EXHIBIT 14(b)
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INDIVIDUAL
RETIREMENT
ACCOUNT
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DISCLOSURE STATEMENT
CUSTODIAL ACCOUNT
AGREEMENT
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DISCLOSURE STATEMENT
RIGHT TO REVOKE YOUR XXX
If you receive this Disclosure Statement at the time you establish your XXX, you
have the right to revoke your XXX within seven (7) days of its establishment. If
revoked, you are entitled to a full return of the contribution you made to your
XXX. The amount returned to you would not include an adjustment for such items
as sales commissions, administrative expenses, or fluctuation in market value.
You may make this revocation only by mailing or delivering a written notice to
the Custodian at:
FPS Services, Inc.
0000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000-0000
If you send your notice by first-class mail, your revocation will be deemed
mailed as of the date of the postmark.
If you have any questions about the procedure for revoking your XXX, please call
the Custodian at the telephone number listed on the Application.
REQUIREMENTS OF AN XXX
X. CASH CONTRIBUTIONS - Your contribution must be in cash, unless it is a
rollover contribution.
B. MAXIMUM CONTRIBUTION - The total amount you may contribute to an XXX for
any taxable year cannot exceed the lesser of $2,000 or 100 percent of your
compensation.
C. NONFORFEITABILITY - Your interest in your XXX is nonforfeitable.
D. ELIGIBLE CUSTODIANS - The Custodian of your XXX must be a bank, savings and
loan association, credit union, or a person approved by the Secretary of
the Treasury.
E. COMMINGLING ASSETS - The assets of your XXX cannot be commingled with other
property except in a common trust fund or common investment fund.
F. LIFE INSURANCE - No portion of your XXX may be invested in life insurance
contracts.
G. COLLECTIBLES - You may not invest the assets of your XXX in collectibles
(within the meaning of Internal Revenue Code (IRC) Section 408(m)). A
collectible is defined as any work of art, rug or antique, metal or gem,
stamp or coin, alcoholic beverage, or any other tangible personal property
specified by the Internal Revenue Service. Specially minted United States
gold and silver bullion coins and certain state-issued coins are
permissible XXX investments.
H. REQUIRED MINIMUM DISTRIBUTIONS - You are required to take minimum
distributions from your XXX at certain times in accordance with Proposed
Treasury Regulations Section 1.408-8. Below is a summary of the XXX
distribution rules.
1. You are required to take a minimum distribution from your XXX for the
year in which you reach age 70 1/2 and for each year thereafter. You
must take your first payout by your required beginning date, April 1
of the year following the year you attain age 70 1/2. The minimum
distribution for any taxable year is equal to the amount obtained by
dividing the account balance at the end of the prior year (less any
required distribution taken between January 1 and April 1 of the year
following the year you attain age 70 1/2) by the joint life expectancy
of you and your designated beneficiary. If you have not
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designated a beneficiary for your XXX by your required beginning date,
your single life expectancy will be used.
2. Your single or joint life expectancy is determined by using the IRS
unisex life expectancy tables. You can find these tables in Treasury
Regulation Section 1.72-9.
We may establish a policy dictating whether or not life expectancies
may be recalculated in determining required minimum distributions from
your XXX. Alternatively, we may allow you to elect whether or not to
recalculate your life expectancies.
You may choose (within the limits set forth in the distribution rules
and our life expectancy recalculation policy) how you want your
required minimum distributions structured. You must make your payment
elections no later than April 1 following your 70 1/2 year. If you do
not make an election by that date, we may do any one of the following:
(a) make no payment until you give us a proper payout request,
(b) pay your entire XXX to you in a single sum payment, or
(c) determine your required minimum distribution each year based on
your single life expectancy (not recalculated) and pay those
distributions to you until you direct otherwise.
3. If you name someone other than your spouse as your beneficiary, and
your beneficiary is more than 10 years younger than you, your required
minimum distributions must satisfy the Minimum Distribution Incidental
Benefit (MDIB) rule. The MDIB rule generally requires that your
required minimum distributions be calculated as if your beneficiary
were exactly 10 years younger than you.
4. If you die:
(a) on or after your required beginning date, distributions must be
made to your beneficiary or beneficiaries at least as rapidly as
under the method being used to determine minimum distributions as
of the date of your death.
