STATE FARM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT PLAN
This prototype Individual Retirement Account Plan is for the use of Agents
and Employees of the State Farm Insurance Companies and members of their
families.
SECTION I
DEFINITIONS
1.1 Participant means the individual who signs the Application and makes
contributions in the manner prescribed herein.
1.2 Custodial Account Agreement means the State Farm Funds Individual
Retirement Account Plan Custodial Account Agreement as described in Section
VIII.
1.3 Custodian means Commerce Bank, Bloomington, Illinois, and any
successor thereto as herein provided.
1.4 State Farm Fund or State Farm Funds means the Investment Company or
Companies specified in the Application in which assets of the Plan may be
invested; provided that no Investment Company will be deemed available for
investment hereunder (i) prior to the date the prospectus for such Investment
Company discloses such availability, or (ii) with respect to any Participant
who resides in any state with respect to which shares of the Investment
Company are not available for sale.
1.5 Shares means shares of common stock of the State Farm Funds.
1.6 Compensation means wages, salaries, professional fees or other amounts
derived from personal services actually rendered (including, but not limited
to, commissions, tips, and bonuses) and includes earned income (as defined in
section 401(c) (2) of the Internal Revenue Code) reduced by the deduction a
self-employed individual takes for contributions made to a Xxxxx plan. For
purposes of this definition, section 401(c) (2) shall be applied as if the
term trade or business for purposes of section 1402 of the Internal Revenue
Code included service described in subsection (c) (6). Compensation does not
include amounts derived from or received as earnings or profits from property
(including, but not limited to, interest and dividends) or amounts not
includable in gross income. The term "compensation" does not include any
amount received as a pension or annuity and does not include any amount
received as deferred compensation. The term "compensation" shall include any
amount includible in the individual's gross income under Section 71 of the
Internal Revenue Code with respect to a divorce or separation instrument
described in subparagraph (A) of section 71 (b)(2) of the Internal Revenue
Code.
1.7 Plan means the State Farm Funds Individual Retirement Account Plan.
1.8 Plan Sponsor means State Farm Interim Fund, Inc.
1.9 Beneficiary means any individual designated as a beneficiary pursuant
to paragraph 4.7.
1.10 Required Beginning Date means April 1 of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
SECTION II ELIGIBILITY
2.1 Participation in this Plan is limited to Agents and Employees of the
State Farm Insurance Companies and members of their families.
SECTION III CONTRIBUTIONS
3.1 RESTRICTIONS ON CONTRIBUTIONS. No contributions may be made by or on
behalf of a Participant (i) for any taxable year of the Participant during
which such Participant has attained or will attain the age of 70 1/2 (except
Rollover Contributions), and (ii) during any period of time during which
Participant is ineligible to purchase Shares of the State Farm Funds under
eligibility rules established from time to time by such Funds. Contributions
(other than certain rollover contributions as described in paragraph 5.3 of
the Plan) made under a SIMPLE IRA Plan by or on behalf of a Participant may
not be deposited into this (non-SIMPLE IRA) Plan. This is not a SIMPLE IRA
Plan and is not a Xxxx IRAPlan.
3.2 AMOUNTS OF CONTRIBUTIONS. Except as provided in Sections V and VII
hereof, the aggregate amount of contributions by the Participant for each
taxable year of the Participant shall not be more than an amount equal to the
lesser of the Compensation of the Participant within such taxable year or
$2,000. The Participant may not contribute more than $2,000 annually to all of
the Participant's IRAs, including any regular IRA and any Xxxx XXX, but
excluding any Education IRA. Contributions for a given taxable year may be
made during such year or not later than the time prescribed by law for filing
Participant's Federal income tax return for such taxable year (not including
extensions of time for filing). All contributions (except Rollover
Contributions as described in Section V) must be made by check or compensation
deduction and are subject to the minimum investment requirements established
by the State Farm Funds.
