Exhibit (14)
GALAXY FUND
INDIVIDUAL RETIREMENT ACCOUNT
CUSTODIAL AGREEMENT
ARTICLE I
DEFINITIONS
By executing the Adoption Agreement, the Participant hereby establishes an
Individual Retirement Account Plan intended to qualify under Section 408 of the
Internal Revenue Code ("Code") for the exclusive benefit of the Participant or
his or her Beneficiaries. The interest of the Participant in the balance in the
Custodial Account hereby created is, and at all times shall remains fully vested
and nonforfeitable.
1.1 "ACCOUNT"
Shall mean the assets held from time to time under this Agreement for
the account of the Participant or the Participant's Beneficiary or
Beneficiaries.
1.2 "ADOPTION AGREEMENT"
Shall mean the form prescribed by the Sponsor as
executed by the Participant, by which the Participant adopted the Plan as set
forth herein, including any written notice from the
sponsor to the Participant by which the Sponsor acknowledges its acceptance
thereof.
1.3 "AGREEMENT"
Shall mean this Custodial Agreement and the Adoption Agreement.
1.4 "BENEFICIARY"
Shall mean the person or persons designated by a Participant or
otherwise specified pursuant to Section 4.6.
1.5 "CODE"
Shall mean the Internal Revenue Code of 1986, as amended from time to
time.
1.6 "CUSTODIAN"
Shall mean Fleet National Bank, 100 Westminster Street, Providence,
Rhode Island.
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1.7 "EARNINGS"
Shall mean wages, salaries, professional fees, or other amounts
derived from or received for personal services actually rendered (including, but
not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips, and
bonuses) and includes earned income, as defined in Section 401(c)(2) (reduced by
the deduction the self-employed individual takes for contributions made to a
self-employed retirement 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 included service described in subsection (c)(6). Earnings do not
include amounts derived from or received as earnings or profits from property
(including, but not limited to, interest and dividends) or amounts not
includible in gross income. Earnings also do not include any amount received as
a pension or annuity or as deferred compensation. Earnings shall include any
amount includible in the individual's gross income under Section 71 with respect
to a divorce or separation instrument described in subparagraph (A) of Section
71(b)(2).
1.8 "EXCESS CONTRIBUTIONS"
Shall mean the portion of any contribution by or on behalf of a
Participant which is in excess of the permissible contribution limits under
Section 219 of the Code with respect to the Year in question.
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1.9 "MUTUAL FUND" OR "MUTUAL FUNDS"
Shall mean the Galaxy family of Mutual Funds which are offered by the
Sponsor.
1.10 "PARTICIPANT"
Shall mean the individual named as such in the Adoption Agreement.
1.11 "PLAN"
Shall mean the Custodial Individual Retirement Account Plan as set
forth in this Agreement.
1.12 "ROLLOVER CONTRIBUTION"
Shall mean a contribution which is composed of funds from an
individual retirement plan or other tax qualified plan and which meets the
requirements of Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8),
or 408(d)(3) of the Code.
1.13 "SEP CONTRIBUTION"
Shall mean a contribution made on behalf of a Participant by an
employer under a simplified employee pension plan as defined in Section 408(k)
of the Code.
1.14 "SPONSOR"
Shall mean the Galaxy Fund, 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000.
1.15 "YEAR"
Shall mean the calendar year.
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ARTICLE II
CONTRIBUTIONS TO ACCOUNT
2.1 ANNUAL CASH CONTRIBUTIONS.
Except in the case of a Rollover Contribution or SEP Contribution, for
each Year no contributions will be accepted unless they are in cash, and the
total of such contributions shall not exceed whichever of the following is
applicable, as determined by the Participant:
(a) BASIC INDIVIDUAL ACCOUNT.
The lesser of $2,000 or 100% of the Participant's Earnings for
such Year.
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(b) SPOUSAL ACCOUNT.
If the Participant and his or her spouse file a joint federal
income tax return for the Year and either the Participant or his or her spouse
has no Earnings for such Year, the aggregate amount contributed by or on behalf
of the participant (or if the Participant has no Earnings, by or on behalf of
the Participant's spouse) to the Account and a similar individual retirement
plan for the Participant's spouse, may not exceed the lesser of $2,250 or 100%
of the Earnings of the Participant for such Year (or if the Participant has no
Earnings for the Year, the Earnings of the Participant's spouse), but in no
event shall the amount contributed under this Subsection (b) to the Account for
any Year exceed $2,000. For purposes of this paragraph, a Participant or spouse
with Earnings may elect to be treated as having no Earnings.
No amount may be contributed pursuant to this Section 2.1 for the Year
in which the Participant attains age 70 1/2 or any Year thereafter.
For purposes of this Section 2.1, a contribution to the Account shall
be deemed to have been made on the last day of the preceding Year if the
contribution is made on account of such Year and is made not later than the date
prescribed by law for filing the Participant's federal income tax return for
such Year (without regard to any extensions of time for filing granted to the
Participant).
2.2 ANNUAL SEP CONTRIBUTIONS.
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When this Plan is adopted by a Participant for use in connection with
a simplified employee pension plan (as defined in Section 408(k) of the Code) of
the Participant's employer (a "SEP"), the limitations on annual contributions in
Section 2.1 shall not apply with respect to the employer's SEP contributions,
and the limitations on SEP Contributions for the year, in addition to
contributions otherwise permitted to the participant under Section 2.1, shall be
the lesser of (i) 15% of the Participant's Earnings for the Year (not to exceed
$200,000, as adjusted for cost of living increases) from the participant's
employer (determined without regard to the employer's SEP Contribution), and
(ii) the amount of the SEP Contribution included in the Participant's gross
income, but not in excess of $30,000 (as adjusted for cost of living increases).
For purposes of this Section 2.2, a contribution to the Account shall be deemed
to have been made on the last day of the preceding Year if the contribution is
made on account of such Year and is made not later than the due date for filing
the Participant's federal income tax return for such Year or such later date as
may be permitted under the Code.
2.3 ROLLOVER CONTRIBUTIONS.
In addition to any annual contributions referred to in Section 2.1 or
Section 2.2, a Participant may contribute or cause to be contributed to the
Account at any time a Rollover Contribution. The Plan will accept for the
Account only Rollover Contributions which consist of cash or Mutual Fund shares.
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2.4 TREATMENT OF EXCESS CONTRIBUTION.