(b) before your required beginning date, the entire amount remaining
in your account will, at the election of your beneficiary or
beneficiaries, either
(i) be distributed by December 31 of the year containing the
fifth anniversary of your death, or
(ii) be distributed in equal or substantially equal payments over
the life or life expectancy of your designated beneficiary
or beneficiaries.
Your beneficiary or beneficiaries must elect either option (i) or (ii)
by December 31 of the year following the year of your death. If no
election is made, distribution will be made in accordance with (ii) if
the beneficiary is your surviving spouse, and in accordance with (i)
if your beneficiary is not your surviving spouse. In the case of
distributions under (ii), distributions must commence by December 31
of the year following the year of your death. If your spouse is the
beneficiary, distributions need not commence until December 31 of the
year you would have attained age 70 1/2, if later.
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INCOME TAX CONSEQUENCES OF ESTABLISHING AN XXX
X. XXX DEDUCTIBILITY - If you have not yet reached the year in which you attain
age 70 1/2 and have earned income from services rendered, you may make an
XXX contribution of the lesser of 100 percent of compensation or $2,000.
However, the amount of the contribution for which you may take a tax
deduction will depend upon whether you (or your spouse) are an active
participant in an employer-maintained retirement plan. If you (and your
spouse) are not an active participant, your XXX contribution will be
totally deductible. If you (or your spouse) are an active participant, the
deductibility of your contribution will depend on your adjusted gross
income (AGI) for the tax year for which the contribution was made. AGI is
determined on your tax return (disregarding any deductible XXX
contribution).
DEFINITION OF ACTIVE PARTICIPANT - Generally, you will be an active
participant if you are covered by one or more of the following employer-
maintained retirement plans:
1. a qualified pension, profit sharing, 401(k), or stock bonus plan;
2. a qualified annuity plan of an employer;
3. a simplified employee pension (SEP) plan;
4. a retirement plan established by the Federal government, a State, or a
political subdivision (except certain unfunded deferred compensation
plans under IRC Section 457);
5. a tax sheltered annuity for employees of certain tax-exempt
organizations or public schools;
6. a qualified plan for self-employed individuals (H.R. 10 or Xxxxx Plan);
and
7. a SIMPLE XXX plan or a SIMPLE 401(k) plan.
If you do not know whether your employer maintains one of these plans or
whether you are an active participant in it, check with your employer and
your tax advisor. Also, the Form W-2 (Wage and Tax Statement) that you
receive at the end of the year from your employer will indicate whether you
are an active participant.
If you are single, your threshold AGI level is $25,000. The threshold level
if you are married and file a joint tax return is $40,000, and if you are
married but file a separate tax return, the threshold level is $0. If your
AGI is less than $10,000 above your threshold level, you will still be able
to make a deductible contribution but it may be limited in amount (but
never less than $200).
The deductible amount of your contribution is determined by taking your
threshold AGI level plus $10,000 (e.g., $50,000 if you are married and
filing jointly, $35,000 if you are single) and subtracting from it your AGI
(determined prior to taking your itemized deductions). Multiply the
resulting number by .2 to give you your personal deduction limit. You must
round up the resulting number to the next highest $10 if the number is not
a multiple of 10.
B. TAX-DEFERRED EARNINGS - The investment earnings of your XXX are not subject
to federal income tax until distributions are made (or, in certain
instances, when distributions are deemed to be made).
C. NONDEDUCTIBLE CONTRIBUTIONS - You may make nondeductible contributions to
your XXX to the extent that deductible contributions are not allowed. The
sum of your deductible and nondeductible XXX contributions cannot exceed
your contribution limit (the lesser of $2,000 or 100 percent of
compensation). You may elect to
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treat deductible XXX contributions as nondeductible contributions.
If you make nondeductible contributions for a particular tax year, you must
report the amount of the nondeductible contribution on your federal income
tax return (using IRS Form 8606).
If you overstate the amount of designated nondeductible contributions for
any taxable year, you are subject to a $100 penalty unless reasonable cause
for the overstatement can be shown. Failure to file any for required by the
IRS to report nondeductible contributions (eg., IRS Form 8606) will result
in a $50 per failure penalty.
D. TAXATION OF DISTRIBUTIONS - The taxation of XXX distributions depends on
whether or not you have ever made nondeductible XXX contributions. If you
have only made deductible contributions, any XXX distribution will be fully
included in income.