3.3 PARTICIPANT'S INTEREST IN PLAN. All contributions made by or on behalf
of a Participant and all investments made with such contributions, and the
earnings and losses thereon shall be deposited in a Custodial Account
established for such Participant in accordance with Section VIII herein. A
Participant's interest in the balance of his/her Custodial Account shall at
all times be nonforfeitable, but subject to the fees, expenses and charges
described in Article VII of the Custodial Account Agreement.
SECTION IV PAYMENT OF BENEFITS
4.1 DISTRIBUTIONS. The entire interest of the Participant in the Custodial
Account must be, or commence to be, distributed not later than the
Participant's Required Beginning Date. Not later than such time, the
Participant may elect, on a form and at such time as may be acceptable to the
Custodian, to have the balance in the Custodial Account distributed:
(A) In a single sum payment in Shares or cash (consisting of the
entire balance or a portion of the balance in the Custodial Account with
further distributions to be made pursuant to options B or C of this paragraph
4.1) to be paid not later than the Participant's Required Beginning Date;
(B) In substantially equal annual or more frequent installments
commencing not later than the Participant's Required Beginning Date and
continuing over a period not to exceed the life expectancy of the Participant
(if payments are to be made solely to the Participant) or life expectancy of
such Participant and a beneficiary (if payments are to be made to the
Participant while living and upon the Participant's death any remaining
payments are to be made to the surviving beneficiary); or
(C) By purchase from an insurance company and delivery of an
immediate or deferred annuity contract for the life of the Participant, or if
the Participant so elects, for the lives of the Participant and a beneficiary
(and the survivor thereof); provided, however, such contract must commence
payments not later than the Participant's Required Beginning Date. The annuity
contract must be selected by Participant and must satisfy the requirements of
sections 408(b) (1), (2), (3) and (4) of the Internal Revenue Code.
Except for payment of a life annuity, the life expectancy of the
Participant and the Participant's spouse shall be redetermined annually. Life
expectancy and joint and last survivor expectancy are computed by use of the
return multiples contained in Tables V and VI of section 1.72-9 of the Income
Tax Regulations.
Even though distributions may have commenced pursuant to one of the
above options, the Participant may, at any time, request a distribution of
part or all of the balance in his/her Custodial Account or request the
distribution method be changed to another option allowed by this paragraph
4.1, subject to the minimum distribution requirements of paragraph 4.2. The
request shall be made to the Custodian in writing and in a form acceptable to
the Custodian.
4.2 MINIMUM DISTRIBUTIONS. If payments are made under option B of
paragraph 4.1, payments made in calendar years beginning with the year in
which the Participant reaches age 70 1/2 shall be subject to the following:
(i) The minimum annual payment shall be calculated by dividing the
Participant's entire interest in the Custodial Account at the beginning of
each year by the lesser of (1) the applicable life expectancy or (2) if the
Participant's spouse is not the Beneficiary, the applicable divisor determined
from the table set forth in Q&A-4 or Q&A-5, as applicable, of section 1.401
(a) (9)-2 of the Proposed Income Tax Regulations. Distributions after the
death of the Participant shall be distributed using the applicable life
expectancy as the relevant divisor without regard to proposed regulations
section 1.401 (a) (9)-2. For purposes of this section, the life expectancy of
the Participant and the Participant's spouse shall be redetermined annually.
(ii) The minimum monthly payment shall be calculated by dividing
the result in (i) above by 12.
(iii) The minimum quarterly payment shall be calculated by dividing
the result in (i) above by 4.
For the year in which the Participant attains age 70 1/2, the minimum
distribution must be made by April 1 of the following calendar year. For all
years following the year in which the Participant attains age 70 1/2, the
minimum distribution must be made by December 31 of such years.
Notwithstanding any provision of this agreement to the contrary, the
distribution of a Participant's or Beneficiary's interest shall be made in
accordance with the minimum distribution requirements of section 408(a)(6) or
408(b)(3) of the Internal Revenue Code and the regulations thereunder,
including the incidental death benefit provisions of section 1.401(a)(9)-2 of
the proposed regulations, all of which are herein incorporated by reference.
