of computing the amount of any
additional interest that we pay on each sum; and
- - each sum will earn interest only from the business day on which it is
received in good order at the Prudential Annuity Service Center until the end
of the guarantee period.
We generally will sell you a contract only if the eldest of the owner, any
joint owner, annuitant, and any co-annuitant is 85 or younger on the contract
date (age 69 or younger, for IRAs).
ALLOCATION OF PURCHASE PAYMENT
When you purchase a contract, we will allocate your invested purchase payment to
the guarantee period of your choosing, provided that we are offering that
guarantee period at the time. You must allocate all of your initial purchase
payment to a single guarantee period. Likewise, any subsequent purchase payment
you make during the 30-day period immediately preceding the end of a guarantee
period will be consolidated with your existing contract value, and the total
will be allocated to a single guarantee period of your choosing.
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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS
HORIZON ANNUITY CONTRACT?
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THERE ARE CHARGES ASSOCIATED WITH THE CONTRACT THAT MAY REDUCE THE RETURN ON
YOUR INVESTMENT. THESE CHARGES ARE DESCRIBED BELOW.
WITHDRAWAL CHARGE
The withdrawal charge is for the payment of the expenses involved in selling and
distributing the contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature and other
promotional activities.
You may surrender your contract in whole or in part while the guarantee
period remains in effect. If you do so, however, you will be subject to (a) a
possible withdrawal charge, (b) a market value adjustment (which we discussed in
Section 2 above) and (c) possible tax penalties. After the first contract year,
you may withdraw, without the imposition of any withdrawal charge or market
value adjustment, an amount equal to the interest earned under your contract
during the immediately preceding contract year. When we calculate the withdrawal
charge and market value adjustment, we first take into account any available
charge-free amount. We impose a withdrawal charge and market value adjustment
only after that amount has been exhausted. In addition, we do not impose either
a withdrawal charge or a market value adjustment on amounts you withdraw under
the contract's minimum distribution option to satisfy Internal Revenue Service
minimum distribution requirements.
If you make a full withdrawal, we will deduct the withdrawal charge from the
proceeds that we pay to you. If you make a partial withdrawal, we will deduct
the withdrawal charge from the contract value remaining in the guarantee period.
We calculate the withdrawal charge after we have given effect to any market
value adjustment.
The withdrawal charge that we impose is equal to a specified percentage of
the contract value withdrawn that is in excess of the charge-free amount
described above. With respect to the initial guarantee period, the withdrawal
charge is based on the number of contract anniversaries that have elapsed since
the contract date. Withdrawal charges also are imposed during your first,
renewal guarantee period, as discussed below. No withdrawal charges apply to any
guarantee period that you choose subsequent to your first, renewal guarantee
period. Moreover, we impose no withdrawal charge on withdrawals from any one
year guarantee period. The withdrawal charge for the initial guarantee period is
equal to the following:
The withdrawal charge during the first year of the first renewal guarantee
period is equal to the lesser of 5%, or 1% times the number of years in the
renewal guarantee period, and the charge decreases by 1% per year thereafter.
The withdrawal charge schedule for those aged 90 or older differs slightly. Some
or all of the guarantee periods that we offer at any given time will be shorter
than the time periods indicated immediately above. If a withdrawal is effective
on the day before a contract anniversary, the withdrawal charge percentage will
be that as of the next following contract anniversary.
TAXES ATTRIBUTABLE TO PREMIUM
There may be premium based taxes applicable to your purchase payment. We are
responsible for the payment of these taxes and may make a deduction from the
value of the contract to pay some or all of these taxes. It is our current
practice not to deduct a charge for state premium taxes until annuity payments
begin. In the states that impose a premium tax on us, the current rates range up
to 3.5%. New York, however, does not
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
currently impose a charge for premium taxes. It is also our current practice not
to deduct a charge for the federal tax associated with deferred acquisition
costs paid by us that are based on premium received. However, we reserve the
right to charge the contract owner in the future for any such tax associated
with deferred acquisition costs and any federal, state or local income, excise,
business or any other type of tax measured by the amount of premium received by
us.
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7:
HOW CAN I ACCESS
MY MONEY?
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You can withdraw money at any time during the accumulation phase. If you do so,
however, you may be subject to income tax and, if the withdrawal is prior to
your attaining age 59 1/2, an additional tax penalty. You will need our consent
to make a partial withdrawal if the requested withdrawal is less than $250.
