Common use of An Education Savings Account Clause in Contracts

An Education Savings Account. This Disclosure Statement contains information about an education savings custodial account with UMB Bank, n.a. as custodian. An Education Savings Account provides several tax benefits. While contributions to an Education Savings Account are not deductible to the contributor, dividends on and growth of the assets held in the Education Savings Account are not subject to federal income tax. Withdrawals from an Education Savings Account are excluded from income for federal income tax purposes if used for qualified education expenses (described below). State income tax treatment of your Education Savings Account may differ from federal treatment; ask your state tax department or your personal tax advisor for details. Regular annual contributions to Education Savings Accounts must be made in cash, on behalf of a designated individual (the “student”) who is less than 18 years old at the time of the contribution, and rollover contributions must be made on behalf of a student who is less than age 30 at the time of the rollover. These age restrictions do not apply to a Student who is a special needs student (defined below). The trustee or custodian must be a bank or other person who has been approved by the Secretary of the Treasury. Contributions may not be invested in life insurance or be commingled with other property except in a common trust or investment fund. The student’s interest in the account must be non-forfeitable at all times. Upon the death of the student, the account may pass to a beneficiary who has been designated as such and who is a qualifying member of the student’s family (this is explained below). If the account does not pass to such a beneficiary, any balance in the account should be withdrawn by the appropriate representative of the student’s estate within 30 days of the date of death (if not so withdrawn, the taxable amount will nevertheless be treated for income tax purposes as if it had been withdrawn). You may obtain further information on Education Savings Accounts from any district office of the Internal Revenue Service. The donor (the person who establishes the custodial account) may revoke a newly established Education Savings Account at any time within seven days after the date on which he or she receives this Disclosure Statement. An Education Savings Account established more than seven days after the date of receipt of this Disclosure Statement may not be revoked. To revoke the Education Savings Account, mail or deliver a written notice of revocation to the custodian at the address which appears at the end of this Disclosure Statement. Mailed notice will be deemed given on the date that it is postmarked (or, if sent by certified or registered mail, on the date of certification or registration). If the Education Savings Account is revoked within the seven-day period, the donor will receive payment of the entire amount originally contributed into the Education Savings Account, without adjustment for such items as sales charges, administrative expenses or fluctuations in market value. An Education Savings Account is established on behalf of the student and is controlled by the student (or parent). The donor making a contribution, if not the student or parent, may designate the initial investments in the Education Savings Account, but shall have no further rights, interests or obligations related to the Education Savings Account, except that he or she can make additional contributions, subject to the limits described below. The Adoption Agreement must be signed by the donor, and any and all forms, applications, certifications and other documents must be signed by the parent if the student has not yet reached the age of majority recognized by the laws of the state of student’s residence (“age of majority”). While the student remains a minor, the parent identified in the Adoption Agreement will exercise all of the rights and responsibilities of the student, including the selection and exchange of fund shares in which the Education Savings Account is invested. The custodian’s acceptance of the contribution to this Education Savings Account is conditioned on agreement by the parent of any student who is a minor to be bound by all of the terms and conditions of this Disclosure Agreement and the provisions set out in Articles I-X of the Custodial Account Agreement. The student may notify the custodian in writing that he or she has reached the age of majority in the state where the student then resides (and provide any documentation the custodian may request verifying the fact that he or she has attained such age). Upon receiving such request (and documentation, if requested), the custodian will recognize the student as the individual controlling the custodial account with power to exercise all rights and responsibilities related to the Education Savings Account, and the parent will thereafter have no control or power over the custodial account. NOTE: The Custodian is under no obligation to determine whether any parent actually holds the legal right and capacity to direct or control a student’s Education Savings Account.