Furthermore, a Participant or Beneficiary may satisfy the minimum
distribution requirements under sections 408(a)(6) and 408(b)(3) of the
Internal Revenue Code by receiving a distribution from one IRA that is equal
to the amount required to satisfy the minimum distribution requirements for
two or more IRAs. For this purpose, the owner of two or more IRAs may use the
alternative method described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above.
4.3 FAILURE TO ELECT OPTION. If the Participant fails to elect one of the
described methods of distribution on or before April 1 of the calendar year
following the calendar year in which the Participant attains age 70 1/2,
distribution to the Participant will be made not later than that time pursuant
to subparagraph 4.2(i); provided, however, that the Custodian shall have no
liability to the Participant for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to make such distribution.
4.4 PREMATURE DISTRIBUTIONS. Premature distributions from the Custodial
Account may be subject to a penalty under section 72(t) of the Internal
Revenue Code; the Custodian assumes no responsibility for the tax treatment of
any distribution from the Custodial Account; such responsibility is solely
that of the Participant ordering the distribution.
4.5 WITHDRAWAL OF EXCESS CONTRIBUTIONS. The Participant may elect to
withdraw any excess contributions (as described in section 408(d)(4) of the
Internal Revenue Code) made to the Custodial Account and, if withdrawn
pursuant to section 408(d)(4) of the Internal Revenue Code, the net income
attributable thereto. Participant must furnish Custodian a written notice (in
a manner acceptable to Custodian) of his/her election to make such a
withdrawal.
4.6 DISTRIBUTION ON DEATH.
1. Beneficiary Designated
(a) If the Participant dies on or after his/her Required
Beginning Date and if distribution of his/her interest had previously
commenced in accordance with Option B in paragraph 4.1, any remaining portion
of such interest, at the election of the Beneficiary in accordance with
procedures established by the Custodian, may be distributed either --
(i) in an immediate single sum payment, or
(ii) in installments paid at least as rapidly as
under the method of distribution being used as of the date of the
Participant's death.
(b) If the Participant dies before reaching his/her
Required Beginning Date and any portion of the Participant's interest is
payable to or for the benefit of a Beneficiary, such portion, at the election
of the Beneficiary in accordance with procedures established by the Custodian,
may be distributed either --
(i) in a single sum payment, made not later than
December 31 of the year containing the fifth anniversary of the Participant's
death,
(ii) in installments commencing not later than
December 31 of the year following the year of the Participant's death, and
paid over a period not extending beyond the life expectancy of such
Beneficiary; provided, the Beneficiary may accelerate such payments at any
time, or
(iii) if the Beneficiary is the Participant's
surviving spouse, in a single sum or installments, commencing by the later of
1) December 31 of the year following the year of the Participant's death, and
2) December 31 of the calendar year in which the Participant would have
attained age 70 1/2, and paid over a period not exceeding the life expectancy
of such spouse Beneficiary. The surviving spouse may change the frequency or
amount of such payments, subject to the limit of the preceding sentence.
(c) If the Beneficiary is the Participant's surviving
spouse, the spouse may, in lieu of the above distribution options in (a) and
(b), elect to treat the Participant's account as his/her own individual
retirement arrangement (IRA). This election will be deemed to have been made
if such surviving spouse makes a regular IRA contribution to the account,
makes a rollover contribution to the account, or fails to elect any of the
above distribution options.
For purposes of the above, payments will be calculated by use of the
return multiples specified in Tables V and VI of section 1.72-9 of the Income
Tax Regulations. Life expectancy of a surviving spouse shall be recalculated
annually. In the case of any other designated beneficiary, life expectancy
will be calculated at the time payment first commences and payments for any
twelve-consecutive month period will be based on such life expectancy minus
the number of whole years passed since distribution first commenced.
For purposes of this requirement, any amount paid to a child of the
Participant will be treated as if it has been paid to the surviving spouse if
the remainder of the interest becomes payable to the surviving spouse when the
child reaches the age of majority.
