THE XXXXXXX FUNDS, INC.
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an
Individual Retirement Account (under Section 408(a) of the Internal
Revenue Code) between the Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash contributions on behalf
of the Depositor for a tax year of the Depositor. The total cash
contributions are limited to $2,000 for the tax year unless the
contribution is a rollover contribution described in Section 402(c) (but
only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described
in Section 408(k). Rollover contributions before January 1, 1993, include
rollovers described in Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified employee
pension plan as described in Section 408(k).
ARTICLE II
The Depositor's interest in the balance in the custodial account
is nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life
insurance contracts, nor may the assets of the custodial account be
commingled with other property except in a common trust fund or common
investment fund (within the meaning of Section 408(a)(5)).
2. No part of the custodial funds may be invested in
collectibles (within the meaning of Section 408(m)) except as otherwise
permitted by Section 408(m)(3) which provides an exception for certain
gold and silver coins and coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this agreement to the
contrary, the distribution of the Depositor's interest in the custodial
account shall be made in accordance with the following requirements and
shall otherwise comply with Section 408(a)(6) and Proposed Regulations
Section 1.408-8, including the incidental death benefit provisions of
Proposed Regulations Section 1.401(a)(9)-2, the provisions of which are
herein incorporated by reference.
2. Unless otherwise elected by the time distributions are
required to begin to the Depositor under Paragraph 3, or to the surviving
spouse under Paragraph 4, other than in the case of a life annuity, life
expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Depositor and the surviving spouse and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
3. The Depositor's entire interest in the custodial account
must be, or begin to be, distributed by the Depositor's required beginning
date, April 1 following the calendar year end in which the Depositor
reaches age 70 1/2. By that date, the Depositor may elect, in a manner
acceptable to the Custodian, to have the balance in the custodial account
distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially
equal monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a
specified period that may not be longer than the Depositor's life
expectancy.
(e) Equal or substantially equal annual payments over a
specified period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her designated
beneficiary.
4. If the Depositor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be
distributed as follows:
(a) If the Depositor dies on or after distribution of his or
her interest has begun, distribution must continue to be made in
accordance with Paragraph 3.
(b) If the Depositor dies before distribution of his or her
interest has begun, the entire remaining interest will, at the election of
the Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year
containing the fifth anniversary of the Depositor's
death, or
(ii) Be distributed in equal or substantially equal
payments over the life or life expectancy of the
designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the
Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this
distribution is not required to begin before December
31 of the year in which the Depositor would have
turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting
the requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has
been distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover contributions may be
accepted in the account.
5. In the case of a distribution over life expectancy in equal
or substantially equal annual payments, to determine the minimum annual
payment for each year, divide the Depositor's entire interest in the
custodial account as of the close of business on December 31 of the
preceding year by the life expectancy of the Depositor (or the joint life
and last survivor expectancy of the Depositor and the Depositor's
designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under
Paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designed
beneficiary as of their birthdays in the year the Depositor reaches age 70
1/2. In the case of a distribution in accordance with Paragraph 4(b)(ii),
determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
6. The owner of two or more individual retirement accounts may
use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524,
to satisfy the minimum distribution requirements described above. This
method permits an individual to satisfy these requirements by taking from
one individual retirement account the amount required to satisfy the
requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports required
under Section 408(i) and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal
Revenue Service and the Depositor prescribed by the Internal Revenue
Service.
ARTICLE VI
Notwithstanding any other articles which may be added or
incorporated, the provisions of Articles I through III and this sentence
will be controlling. Any additional articles that are not consistent with
Section 408(a) and related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with
the provisions of the Code and related regulations. Other amendments may
be made with the consent of the persons whose signatures appear below.
ARTICLE VIII
1. Investment of Account Assets. (a) All contributions to the
custodial account shall be invested in shares of The Xxxxxxx Growth Fund
or, if available, any other series of The Xxxxxxx Funds, Inc. or other
regulated investment companies for which Xxxxxxx Capital Management, Inc.
serves as investment advisor or designates as being eligible for
investment ("Investment Company"). Shares of stock of an Investment
Company shall be referred to as "Investment Company Shares." To the
extent that two or more funds are available for investment, contributions
shall be invested in accordance with the Depositor's investment election.