If you have ever made nondeductible contributions to any XXX, the following
formula must be used to determine the amount of any XXX distribution
excluded from income:
(Aggregate Nondeductible Contributions)
x (Amount Withdrawn) = Amount Excluded
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Aggregate XXX Balance From Income
NOTE: Aggregate nondeductible contributions include all nondeductible
contributions made by you through the end of the year of the distribution
(which have not previously been withdrawn and excluded from income). Also
note that aggregate XXX balance includes the total balance of all of your
IRAs as of the end of the year of distribution and any distributions
occurring during the year.
E. ROLLOVERS - Your XXX may be rolled over to an XXX of yours, or may receive
rollover contributions, provided that all of the applicable rollover rules
are followed. Rollover is a term used to describe a tax-free movement of
cash or other property to your XXX from any of your IRAs, or from your
employer's Qualified Retirement Plan or Tax Sheltered Annuity. SIMPLE XXX
funds may not be rolled to your XXX during the first two years you
participate in your employer's SIMPLE XXX plan. The rollover rules are
generally summarized below. These transactions are often complex. If you
have any questions regarding a rollover, please see a competent tax
advisor.
1. XXX TO XXX ROLLOVERS - Funds distributed from your XXX may be rolled
over to an XXX of yours if the requirements of IRC Section 408(d)(3)
are met. A proper XXX to XXX rollover is completed if all or part of
the distribution is rolled over not later than 60 days after the
distribution is received. You may not have completed another XXX to
XXX rollover from the distributing XXX during the 12 months preceding
the date you receive the distribution. Further, you may roll the same
dollars or assets only once every 12 months.
2. QUALIFIED PLAN (OR TAX-SHELTERED ANNUITY) TO XXX ROLLOVERS - Effective
for qualified plan distributions received after January 1, 1993, you
may roll over, directly or indirectly, any eligible rollover
distribution. An eligible rollover distribution is defined generally
as any distribution from a qualified plan (other than distributions to
nonspouse beneficiaries) unless it is part of certain series of
substantially equal periodic payments, after-tax dollars or a required
minimum distribution.
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If you elect to receive your rollover distribution prior to placing it
in an XXX, thereby conducting an indirect rollover, your plan
administrator will generally be required to withhold 20 percent of
your distribution as a prepayment of income taxes. When completing the
rollover, you may make up the amount withheld, out of pocket, and roll
over the full amount distributed from your qualified plan balance, if
you so choose. To qualify as a rollover, your eligible rollover
distribution must be rolled over to your XXX not later than 60 days
after you receive it. Alternatively, you may claim the withheld amount
as income and pay the applicable income tax and, if you are under age
59 1/2, the 10 percent early distribution penalty (unless an exception
to the penalty applies). As an alternative to the indirect rollover,
your employer generally must give you the option of directly rolling
your qualified plan balance over to an XXX. If you elect the direct
rollover option, your eligible rollover distribution will be paid
directly to the XXX (or other qualified plan) that you designate. The
20 percent withholding requirements do not apply to direct rollovers.
If you place your rollover contribution in a separate (i.e., conduit)
XXX plan which holds just those dollars, you preserve the right to
later roll the money originating from the qualified plan into another
qualified plan.
3. WRITTEN ELECTION - At the time you make a proper rollover to an XXX,
you must designate to the Custodian, in writing, your election to
treat that contribution as a rollover. Once made, the rollover
election is irrevocable.
F. CARRYBACK CONTRIBUTIONS - A contribution is deemed to have been made on the
last day of the preceding taxable year if you make a contribution by the
deadline for filing your income tax return (not including extensions), and
you designate that contribution as a contribution for the preceding taxable
year. For example, if you are a calendar year taxpayer and you make your
XXX contribution on or before April 15, your contribution is considered to
have been made for the previous tax year if you designated it as such.
LIMITATIONS AND RESTRICTIONS
A. SEP PLANS - Under a Simplified Employee Pension (SEP) Plan that meets the
requirements of IRC Section 408(k), your employer may make contributions to
your XXX. Your employer is required to provide you with information which
describes the terms of your employer's SEP Plan.