2. No Designated Beneficiary
(a) If the Participant dies on or after his/her Required
Beginning Date and if distribution of his/her interest has commenced in
accordance with option B in paragraph 4.1, and no Beneficiary has been
designated or the designated Beneficiary and all secondary Beneficiaries have
either predeceased the Participant or cannot, after diligent effort, be found,
the remaining portion of such interest, at the election of the recipient in
accordance with procedures established by the Custodian, may be distributed --
(i) in an immediate single sum payment, or
(ii) in installments paid at least as rapidly as
under the method of distribution being used as of the date of the
Participant's death; provided that the entire remaining interest must be
distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(b) If the Participant dies before reaching his/her
Required Beginning Date and no Beneficiary has been designated, or the
designated Beneficiary and all secondary Beneficiaries have predeceased the
Participant or cannot, after diligent effort, be found, the entire interest of
the Participant shall be distributed not later than December 31 of the
calendar year containing the fifth anniversary of the Participant's death. In
accordance with procedures established by the Custodian, the recipient of the
distribution may elect to receive the distribution -
(i) in a single sum payment, or
(ii) in installment payments for a period not
extending beyond December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
3. Failure to Elect Option
If any Beneficiary (other than a surviving spouse Beneficiary)
under subparagraph (1) above or any recipient under subparagraph (2) above has
the right to elect a method of distribution described in the respective
subparagraphs and fails to do so within the time allowed by law, the Custodian
has the right to make a single sum distribution at such time in cash or
Shares; provided however, that the Custodian shall have no liability to any
Beneficiary or recipient for any tax penalty or other damages resulting from
any inadvertent failure by the Custodian to make such distribution.
4.7 DESIGNATION OF BENEFICIARY. A Participant shall have the right by
written notice to the Custodian to designate, or to change, his/her
Beneficiary to receive any amount to which Participant may be entitled in the
event of his/her death before the complete distribution of such benefits. Such
designation shall be on the Designation of Beneficiary Form or on a form
permitted by the Custodian and shall be effective only when filed with, and
acknowledged by, the Custodian before the death of the Participant. Such
designation may include secondary Beneficiaries. If no such designation is in
effect on the Participant's death, or if the designated Beneficiary and all
secondary Beneficiaries have predeceased the Participant, his/her Custodial
Account shall be distributed to his/her estate. Unless the Participant (in
writing filed with the Custodian) makes an election described in subparagraph
4.6 (1) (a), the Beneficiary may elect one of the methods of distribution of
benefits under paragraph 4.6. Such election shall be made in accordance with
procedures established by the Custodian. If the Beneficiary fails, or is
unable, to elect a method of payment, the Beneficiary's interest shall be
distributed to him/her in cash in a single sum. The Custodian shall be
responsible for determining the identity of the person or persons who qualify
as the Beneficiary or Beneficiaries designated by a Participant pursuant to
the terms of this paragraph 4.7, or who qualify as the executor or
administrator of such Participant's estate in the case of a distribution
required hereunder to be made to such Participant's estate. If any person to
whom all or a portion of the Participant's interest is payable is a minor,
payment of such minor's interest shall be made on behalf of such minor to the
person designated by the Participant in the Designation of Beneficiary Form to
receive such minor's interest as a custodian under the Illinois Uniform Gifts
to Minors Act or similar statute. If any person to whom all or a portion of
the Participant's interest is payable is a minor and if the Participant has
not so designated a person to receive the minor's interest on behalf of such
minor, the Custodian may in its sole discretion:
(i) distribute the interest to the legal guardian of such minor;
or
(ii) designate an adult member of the minor's family, a guardian or
a trust company (including the Custodian), as those terms are defined in the
Illinois Uniform Gifts to Minors Act, as custodian for such minor under the
Illinois Uniform Gifts to Minors Act or similar statute and distribute such
minor's interest to the person so designated.
The receipt by the guardian or the person designated as custodian
under the Illinois Uniform Gifts to Minors Act or similar statute shall be a
full discharge of the Custodian.