If a Participant notifies the Sponsor in writing that all or any
portion of the amount contributed to the Account by or on behalf of the
Participant with respect to any Year is an Excess Contribution, and if such
written notice specifies the amount of such Excess Contribution, the Sponsor
will, at the election of the Participant, either (a) distribute such Excess
Contribution from the Account to the Participant, or (b) subject to the
limitations in Section 2.1, credit such Excess Contribution as if it were a cash
contribution by or on behalf of the Participant for the current or following
Year. If the Participant's notice indicates that he or she intends for a
distribution pursuant to subdivision (a) of the preceding sentence to comply
with Section 408(d)(4) of the Code (concerning a return of Excess Contribution
and net income thereon prior to the due date of the Participant's tax return),
the Sponsor will, not later than the tenth (l0th) business day following receipt
of the Participant's notice, distribute to the Participant the Excess
Contribution plus the amount of income attributable to such Excess Contribution,
reduced by any interest penalty for early withdrawal imposed by federal banking
law and regulation.
2.5 RESPONSIBILITY OF THE SPONSOR AND CUSTODIAN.
Neither the Custodian nor the Sponsor shall be responsible for the
deductibility under the Code of any contribution or the qualification of any
Rollover Contribution or SEP Contribution, and under no circumstances shall the
Custodian
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or Sponsor be liable to a Participant for any disallowance of such deduction or
for the failure of a contribution to qualify as a Rollover Contribution or SEP
Contribution.
2.6 SPONSOR TO MAINTAIN RECORDS.
The Sponsor shall maintain separate records showing the interest of
each Participant, shall furnish annual calendar year reports concerning the
valuation and status of the Account, and shall maintain such other accounts and
records as it deems necessary to administer the Plan.
ARTICLE III
INVESTMENT OF ACCOUNT
3.1 INVESTMENT OF CONTRIBUTIONS.
The Participant has the sole discretion and authority, fully and
completely, to select and direct the investment of all assets in the
Participant's Account in such Mutual Funds as the Sponsor may allow. The
Participant accepts full and sole responsibility for the success or failure of
any selection made. Upon the death of the Participant, the Beneficiary assumes
all rights and responsibilities for investment of the Account.
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3.2 CUSTODIAN AND SPONSOR LIMITATION ON LIABILITY.
Neither the Custodian nor the Sponsor shall be liable for the acts or
omissions of the Participant. Neither the Custodian nor the Sponsor will act as
an investment advisor to a Participant and shall not have any duty to question
the Participant's or his authorized agent's directions regarding the purchase,
retention, or sale of any asset.
3.3 SPONSOR'S INTERIM RESPONSIBILITY.
The Participant shall direct the Sponsor with regard to the investment
of any cash in the Account. In the event such instructions are not received by
the Sponsor, the Participant shall be deemed to have directed the Sponsor to
invest such cash in the cash investment default option elected by the Sponsor.
3.4 LIFE INSURANCE CONTRACTS; COLLECTIBLES; COMMINGLING.
No part of the Account will be invested in life insurance contracts or
in collectibles (such as, without limitation, precious metals, works of art,
gems, or coins) as such term is defined in Section 408(m) of the Code. No part
of the Account will be commingled with any other property except in a common
trust fund or common investment fund which includes only assets of individual
retirement accounts and the assets of trusts exempt from taxation under Section
501(a) of the Code which are parts of plans described in Section 401(a) of the
Code.
ARTICLE IV
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DISTRIBUTIONS FROM ACCOUNT
4.1 GENERAL REQUIREMENTS AS TO DISTRIBUTIONS.
Subject to the provisions of this Article IV, the Sponsor will
distribute the Account or the remaining balance thereof to the Participant on
such date and in such manner as the Participant shall have specified in written
instructions to the Sponsor; provided, however, that the entire value of the
Account of the individual must be, or commence to be, distributed to the
Participant by the Participant's required beginning date, the April 1 following
the Year in which the Participant reaches age 70 1/2.
All instructions as to distribution shall be written, shall be signed
by the Participant (or, if applicable, the Participant's Beneficiary), and shall
be delivered to the sponsor. The Sponsor shall process the instructions no
later than the tenth (10th) business day after receipt thereof. If instructions
as to distribution are, in the opinion of the Sponsor, not clear, the Sponsor
shall request clarification from the Participant or other person requesting
distribution and, pending receipt of such clarification, no distribution shall
be made.
Except in the case of the Participant's death, disability (as defined
in Section 72(m) of the Code) or after attainment of age 59 1/2, before the
Sponsor shall be required to cause distribution of any amount to the Participant
to occur, the
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Sponsor shall have received from the Participant a written declaration of his or
tier intention as to the disposition of the amount to be distributed. The
Sponsor may require such certificates or other proof as to the age, death, or
disability of the Participant or other matters as the Sponsor deems necessary
for it to establish the reasons for, or intended disposition of, the
distribution.
4.2 DISTRIBUTIONS TO PARTICIPANT.
The Participant's entire interest in the Account must be or begin to
be distributed by the Participant's required beginning date, the April 1
following the calendar year in which the Participant reaches age 70 1/2. By
that date, the Participant may elect by his or her written instructions, in a
manner acceptable to the Sponsor, to have the balance in the Account distributed
in:
(a) A single lump sum payment;
(b) Equal or substantially equal annual payments over a specified
period that may not be longer than the Participant's life expectancy; or
(c) 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 Participant and his or her designated Beneficiary.
Even if distributions have begun to be made under option (b) and (c)
above, the Participant may receive a distribution of the balance in the Account
at any time by giving
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written notice to the Sponsor. If the Participant elects as a means of
distribution (b) or (c) above, the annual payment required to be made by the
Participant's required beginning date is for the Year the Participant reached
age 70 1/2. Annual payments for subsequent Years, including the Year the
Participant's required beginning date occurs, must be made by December 31 of
that Year.
If the Participant's entire interest is to be distributed in other
than a lump sum, then the amount to be distributed each year (commencing with
the required beginning date and each year thereafter) must be at least equal to
the quotient obtained by dividing the Participant's benefit by the applicable
life expectancy.
For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
Participant.
For calendar years beginning after December 31, 1988, the amount to be
distributed each year, beginning with the first calendar year for which
distributions are required and then for each succeeding calendar year, shall not
be less than the quotient obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy, or (2) if the Participant's spouse
is not the designated beneficiary, the applicable divisor determined from the
table set forth in Q&A-4
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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.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless
otherwise elected by the Participant by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Participant and shall apply to all subsequent years. The
life expectancy of a non-spouse Beneficiary may not be recalculated, instead
life expectancy will be calculated using the attained age of such Beneficiary
during the calendar year in which distributions are required to begin pursuant
to this Section, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
4.3 DISTRIBUTIONS UPON DEATH.
If the Participant 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 Participant dies after distribution of his or her interest
has begun, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the
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method of distribution being used prior to the Participant's death.
(b) If the Participant dies before distribution of his or her
interest begins, the Participant's entire interest will be distributed in
accordance with one of the following four provisions:
(1) The Participant's entire interest will be paid by December
31 of the calendar year containing the fifth anniversary of the Participant's
death.