(b) Each contribution to the custodial account shall identify
the Depositor's account number and be accompanied by a signed statement
directing the investment of that contribution. The Custodian may return
to the Depositor, without liability for interest thereon, any contribution
which is not accompanied by adequate account identification or an
appropriate signed statement directing investment of that contribution.
(c) Contributions shall be invested in whole and fractional
Investment Company Shares at the price and in the manner such shares are
offered to the public. All distributions received on Investment Company
Shares, including both dividends and capital gains distributions, held in
the custodial account shall be reinvested in like shares. If any
distribution of Investment Company Shares may be received in additional
like shares or in cash or other property, the Custodian shall elect to
receive such distribution in additional like Investment Company Shares.
(d) All Investment Company Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The
Depositor shall be the beneficial owner of all Investment Company Shares
held in the custodial account and the Custodian shall not vote any such
shares, except upon written direction of the Depositor, timely received,
in a form acceptable to the Custodian. The Custodian agrees to forward to
the Depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held in the
custodial account received by the Custodian.
(e) The Depositor may, at any time, by written notice to the
Custodian, in a form acceptable to the Custodian, redeem any number of
shares held in the custodial account and reinvest the proceeds in the
shares of any other Investment Company upon the terms and within the
limitations imposed by the then current prospectus of such other
Investment Company in which the Depositor elects to invest. By giving
such instructions, the Depositor will be deemed to have acknowledged
receipt of such prospectus. Such redemptions and reinvestments shall be
done at the price and in the manner such shares are then being redeemed or
offered by the respective Investment Company.
2. Amendment and Termination. (a) Xxxxxxx Capital
Management, Inc., the investment advisor for The Xxxxxxx Funds, Inc., may
amend the Custodial Account (including retroactive amendments) by
delivering to the Custodian and to the Depositor written notice of such
amendment setting forth the substance and effective date of the amendment.
The Custodian and the Depositor shall be deemed to have consented to any
such amendment not objected to in writing by the Custodian or Depositor,
as applicable, within thirty (30) days of receipt of the notice, provided
that no amendment shall cause or permit any part of the assets of the
custodial account to be diverted to purposes other than for the exclusive
benefit of the Depositor or his or her beneficiaries.
(b) The Depositor may terminate the custodial account at any
time by delivering to the Custodian a written notice of such termination.
(c) The custodial account shall automatically terminate upon
distribution to the Depositor or his or her beneficiaries of its entire
balance.
(d) The provisions of this Section 2 of Article VIII control
over the provisions of Article VII.
3. Taxes and Custodial Fees. Any income taxes or other taxes
levied or assessed upon or in respect of the assets or income of the
custodial account and any transfer taxes incurred shall be paid from the
custodial account. All administrative expenses incurred by the Custodian
in the performance of its duties, including fees for legal services
rendered to the Custodian in connection with the custodial account, and
the Custodian's compensation shall be paid from the custodial account,
unless otherwise paid by the Depositor or his or her beneficiaries.
Sufficient shares shall be liquidated from the custodial account to pay
such fees and expenses.
The Custodian's fees are set forth in a schedule provided to the
Depositor. Extraordinary charges resulting from unusual administrative
responsibilities not contemplated by the schedule will be subject to such
additional charges as will reasonably compensate the Custodian. Fees for
refund of excess contributions, transferring to a successor trustee or
custodian, or redemption/reinvestment of Investment Company Shares will be
deducted from the refund or redemption proceeds and the remaining balance
will be remitted to the Depositor, or reinvested or transferred in
accordance with the Depositor's instructions.
4. Reports and Notices. (a) The Custodian shall keep
adequate records of transactions it is required to perform hereunder.
After the close of each calendar year, the Custodian shall provide to the
Depositor or his or her legal representative a written report or reports
reflecting the transactions effected by it during such year and the assets
and liabilities of the Custodial Account at the close of the year.
(b) All communications or notices shall be deemed to be given
upon receipt by the Custodian at Post Office Box 701, Milwaukee, Wisconsin
53201-0701 or the Depositor at his most recent address shown in the
Custodian's records. The Depositor agrees to advise the Custodian
promptly, in writing, of any change of address.