During the accumulation phase, we generally have the right to terminate your
contract and pay you the contract value if the current contract value is less
than $2,000 and certain other conditions apply.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND A MARKET VALUE
ADJUSTMENT MAY APPLY TO ANY WITHDRAWAL YOU MAKE. FOR A MORE COMPLETE EXPLANATION
OF TAX CONSEQUENCES, SEE SECTION 8 OF THIS PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an automated withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual, or annual intervals. We
will process your withdrawal at the end of the business day at the intervals you
specify. We will continue at these intervals until you tell us otherwise. We
reserve the right to cease paying automated withdrawals if paying any such
withdrawal would cause the contract value to be less than $2,000.
The minimum automated withdrawal amount you can make is $100. An assignment
of the contract terminates any automated withdrawal program that you had in
effect. Withdrawal charges, and a market value adjustment, may apply to any
automated withdrawal you make. You may not use the automated withdrawal feature
to withdraw the interest earned under your contract.
INCOME TAXES, TAX PENALTIES, WITHDRAWAL CHARGES, AND A MARKET VALUE
ADJUSTMENT MAY APPLY TO AUTOMATED WITHDRAWALS. FOR A MORE COMPLETE DISCUSSION OF
TAX CONSEQUENCES, SEE SECTION 8 OF THIS PROSPECTUS.
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8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS
HORIZON ANNUITY CONTRACT?
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The tax considerations associated with the Strategic Partners Horizon Annuity
contract vary depending on whether the contract is (i) owned by an individual
and not associated with a tax-favored retirement plan (including contracts held
by a non-natural person, such as a trust acting as an agent for a natural
person), or (ii) held under a tax-favored retirement plan. We discuss the tax
considerations for these categories of contracts below. The discussion is
general in nature and describes only federal income tax law (not state or other
tax laws). It is based on current law and interpretations, which may change. The
discussion includes a description of certain spousal rights under the contract
and under tax-qualified plans. Our administration of such spousal rights and
related tax reporting accords with our understanding of the Defense of Marriage
Act (which defines a "marriage" as a legal union between a man and a woman and a
"spouse" as a person of the opposite sex). The information provided is not
intended as tax advice. You should consult with a qualified tax advisor for
complete information and advice. References to purchase payments below relate to
your cost basis in your contract. Generally, your cost basis in a contract not
associated with a tax-favored retirement plan is the amount you pay into your
contract, or into annuities exchanged for your contract, on an after-tax basis
less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawal from a contract while you are alive even if
the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal. Also, if you
elect the interest payment option that we may offer, that election will be
treated, for tax purposes, as surrendering your contract.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction may be allowed for the unrecovered
amount.
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TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS HORIZON ANNUITY
CONTRACT CONTINUED
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10
percent tax penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching 59 1/2 or 5 years.
Modification of payments during that time period will result in retroactive
application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
Partial surrenders may be treated in the same way as tax-free 1035 exchanges
of entire contracts, therefore avoiding current taxation of any gains in the
contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The
Internal Revenue Service (IRS) has reserved the right to treat transactions it
considers abusive as ineligible for this favorable partial 1035 exchange
treatment. We do not know what transactions may be considered abusive. For
example, we do not know how the IRS may view early withdrawals or annuitizations
after a partial exchange. In addition, it is unclear how the IRS will treat a
partial exchange from a life insurance, endowment, or annuity contract into an
immediate annuity. As of the date of this prospectus, we will accept a partial
1035 exchange from a non-qualified annuity into an immediate annuity as a "tax-
free" exchange for future tax reporting purposes, except to the extent that we,
as a reporting and withholding agent, believe that we would be expected to deem
the transaction to be abusive. However, some insurance companies may not
recognize these partial surrenders as tax-free exchanges and may report them as
taxable distributions to the extent of any gain distributed as well as
subjecting the taxable portion of the distribution to the 10% tax penalty. We
strongly urge you to discuss any transaction of this type with your tax advisor
before proceeding with the transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: The beneficiary is taxed on earnings in the contract.