(2) If the Participant's interest is payable to a Beneficiary
designated by the Participant and the Participant has not elected (1) above,
then the entire interest will be distributed over the life or over a period
certain not greater than the life expectancy of the designated beneficiary
commencing on or before December 31 of the calendar year immediately following
the calendar year in which the Participant died. The designated Beneficiary may
elect at any time to receive greater payments.
(3) If the designated Beneficiary of the Participant is the
Participant's surviving spouse, the spouse may elect to receive equal or
substantially equal payments over the life or life expectancy of the surviving
spouse commencing at any date prior to the later of (1) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age 70 1/2. Such election must
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be made no later than the earlier of December 31 of the calendar year containing
the fifth anniversary of the Participant's death or the date distributions are
required to begin pursuant to the preceding sentence. The surviving spouse may
accelerate these payments at any time, i.e., increase the frequency or amount of
such payments.
(4) If the designated Beneficiary is the Participant's surviving
spouse, the spouse may treat the Account as his or her own individual retirement
arrangement (XXX). This election will be deemed to have been made if such
surviving spouse makes a regular XXX contribution to the Account, makes a
rollover to or from such Account, or fails to elect any of the above three
provisions.
(c) If the Participant 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.
(d) Life expectancy is computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
For purposes of distributions beginning after the owner's death, unless
otherwise elected by the surviving spouse by the time distributions are required
to begin, life expectancies shall be recalculated annually. Such election shall
be irrevocable as to the surviving spouse and shall apply to all subsequent
years. In the case of any other designated Beneficiary, life expectancies shall
be calculated using the
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attained age of such Beneficiary during the calendar year in which distributions
are required to begin pursuant to this Section, and payments for any subsequent
calendar year shall be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the calendar year life expectancy
was first calculated.
(e) For purpose of this requirement, any amount paid to a child of
the Participant will be treated as if it had been paid to the surviving spouse
if the remainder of any interest becomes payable to the surviving spouse when
the child reaches the age of majority.
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4.4 INSTALLMENT DISTRIBUTIONS.
In the case of distributions over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each Year, the Participant's entire interest in the Account as of the close of
business on December 31 of the preceding Year shall be divided by the life
expectancy of the Participant (or the joint life and last survivor expectancy of
the Participant and the Participant's designated Beneficiary, or the life
expectancy of the designated Beneficiary, whichever applies). The minimum
annual payment may be made in a series of installments (e.g., monthly,
quarterly, etc.) as long as the total payments for the Year made by the required
date are not less than the minimum amounts required. Distributions shall be
made pursuant to instructions received from the Participant or Beneficiary in
accordance with the Regulations under Section 401(a)(9) of the Code.
4.5 PENALTY ON EARLY WITHDRAWAL.
If any distribution to a Participant results in the imposition of any
penalty for early withdrawal, the amount of the distribution to the Participant
shall be reduced by such penalty.
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4.6 BENEFICIARY.
A Participant may designate a Beneficiary or Beneficiaries at any time
and any such prior designation may be changed or revoked at any time by a
Participant by written designation signed by the Participant on a form
acceptable to, and filed with, the Sponsor; provided, however, that such
designation, or change or revocation of a prior designation, shall not become
effective until it has been received by the Sponsor, nor shall it be effective
unless received by the Sponsor within thirty (30) days after the death of the
Participant, and provided further that the last such designation of Beneficiary
or change or revocation of Beneficiary executed by the Participant, if received
by the Sponsor within the time specified, shall control. If the Participant had
not, by the date of his or her death, properly designated a Beneficiary in
accordance with the preceding sentence, or if no designated Beneficiary survives
the Participant, the Participant's Beneficiary for purposes of this plan shall
be the Participant's surviving spouse, or if there is no surviving spouse, the
Participant's issue by right of representation, or if there is no issue, the
Participant's estate.
Unless otherwise specified in the form of designation of Beneficiary
filed by the Participant in accordance with the preceding paragraph, if a
Beneficiary (whether designated by the Participant or as otherwise specified in
the preceding paragraph) shall die prior to receiving his or her entire interest
in the
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Account, such Beneficiary's remaining interest in the Account shall be paid to
the estate of such deceased Beneficiary, except that if (i) distribution to the
Participant had commenced pursuant to Section 4.2(c) under a method of
distribution providing for a continuation of payments to the Participant's
surviving spouse, and if (ii) the Participant predeceases such surviving spouse,
and if (iii) the Participant did not otherwise specify in his or her written
form of designation of Beneficiary, then such surviving spouse shall be entitled
to designate a Beneficiary or Beneficiaries to receive the balance of the
Account, if any, remaining upon the death of such spouse.
Any amount paid to a child of the Participant will be treated as if it
had 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.
4.7 RESPONSIBILITY OF THE CUSTODIAN AND SPONSOR.
The Custodian and Sponsor do not assume nor do they have any
responsibility to make any distribution unless and until instructions relating
thereto and in conformity with this Article IV have been received by the Sponsor
from the Participant or Beneficiary. The Custodian and Sponsor do not assume
nor do they have any responsibility or liability for the timing, purpose, or
propriety of any distribution from a Participant's Account, which matters are
and shall be the exclusive responsibility of the Participant or his or her
Beneficiary.
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ARTICLE V
CONCERNING THE CUSTODIAN
5.1 POWERS AND DUTIES OF THE CUSTODIAN.
In addition to, and not in limitation of, such powers as the Custodian
has by law or under any other provisions of this Agreement, the Custodian shall,
subject to the limitations set forth in Article III, have the following powers:
(a) to deal with all or any part of the assets of the Account;
(b) to retain uninvested (without liability for (interest) such cash
of the Account held hereunder where vestment of such cash is delayed for any
reason;
(c) to enforce by suit or otherwise, or to waive its rights on behalf
of the Account held hereunder, and to defend claims asserted against it or the
Account, provided that the Custodian is indemnified to its satisfaction against
liability and expenses;
(d) to compromise, adjust, and settle any and all claims against or
in favor of it or the Account;
(e) to retain any funds or property subject to any dispute without
liability for the payment of interest and to decline to make payment or delivery
of the funds or property until a court of competent jurisdiction make final
adjudication;
(f) to charge against and pay from the Account all taxes of any
nature levied, assessed, or imposed upon the Account
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and to pay all reasonable expenses and attorney fees which may be necessarily
incurred by the Custodian with respect thereto;
(g) to file any tax or information return required of the Custodian,
and to pay any tax, interest or penalty associated with any such tax return;
(h) to make, execute, acknowledge, and deliver any and all
instruments that it deems necessary or appropriate to carry out the powers
herein granted; and
(i) generally to exercise any of the powers of an owner with respect
to all or any part of the Account.