B. SPOUSAL XXX - If you are married, you may make payments to an XXX
established for the benefit of your spouse. Your spouse must not have
attained age 70 1/2 in that year, or any prior year, even if you are age 70
1/2 or older. You must file a joint tax return for the year for which the
contribution is made.
The amount you may contribute to your XXX and your spouse's XXX is the
lesser of $4,000 or 100 percent of your combined compensation. However, you
may not contribute more than $2,000 to any one XXX.
C. DEDUCTION OF ROLLOVERS AND TRANSFERS - A deduction is not allowed for
rollover or transfer contributions.
D. ESTATE TAX EXCLUSION - The $100,000 federal estate tax exclusion previously
available has been repealed for individuals dying after 12/31/84. No
exclusion will be allowed for individuals dying after that date. Transfers
of
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your XXX assets to a named beneficiary made during your life and at your request
or because of your failure to instruct otherwise, may be subject to federal gift
tax under IRC Section 2501 if made after October 22, 1986.
E. SPECIAL TAX TREATMENT - Capital gains treatment and the favorable five or ten
year forward averaging tax authorized by IRC Section 402 do not apply to XXX
distributions.
F. INCOME TAX TREATMENT - Any withdrawal from your XXX, except a direct
transfer, is subject to federal income tax withholding. You may, however,
elect not to have withholding apply to your XXX withdrawal. If withholding is
applied to your withdrawal, not less than 10 percent of the amount withdrawn
must be withheld.
G. PROHIBITED TRANSACTIONS - If you or your beneficiary engage in a prohibited
transaction with your XXX, as described in IRC Section 4975, your XXX will
lose its tax-exempt status and you must include the value of your account in
your gross income for that taxable year.
H. PLEDGING - If you pledge any portion of your XXX as collateral for a loan,
the amount so pledged will be treated as a distribution and will be included
in your gross income for that year.
FEDERAL TAX PENALTIES
A. EARLY DISTRIBUTION PENALTY - If you are under age 59 1/2 and receive an XXX
distribution, an additional tax of 10 percent will apply, unless made on
account of death, disability, a qualifying rollover, a direct transfer, the
timely withdrawal of an excess contribution; or if the distribution is part
of a series of substantially equal periodic payments (at least annual
payments) made over your life expectancy or the joint life expectancy of you
and your beneficiary. Beginning January 1, 1997, payments made to pay medical
expenses which exceed 7.5 percent of your adjusted gross income and
distributions to pay for insurance by an individual who has separated from
employment and who has received unemployment compensation under a federal or
state program for at least 12 weeks are also exempt from the 10 percent tax.
This additional tax will apply only to the portion of a distribution which is
includible in your income.
B. EXCESS CONTRIBUTION PENALTY - An excise tax of 6 percent is imposed upon any
excess contribution you make to your XXX. This tax will apply each year in
which an excess remains in your XXX. An excess contribution is any
contribution amount which exceeds your contribution limit, excluding rollover
and direct transfer amounts. Your contribution limit is the lesser of $2,000
or 100 percent of your compensation for the taxable year.
C. EXCESS ACCUMULATION PENALTY - One of the requirements listed above is that
you are required to take a minimum distribution by April 1 of the year
following the year you attain age 70 1/2 and by the end of each year
thereafter and that your designated beneficiary(ies) is required to take
certain minimum distributions after your death. An additional tax of 50
percent is imposed on the amount of the required minimum distribution which
should have been taken but was not. This tax is referred to as an excess
accumulation penalty tax.
D. EXCESS DISTRIBUTION PENALTY - You will be taxed an additional 15 percent on
any amount received and included in income during a calendar year from
qualified retirement plans, tax-sheltered annuities and IRAs which exceeds
$112,500 (indexed each year for the cost of
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living). Certain exceptions may apply. If you receive an excess distribution as
described above, you should see your tax advisor to determine if these
exceptions apply to you. This tax is referred to as an excess distribution
penalty. However, this penalty is suspended for payments received during 1997,
1998 and 1999 as a result of the Small Business Job Protection Act of 1996.
E. EXCESS RETIREMENT ACCUMULATION PENALTY - Your estate will have to pay
additional federal estate tax if you die with an excess retirement
accumulation. The increased estate tax will be equal to 15 percent of the
excess retirement accumulation. An excess retirement accumulation exists if,
at the time of your death, the value of all of your interests in qualified
plans, tax-sheltered annuities and IRAs exceeds the present value of an
annuity with annual payments of $112,500 (indexed each year for the cost of
living), payable over your life expectancy immediately before your death.