5. Designation of Beneficiary. The Depositor may designate a
beneficiary or beneficiaries to receive benefits from the custodial
account in the event of the Depositor's death. In the event the Depositor
has not designated a beneficiary, or if all beneficiaries shall predecease
the Depositor, the following persons shall take in the order named:
(a) The spouse of the Depositor;
(b) If the spouse shall predecease the Depositor or if the
Depositor does not have a spouse, then to the Depositor's estate.
The Depositor may also change or revoke any previously made
designation of beneficiary. Any designation or change or revocation of a
designation shall be made by written notice in a form acceptable to and
filed with the Custodian, prior to the complete distribution of the
balance in the custodial account. The last such designation on file at
the time of the Depositor's death shall govern. If a beneficiary dies
after the Depositor, but prior to receiving his or her entire interest in
the custodial account, the remaining interest in the custodial account
shall be paid to the beneficiary's estate.
6. Multiple Individual Retirement Accounts. In the event the
Depositor maintains more than one individual retirement account (as
defined in Section 408(a)) and elects to satisfy his or her minimum
distribution requirements described in Article IV above by making a
distribution for another individual retirement account in accordance with
Paragraph 6 thereof, the Depositor shall be deemed to have elected to
calculate the amount of his or her minimum distribution under this
custodial account in the same manner as under the individual retirement
account from which the distribution is made.
7. Inalienability of Benefits. Neither the benefits provided
under this custodial account nor the assets held therein shall be subject
to alienation, assignment, garnishment, attachment, execution or levy of
any kind and any attempt to cause such benefits or assets to be so
subjected shall not be recognized except to the extent as may be required
by law.
8. Rollover Contributions and Transfers. The Custodian shall
have the right to receive rollover contributions and to receive direct
transfers from other custodians or trustees. All contributions must be
made in cash or check.
9. Conflict in Provisions. To the extent that any provisions
of this Article VIII shall conflict with the provisions of Articles IV, V
and/or VII, the provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be
construed, administered and enforced according to the laws of the State of
Wisconsin.
11. Resignation or Removal of Custodian. The Custodian may
resign at any time upon thirty (30) days notice in writing to the
Investment Company. Upon such resignation, the Investment Company shall
notify the Depositor, and shall appoint a successor custodian under this
Agreement. The Depositor or the Investment Company at any time may remove
the Custodian upon 30 days written notice to that effect in a form
acceptable to and filed with the Custodian. Such notice must include
designation of a successor custodian. The successor custodian shall
satisfy the requirements of section 408(h) of the Code. Upon receipt by
the Custodian of written acceptance of such appointment by the successor
custodian, the Custodian shall transfer and pay over to such successor the
assets of and records relating to the Custodial Account. The Custodian is
authorized, however, to reserve such sum of money as it may deem advisable
for payment of all its fees, compensation, costs and expenses, or for
payment of any other liability constituting a charge on or against the
assets of the Custodial Account or on or against the Custodian, and where
necessary may liquidate shares in the Custodial Account for such payments.
Any balance of such reserve remaining after the payment of all such items
shall be paid over to the successor Custodian. The Custodian shall not be
liable for the acts or omissions of any predecessor or successor custodian
or trustee.
12. Limitation on Custodian Responsibility. The Custodian will
not under any circumstances be responsible for the timing, purpose or
propriety of any contribution or of any distribution made hereunder, nor
shall the Custodian incur any liability or responsibility for any tax
imposed on account of any such contribution or distribution. Further, the
Custodian shall not incur any liability or responsibility in taking or
omitting to take any action based on any notice, election, or instruction
or any written instrument believed by the Custodian to be genuine and to
have been properly executed. The Custodian shall be under no duty of
inquiry with respect to any such notice, election, instruction, or written
instrument, but in its discretion may request any tax waivers, proof of
signatures or other evidence which it reasonably deems necessary for its
protection. The Depositor and the successors of the Depositor including
any executor or administrator of the Depositor shall, to the extent
permitted by law, indemnify the Custodian and its successors and assigns
against any and all claims, actions or liabilities of the Custodian to the
Depositor or the successors or beneficiaries of the Depositor whatsoever
(including without limitation all reasonable expenses incurred in
defending against or settlement of such claims, actions or liabilities)
which may arise in connection with this Agreement or the Custodial
Account, except those due to the Custodian's own bad faith, gross
negligence or willful misconduct. The Custodian shall not be under any
duty to take any action not specified in this Agreement, unless the
Depositor shall furnish it with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian, or
to defend or engage in any suit with respect hereto unless it shall have
first agreed in writing to do so and shall have been fully indemnified to
its satisfaction.