5.2 RESPONSIBILITY OF SPONSOR AND CUSTODIAN.
To the extent permitted by law, neither the Custodian nor the Sponsor
shall be liable for any action or nonaction taken pursuant to the instructions
of a Participant (or if applicable, the Participant's Beneficiary) nor shall the
Custodian or Sponsor be liable for any loss which may be incurred by the Account
held hereunder except to the extent that such loss has been caused by its bad
faith or misconduct. The Custodian and Sponsor serve solely to receive and
invest contributions as directed by a Participant (or if applicable, the
Participant's Beneficiary), and to keep records with respect to a Participant's
Account, all in accordance with the provisions of this Agreement. To the extent
permitted by law, the Custodian and Sponsor shall not be liable to anyone for
any loss, or by reason of any breach which results from a Participant's (or, if
applicable, his or her Beneficiary's) actions or inactions.
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5.3 RESPONSIBILITY AS TO CONTRIBUTIONS OR DISTRIBUTIONS.
Neither the Custodian nor the Sponsor will under any circumstances be
responsible for the timing, purpose or propriety of any contribution or of
any distribution made hereunder. The Code imposes a tax upon a Participant
if an Excess Contribution is made to a Participant's Account, or if any early
distribution (referred to in Section 408(f) of the Code) is made from a
Participant's Account prior to his or her attaining the age of 59 1/2 years
(except in the case of death, disability, or other limited exceptions), or if
distribution to a Participant is not made or commenced by the required
beginning date for the Year in which the Participant attains age 70 1/2 or if
distributions are made in a timely fashion but are insufficient in amount, or
if distributions from all retirement accounts held by Participant exceed
certain minimum amounts. The Custodian and Sponsor shall not incur any
liability or responsibility for any such tax or penalty, which shall be the
sole responsibility of the Participant.
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5.4 FEES AND EXPENSES.
The Participant shall be charged by the Custodian and Sponsor for
their services under this Plan in accordance with the XXX fee schedule. The
Custodian or Sponsor may substitute a different fee schedule at any time upon
not less than 30 days written notice to the Participant. Further, the Custodian
or Sponsor shall be entitled to reimbursement for all reasonable expenses and
for any extraordinary services incurred in the administration of the Account,
including but not limited to fees for legal services rendered to the Custodian
or Sponsor. The Custodian or Sponsor shall pay all expenses (including any tax,
interest or penalty on a tax) reasonably incurred by it in its administration of
the Plan from the Account unless the Participant pays the expenses. The
Custodian or Sponsor may establish a reasonable reserve from the assets of the
Account with which to pay its compensation or expenses of administration. The
Custodian or Sponsor may deduct its fees and expenses from the cash available in
the Participant's Account. The Participant shall pay any debit balance of the
obligation owing to the Custodian or Sponsor on demand. If cash is not
available and in the event fees are not paid or expenses reimbursed within 45
days after written notice of the amount due is sent to the Participant, the
Custodian or Sponsor may at its discretion liquidate plan investments and
withdraw unpaid fees and expenses from the Account to make such payments.
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5.5 ACTIONS IN THE ABSENCE OF SPECIFIC INSTRUCTIONS.
If the Sponsor receives no response to communications sent to the
Participant (or the Participant's Beneficiary) at the Participant's (or
Beneficiary's) last known address as shown in the records of the Sponsor, or if
the Sponsor determines, on the basis of evidence satisfactory to it, that the
Participant is legally incompetent, the Sponsor may make such determinations
with respect to distributions and other administrative matters arising under
this Plan as it considers reasonable. Any determinations so made shall be
binding on all persons having or claiming any interest under the Account, and
neither the Sponsor nor the Custodian shall incur any obligation or liability
for any such determination made in good faith or for any action taken in
pursuance thereof.
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ARTICLE VI
SPENDTHRIFT PROVISIONS
Except as required by law, the interest of a Participant in the Account
shall not be transferred or assigned by voluntary or involuntary act of the
Participant, nor shall it be subject to alienation, assignment, garnishment,
attachment, receivership, execution, or levy or any kind. Notwithstanding the
foregoing, in the event of a property settlement between a Participant and his
or her former spouse pursuant to which the transfer of a Participant's interest
hereunder, or of a portion thereof, is incorporated in a divorce decree or in a
written instrument incident to such divorce, the interest so decreed to be the
property of such former spouse shall be reregistered in a separate Account then
established hereunder for the benefit of such former spouse. In the event of
such a transfer incident to a divorce, such former spouse shall be deemed to be
a "Participant" under this Agreement.
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ARTICLE VII
AMENDMENT AND TERMINATION; RESIGNATION OR REMOVAL OF CUSTODIAN
7.1 AMENDMENT.
The Participant authorizes the Sponsor to amend this Agreement in any
respect at any time (including retroactively), effective on a stated date, so
that it may conform with applicable provisions of the Code as in effect from
time to time (including liberalizing provisions such as changes in dollar
amounts allowable as deductions) or in order to obtain expeditiously an Internal
Revenue Service determination, opinion, or ruling that such requirements are
met, or to conform this Agreement with other applicable law.
Any amendment to this Agreement other than one made for the purposes
set forth in the preceding paragraph shall require the consent of the
Participant, the Sponsor and the custodian; provided, however, that no such
amendment shall deprive a Participant or Beneficiary of any amount to which he
or she was entitled prior to such amendment (unless such amendment is necessary
to conform this Agreement to, or to satisfy the conditions of, Section 408 of
the Code or other applicable law), and provided further that no such amendment
shall permit any asset held hereunder to be diverted to a purpose other than for
the exclusive benefit of a Participant (or his or her Beneficiary) for whom it
is then held. The Participant shall be deemed to consent to any such amendments
if he or she fails to
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object thereto by written notice received by the Sponsor within fifteen (15)
calendar days from the date of the Sponsor's mailing to the Participant an exact
copy of such amendment(s).
7.2 RESIGNATION OR REMOVAL OF CUSTODIAN.
The Custodian may resign at any time upon thirty (30) days written
notice to the Participant and Sponsor.
Upon the resignation of the Custodian, the Custodian may, but shall
not be required to, appoint a successor custodian, and upon any resignation of
the Custodian, the Sponsor may appoint a successor custodian; provided that any
successor custodian appointed by the Custodian or the Sponsor shall satisfy the
requirements of Section 408(a)(2) of the Code; and provided further that the
appointment of a successor custodian by the Sponsor shall take precedence over
the appointment of a successor custodian by the Custodian. Upon any such
appointment of a successor custodian, and upon such successor's acceptance of
such designation, the Custodian shall transfer the assets of the Account
together with copies of relevant books and records, to such successor custodian.