- - Choice 2: The beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: The beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contract are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
if you are a married individual with three exemptions unless you designate a
different withholding status. In the case of all other distributions, we will
withhold at a 10% rate. You may generally elect not to have tax withheld from
your payments. An election out of withholding must be made on forms that we
provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the CONTRACTS HELD
BY TAX FAVORED PLANS section below for a discussion regarding withholding rules
for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
REQUIRED DISTRIBUTIONS UPON YOUR DEATH. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die on or before you start taking annuity payments under the
contract or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must
be distributed within 5 years after the date of death. However, if a periodic
payment option is selected by your designated beneficiary and if such payments
begin within 1 year of your death, the value of the contract may be distributed
over the beneficiary's life or a period not exceeding the beneficiary's life
expectancy. Your designated beneficiary is the person to whom benefit rights
under the contract pass by reason of death, and must be a natural person in
order to elect a periodic payment option based on life expectancy or a period
exceeding five years.
If the contract is payable to (or for the benefit of) your surviving spouse,
such portion of the contract may be continued with your spouse as the owner.
CHANGES IN THE CONTRACT. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contractowners and you will be
given notice to the extent feasible under the circumstances.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. This description assumes that you
have satisfied the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE
INCOME TAX DEFERRAL REGARDLESS OF WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS
MEANS THAT WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY
DOES NOT RESULT IN ANY ADDITIONAL TAX BENEFITS (SUCH AS INCOME TAX DEFERRAL AND
INCOME TAX FREE TRANSFERS).
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CONTRACT CONTINUED
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and the contract. The "IRA Disclosure Statement," attached to
this prospectus, contains information about eligibility, contribution limits,
tax particulars and other IRA information. In addition to this information (some
of which is summarized below), the IRS requires that you have a "free look"
after making an initial contribution to the contract. During this time, you can
cancel the contract by notifying us in writing, and we will refund all of the
purchase payments under the contract (or, if provided by applicable state law,
the amount your contract is worth, if greater), less any applicable federal and
state income tax withholding.
CONTRIBUTIONS LIMITS/ROLLOVERS. Because of the way the contract is designed,
you may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan, as a transfer from another IRA or as a
combined contribution for both the current and prior tax year (only available
between January 1st and April 15th). You must make a minimum initial payment of
$5,000 to purchase a contract. This minimum is greater than the maximum amount
of any annual contribution allowed by law you may make to an IRA. For 2005, the
limit is $4,000, increasing to $5,000 in 2008. After 2008, the contribution
amount will be indexed for inflation. The tax law also provides for a catch-up
provision for individuals who are age 50 and above. These taxpayers will be
permitted to contribute an additional $500 increasing to $1,000 in 2006 and
years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan into another
Section 401(a) plan.
REQUIRED PROVISIONS: Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree of
divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April 1st
of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements."
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty";
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution.
Roth IRAs. Like standard IRAs, income within a Roth IRA accumulates tax-free,
and contributions are subject to specific limits. Roth IRAs have, however, the
following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income. A
"qualified
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
distribution" is a distribution that satisfies two requirements: (1) the
distribution must be made (a) after the owner of the IRA attains age 59 1/2;
(b) after the owner's death; (c) due to the owner's disability; or (d) for a
qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year
that is at least five tax years after the first year for which a contribution
was made to any Roth IRA established for the owner or five years after a
rollover, transfer, or conversion was made from a traditional IRA to a Roth
IRA. Distributions from a Roth IRA that are not qualified distributions will
be treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a traditional IRA; and
- - If eligible (including meeting income limitations and earnings requirements),
you may make contributions to a Roth IRA after attaining age 70 1/2, and
distributions are not required to begin upon attaining such age or at any
time thereafter.
Because the contract's minimum initial payment of $5,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA, you may only
purchase a contract for a Roth IRA in connection with a "rollover" or
"conversion" of amounts of another traditional IRA, conduit IRA, or Roth IRA or
as a combined contribution for both the current and prior tax year (only
available between January 1st and April 15th). This minimum is greater than the
maximum amount of any annual contribution allowed by law you may make to a Roth
IRA. The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who receive certain qualifying
distributions from such non-Roth IRAs, to directly rollover or make, within 60
days, a "rollover" of all or any part of the amount of such distribution to a
Roth IRA which they establish. This conversion triggers current taxation (but is
not subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
Tax Deferred Annuities (TDAs). You may own TDAs generally if you are either
an employer or employee of a tax-exempt organization (as defined under Code
Section 501(c)(3)) or a public educational organization. You may make
contributions to a TDA so long as the employee's rights to the annuity are
nonforfeitable. Contributions to a TDA, and any earnings, are not taxable until
distribution. You may also make contributions to a TDA under a salary reduction
agreement, generally up to a maximum of $14,000 in 2005. Individuals
participating in a TDA who are age 50 or above by the end of the year will be
permitted to contribute an additional $4,000 in 2005, increasing to $5,000 in
2006. Thereafter the amount is indexed for inflation. Further, you may roll over
TDA amounts to another TDA or an IRA. TDA amounts may also be rolled over to a
qualified retirement plan and a 457 government plan.