THE XXXXXXX FUNDS, INC.
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
Please read the following information together with the
Individual Retirement Account Custodial Agreement and the Prospectus(es)
for the fund(s) you select for investment of your IRA contributions.
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 Xxxxxxx Funds, Inc., c/o Firstar Trust Company, 000
Xxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx, X. X. Box 701, Milwaukee, Wisconsin
53201-0781, Attention: Mutual Fund Department. If your revocation is
mailed, the date of the postmark (or the date of certification if sent by
certified or registered mail) will be considered your revocation date.
Upon proper revocation, you will receive a full refund of your initial
contribution, without any adjustments for items such as administrative
fees or fluctuations in market value.
(a) General. Your IRA is a custodial account created for your
exclusive benefit, and Firstar Trust Company serves as custodian. Your
interest in the account is nonforfeitable.
(b) Investments. Contributions made to your IRA will be
invested in one or more of the regulated investment companies for which
Xxxxxxx Capital Management, Inc. serves as investment advisor or any other
regulated investment company designated by Xxxxxxx Capital Management,
Inc. No part of your account may be invested in life insurance contracts;
further, the assets of your account may not be commingled with other
property.
(c) Eligibility. Employees and self-employed individuals are
eligible to contribute to an IRA. Employers may also contribute to
employer-sponsored IRAs established for the benefit of their employees.
You may also establish an IRA to receive rollover contributions and
transfers from another IRA custodian or trustee or from certain other
retirement plans.
(d) Time of Contribution. You may make regular contributions
to your IRA any time up to and including the due date for filing your tax
return for the year, not including extensions. You may continue to make
regular contributions to your IRA up to (but not including) the calendar
year in which you reach 70-1/2. Employer contributions to a SEP - IRA
plan may be continued after you attain age 70-1/2. Rollover contributions
and transfers may be made at any time, including after you reach age 70-
1/2.
(e) Amount of Contribution. You may make annual regular
contributions to an IRA in any amount up to 100% of your compensation for
the year or $2,000, whichever is less. Qualifying rollover contributions
and transfers are not subject to this limitation. In addition, if you are
married and file a joint return, you may make contributions to your
spouse's IRA. However, the maximum amount contributed to both your own
and to your spouse's IRA may not exceed 100% of your combined compensation
or $4,000, whichever is less. Moreover, the annual contribution to either
your account or your spouse's account may not exceed $2,000. Note that a
different rule for spousal IRAs applied for tax years beginning before
January 1, 1997.
(f) Rollovers and Transfers. You are allowed to "roll over" a
distribution or transfer your assets from one individual retirement
account to another without any tax liability. Rollovers between IRAs may
be made once per year and must be accomplished within 60 days after the
distribution. Also, under certain conditions, you may roll over (tax
free) all or a portion of a distribution received from a qualified plan or
tax-sheltered annuity in which you participate or in which your deceased
spouse participated. However, strict limitations apply to such rollovers,
and you should seek competent advice in order to comply with all of the
rules governing rollovers.
Most distributions from qualified retirement plans will be
subject to a 20% withholding requirement. The 20% withholding can be
avoided by directly transferring the amount of the distribution to an
individual retirement account or to certain other types of retirement
plans. You should receive more information regarding these new
withholding rules and whether your distribution can be transferred to an
IRA from the plan administrator prior to receiving your distribution.
(g) Tax Deductibility of Annual Contributions. Although you
may make an IRA contribution within the limitations described above, all
or a portion of your contribution may be nondeductible. No deduction is
allowed for a rollover contribution or transfer. If you are not married
and are not an "active participant" in an employer-sponsored retirement
plan, you may make a fully deductible IRA contribution in any amount up to
$2,000 or 100% of your compensation for the year, whichever is less. The
same limits apply if you are married and file a joint return with your
spouse and neither you nor your spouse is an "active participant" in an
employer-sponsored retirement plan.