The Custodian is authorized, however, to reserve such sum of money or property
as it may deem advisable for payment of any liabilities constituting a charge on
or against the assets of the Account held hereunder, or on or against the
Custodian, with any balance of such reserve remaining after the payment of all
such items to be paid over to the successor custodian. The successor custodian
shall hold the assets paid over to it under terms similar to those of this
-28-
Agreement that qualify under Section 408 of the Code. The Custodian shall not
be liable for the acts or omissions of any successor to it. If within thirty
(30) days after notice of the Custodian's resignation neither the Custodian nor
the Sponsor has appointed a successor Custodian which has accepted such
appointment, the Sponsor shall terminate the Plan in accordance with Section
7.3, and this Agreement shall thereupon terminate.
7.3 TERMINATION.
The Participant or Sponsor may at any time terminate the Plan by
delivering to the Sponsor (in the case of a Participant termination) or to the
Custodian (in the case of a Sponsor termination) a signed written notice of
termination; provided, however, that if such termination occurs prior to the
Participant's death, disability (as defined in Section 72(m) of the Code), or
attainment of age 59 1/2, the Participant shall furnish the Sponsor with a
written declaration of his or her intention as the disposition of the amount to
be distributed in accordance with the requirements set forth in Section 4.1.
Termination of this Plan shall be effected by a distribution of the
assets held hereunder in a lump sum to or for the benefit of the Participant (or
the Participant's Beneficiary) subject to the reserving of such funds as may be
necessary to pay the fees and expenses referred to in Section 5.4. Termination
of this Agreement shall occur automatically upon distribution of all assets held
hereunder. Upon such termination, the Custodian and Sponsor shall be relieved
from all further liability with respect
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to this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES.
All notices required to be given by the Sponsor or Custodian to the
Participant shall be deemed to have been given when sent by mail to the address
of the Participant in the records of the Sponsor. All notices required to be
given by the Participant to the Sponsor or Custodian shall be deemed to have
been given when received by the Sponsor or Custodian at its principal office.
Whenever the Sponsor or Custodian is required or authorized to take any action
under the Plan on the direction of a Participant (or Beneficiary), such action
shall be taken on the direction of the duly appointed representative of the
Participant (or Beneficiary) or his or her estate in the event of the
Participant's (or Beneficiary's) incompetency or death.
8.2 GOVERNING LAW.
This Agreement shall be construed, administered and enforced according
to the laws of the State of Rhode Island except as superseded by federal law or
statute.
-30-
8.3 PROHIBITED TRANSACTIONS.
The Participant shall not engage in any transaction with respect to
the Account which, pursuant to Sections 408(e)(2) and 4975 of the Code, might
cause the Account to cease to qualify as an "individual retirement account."
8.4 CONSTRUCTION OF TERMS.
In this Agreement, the masculine gender shall include the feminine,
the plural shall include the singular, and the singular the plural, unless the
context otherwise requires.
8.5 INFORMATION AND REPORTS.
The Participant shall furnish to the Sponsor, and the Sponsor shall
furnish to the Participant and appropriate governmental agencies, such
information relevant to the Account as may be required under the Code and any
regulations issued or forms adopted by the Treasury Department thereunder, or
under other applicable laws.
8.6 AGREEMENT EFFECTIVE; REPRODUCED COPIES.
This Agreement shall not become effective until acceptance of the
Adoption Agreement by or on behalf of the Sponsor at its principal office. This
Agreement, including the Adoption Agreement and any designation of Beneficiary
executed by the Participant, may be proved either by an original copy or by a
reproduced copy thereof.
-31-
GALAXY FUND XXX
DISCLOSURE STATEMENT
The following information is provided to you in accordance with the
requirements of the Internal Revenue Code and should be reviewed in conjunction
with both the Custodial Agreement and the Adoption Agreement for your Individual
Retirement Account ("XXX").
SPONSOR
The Sponsor of your XXX is:
Galaxy Fund
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone:
CUSTODIAN
The Custodian of your XXX is:
Retirement Accounts
Fleet National Bank
000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone Number: (000)000-0000
RIGHT TO REVOKE ACCOUNT
You may revoke this account any time within seven calendar days after it is
established by mailing or delivering a written request for revocation to the
Sponsor at the above address. Upon revocation, you will receive a full refund
of your initial contribution. If you have any questions relative to this
procedure, please telephone the Sponsor at the above listed telephone number.
DESCRIPTION OF ACCOUNT
Your XXX is a custodial account created for your exclusive benefit. Your
interest in the Account is nonforfeitable.
ELIGIBILITY AND DEDUCTIBLE CONTRIBUTIONS
You may make annual cash contributions to your XXX for any tax year in an
amount up to the lesser of:
1. 100% of your compensation (earned income) that is includable in your
gross income for such tax year; or
2. (a) $2,000 if the contribution is made to your own Account; and
(b) $2,250 if the contributions are made to your own Account and to
the Account of your spouse who has no compensation during the tax year for which
the deduction is claimed; provided, that in no event shall the contribution to
either Account exceed $2,000. For purposes of this paragraph, a spouse with
compensation may elect to be treated as having no compensation.
Your employer may make contributions to your Account, but, except as
noted below under a SEP, the total contributions from you and your employer may
not exceed the preceding limitations. Rollover contributions are not subject to
the preceding limitations.
For years ending on or before December 31, 1986, employees and
self-employed individuals were eligible to make tax deductible contributions to
an XXX even if they are already covered under another tax qualified plan.
For years beginning on and after January 1, 1987, if
-2-
neither you, nor your spouse, is an active participant (see A. below), you may
make a contribution of up to the lesser of $2,000 (or $2,250 in the case of a
regular and spousal XXX) or 100% of compensation and take a deduction for the
entire amount contributed. If you or your spouse is an active participant but
have an adjusted gross income (AGI) below a certain level (see B. below), you
may make a deductible contribution. If, however, you or your spouse is an active
participant and your combined AGI is above the specified level, the amount of
the deductible contribution you may make to an XXX is phased down and eventually
eliminated.
A. ACTIVE PARTICIPANT
You are an "active participant for a year if you are covered by a
retirement plan. You are covered by a "retirement plan" for a year if your
employer or union has a retirement plan under which money is added to your
account or you are eligible to earn retirement credits. For example, if you are
covered under a profit-sharing plan, certain government plans, a salary
reduction arrangement (such as a tax sheltered annuity arrangement or a 401(k)
plan), a simplified employee pension Plan (SEP) or a plan which promises you a
retirement benefit which is based upon the number of years of service you have
with the employer, you are likely to be an active participant. Your Form W-2 for
the year, starting with the 1987 tax year, should indicate your participation
status.
You are an active participant for a year even if you
-3-
are not yet vested in your retirement benefit. Also, if you make required
contributions or voluntary employee contributions to a retirement plan, you are
an active participant. In certain plans you may be an active participant even
if you were only with the employer for part of the year.