A contract may only qualify as a TDA if distributions (other than
"grandfathered" amounts held as of December 31, 1988) may be made only on
account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by April
1st of the calendar year after the calendar year you turn age 70 1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and
23
8:
TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS HORIZON ANNUITY
CONTRACT CONTINUED
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
minimum participation rules applicable to "qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us a reasonable time before
the IRS deadline so that a timely distribution is made. Please note that there
is a 50% penalty tax on the amount of any minimum distribution not made in a
timely manner.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, Roth IRA, TDA or qualified retirement plan before you attain age 59 1/2.
Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - the amount paid or received is in the form of substantially equal payments
not less frequently than annually (please note that substantially equal
payments must continue until the later of reaching age 59 1/2 or 5 years.
Modification of payments during that time period will generally result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless you elect otherwise, we will withhold federal income tax from the taxable
portion of such distribution at an appropriate percentage. The rate of
withholding on annuity payments where no mandatory withholding is required is
determined on the basis of the withholding certificate that you file with us. If
you do not file a certificate, we will automatically withhold federal taxes on
the following basis:
- - For any annuity payments not subject to mandatory withholding, you will have
taxes withheld by us as if you are a married individual, with three
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes. There may be additional state income tax withholding
requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevent a fiduciary and other "parties in interest" with respect to a plan (and,
for these purposes, an IRA would also constitute a "plan") from receiving any
benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans,
24
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
provided that certain information is disclosed to the person purchasing the
contract. This information has to do primarily with the fees, charges, discounts
and other costs related to the contract, as well as any commissions paid to any
agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under Section 6, "What Are The Expenses Associated With
The Strategic Partners Horizon Contract?"
Information about sales representatives and commissions may be found under
"Other Information" and "Sale And Distribution Of The Contract" in Section 9.
In addition, other relevant information required by the exemptions is
contained in the contract and accompanying documentation. Please consult your
tax advisor if you have any additional questions.
ADDITIONAL INFORMATION
For additional information about the requirements of federal tax law applicable
to tax favored plans, see the "IRA Disclosure Statement," attached to this
prospectus. The following additional tax considerations also may be of interest.
ENTITY OWNERS.
Where a contract is held by a non-natural person (e.g., a corporation), other
than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract will be subject to tax.
PURCHASE PAYMENTS MADE BEFORE AUGUST 14, 1982.
If your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982, favorable tax rules may apply to certain
withdrawals from the contract. Generally, withdrawals are treated as a recovery
of your investment in the contract first until purchase payments made before
August 14, 1982 are withdrawn. Moreover, any income allocable to purchase
payments made before August 14, 1982, is not subject to the 10% tax penalty.
GENERATION-SKIPPING TRANSFERS.
If you transfer your contract to a person two or more generations younger than
you (such as a grandchild or grandniece) or to a person that is more than 37 1/2
years younger than you, there may be generation-skipping transfer tax
consequences.
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
9:
OTHER
INFORMATION
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PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey (Pruco Life of New Jersey) is a stock
life insurance company, organized in 1982 under the laws of the State of New
Jersey. It is licensed to sell life insurance and annuities in New Jersey and
New York, and accordingly is subject to the laws of each of those states.
Pruco Life of New Jersey is an indirect wholly-owned subsidiary of The
Prudential Insurance Company of America (Prudential), a New Jersey stock life
insurance company doing business since 1875. Prudential is an indirect
wholly-owned subsidiary of Prudential Financial, Inc. (Prudential Financial), a
New Jersey insurance holding company. As Pruco Life of New Jersey's ultimate
parent, Prudential Financial exercises significant influence over the operations
and capital structure of Pruco Life of New Jersey and Prudential. However,
neither Prudential Financial, Prudential, nor any other related company has any
legal responsibility to pay amounts that Pruco Life of New Jersey may owe under
the contract.