An employer-sponsored retirement plan includes any of the
following types of retirement plans:
-- a qualified pension, profit-sharing, or
stock bonus plan established in accordance
with IRC 401(a) or 401(k),
-- a Simplified Employee Pension Plan (SEP)
(IRC 408(k)),
-- a deferred compensation plan maintained by a
governmental unit or agency,
-- tax-sheltered annuities and custodial
accounts (IRC 403(b) and 403(b)(7)),
-- a qualified annuity plan under IRC Section
403(a).
-- a Savings Incentive Match Plan for Employees
of Small Employers (SIMPLE Plan).
Generally, you are considered an "active participant" in a
defined contribution plan if an employer contribution or forfeiture was
credited to your account during the year. You are considered an "active
participant" in a defined benefit plan if you are eligible to participate
in a plan, even though you elect not to participate. You are also treated
as an "active participant" if you make a voluntary or mandatory
contribution to any type of plan, even if your employer makes no
contribution to the plan.
If you (or your spouse, if filing a joint tax return) are
covered by an employer-sponsored retirement plan, your IRA contribution is
fully deductible if your adjusted gross income (or combined income if you
file a joint tax return) does not exceed certain limits. For this
purpose, your adjusted gross income (1) is determined without regard to
the exclusions from income arising under Sections 135 (exclusion of
certain savings bond interest), 137 (exclusion of certain employer
provided adoption expenses) and 911 (certain exclusions applicable to U.S.
citizens or residents living abroad) of the Code, (2) is not reduced for
any deduction that you may be entitled to for IRA contributions, and (3)
takes into account the passive loss limitations under Section 469 of the
Code and any taxable benefits under the Social Security Act and Railroad
Retirement Act as determined in accordance with Section 86 of the Code.
If you (or your spouse, if filing a joint tax return) are
covered by an employer-sponsored retirement plan, the deduction for your
IRA contribution is reduced proportionately for adjusted gross income
which exceeds the applicable dollar amount. The applicable dollar amount
for an individual is $25,000 and $40,000 for married couples filing a
joint tax return. The applicable dollar limit for married individuals
filing separate returns if $0. If your adjusted gross income exceeds the
applicable dollar amount by $10,000 or less, you may make a deductible IRA
contribution. The deductible amount, however, will be less than $2,000.
To determine the amount of your deductible contribution, use the
following calculations:
1) Subtract the applicable dollar amount from
your adjusted gross income. If the result
is $10,000 or more, you can only make a
nondeductible contribution to your IRA.
2) Divide the above figure by $10,000, and
multiply that percentage by $2,000.
3) Subtract the dollar amount (result from #2
above) from $2,000 to determine the amount
which is deductible.
If the deduction limit is not a multiple of $10 then it should
be rounded up to the next $10. There is a $200 minimum floor on the
deduction limit if your adjusted gross income does not exceed $35,000 (for
a single taxpayer), $50,000 (for married taxpayers filing jointly) or
$10,000 (for a married taxpayer filing separately).
Even if your income exceeds the limits described above, you may
make a contribution to your IRA up to the contribution limitations
described in Section 5 above. To the extent that your contribution
exceeds the deductible limits, it will be nondeductible. However,
earnings on all IRA contributions are tax deferred until distribution.
(h) Excess Contributions. Contributions which exceed the
allowable maximum for federal income tax purposes are treated as excess
contributions. A nondeductible penalty tax of 6% of the excess amount
contributed will be added to your income tax for each year in which the
excess contribution remains in your account.
(i) Correction of Excess Contribution. If you make a
contribution in excess of your allowable maximum, 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, including extensions, for filing your tax return for the tax year
for which the contribution was made. Any earnings on the withdrawn excess
contribution will be taxable in the year the excess contribution was made
and may be subject to a 10% early distribution penalty tax if you are
under age 59 1/2. In addition, in certain cases an excess contribution
may be withdrawn after the time for filing your tax return. Finally,
excess contributions for one year may be carried forward and applied
against the contribution limitation in succeeding years.