You are not considered an active participant if you are covered in a
plan only because of your service as (1) an Armed Forces Reservist, for less
than 90 days of active service, or (2) a volunteer firefighter covered for
firefighting service by a government plan. Of course, if you are covered in any
other plan, these exceptions do not apply.
If you are married but file a separate tax return, your spouse's
active participation does not affect your ability to make deductible
contributions if you and your spouse did not live together at any time during
the year.
B. ADJUSTED GROSS INCOME (AGI)
If you are an active participant, you must look at your Adjusted Gross
Income for the year (if you and your spouse file a joint tax return you use your
combined AGI) to determine whether you can make a deductible XXX contribution.
Your tax return will show you how to calculate your AGI for this purpose. If
you are at or below a certain AGI level, called the "threshold level," you are
treated as if you were not an active participant and can make a deductible
contribution under the same rules as a person who is not an active participant.
If you are single, your threshold AGI level is $25,000.
-4-
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 will be limited in
amount. The amount by which your AGI exceeds your threshold level (AGI -
threshold level) is called your Excess AGI. The Maximum Allowable Deduction is
$2,000 (or $2,250 for a regular and spousal XXX). You can calculate your
Deduction Limit as follows:
$10,000 - Excess AGI
-------------------- X Maximum Allowable Deduction =
$10,000 Deduction Limit
You must round up the result to the next highest $10 level (the next
highest number which ends in zero). For example, if the result is $1,525, you
must round it up to $1,530. If the final result is below $200 but above zero,
your Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed
100% of your compensation.
-5-
NONDEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the threshold level and thus may not make a
deductible contribution of $2,000 ($2,250 for a regular and spousal XXX), you
may still contribute up to the lesser of 100% of compensation or $2,000 to an
XXX ($2,250 for a regular and spousal XXX). The amount of your contribution
which is not deductible will be a nondeductible contribution to the XXX. You
may also choose to make a nondeductible contribution even if you could have
deducted part or all of the contribution. Interest or other earnings on your
XXX contribution, whether from deductible or nondeductible contributions, will
not be taxed until taken out of your XXX and distributed to you.
If you make a nondeductible contribution to an XXX you must report the
amount of the nondeductible contribution to the IRS on Form 8606 as a part of
your tax return for the year.
You may make a $2,000 contribution at any time during the year if your
compensation for the year will be at least $2,000 without having to know how
much will be deductible. When you fill out your tax return you may then figure
out how much is deductible.
You may withdraw an XXX contribution made for a year any time before April
15 of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year for
which the contribution was made. If some portion of your contribution is not
deductible, you may decide either to withdraw the
-6-
nondeductible amount, or to leave it in the XXX and designate that portion as a
nondeductible contribution on your tax return.
DISTRIBUTIONS OF NONDEDUCTIBLE CONTRIBUTIONS
The portion of XXX distributions consisting of nondeductible contributions
will not be taxed when received by you. If you make any nondeductible XXX
contributions, each distribution from your IRAs will consist of a nontaxable
portion (return of nondeductible contributions) and a taxable portion (return of
deductible contributions, if any, and account earnings).
Thus, you may not take a distribution which is entirely tax-free. The
following formula is used to determine the nontaxable portion of your
distributions for a taxable year:
Remaining
Nondeductible Total Nontaxable
contributions X Distributions = distributions
------------- (for the year) (for the year)
Year-end total
XXX account balances
To figure the year-end total XXX account balance you treat all of your IRAs
as a single XXX. This includes all regular IRAs, as well as Simplified Employer
Pension (SEP) IRAs and Rollover IRAs. You also add back the distributions taken
during the year.
TYPE OF CONTRIBUTIONS
Contributions (other than Rollover Contributions described below) must be
made in "cash" and not in "kind." Therefore, securities or other assets already
owned cannot be contributed to an XXX but can be converted to cash and then
contributed.
-7-
SPOUSAL ACCOUNTS. If you are married, and you file a joint tax return, you
may make cash contributions to a "spousal" XXX in addition to your own XXX if
your spouse does not make a contribution to an XXX. The total amounts
contributed to your own and to your spouse's XXX may not exceed 100% of your
compensation or $2,250, whichever is less. In no event, however, may the annual
contribution to either your account or your spouse's account exceed $2,000.
TIME OF CONTRIBUTION. You may make deductible or nondeductible
contributions to your XXX any time up to the due date (not including extensions)
for filing your tax return for the year. You may continue to make contributions
to your XXX up to (but not including) the calendar year in which you reach age
70 1/2.
ROLLOVER CONTRIBUTIONS. Qualifying distributions from tax qualified plans
(i.e. pension, profit sharing, Xxxxx, etc.) may be eligible for rollover into
your XXX. However, strict limitations apply to such rollovers and you should
seek competent tax advice regarding these restrictions.
Distributions from your XXX representing all or any part of the assets in
your XXX account are eligible for rollover treatment. You may rollover all or
any part of the same property from this distribution of assets, within sixty
(60) days of receipt, into another XXX, individual retirement annuity, or into
retirement bonds, and maintain the tax-deferred status of these assets. These
rollovers between IRA's may be made once per year.
-8-
SIMPLIFIED EMPLOYEE PENSION PLAN CONTRIBUTIONS. Your XXX may be used as
part of a SEP established by your employer. Your employer may contribute to
your XXX/SEP up to a maximum of 15% of your compensation or $30,000, whichever
is less. You may contribute, in addition to the amount contributed by your
employer to your XXX/SEP, an amount not in excess of the regular XXX limits
referred to above. It is your and your employer's responsibility to see that
contributions in excess of normal XXX limits are made under a valid SEP and are,
therefore, proper.
TAX DEDUCTIBILITY. You may take a tax deduction on your federal income tax
return for the amount of cash contributions paid to your XXX or spousal XXX, not
exceeding the alternate limits discussed above. If you and your spouse both
work and contribute to IRA'S, you may deduct up to $4,000 when filing a joint
return if permissible under the limits described above. Contributions by your
employer to your XXX must be included in your gross income but you may take a
deduction in the amount of such payment up to the allowable limitations.
Contributions by your employer to a SEP are not included in your income, and
therefore, you may not take a deduction for these contributions.
No deduction is allowed with respect to a rollover contribution (the
tax-free deposit of retirement funds from one retirement plan to another).
EXCESS CONTRIBUTIONS. Contributions which exceed the allowable maximum are
treated as excess contributions. A non-deductible penalty tax of 6% of the
excess amount contributed
-9-
will be added to your income tax for each year in which the excess contribution
remains in your account. If you make a contribution in excess of your allowable
maximum for any taxable year, you may correct the excess contribution and avoid
the 6% penalty tax for that year by withdrawing the excess contribution, and its
earnings on or before the date (not including extensions) for filing your tax
return for that year.