Pruco Life of New Jersey publishes annual and quarterly reports that are
filed with the SEC. These reports contain financial information about Pruco Life
of New Jersey that is annually audited by independent accountants. Pruco Life of
New Jersey's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that Pruco Life of New Jersey files with the SEC,
are incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the Pruco Life of New Jersey
annual report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at the
address or telephone number listed on the cover. The SEC file number for Pruco
Life of New Jersey is 33-18053. You may read and copy any filings made by Pruco
Life of New Jersey with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, Washington, D.C. 20549-0102. You can obtain information on the operation
of the Public Reference Room by calling (202) 942-8090. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC (PIMS), a wholly-owned subsidiary
of Prudential Financial, Inc., is the distributor and principal underwriter of
the securities offered through this prospectus. PIMS acts as the distributor of
a number of annuity contracts and life insurance products we offer.
PIMS's principal business address is 100 Mulberry Street, Newark, New Jersey
07102-4077. PIMS is registered as a broker/dealer under the Securities Exchange
Act of 1934 (Exchange Act) and is a member of the National Association of
Securities Dealers, Inc. (NASD).
The contract is offered on a continuous basis. PIMS enters into distribution
agreements with broker/dealers who are registered under the Exchange Act and
with entities that may offer the contract but are exempt from registration
(firms). Applications for the contract are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, PIMS may offer the
contract directly to potential purchasers.
Commissions are paid to firms on sales of the contract according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of purchase payments made, up to a maximum of
5%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
contract value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the contract. Commissions and
other compensation paid in relation to the contract do not result in any
additional charge to you or to the separate account.
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
In addition, in an effort to promote the sale of our products (which may
include the placement of Pruco Life of New Jersey and/or the contract on a
preferred or recommended company or product list and/or access to the firm's
registered representatives), we or PIMS may enter into compensation arrangements
with certain broker/dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the contract's features;
conducting due diligence and analysis; providing office access, operations and
systems support; holding seminars intended to educate registered representatives
and make them more knowledgeable about the contract; providing a dedicated
marketing coordinator; providing priority sales desk support; and providing
expedited marketing compliance approval and preferred programs to PIMS.
To the extent permitted by NASD rules and other applicable laws and
regulations, PIMS may pay or allow other promotional incentives or payments in
the form of cash or non-cash compensation. These arrangements may not be offered
to all firms and the terms of such arrangements may differ between firms. A list
of firms that PIMS paid pursuant to such arrangements is shown below.
You should note that firms and individual registered representatives and
branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the contract than
for selling a different contract that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to a contract product, any such
compensation will be paid by us or PIMS and will not result in any additional
charge to you. Your registered representative can provide you with more
information about the compensation arrangements that apply upon the sale of the
contract.
PAYMENTS MADE TO PROMOTE SALE OF OUR PRODUCTS
The list below identifies three general types of payments that PIMS pays which
are broadly defined as follows:
- - Percentage Payments based upon "Assets under Management" or "AUM:" This type
of payment is a percentage payment that is based upon the total amount held
in all Pruco Life of New Jersey products that were sold through the firm (or
its affiliated broker/dealers).
- - Percentage Payments based upon sales: This type of payment is a percentage
payment that is based upon the total amount of money received as purchase
payments under Pruco Life of New Jersey products sold through the firm (or
its affiliated broker/dealers).
- - Fixed payments: These types of payments are made directly to or in
sponsorship of the firm (or its affiliated broker/dealers). Examples of
arrangements under which such payments may be made currently include, but are
not limited to, sponsorships, conferences (national, regional and top
producer), speaker fees, promotional items, and reimbursements to firms for
marketing activities or services paid by the firms and/or their individual
representatives. The amount of these payments varies widely because some
payments may encompass only a single event, such as a conference, and others
have a much broader scope. In addition, we may make payments upon the
initiation of a relationship for systems, operational and other support.
The list below includes the names of the firms (or their affiliated
broker/dealers) that we are aware (as of May 2, 2005) received payment of more
than $10,000 under one or more of these types of arrangements during the last
calendar year or that have received or are expected to receive such payment
during the current calendar year. Your registered representative can provide you
with more information about the compensation arrangements that apply upon the
sale of the contract.
27
9:
OTHER INFORMATION CONTINUED
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
Name of Firm:
AIG
American Portfolios Financial Services, Inc.
Associated Securities Corp.
Bluevase Securities
Brecek & Young Advisors, Inc.
Brookstreet Securities Corporation
Cadaret, Grant & Co. Inc.
Cambridge Investment Research, Inc.
Capital Analysts, Inc.
Centaurus Financial, Inc.
