EXHIBIT 14.1
THE JEFFERSON FUND GROUP TRUST
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), 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 the state.
ARTICLE IV
1. Notwithstanding any provisions 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 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 expec-tancy 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 not 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 designated
beneficiary as of their birthdays in the year the Depositor reaches age 70-1/2.
In the case of a distribution in accordance with Paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under Section 408(i)
and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribes 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.
ARTICLE VIII
1. Investment of Account Assets (a) All contributions to the custodial
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account shall be invested in the shares of The Jefferson Fund Group Trust or, if
available, any other series of The Jefferson Fund Group Trust or other
regulated investment companies for which Uniplan, Inc. serve as the 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
dividend and capital gain 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 ant 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 then
current prospectus of such other Investment Company in which the Depositor
elects to invest. By giving suchinstructions, 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 InvestmentCompanies.
2. Amendment and Termination (a) Uniplan, Inc. the investment advisor for
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The Jefferson Fund Group Trust, may amend the Custodial Account (including
retroactive amendments) by delivering to Custodian and to the Depositor written
notice of such amendment setting forth the substance and effective date of the
amendment. The Custodian and the shall be deemed to have consented to any such
amendment not subject to in writing by the Custodian or Depositor as applicable
within thirty (30) days of the receipt 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.
3. Taxes and Custodial Fees. Any income taxes or other taxes levied or
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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 will 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 or 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
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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: Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin
53201-0701 or the Depositor at his or her 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
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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. A 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
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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. The benefits provided under this
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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
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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
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Article VIII shall conflict with the provisions of Article IV, V and/or VII, the
provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be construed,
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administered and enforced according to the laws of the State of Wisconsin.
11. Resignation or Removal of Custodian. The Custodian may resign at
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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 thirty (30) days
written notice to the 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
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under any circumstances be responsible for the timing, purpose or propriety of
any contribution or of any distributions 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 t 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 successor of the Depositor
including any executor or administrator to 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 successor 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 JEFFERSON FUND GROUP TRUST
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 Jefferson Fund Group Trust, c/o Firstar Trust Company, 000 Xxxx Xxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, 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.
1. General. Your IRA is a custodial account created for your
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exclusive benefit, and Firstar Trust Company serves as custodian. Your interest
in the account is nonforfeitable.
2. Investments. Contributions made to your IRA will be invested in
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one or more of the regulated investment companies for which Uniplan, Inc. serves
as investment advisor or any other regulated investment company designated by
The Jefferson Fund Group Trust. 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.
3. Eligibility. Employees and self-employed individuals are
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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.
4. Time of Contribution. You may make regular contributions to your
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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.
5. Amount of Contribution. You may make annual regular
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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.
6. Rollovers and Transfers. You are allowed to "roll over" a
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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.
7. Tax Deductibility of Annual Contributions. Although you may make
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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 Section 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.
8. Excess Contributions. Contributions which exceed the allowable
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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.
9. Correction of Excess Contribution. If you make a contribution in
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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.
10. Simplified Employee Pension Plan. An IRA may also be used in
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connection with a Simplified Employee Pension Plan established by your employer
(or by you if you are self-employed.) Your employer (or you if self-employed)
may contribute to the IRA of each eligible participant up to a maximum of 15
percent of compensation or $22,500, whichever is less. In addition, if your SEP
Plan as in effect on December 31, 1996 permitted salary reduction contributions,
you may also elect to have your employer make salary reduction contributions
of up to $9,500 per year. The $9,500 limit applies for 1997 and is adjusted
periodically for cost of living increases. Certain lower limits may apply for
highly compensated participants. In any event, the combination of your
employer's contributions and your salary reduction contributions (if your SEP
Plan is eligible) may not exceed the lesser of 15 percent of compensation or
$30,000. A number of special rules apply to SEP/IRA, including a requirement
that contributions be made on behalf of all employees of the employer 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.
11. Savings and Incentive Match Plan for Employees of Small Employers
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("SIMPLE"). An IRA may also be used in connection with a SIMPLE Plan
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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.
12. Form of Distributions. Distributions may be made in any one of
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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.
13. Latest Time to Withdraw. You must begin receiving the assets in
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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 totaled 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.
14. Distribution of Account Assets After Death. If you die before
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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.
15. Tax Treatment of Distributions. Amounts distributed to you are
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generally included 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 included in
your gross income.
16. Early Distributions. Distributions from your IRA made before age
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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.
17. 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.
18. 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.
19. Penalty for Pledging Account. If you use (pledge) all or
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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.
20. Reporting for Tax Purposes. Deductible contributions to
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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 Treasury 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.
21. Allocation of Earnings. The method of computing and
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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.
22. 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.
23. Other Information. Information about the shares of each
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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.