INVESTMENT OF ACCOUNT
Your XXX will be invested in accordance with your instructions in such of
the Galaxy Mutual Funds, selected by you, as are offered by the Sponsor under
the XXX.
DISTRIBUTIONS
Penalty-free distributions from your XXX may begin no earlier than age 59
1/2 except in cases of disability or death, or unless the distribution is part
of a series of substantially equal periodic payments (not less frequently than
annually) made for your life expectancy or the joint life expectancies of you
and your beneficiary. Distributions must begin no later than April 1 following
the calendar year in which you reach age 70 1/2. Distributions from your
account will be included in your gross income for federal income tax purposes
for the year withdrawn. There is no tax or additional penalty tax imposed on
the portion of a distribution that is a return of nondeductible contributions.
METHODS OF DISTRIBUTION. Assets may be distributed from your Account
according to one or both of the following methods
-10-
selected by you:
(a) lump sum distribution
(b) distribution in installments over a period certain.
PENALTY FOR PREMATURE DISTRIBUTIONS. Distributions from your XXX made
before age 59 1/2 will be subject to a 10% nondeductible penalty tax (in
addition to being taxable as income) except in cases of death or disability, or
unless the distribution is an exempt withdrawal of an excess contribution, or
part of a series of equal periodic payments (not less frequently than annually)
made for your life expectancy or the joint life expectancy of you and your
beneficiary, or the distribution is rolled over to another qualified XXX.
PENALTY FOR INSUFFICIENT OR LATE DISTRIBUTION. In addition to the regular
income tax that may be payable on distributions from your XXX, you will be
assessed penalties on certain accumulations if funds in the Account are not
distributed in accordance with IRS Regulations. If the amount distributed from
the Account during the taxable year is less than the minimum required during
such year, an excise tax will be imposed. The tax imposed is equal to 50% of
the amount by which the minimum required distribution exceeds the amount
actually distributed during the year.
PAYMENTS REQUIRED AFTER AGE 70 1/2. After you reach age 70 1/2, minimum
distributions are required from the Account each year. The distribution for the
year in which you reach age 70 1/2 must be made no later than April 1 of the
following year.
-11-
Distributions for subsequent years must be taken by December 31 of each year.
Unless you elect to withdraw the entire balance by April 1 of the year
after you reach age 70 1/2, you must elect to take the distributions in a manner
which distributes the funds at least as rapidly as the minimum required
distributions. The minimum required distribution for each year is determined by
dividing your ending account balance for the previous year (adjusted by any
outstanding rollovers) by your joint life expectancy with the appropriate
beneficiary. If no beneficiary exists or a beneficiary other than a natural
person is named (except certain trusts), your single life expectancy must be
used for this calculation.
For years after the first distribution year, you may elect to annually
recalculate your and/or your spouse's life expectancies. If no election is
made, it is presumed that recalculation is elected. If recalculation is
elected, a new life expectancy factor is determined each year based upon the age
of you and/or your spouse as of your birthdays during the year. If the person
whose life is being recalculated dies, the life expectancy for that individual
becomes zero. If recalculation is not chosen, the life expectancy is calculated
by determining the life expectancy at the end of the first distribution year and
subtracting one (1) for each year which has elapsed since. If no recalculation
is elected, the death of the Account Owner or beneficiary is disregarded.
-12-
For years beginning after 1988, the joint life expectancy of you and a
beneficiary other than your spouse is limited by the minimum distribution
incidental benefit (MDIB) tables. The tables give life expectancies for you and
a beneficiary ten years younger. If this factor is less than your joint life
expectancy with the applicable beneficiary, the factor from the MDIB table must
be used to calculate the minimum distribution.
DISTRIBUTION AFTER DEATH. If you die after the date when payments must
have begun (after you reach age 70 1/2), the payments to your beneficiary or
estate must continue so that the funds will be distributed at least as rapidly
as they would have been distributed if death had not occurred. If you die
before the required beginning date, your beneficiary has the following options:
(a) The beneficiary may withdraw the entire account balance in any manner
so that the Account is depleted by December 31 of the fifth year following the
year of death.
(b) The beneficiary may withdraw the funds in a series of payments over a
period which does not exceed the beneficiary's life expectancy. These payments
must begin by December 31 of the year following the year of death if the
beneficiary is not your spouse, or December 31 of the year you would have been
age 70 1/2 (if later), if the beneficiary is your spouse.
The beneficiary must elect to take distributions under option (a) or
(b) by December 31 of the year following the year of death. If no election is
made, the beneficiary is presumed to
-13-
have elected option (b) if the beneficiary is your surviving spouse, and option
(a) if the beneficiaries include anyone other than your spouse.
A spouse beneficiary may elect to roll a distribution over into
his/her own account or to treat the Account as his/her own.
EXCESS DISTRIBUTION PENALTY. Beginning in 1987, there is a tax on excess
distributions from retirement plans. If you receive more than $112,500 (subject
to annual cost-of-living adjustments) in a calendar year from all retirement
plans, a 15% tax will be imposed on the amount in excess of $112,500 (special
rules may apply to benefits accumulated prior to August 1, 1986). All calendar
year distributions from IRAs, qualified retirement plans, tax sheltered
annuities, and qualified annuity plans must be aggregated for purposes of
determining the penalty tax. If you are a recipient of a lump-sum distribution
eligible for 5- or 10-year averaging, you can multiply the $112,500 by 5,
increasing the limit to $562,000.
The 15% excess distribution tax will be reduced by any premature
distribution tax (10%) assessed on the excess distribution.
Certain distributions may be excluded from this tax, such as distributions
that are rolled over into another retirement plan.
-14-
FEES AND EXPENSES
Fees and other expenses of maintaining your XXX are described in the
materials accompanying your XXX Adoption Agreement and may be changed from time
to time, as provided in the Custodial Agreement.
PROVISIONS REGARDING THE CUSTODIAN
Under the provisions of Section 408(a) of the Internal Revenue Code of 1986
as amended, certain approved organizations are permitted to establish Custodial
Accounts for the exclusive benefit of an individual or beneficiaries provided
the written agreement meets certain requirements. These requirements are that:
(a) Except for rollover contributions, contributions to the Account must
be in cash and will not be accepted for the taxable year in excess of:
(1) $2,000 on behalf of an individual where a contribution would be
allowed the Account owner under Internal Revenue Code provisions governing
regular Individual Retirement Accounts, or
(2) $2,250 if the contributions are made to the Account of the spouse
who has compensation during the year and to the Account of the spouse who has no
compensation or elects to be treated as having no compensation.
(b) The Custodian is a bank, savings and loan association, credit union,
or other entity that is permitted to accept contributions to these Accounts.