Citigroup Global Markets, Inc.
Commonwealth Financial Network
Crown Capital Securities
CUSO Financial Services
Equity Services, Inc.
Financial Network Investment Corp.
FSC Securities Corporation
GunnAllen Financial Incorporated
H. Beck, Inc.
Hantz Financial Services, Inc.
ING Financial Partners
Invest Financial Corp
Investment Centers of America
Investors Capital Corporation
Jefferson Pilot Securities Corp
Legend Equities Corporation
Linsco Private Ledger
Multi-Financial Securities Corporation
Mutual Service Corporation
National Planning Corporation
Next Financial Group, Inc.
NFP Securities
Prime Capital Services
Primevest Financial Services, Inc.
Pruco Securities
Questar Capital Corporation
Raymond James & Associates, Inc.
Raymond James Financial Services, Inc.
RBC Dain Rauscher
Royal Alliance Associates, Inc.
Securities America, Inc.
Securities Service Network, Inc.
Sigma Financial Corporation
SII Investments
Stifel, Nicolaus & Company, Inc.
SunAmerica Securities, Inc.
TD Waterhouse Investor Services, Inc.
The Investment Center, Inc.
United Planners Financial Services of America
UVEST Financial Services Group
Wachovia Securities, LLC
Waterstone Financial Group, Inc.
LITIGATION
Pruco Life of New Jersey is subject to legal and regulatory actions in the
ordinary course of its businesses, which may include class action lawsuits.
Pending legal and regulatory actions include proceedings relating to aspects of
the businesses and operations that are specific to Pruco Life of New Jersey and
that are typical of the businesses in which Pruco Life of New Jersey operates.
Class action and individual lawsuits may involve a variety of issues and/or
allegations, which include sales practices, underwriting practices, claims
payment and procedures, premium charges, policy servicing and breach of
fiduciary duties to customers. We may also be subject to litigation arising out
of our general business activities, such as our investments and third party
contracts. In certain of these matters, the plaintiffs may seek large and/or
indeterminate amounts, including punitive or exemplary damages.
Pruco Life of New Jersey has received formal requests for information
relating to its variable annuity business from regulators, including, among
others, the Securities and Exchange Commission and the State of New York
Attorney General's Office. As part of a broad initiative by the National
Association of Insurance Commissioners, Pruco Life of New Jersey has received a
request for information from the New Jersey Department of Banking and Insurance
related to producer compensation and fee arrangements. It is possible that other
regulators will issue similar requests.
Pruco Life of New Jersey's litigation is subject to many uncertainties, and
given the complexity and
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STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
scope, the outcomes cannot be predicted. It is possible that the results of
operations or the cash flow of Pruco Life of New Jersey in a particular
quarterly or annual period could be materially affected by an ultimate
unfavorable resolution of litigation and regulatory matters. Management
believes, however, that the ultimate outcome of all pending litigation and
regulatory matters should not have a material adverse effect on Pruco Life of
New Jersey's financial position.
ASSIGNMENT
In general, you can assign the contract at any time during your lifetime. We
will not be bound by the assignment until we receive written notice. We will not
be liable for any payment or other action we take in accordance with the
contract if that action occurs before we receive notice of the assignment. An
assignment, like any other change in ownership, may trigger a taxable event. If
you assign the contract, that assignment will result in the termination of any
automated withdrawal program that had been in effect. If the new owner wants to
re-institute an automated withdrawal program, then he/she needs to submit the
forms that we require, in good order.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
HOUSEHOLDING
To reduce costs, we now send only a single copy of prospectuses to each
consenting household, in lieu of sending a copy to each contract owner that
resides in the household. If you are a member of such a household, you should be
aware that you can revoke your consent to householding at any time, and begin to
receive your own copy of prospectuses, by calling (877) 778-5008.
INDEMNIFICATION
Pruco Life of New Jersey, in conjunction with certain affiliates, maintains
insurance on behalf of any person who is or was a trustee, director, officer,
employee, or agent of Pruco Life of New Jersey, or who is or was serving at the
request of Pruco Life of New Jersey as a trustee, director, officer, employee or
agent of such other affiliated trust or corporation, against any liability
asserted against and incurred by him or her arising out of his or her position
with such trust or corporation.