(j) Simplified Employee Pension Plan. An IRA may also be used
in connection with a Simplified Employee Pension Plan established by your
employer (or by you if you are self-employed). In addition, if your SEP
Plan as in effect on December 31, 1996 permitted salary reduction
contributions, you may elect to have your employer make salary reduction
contributions. Several limitations on the amount that may be contributed
apply. First, salary reduction contributions (for plans that are
eligible) may not exceed $9,500 per year (certain lower limits may apply
for highly compensated employees). The $9,500 limit applies for 1997 and
is adjusted periodically for cost of living increases. Second, the
combination of all contributions for any year (including employer
contributions and, if your SEP Plan is eligible, salary reduction
contributions) cannot exceed 15 percent of compensation (disregarding for
this purpose compensation in excess of $160,000 per year). The $160,000
compensation limit applies for 1997 and is adjusted periodically for cost
of living increases. A number of special rules apply to SEP Plans,
including a requirement that contributions generally be made on behalf of
all employees of the employer (including for this purpose a sole
proprietorship or partnership) who satisfy certain minimum participation
requirements. It is your responsibility and that of your employer to see
that contributions in excess of normal IRA limits are made under and in
accordance with a valid SEP Plan.
(k) Savings and Incentive Match Plan for Employees of Small
Employers ("SIMPLE"). An IRA may also be used in connection with a SIMPLE
Plan established by your employer (or by you if you are self-employed).
Under a SIMPLE Plan, you may elect to have your employer make salary
reduction contributions of up to $6,000 per year to your SIMPLE IRA. The
$6,000 limit applies for 1997 and is adjusted periodically for cost of
living increases. In addition, your employer will contribute certain
amounts to your SIMPLE IRA, either as a matching contribution to those
participants who make salary reduction contributions or as a non-elective
contribution to all eligible participants whether or not making salary
reduction contributions. A number of special rules apply to SIMPLE Plans,
including (1) a SIMPLE Plan generally is available only to employers with
fewer than 100 employees, (2) contributions must be made on behalf of all
employees of the employer (other than bargaining unit employees) who
satisfy certain minimum participation requirements, (3) contributions are
made to a special SIMPLE IRA that is separate and apart from your other
IRAs, (4) if you withdraw from your SIMPLE IRA during the 2 year period
during which you first began participation in the SIMPLE Plan, the early
distribution excise tax (if otherwise applicable) is increased to 25
percent; and (5) during this two year period, any amount withdrawn may be
rolled over tax-free only into another SIMPLE IRA (and not to a "regular"
IRA). It is your responsibility and that of your employer to see that
contributions in excess of normal IRA limits are made under and in
accordance with a valid SIMPLE Plan.
(l) Form of Distributions. Distributions may be made in any
one of three methods:
(a) a lump-sum distribution,
(b) installments over a period not extending beyond your life
expectancy (as determined by actuarial tables), or
(c) installments over a period not extending beyond the joint
life expectancy of you and your designated beneficiary (as determined
by actuarial tables).
You may also use your account balance to purchase an annuity
contract, in which case your custodial account will terminate.
(m) Latest Time to Withdraw. You must begin receiving the
assets in your account no later than April 1 following the calendar year
in which you reach age 70-1/2 (your "required beginning date"). In
general, the minimum amount that must be distributed each year is equal to
the amount obtained by dividing the balance in your IRA on the last day of
the prior year (or the last day of the year prior to the year in which you
attain age 70-1/2) by your life expectancy, the joint life expectancy of
you and your beneficiary, or the specified payment term, whichever is
applicable. A federal tax penalty may be imposed against you if the
required minimum distribution is not made for the year you reach age 70-
1/2 and for each year thereafter. The penalty is equal to 50% of the
amount by which the actual distribution is less than the required minimum.
Unless you or your spouse elects otherwise, your life expectancy
and/or the life expectancy of your spouse will be recalculated annually.
An election not to recalculate life expectancy(ies) is irrevocable and
will apply to all subsequent years. The life expectancy of a nonspouse
beneficiary may not be recalculated.
If you have two or more IRAs, you may satisfy the minimum
distribution requirements by receiving a distribution from one of your
IRAs in an amount sufficient to satisfy the minimum distribution
requirements for your other IRAs. You must still calculate the required
minimum distribution separately for each IRA, but then such amounts may be
totalled and the total distribution taken from one or more of your
individual IRAs.