This tax is referred to as an excess retirement accumulation tax penalty.
F. PENALTY REPORTING - You must file Form 5329 with the Internal Revenue Service
to report and remit any penalties or excise taxes.
CUSTODIAN/PLAN ADMINISTRATOR
The Custodian of your XXX is identified in the Individual Retirement Account
Application. If FPS Services, Inc. is not the Custodian, FPS Services, Inc.
serves as the Plan Administrator, and in such capacity is responsible for all
record keeping, applicable tax reporting and fee collection in connection with
XXX accounts. FPS Services, Inc. is also the transfer agent for the Funds.
FEES
The custodial fee currently in effect is an annual maintenance fee of $12 per
Fund account.
Your first annual maintenance fee may be paid at the same time that you mail
your XXX Application to FPS Services, Inc. Forward a separate check for $12,
made payable to FPS Services, Inc.
In subsequent years, you may pay the annual maintenance fee by forwarding a
check to FPS Services, Inc. If you do not forward payment for the annual
maintenance fee by August 31 of each year, FPS Services, Inc. will obtain
payment directly from your XXX by redeeming a sufficient number of the Fund
shares held in your XXX.
The Custodial Fees may be modified upon 30 days' written notice from the
Custodian of your XXX.
One or more of the mutual funds available for investment through your XXX may be
subject to sales charges. Such charges, if any, are listed in the prospectus of
that fund.
OTHER
A. IRS PLAN APPROVAL - The Agreement used to establish this XXX has been
approved by the Internal Revenue Service. The Internal Revenue Service
approval is a determination only as to form. It is not an endorsement of the
plan in operation or of the investments offered.
B. ADDITIONAL INFORMATION - You may obtain further information on IRAs from your
District Office of the Internal Revenue Service. In particular, you may wish
to obtain IRS Publication 590, Individual Retirement Arrangements.
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INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
Form 5305-S Under Section 408(a) of the Internal Revenue Code
The depositor whose name appears on the attached is establishing an Individual
Retirement Account under section 408(a) to provide for his or her retirement and
for the support of his or her beneficiaries after death.
The Custodian named on the attached Application has given the Depositor the
disclosure statement required under Regulations section 1.408-6.
The Depositor has assigned the custodial account the sum indicated on the
Application.
The Depositor and the Custodian make the following agreement:
ARTICLE I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3) or an employer contribution to a Simplified
Employee Pension Plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a Simplified Employee Pension Plan described in Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the Custodial account is
nonforfeitable.
ARTICLE III
1. No part of the Custodial funds may be invested in life insurance contracts,
nor may the assets of the Custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning
of Section 408(a)(5)).
2. No part of the Custodial funds may be invested in collectibles (within the
meaning of Section 408(m)) except as otherwise permitted by Section 408(m)(3)
which provides an exception for certain gold and silver coins and coins
issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the Custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with Section 408(a)(6) and Proposed Regulations Section 1.408-8, including
the incidental death benefit provisions of Proposed Regulations Section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
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3. The Depositor's entire interest in the Custodial account must be, or begin to
be, distributed by the Depositor's required beginning date (April 1 following
the calendar year end in which the Depositor reaches age 701/2). By that
date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the Custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:
a. If the Depositor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with paragraph
3.
b. If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
i. Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
ii. Be distributed in equal or substantially equal payments over the life
or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the
Depositor's death. If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not required to begin
before December 31 of the year in which the Depositor would have
turned age 70 1/2.
c. Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
d. If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in
the account.
5. In the case of a distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the
close of business on December 31 of the preceding year by the life expectancy
of the Depositor (or the joint life and last survivor expectancy of the
Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of
distributions under paragraph 3, determine the initial life expectancy (or
joint life and last survivor expectancy) using the attained
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ages of the Depositor and designated beneficiary as of their birthdays in the
year the Depositor reaches age 70 1/2. In the case of a distribution in
accordance with paragraph 4(b)(ii), determine life expectancy using the attained
age of the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits
an individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for
another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under Section 408(i) and
Regulations Sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) and related
regulations will be invalid.
ARTICLE VII
This Agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Application.