New Jersey, being the state of organization of Pruco Life of New Jersey,
permits entities organized under its jurisdiction to indemnify directors and
officers with certain limitations. The relevant provisions of New Jersey law
permitting indemnification can be found in Section 14A:3-5 et. seq. of the New
Jersey Statutes Annotated. The text of Pruco Life of New Jersey's By-law,
Article V, which relates to indemnification of officers and directors, is
incorporated by reference to Exhibit 1.A.(6)(c) to Form S-6, Registration No.
333-85117, filed August 13, 1999 on behalf of Pruco Life of New Jersey Variable
Appreciable Account.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of Pruco
Life of New Jersey pursuant to the foregoing provisions or otherwise, Pruco Life
of New Jersey 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 Pruco Life
of New Jersey of expenses incurred or paid by a director, officer or controlling
person of Pruco Life of New Jersey 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, Pruco Life of New Jersey will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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PART II
STRATEGIC PARTNERS HORIZON ANNUITY PROSPECTUS SECTIONS 1-9
MARKET-VALUE
ADJUSTMENT FORMULA
- --------------------------------------------------------------------------------
MARKET-VALUE ADJUSTMENT FORMULA
The general formula under which Pruco Life of New Jersey calculates the market
value adjustment applicable to a full or partial surrender, annuitization, or
settlement under Strategic Partners Horizon Annuity is set forth below. The
market value adjustment is expressed as a multiplier factor. That is, the
Contract Value after the market value adjustment ("MVA"), but before any
surrender charge, is as follows: Contract Value (after MVA) = Contract Value
(before MVA) X (1 + MVA). The MVA itself is calculated as follows:
1 + I
MVA = [(-----------)to the N/12 power] -1
1 + J + .0025
The MVA formula uses an interpolated rate "J" as the current credited interest
rate. Specifically, "J" is the interpolated current credited interest rate
offered on new money at the time of withdrawal, annuitization, or settlement.
The interpolated value is calculated using the following formula:
m/365 X (n + 1) year rate + (365 - m)/365 X n year rate,
where "n" equals the number of whole years remaining in the Contract's current
guarantee period, and "m" equals the number of additional days remaining in the
current guarantee period.
MARKET VALUE ADJUSTMENT EXAMPLE
The following will illustrate the application of the Market-Value Adjustment.
For simplicity, surrender charges are ignored in these hypothetical examples.
Positive market value adjustment
- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value has accumulated to $11,127.11. The number of whole years remaining in
the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 4%, and
for a guarantee period of 4 years (the number of whole years remaining plus
1) is 5%.
The following computations would be made:
1) Calculate the Charge Free Amount. The Charge Free Amount is the interest
credited in the contract in the previous contract year. This amount is
$600.00. It is not subject to a Market Value Adjustment.
2) Subtract the Charge Free Amount from the Contract Value. The result is the
amount subject to a Market Value Adjustment (MVA).
$11,127.11 - $600.00 = $10,527.11
3) Determine the Market Value Adjustment factor.
The MVA factor calculation would be: [(1.06)/(1.0417 + .0025)](38/12) -1 =
0.04871
4) Multiply the amount subject to a Market Value Adjustment by the factor
calculated in Step 3.
$10,527.11 X 0.04871 = $512.78
5) Add together the Market Value Adjustment and the amount subject to the MVA.
$10,527.11 + $ 512.78 = $11,039.89
6) Add back the Charge Free Amount to get the total Contract Surrender Value.
$11,039.89 + $600.00 = $11,639.89
The MVA may not always be positive. Here is an example where it is negative.
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- - Suppose a contract owner made an invested purchase payment of $10,000 on July
1, 2005 and received a guaranteed interest rate of 6% for 5 years. A request
to surrender the contract is made on May 1, 2007. At the time, the Contract
Value has accumulated to $11,127.11. The number of whole years remaining in
the guarantee period is 3.
- - On May 1, 2007 the interest rate declared by Pruco Life of New Jersey for a
guarantee period of 3 years (the number of whole years remaining) is 7%, and
for a guarantee period of 4 years (the number of whole years remaining plus
1) is 8%.
The following computations would be made:
1) Calculate the Charge Free Amount. The Charge Free Amount is the interest
credited in the contract in the previous contract year. This amount is
$600.00. It is not subject to a Market Value Adjustment.
2) Subtract the Charge Free Amount from the Contract Value. The result is the
amount subject to a Market Value Adjustment (MVA).
$11,127.11 - $600.00 = $10,527.11
3) Determine the Market Value Adjustment Factor.