Distribution from your IRA must satisfy the special "incidental
death benefit" rules of the Internal Revenue Code. These provisions set
forth certain limitations on the joint life expectancy of you and your
beneficiary. If your beneficiary is not your spouse, your beneficiary
will be generally considered to be no more than 10 years younger than you
for the purpose of calculating the minimum amount that must be
distributed.
(n) Distribution of Account Assets After Death. If you die
before receiving the balance of your account, distribution of your
remaining account balance is subject to several special rules. If you die
on or after your required beginning date, distribution must continue in a
method at least as rapid as under the method of distribution in effect at
your death. If you die before your required beginning date, your
remaining interest will, at the election of your beneficiary or
beneficiaries, (i) be distributed by December 31 of the year in which
occurs the fifth anniversary of your death, or (ii) commence to be
distributed by December 31 of the year following your death over a period
not exceeding the life or life expectancy of your designated beneficiary
or beneficiaries.
Two additional distribution options are available if your spouse
is the beneficiary: (i) payments to your spouse may commence as late as
December 31 of the year you would have attained age 70-1/2 and be
distributed over a period not exceeding the life or life expectancy of
your spouse, or (ii) your spouse can simply elect to treat your IRA as his
or her own, in which case distributions will be required to commence by
April 1 following the calendar year in which your spouse attains age 70-
1/2.
(o) Tax Treatment of Distributions. Amounts distributed to you
are generally includable in your gross income in the taxable year you
receive them and are taxable as ordinary income. To the extent, however,
that any part of a distribution constitutes a return of your nondeductible
contributions, it will not be included in your income. The amount of any
distribution excludable from income is the portion that bears the same
ratio as your aggregate nondeductible contributions bear to the balance of
your IRA at the end of the year (calculated after adding back
distributions during the year). For this purpose, all of your IRAs are
treated as single IRA. Furthermore, all distributions from an IRA during
a taxable year are to be treated as one distribution. The aggregate
amount of distributions excludable from income for all years cannot exceed
the aggregate nondeductible contributions for all calendar years.
No distribution to you or anyone else from your account can
qualify for capital gains treatment under the federal income tax laws.
Similarly, you are not entitled to the special five- or ten-year averaging
rule for lump-sum distributions available to persons receiving
distributions from certain other types of retirement plans. All
distributions are taxed to the recipient as ordinary income except the
portion of a distribution which represents a return of nondeductible
contributions. The tax on excess distributions (but not the additional
estate tax payable with respect to excess accumulations) under Section
4980A of the Code does not apply with respect to distributions made in
1997, 1998 and 1999.
Any distribution which is properly rolled over will not be
includable in your gross income.
(p) Early Distributions. Distributions from your IRA made
before age 59-1/2 will be subject to a 10% nondeductible penalty tax
unless the distribution is a return of nondeductible contributions or is
made because of your death, disability, as part of a series of
substantially equal periodic payments over your life expectancy or the
joint life expectancy of you and your beneficiary, or the distribution is
made for medical expenses in excess of 7.5% of adjusted gross income, is
made for reimbursement of medical premiums while you are unemployed, or is
an exempt withdrawal of an excess contribution. The penalty tax may also
be avoided if the distribution is rolled over to another individual
retirement account. See paragraph 11 above for special rules applicable
to distributions from a SIMPLE IRA.
(q) Qualification of Plan. Your Individual Retirement Account
Plan has been approved as to form by the Internal Revenue Service. The
Internal Revenue Service approval is a determination only as to the form
of the Plan and does not represent a determination of the merits of the
Plan as adopted by you. You may obtain further information with respect
to your Individual Retirement Account from any district office of the
Internal Revenue Service.
(r) Prohibited Transactions. If you engage in a "prohibited
transaction," as defined in section 4975 of the Internal Revenue Code,
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. Examples of prohibited transactions are:
(a) the sale, exchange, or leasing of any property between
you and your account,
(b) the lending of money or other extensions of credit
between you and your account,
(c) the furnishing of goods, services, or facilities
between you and your account.
If you are under age 59-1/2, you may also be subject to the 10% penalty
tax on early distributions.
(s) Penalty for Pledging Account. If you use (pledge) all or
part of your IRA 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 during the year in which you make such pledge. The 10% penalty tax
on early distributions may also apply.