ARTICLE VIII
1. Contributions. The Custodian is under no duty to compel the Depositor to
make any contributions to the Custodial account (the "Account"). The
Depositor must certify to the Custodian (in form satisfactory to it) that
any contribution other than a regular contribution is:
(a) A rollover contribution under Section 402(a)(5), 402(a)(7), 403(a)(4),
403(b)(8) or 408(d)(3) of the Code, or
(b) A direct transfer from another individual retirement account (as
defined in Section 7701(a)(37) of the Code permitted under Article I
of this agreement.
2. Investments. The Depositor shall direct the Custodian with respect to the
investment of all contributions. However, such direction shall be limited
to the purchase of shares of the Fund or Funds. Investments received
without direction may be returned or held uninvested without liability for
loss of income, interest or appreciation while directions are obtained. All
dividends and capital gain distributions received on shares held in the
Account shall be reinvested in additional shares of the issuing Fund(s).
3. Cash Contributions. The Custodian shall not accept any contribution or
direct transfer from another individual retirement account qualified under
Section 408 of the Code unless it is made in cash (or its equivalent).
4. Notices and Voting. The Custodian shall deliver to the Depositor (or, in
the event of the Depositor's death, the Depositor's designated beneficiary)
all shareholder notices and reports, prospectuses, financial statements,
proxy material and other materials as they are received
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from the Fund(s). The Custodian shall vote at all shareholder meetings of the
Fund in accordance with written instructions of the Depositor which will be
secured by the Custodian.
5. Fees and Taxes. The Custodian shall receive, and the Depositor hereby
agrees to pay, such reasonable compensation for its services ("fees") as
set forth in the currently effective Disclosure Statement for the Account.
The Custodian may substitute a different fee schedule at any time upon 30
days' notice in writing to the Depositor. Such fees may be paid by the
Depositor; however, they shall constitute a charge upon the assets of the
Account until paid. Unless otherwise paid, the Custodian shall have the
right to redeem sufficient Fund shares in the Account and to apply the
proceeds to the payment of its annual fees. Any income taxes or other taxes
of any kind that may be levied or assessed against the Account may be
similarly paid from the assets of the Account and shall not be an
obligation of the Custodian.
6. Custodian's Duties and Obligations. If FPS Services, Inc. is not the
Custodian, FPS Services, Inc. serves as the Plan Administrator for the
Custodian and in such capacity is responsible for all record keeping,
applicable tax reporting and fee collection in connection with XXX
accounts. FPS Services, Inc. also serves as transfer agent for the Fund(s).
The Custodian shall be under no duty whatsoever except such duties as are
specifically set forth in this Agreement, and, notwithstanding Article IV
of this Agreement, shall be under no duty to make any distribution from the
Account in the absence of specific directions from the Depositor or, upon
the death of the Depositor, the Depositor's designated beneficiary, whether
or not the Depositor has attained age 70 1/2 or is deceased. Neither the
Custodian, the Plan Administrator, the Sponsor, the Fund(s) nor any of
their respective affiliates shall have any duty:
(a) To ascertain whether a rollover contribution described in Article I of
this Agreement or a direct transfer from another XXX is properly made
in accordance with applicable provisions of the Code or any other
plan, XXX or other retirement arrangement;
(b) To ascertain whether any distribution is sufficient for purposes of
the rules described in Article IV of this Agreement;
(c) To make distributions in the form of an annuity contract under Article
IV of this Agreement;
(d) To confirm the existence of a disability;
(e) To review or make suggestions regarding the investment of the assets
of the Account; or
(f) To invest, reinvest or dispose of any assets held in the Account
except in accordance with Section 2 or 3 of this Article VIII.
Whenever the Depositor is responsible for any direction, notice,
warranty, representation, or instruction under this Agreement, the
Custodian shall be entitled to assume the truth of any statement made,
or believed to have been made, by the Depositor, and the Custodian
shall be under no duty of further inquiry and shall have no liability
with respect to any action taken in reliance upon the truth of such
statement.