The MVA Factor calculation would be: [(1.06)/(1.0717 + .0025)](38/12) -1 =
- -0.04126
4) Multiply the amount subject to a Market Value Adjustment by the factor
calculated in Step 3.
$10,527.11 X -0.04126 = -$434.35
5) Add together the Market Value Adjustment and the amount subject to the MVA.
$10,527.11 - $434.35 = $10,092.76
6) Add back the Charge Free Amount to get the total Contract Surrender Value.
$10,092.76 + $600.00 = $10,692.76
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ORD01146NY
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees
Pruco Life Insurance Company of New Jersey has registered $200 million of
interests in the market value adjusted annuity contracts described in this
registration statement. Pruco Life Insurance Company of New Jersey has paid
$18,400 to the SEC for the registration fees required under the Securities Act
of 1933.
Federal Taxes
Pruco Life Insurance Company of New Jersey estimates the federal tax effect
associated with the deferred acquisition costs attributable to receipt of $5
million of purchase payments over a two year period (from 2004 to 2006) to be
approximately $18,500.
State Taxes
Pruco Life Insurance Company of New Jersey estimates that approximately $0 in
premium taxes will be owed upon receipt of purchase payments under the
contracts, and that additional premium taxes in the approximate amount of $0
would be owed if the full $5 million of purchase payments were applied to
annuity options.
Printing Costs
Pruco Life Insurance Company of New Jersey estimates that the cost of printing
prospectuses for the amount of securities registered herein will be
approximately $12,655.
Legal Costs
This registration statement was prepared by Prudential attorneys whose time is
allocated to Pruco Life Insurance Company of New Jersey.
Accounting Costs
PricewaterhouseCoopers LLP, the independent registered public accounting firm
that audits Pruco Life Insurance Company of New Jersey's financial statements,
charges approximately $4,000 in connection with each filing of this registration
statement with the Commission.
Premium Paid to Indemnify Officers
Officers and Directors of Pruco Life Insurance Company of New Jersey are
indemnified under a policy that also covers officers and directors of other
entities controlled by Prudential Financial, Inc. A portion of the cost of that
policy is attributed to Pruco Life Insurance Company of New Jersey.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant, in connection with certain affiliates, maintains various
insurance coverages under which the underwriter and certain affiliated persons
may be insured against liability that may be incurred in such capacity, subject
to the terms, conditions and exclusions of the insurance policies.
S-1
New Jersey, being the state of organization of Pruco Life Insurance Company of
New Jersey ("Pruco") permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 et seq. of the New Jersey Statutes Annotated. The text of Pruco's By-Law
Article V, which relates to indemnification of officers and directors, is
incorporated by reference to Exhibit 1.A.(6)(c) to Form S-6, Registration No.
333-85117, filed August 13, 1999 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 16. EXHIBITS
(a) Exhibits
S-2
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 this registration statement:
(i) To include any prospectus required by Section 10 (a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information 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;
(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 the 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.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
S-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this post-effective
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Newark, State of New
Jersey, on the 6th day of April, 2005.
PRUCO LIFE INSURANCE COMPANY OF NEW
JERSEY
(Registrant)
By: /s/ BERNARD J. JACOB
---------------------
BERNARD J. JACOB
PRESIDENT AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and the date indicated.
SIGNATURE AND TITLE
/s/*
-----------------------------------------
JAMES J. AVERY JR.
VICE CHAIRMAN AND DIRECTOR
/s/* April 6, 2005
-----------------------------------------
BERNARD J. JACOB
PRESIDENT AND DIRECTOR
/s/* *By: /s/ CLIFFORD E. KIRSCH
----------------------------------------- ---------------------------
JOHN CHIEFFO CLIFFORD E. KIRSCH
VICE PRESIDENT, CHIEF ACCOUNTING (ATTORNEY-IN-FACT)
OFFICER AND PRINCIPAL FINANCIAL OFFICER
/s/*
-----------------------------------------
RONALD P. JOELSON
DIRECTOR
/s/*
-----------------------------------------
C. EDWARD CHAPLIN
SENIOR VICE PRESIDENT AND DIRECTOR
/s/*
-----------------------------------------
HELEN M. GALT
DIRECTOR
/s/*
-----------------------------------------
ANDREW J. MAKO
DIRECTOR
/s/*
-----------------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
S-4
EXHIBIT INDEX
(5) Opinion of Counsel
(23) Written Consent of PricewaterhouseCoopers LLP, Independent Registered
Public Accounting Firm