4.8 PAYMENT ON DISABILITY. If a Participant becomes disabled (as defined
in section 72(m)(7) of the Internal Revenue Code), the amount credited to his
account may be distributed to him in accordance with paragraph 4.1. Before
making any distribution, however, the Custodian shall be furnished with proof
of such disability.
SECTION V ROLLOVER CONTRIBUTIONS
5.1 Regular Rollover Contribution means a rollover contribution to this
Plan from an eligible retirement plan as defined in section 402(c)(5) of the
Internal Revenue Code other than a Special Rollover Contribution. A
Participant who satisfies the eligibility requirements of Section II may make
a regular Rollover Contribution in any amount in cash or Shares. The
Participant shall execute such forms as the Custodian may require describing
the source of the rollover contribution.
5.2 Special Rollover Contribution means (i) a rollover contribution to
this Plan in a manner described in sections 402(c), 403(a)(4) or 403(b)(8) of
the Internal Revenue Code, or (ii) a rollover contribution to this Plan from
an Individual Retirement Account as defined in section 408(a) of the Internal
Revenue Code and the amount rolled over was previously rolled over as
described in sections 402(c), 403(a)(4) or 403(b)(8) of the Internal Revenue
Code. A person who satisfies the eligibility requirements of Section II may
adopt the Plan for the sole purpose of making a Special Rollover Contribution.
The Custodian shall accept the Special Rollover Contribution in any amount in
cash or Shares and establish a Custodial Account for the Participant,
provided, however, that the Custodial Account shall consist only of the
Special Rollover Contribution and the earnings thereon. The Participant shall
execute such forms as the Custodian may require describing the source of the
Special Rollover Contribution. A person adopting this Plan for the sole
purpose of making a Special Rollover Contribution shall be treated as a
Participant under the Plan for all purposes.
5.3 Notwithstanding anything in the Plan to the contrary, no transfer or
rollover of funds from a Participant's SIMPLE IRA will be accepted by this
Plan prior to the expiration of the 2-year period beginning on the date the
Participant first participated in the SIMPLE IRA Plan.
SECTION VI TRANSFER OF ASSETS
6.1 The Custodian, in its sole discretion, may accept a transfer of cash
or Shares from a custodian of a custodial account (or a trustee of a trust)
maintained as an Individual Retirement Account, or a trustee of a trust
associated with a qualified retirement or profit-sharing plan. The Custodian,
by accepting a direct transfer of such assets, does not accept the
responsibility for the tax results of the transfer, the responsibility for
which rests with the individual who directs or consents to such transfer. The
individual for whom the assets are transferred shall become the Participant
for purposes of this Plan.
SECTION VII SPOUSAL IRA CONTRIBUTIONS
7.1 A spouse who satisfies the eligibility requirements of Section II may
adopt this Plan. Such spouse must execute an Application and establish his/her
own Custodial Account.
7.2 For any taxable year for which contributions are made to multiple
individual retirement accounts by or on behalf of an individual and by or on
behalf of his/her spouse, the aggregate annual amount of such contributions to
all such plans shall not exceed the lesser of the combined Compensation of the
individual and his/her spouse within the taxable year or $4,000. The
limitations contained in paragraphs 3.1 and 3.2 remain applicable to each
account. It shall be the sole responsibility of the individual and his/her
spouse to comply with these requirements.
SECTION VIII CUSTODIAL ACCOUNT AND INVESTMENT OF PLAN ASSETS
8.1 CUSTODIAL ACCOUNT AGREEMENT. Concurrently with the adoption of this
Plan, the Participant and Custodian shall execute the Custodial Account
Agreement. Such Agreement shall constitute a part of this Plan. If any
provisions of the Plan are inconsistent with the provisions of the Custodial
Account Agreement, the latter shall control.
8.2 INVESTMENT OF CONTRIBUTIONS. The Custodian shall invest all
contributions solely in Shares of State Farm Funds as directed by Participant.
Participant (or a Beneficiary of a deceased Participant) may change the State
Farm Funds in which his/her account is invested as provided in paragraph 5.2
of the Custodial Account Agreement.