(t) Reporting for Tax Purposes. Deductible contributions to
your IRA may be claimed as a deduction on your IRS Form 1040 for the
taxable year contributed. If any nondeductible contributions are made by
you during a tax year, such amounts must be reported on Form 8606 and
attached to your Federal Income Tax Return for the year contributed. If
you report a nondeductible contribution to your IRA and do not make the
contribution, you will be subject to a $100 penalty for each overstatement
unless a reasonable cause is shown for not contributing. Other reporting
will be required by you in the event that special taxes or penalties
described herein are due. You must also file IRS Form 5329 with the IRS
for each 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 IRA.
(u) Allocation of Earnings. The method of computing and
allocating annual earnings is set forth in Article VIII, Section 1 of the
Individual Retirement Account Custodial Agreement. The growth in value of
your IRA is neither guaranteed or projected.
(v) Income Tax Withholding. You must indicate on distribution
requests whether or not federal income taxes should be withheld.
Redemption request not indicating an election not to have federal income
tax withheld will be subject to withholding.
(w) Other Information. Information about the shares of each
mutual fund available for investment by your IRA must be furnished to you
in the form of a prospectus governed by rules of the Securities and
Exchange Commission. Please refer to the prospectus for detailed
information concerning your mutual fund. You may obtain further
information concerning IRAs from any District Office of the Internal
Revenue Service.
Fees and other expenses of maintaining your account may be
charged to you or your account. The Custodian's current fee schedule is
included as part of these materials.
The Xxxxxxx Funds, Inc.
IRA Application
Mail completed Application to:
The Xxxxxxx Funds, Inc.
Firstar Trust Company
000 Xxxx Xxxxxxxx Xxxxxx, 0xx Floor
P.O. Box 701
Milwaukee, WI 53201-0781
Attention: Mutual Fund Department
1. Account Name Daytime Phone Number ( )
Holder
Address
City/State/Zip
Birthdate Social Security Number
2. Beneficiary Name Daytime Phone Number ( )
Designation*
Address
City/State/Zip
Birthdate Social Security Number
* If no beneficiary is named, in the event of your death your IRA
will be payable to your estate.
3. Type of IRA [ ] Individual Retirement
(Check One) Account
For Tax Year 19___.
[ ] Spousal Account. (If
electing this option be sure to
complete Section 1 showing your
spouse as the account holder.)
For Tax Year 19___.
[ ] SEP Account (IRS Form 5305-
SEP is required with your
Application).
For Tax Year 19___.
[ ] SIMPLE Account (IRS Form
5304 SIMPLE is required with
your application.)
[ ] Rollover Account (You had
physical receipt of assets for
less than 60 days or you have
authorized a direct rollover
from a qualified plan). If
Rollover Account, please specify
the type of account held by
previous custodian below.
[ ] IRA to IRA
[ ] Employer Sponsored Plan
to IRA
[ ] Transfer Account - Check
this box if assets are a
direct transfer from current
IRA custodian (you will not
have personal receipt of
assets) and complete an IRA
Transfer Form.
4. Your Investment Instructions I understand that my account
will be invested in The Xxxxxxx
Growth Fund.
5. Acknowledgement I adopt The Xxxxxxx Funds, Inc.
and Signature IRA, appointing Firstar Trust
Company to act as Custodian and
to perform administrative
services. I have received and
read the prospectus(es) for the
Fund(s) in which I am making my
contribution, and have read and
understand the IRA Custodial
Agreement and Disclosure
Statement. I certify under
penalties of perjury that my
Social Security Number (above)
is correct and that I am of
legal age. I understand that
the Custodian will charge fees
that are shown in the Disclosure
Statement (or any update
thereto) and they may be
separately billed or collected
by redeeming sufficient shares
from my Fund(s) account balance.
I will supply the Internal
Revenue Service with information
as to any taxable year as
required unless filed by the
Custodian.
I have read, accept and
incorporate the Custodial
Agreement and Disclosure
Statement herein, by reference.
I appoint Firstar Trust Company
or its successors, as Custodian
of the account(s).
Your Signature Date
Firstar Trust Company
Authorized Signature Date
Appointment of Custodian accepted:
FIRSTAR TRUST COMPANY