7. Depositor's Warranties. The Depositor hereby agrees that it is not
intended that any fiduciary duties be conferred (by implication or
otherwise) upon the Custodian under this Agreement, and he or she
shall look solely to the assets of his or her Account for the payment
of any benefits to which he or she may become entitled under this
Agreement. The Depositor hereby acknowledges his or her understanding
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that taxes and penalties may be imposed under the Code for:
(a) Excess contributions;
(b) Premature distributions made before the Depositor dies, becomes
disabled (as defined in Section 72(m) of the Code) or reaches age
59 1/2, except in the case of:
(i) Rollovers or transfers to other IRAs or rollovers to eligible
retirement plans in accordance with applicable provisions of the Code
and related regulations; or
(ii) A series of substantially equal periodic payments (as defined in
Section 72(t) of the Code);
(c) Distributions which are less than the minimum amounts required under
Sections 401(a)(9), 408(a)(6) and 4974 of the Code; and
(d) Prohibited transactions under Section 4975 of the Code.
Any and all such taxes and penalties shall be paid by the Depositor.
8. Amendment. The Depositor hereby delegates to the Custodian the power to amend
this Agreement, and the Depositor shall be deemed to have consented to any
such amendment. The Custodian shall adopt amendments only in accordance with
directions made by the Sponsor. The Depositor shall be furnished a copy of
any such amendment. Notwithstanding the foregoing, the Custodian may not
amend this Agreement in such manner as to permit or cause assets of the
Account to be diverted to purposes other than for the exclusive benefit of
the Depositor and his or her beneficiaries, except to the extent that any
such amendment is necessary to conform this Agreement to any applicable law,
governmental regulation or ruling or to satisfy the requirements of the Code.
9. Termination. This Agreement shall terminate upon the complete distribution of
the Account to the Depositor or his or her beneficiaries or to another XXX.
The Custodian shall have the right to terminate this Account upon 30 days'
notice in writing to the Depositor or (in the event of his or her death) to
the Depositor's beneficiaries. In such event and upon expiration of such
period, the Custodian shall distribute the Account:
(a) To such other XXX as the Depositor (or his or her beneficiaries) shall
designate;
(b) In the absence of such direction, to the Depositor; or
(c) In the event of the Depositor's death, to the beneficiaries, as their
interests shall appear.
10.Resignation. The Custodian may resign at any time, upon 30 days' notice in
writing to the Depositor, and may be removed by the Depositor or the Sponsor
at any time, upon 30 days' notice in writing to the Custodian. Upon such
resignation or removal, the Depositor or the Sponsor (as appropriate) shall
appoint a qualified successor custodian which shall be a bank, within the
meaning of Section 408(n) of the Code, or another person who has satisfied
the requirements of Section 408(a)(2) of the Code and related regulations.
11.Successor Custodian. Upon receipt by the Custodian of written acceptance of
such appointment by the successor custodian, the Custodian shall transfer and
pay over to the successor custodian the assets of the Account and all records
pertaining thereto. The Custodian is authorized, however, to reserve such sum
of money or assets as it may deem advisable for payment of all of its fees,
compensation, costs and expenses, or for payment of any other liabilities
constituting a
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charge on or against the assets of the Account or on or against the
Custodian with respect to the Account; and any balance of such reserve
remaining after the payment of all such items shall be paid over to the
successor custodian. If assets are retained in accordance with this Section
11, they may be disposed of in accordance with the provisions of Section 5
of this Article VIII. The successor custodian shall hold the assets paid
over to it under terms which are consistent with Section 408 of the Code
and related regulations.
12. Failure of Appointment. It shall be a condition of the removal of the
Custodian that the Depositor or the Sponsor shall have appointed a
qualified successor custodian. In the event of the resignation of the
Custodian and the failure to appoint a qualified successor custodian, the
Custodian may itself appoint such successor, unless it elects to terminate
this Agreement pursuant to Section 9 of this Article VIII, and the costs of
such appointment shall be treated in the same manner as fees under Section
5 of this Article VIII.
13. Required Appointment of Successor Custodian. The Depositor may remove the
Custodian and appoint a successor custodian upon notification by the
Commissioner of Internal Revenue Service that the Custodian has failed to
comply with the applicable requirements of Section 1.401-12(n) or
applicable successor provisions of the Income Tax Regulations or is not
keeping such records, making such returns or rendering such statements as
are required by applicable Treasury Regulations or by forms prescribed by
the Internal Revenue Service.