8.3 REGISTRATION AND OWNERSHIP OF SHARES. Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The
Participant for whom such Shares are acquired shall be the beneficial owner of
such Shares.
SECTION IX AMENDMENT AND TERMINATION
9.1 AMENDMENT OF PLAN. The Plan Sponsor may, at any time, amend this Plan
in any respect, by delivering to Participant and the Custodian a signed copy
of such amendment provided that: (i) no amendment shall be made at any time
under which any part of the Custodial Account may be diverted to purposes
other than for the exclusive benefit of Participant and his/her Beneficiaries;
and (ii) no amendment shall be made retroactively in a manner so as to deprive
any Participant of any benefit to which he/she was entitled under this Plan by
reason of contributions made before the Amendment unless such Amendment is
necessary to conform the Plan or Custodial Account Agreement to, or satisfy
the requirements of, the Internal Revenue Code or other applicable law.
9.2 TERMINATION OF PLAN. The Participant may elect to terminate this Plan,
provided such election is made concurrently with Participant's election to
terminate the Custodial Account pursuant to paragraph 11.2 of the Custodial
Account Agreement. Participant shall give written notice of his/her election
to terminate the Plan to Custodian by registered or certified mail.
SECTION X MISCELLANEOUS
10.1 RIGHTS OF PARTICIPANT. Neither the establishment of the Plan,
including the execution of the Custodial Account Agreement nor any
modification or amendment thereof, nor the payment of any benefits shall be
construed as giving to the Participant any legal or equitable right against
State Farm Funds, the Custodian, or State Farm Investment Management Corp.
except as provided herein.
10.2 ADMINISTRATION. The Plan shall be administered by the Participant, who
shall have sole responsibility for the operation of the Plan in accordance
with its terms; shall determine all questions arising out of the
administration, except as is otherwise expressly provided in the Plan. The
Participant shall have sole authority and responsibility to determine the
amount of contributions and distributions to be made under the Plan and
neither the Custodian nor any other person shall be responsible therefor, or
for any consequences to the Participant resulting from the making of excess
contributions, or the failure to make required distributions, except as is
otherwise expressly provided in the Plan. Separate records will be maintained
for the interest of each Participant.
10.3 PAYMENT OF TAXES AND EXPENSES. Any income taxes or other taxes of any
kind whatsoever that may be levied upon or assessed against or in respect of
assets of the Plan, or on income arising therefrom, and any transfer taxes,
and any administrative expenses, maintenance fees, or other charges incurred
in connection with the Plan or Custodial Account shall be paid from the assets
of the Custodial Account as provided in the Custodial Account Agreement.
10.4 OTHER CONDITIONS. It is a condition of the Plan and the Custodial
Account Agreement that a Participant, by participating in the Plan, expressly
agrees that he/she shall look solely to the assets of the Custodial Account
for the payment of any benefits to which he/she is entitled under the Plan.
The benefits provided under the Plan shall not be subject to alienation,
assignment, garnishment, attachment, execution or levy of any kind, and any
attempt to cause such benefits to be so subjected shall not be recognized,
except by the Custodian for its fees and expenses under the Custodial Account
Agreement, and except to such extent as may be required by law. The Plan,
Custodial Account Agreement, any forms provided by the Custodian, including
the Designation of Beneficiary Form filed pursuant to Section IV and all
property rights of Participant under the Plan, shall be construed,
administered, and enforced according to the laws of the state of Illinois,
other than its laws with respect to choice of laws.
10.5 INSTALLMENT PAYMENTS LESS THAN A MINIMUM AMOUNT. Notwithstanding any
language to the contrary contained herein, if any installment payment under
sections 4.1 and 4.6 is less than a minimum amount that may be established
from time to time by the Custodian, then at the option of the Custodian, such
installment payment may be paid less frequently, but not less frequently than
annually, or the value of the Custodial Account with respect to such
installments remaining unpaid may be paid in one sum to the person then
entitled to receive such payment, the contingent interest of any other person
notwithstanding.