-15-
(c) No part of the funds will be invested in life insurance contracts.
(d) The interest of an individual in the balance of the Account is
nonforfeitable.
(e) The assets of the Custodial Account will not be commingled with other
property except in a common trust or investment fund.
(f) No part of the funds can be invested in collectibles (as defined in
IRC Section 408(m)) including any work of art, rug or antique, metal or gem,
stamp or coin, alcoholic beverage, or any other tangible property specified by
the IRS. Beginning January 1, 1987, the acquisition of U.S. government-issued
gold and silver coins are permitted as investments in an XXX.
Each year the Sponsor will furnish the Account owner a statement of account
which will give the amount of the contribution to the Account, earnings
accumulated, distributions from the Account, and the total value of the Account
as of the end of the year. Information relating to contributions and
withdrawals must be reported annually to the Internal Revenue Service by the
Account owner or, in the case of a Spousal XXX, by the compensated spouse.
-16-
PROHIBITED TRANSACTIONS
If any of the following events occurs during the existence of your XXX,
your Account will be disqualified and the entire balance in your Account will be
treated as if distributed to you and will be taxable to you as ordinary income
during the year in which such event occurs:
(a) the sale, exchange, or leasing of any property between your Account
and you;
(b) the lending of money or other extensions of credit between your
Account and you; and/or
(c) the furnishing of goods, services, or facilities between you and your
Account.
If you were under age 59 1/2 at the time of such event, you would also be
subject to the 10% penalty tax on early distributions.
If you use (pledge) all or any part of your XXX as security for a loan,
then the portion so pledged will be treated as if distributed to you and will be
taxable to you as ordinary income and subject to the 10% penalty tax during the
year in which you make such a pledge.
-17-
OTHER TAX CONSIDERATIONS
NO SPECIAL TAX TREATMENT. No distribution to you or anyone else from your
Account can qualify for capital gain treatment under the federal income tax law.
It is taxed to the person receiving the distribution as ordinary income.
Similarly, you are not entitled to the special income averaging rule for lump
sum distributions available to persons receiving distributions from certain
other types of retirement plans. However, distributions to you, though taxable
as ordinary income, may qualify for regular income averaging under the tax laws.
GIFT TAX. If you elect during your lifetime to have all or any part of
your Account payable to a Beneficiary at or after your death, the election will
not subject you to any gift tax liability.
ESTATE TAX. For deaths occurring after December 31, 1984, all funds held
within an XXX will be included in your gross estate for estate tax purposes,
regardless of the named beneficiary or manner of distribution. There is no
specific estate tax exclusion for funds held within an XXX.
REPORTING FOR TAX PURPOSES
Deductible contributions to your XXX may be claimed as a deduction on your
tax Form 1040 for the taxable year contributed. Non-deductible contributions
must be reported on Form 8606 which is filed with Form 1040. Other reporting
will be required by you in the event that special taxes or penalties described
herein are due. You must also file Treasury Form 5239 with the IRS for each
-18-
taxable year in which the contribution limits are exceeded, a premature
distribution takes place, or less than the required minimum amount is
distributed from your XXX.
XXX APPROVAL
The form of your Individual Retirement Account Plan has been submitted for
approval to the Internal Revenue Service. The internal Revenue Service approval
is a determination only as to the form and does not represent a determination of
the merits of the Plan. You may obtain further information with respect to your
XXX from any district office of the Internal Revenue Service.
-19-
GALAXY FUND
XXX ADOPTION AGREEMENT AND NEW ACCOUNT APPLICATION
GALAXY FUND XXX FOR:
Name
---------------------------------------------------------------------------
Address Home Phone No.
------------ ----------------------------------------------
City State Zip Code Date of Birth
------------------------- ---------- ------- -------
Social Security No.
------------------------------------------------------------
Initial Contribution Amount
----------------------------------------------------
--------------------------------------------------------------------------------
ESTABLISH THE XXX UNDER THE PLAN AS INDICATED:
____ CONTRIBUTORY OR SPOUSAL ACCOUNT FOR 19___
____ ROLLOVER ACCOUNT (COMPLETE ROLLOVER SECTION BELOW)
____ SIMPLIFIED EMPLOYEE PENSION ACCOUNT (INCLUDE A COPY
OF EMPLOYER'S SEP PLAN DOCUMENT)
--------------------------------------------------------------------------------
ROLLOVERS
1. Please establish my XXX Account a Rollover contribution in the amount of
$__________.
2. I understand that if I make regular XXX contributions to an XXX which holds
rollover funds received from a qualified retirement plan, by making such
regular XXX contributions I waive any right to roll the rollover funds into
a qualified retirement plan in the future. I hereby release the Galaxy
Fund and Fleet National Bank from any loss, damage, or injury that I may
sustain financially as a result of my election to waive any right of future
rollover for funds contributed to this account.
--------------------------------------------------------------------------------
INVESTMENT DIRECTION
I hereby direct the initial investment of my XXX as follows:
1. Name of Galaxy Fund: Number of shares
------------------------- --------
2. Name of Galaxy Fund: Number of shares
------------------------- --------
3. Name of Galaxy Fund: Number of shares
------------------------- --------
--------------------------------------------------------------------------------
DESIGNATION OF BENEFICIARY
Such manner as shall be selected by my beneficiary, beneficiaries or personal
representative.
1.
------------------------------------- ------------------------------
Name of Beneficiary Relationship to Participant
--------------------------------------------------------------------------------
Address of Beneficiary
------------------------------------- ------------------------------
Beneficiary's Social Security Number Date of Birth
2.
------------------------------------- ------------------------------
Name of Beneficiary Relationship to Participant
--------------------------------------------------------------------------------
Address of Beneficiary
------------------------------------- ------------------------------
Beneficiary's Social Security Number Date of Birth
/ / The above named beneficiaries shall share equally in any payments.
/ / The beneficiary first named above shall receive all payment, but if he/she
predeceases me, the second named beneficiary shall receive all payments.
In event neither of the foregoing boxes is checked, the above named
beneficiaries shall share equally in any payments.
I hereby reserve the right to change or revoke this beneficiary
designation without notice to any beneficiary, but any revocation or
change of beneficiary shall not be effective until filed with the
custodian in writing in a form acceptable to the Custodian.
--------------------------------------------------------------------------------
ACCEPTANCE
I hereby adopt the Galaxy Fund Individual Retirement Account Plan (the "Plan")
which is made part of this agreement, establish the account described above,
name the above designated beneficiary, and name Fleet National Bank as Custodian
of this Account. I have read, understood and agreed to the terms set forth in
the Disclosure Statement. I also certify under penalty of perjury that the
Social Security No. shown above is correct.
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Participant Signature Date
ACCEPTED BY GALAXY FUND AND FLEET NATIONAL BANK
By: Date
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