14. Beneficiaries. By separate written document attached as the Beneficiary
Designation to this Agreement, the Depositor may designate a method for
payment of benefits in accordance with Article IV of this Agreement and
designate a beneficiary for the receipt of such benefits in the event of
the Depositor's death. Should the Depositor die without an effective
designation of method of distribution or beneficiary, the assets of the
Account shall be distributed to the surviving spouse in such manner as the
Depositor's spouse shall designate under Article IV of this Agreement. In
the absence of a surviving spouse or surviving designated beneficiary, the
assets of the Account shall be distributed to the Depositor's estate in a
lump sum.
15. Indemnification. The Depositor agrees to indemnify and hold harmless the
Custodian, the Plan Administrator (if applicable), the Sponsor, the Fund(s)
and their respective affiliates, agents, employees, successors and assigns,
from and against any claim or liability arising in connection with the
Depositor's Account, except in the case of gross negligence or willful
misconduct.
16. Governing Laws. Except to the extent preempted by the Code or other
applicable federal law, this Agreement shall be governed by and construed
and administered under the laws of the Commonwealth of Pennsylvania.
17. Severability. If any provision of this Agreement is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any
other provision of this Agreement, and this Agreement shall be construed
and enforced as if such provision had not been included.
18. Captions. The captions contained in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit,
enlarge or describe the scope or intent of this Agreement nor in any way
shall
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affect the construction of any provision of this Agreement.
19. Definitions. For purposes of this Article VIII, "Sponsor" means the
institution identified as such in the XXX Application; and "Fund" or
"Funds" means the regulated investment company or companies, the
investment advisor to which, or the principal underwriter of which, is the
Sponsor.
INSTRUCTIONS
(Section references are to the Internal Revenue Code unless otherwise noted.)
PURPOSE OF FORM
Form 5305-A is a model Custodial account agreement that meets the requirements
of Section 408(a) and has been automatically approved by the IRS. An individual
retirement account (XXX) is established after the form is fully executed by both
the individual (Depositor) and the Custodian and must be completed no later than
the due date of the individual's income tax return for the tax year (without
regard to extensions). This account must be created in the United States for
the exclusive benefit of the Depositor or his or her beneficiaries.
Individuals may rely on regulations for Tax Reform Act of 1986 to the extent
specified in those regulations.
Do not file Form 5305-A with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosure you can get from
your Custodian, get Pub. 590, Individual Retirement Accounts (IRAs).
DEFINITIONS
Custodian: The Custodian must be a bank or savings and loan association, as
defined in Section 408(n), or other person who has the approval of the IRS to
act as Custodian.
Depositor: The Depositor is the person who establishes the Custodial account.
IDENTIFYING NUMBER
The Depositor's social security number will serve as the identification number
of his or her XXX. An employer identification number is required only for an
XXX for which a return is filed to report unrelated business taxable income. An
employer identification number is required for a common fund created for IRAs.
XXX FOR NON-WORKING SPOUSE
Form 5305-A may be used to establish the XXX Custodial account for a nonworking
spouse.
Contributions to an XXX Custodial account for a nonworking spouse must be made
to a separate XXX Custodial account established by the nonworking spouse.
SPECIFIC INSTRUCTIONS
Article IV: Distributions made under this Article may be made in a single sum,
periodic payment, or a combination of both. The distribution option should be
reviewed in the year the Depositor reaches age 70 1/2 to ensure that the
requirements of Section 408(a)(6) have been met.
Article VIII: Article VIII and any that follow it may incorporate additional
provisions that are agreed upon by the Depositor and Custodian to complete the
Agreement. They may include, for example,
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definitions, investment powers, voting rights, exculpatory provisions, amendment
and termination, removal of Custodian, Custodian's fees, State law requirements,
beginning date of distributions, accepting only cash, treatment of excess
contributions, prohibited transactions with the Depositor, etc. Use additional
pages if necessary and attach them to this form.
REQUESTING DISTRIBUTION
A request for a distribution from the XXX must be submitted in writing to:
FPS Services, Inc.
Retirement Plans -- Liquidation Desk
0000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000-0000
If a request does not contain all necessary information, FPS Services, Inc. will
notify the Depositor in writing as to its incompleteness, requesting the
additional information, including signature guarantee if required by the Fund.
When the distribution instructions are in proper order, only then will the
shares be redeemed and the monies distributed.
NOTE: Form 5305-A may be reproduced and
reduced in size for adoption to passbook purposes.
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