EXHIBIT 14(a)
IRA
CUSTODIAL AGREEMENT
AND
DISCLOSURE STATEMENT
[LOGO] JANUS FUNDS
CUSTODIAL AGREEMENT
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INTRODUCTION
The Depositor, by signing the Application, and the Custodian, by accepting the
Application, have established this Individual Retirement Custodial Account
Agreement (the "Agreement") sponsored by Janus Investment Fund. The Application
is a part of this Agreement. The Individual Retirement Custodial Account is
established within the meaning of Section 408 (a) of the Internal Revenue Code
of 1986, as amended, or any successor statute (hereafter referred to as the
"Code"). It is agreed by the Depositor and the Custodian that the terms and
conditions of the Individual Retirement Custodial Account are as stated in this
Agreement, which shall be effective as of the date the Application is accepted
by the Custodian.
5305-A Individual Retirement Custodial Account
ARTICLE I
Contributions
Paragraph 1.1 - 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
Nonforfeitable Benefits
Paragraph 2.1 - The Depositor's interest in the balance in the custodial account
is nonforfeitable.
ARTICLE III
Investments
Paragraph 3.1 - 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)).
Paragraph 3.2 - 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 exemption for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV
Distribution of the Account
Paragraph 4.1 - 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 incorporated by reference.
Paragraph 4.2 - Unless otherwise elected by the time distributions are required
to begin to the Depositor under paragraph 4.3, or to the surviving spouse under
paragraph 4.4, 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.
Paragraph 4.3 - The Depositor's entire interest in the custodial account must
be, or begin to be, distributed by the Depositor's required beginning date,
(April 1 following the calendar year end in which the Depositor reaches age
701/2). By that date, the Depositor may elect, in a manner acceptable to the
Custodian, to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
Paragraph 4.4 - 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 4.3.
(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 701/2.
(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.
Paragraph 4.5 - 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 4.3, 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 701/2. In the case of a distribution in accordance with paragraph
4.4(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.
CUSTODIAL AGREEMENT
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Paragraph 4.6 - 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
Disclosure and Reporting
Paragraph 5.1 - The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.
Paragraph 5.2 - The Custodian agrees to submit reports to the Internal Revenue
Service and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI
Miscellaneous
Paragraph 6.1 - 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 the related regulations will be invalid.
ARTICLE VII
Amendment
Paragraph 7.1 - 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
Definitions and Other
Paragraph 8.1 - Definitions. The following definitions shall apply to terms used
in this Agreement:
a. "Application" shall mean the IRA Application submitted by the
Depositor to the Custodian.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any regulations, procedures, rulings, or notices issued
thereunder.
c. "Company" shall mean Janus Investment Fund.
d. "Custodial Account" shall mean the custodial account established under
this Agreement.
e. "Custodian" shall mean Investors Fiduciary Trust Company and any
successor custodian.
f. "Depositor" shall mean the individual establishing this IRA by
completing and signing the Application.
Paragraph 8.2 - Investment of Contributions. Contributions shall be invested in
shares of available series of the Company in accordance with the Depositor's
written instructions in the Application, and with subsequent written
instructions of the Depositor (or, following the death of the Depositor, his or
her beneficiary) in a form acceptable to and filed with the Custodian. By giving
such instructions, the Depositor (or beneficiary, where applicable) will be
deemed to have acknowledged receipt of the then current prospectus for any
shares in which the Depositor (or beneficiary) directs the Custodian to invest
contributions. The Depositor, by making a rollover contribution, as described in
Article I, hereby certifies that the contribution meets all requirements for
rollover contributions. The amount of each contribution shall be applied to the
purchase of such shares at the price and in the manner in which such shares are
then being publicly offered by the Company in accordance with the then current
prospectus, and such shares shall be credited to the Custodial Account. All
dividends and capital gain distributions received on the shares of the fund held
in each Custodial Account shall be reinvested in such shares which shall be
credited to such Custodial Account. If any distribution on shares of the fund
may be received at the election of the shareholder in additional shares or in
cash or other property, the Custodian shall elect to receive such distribution
in additional shares. The Custodian shall not be liable for interest on any cash
balance in the Custodial Account. All Company shares acquired by the Custodian
shall be registered in the name of the Custodian or its registered nominee.
Paragraph 8.3 - Voting with respect to shares. The Custodian shall not vote any
of the shares of a Company mutual fund held in the Custodial Account except in
accordance with written instructions of the Depositor, timely received, in a
form acceptable to the Custodian.
Paragraph 8.4 - Alternative Distribution Methods: Notwithstanding Article IV, a
Depositor may elect in writing in a form acceptable to and filed with the
Custodian, to have the balance in the Custodial Account distributed only in a
lump sum or in substantially equal payments over a period that does not exceed
the Depositor's life expectancy or the joint and last survivor life expectancy
of the Depositor and his or her designated beneficiary. For this purpose, life
expectancies must be determined by using applicable Internal Revenue Service
tables. 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. To receive an annuity
distribution, a Depositor may roll over a lump sum distribution to purchase an
individual retirement annuity payable in equal or substantially equal payments
over the Depositor's life expectancy or the joint and last survivor life
expectancy of the Depositor and his or her designated beneficiary. The
distribution option should be reviewed in the year the Depositor reaches age
701/2 to make sure the requirements of Code Section 408(a)(6) have been met.
Consistent with paragraph 4.6 of Article IV, the Custodian is not obligated to
make any distribution absent a specific written direction, in a form acceptable
to and filed with the Custodian, from the Depositor or designated beneficiary to
do so.
Paragraph 8.5 - Amendment and Termination. The Depositor may at any time and
from time to time terminate this Agreement in whole or in part by delivering to
the Custodian a signed written notice of such termination, in a form acceptable
to the Custodian. The Depositor and the Custodian delegate to the Company the
right to amend this Agreement (including retroactive amendments) by written
notice to the Custodian and the Depositor. The Depositor shall be deemed to have
consented to any such amendment, provided that (a) 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) any amendment which affects the rights, duties or
responsibilities of the Custodian may only be made with the Custodian's consent;
and (c) no amendment shall be made except in accordance with any applicable laws
and regulations affecting this Agreement and the Custodial Account.
Paragraph 8.6 - Resignation or Removal of Custodian. The Custodian may resign at
any time upon thirty (30) days notice in writing to the Depositor and the
Company. Upon such resignation, the Depositor delegates to the Company the
responsibility to appoint a successor custodian under this Agreement. The
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
CUSTODIAL AGREEMENT
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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 successor
custodian.
Paragraph 8.7 - Custodian's Annual Fees: The Depositor shall be charged by the
Custodian for its services under this Agreement in such amount as the Custodian
shall establish from time to time. Sufficient shares may be liquidated from the
Custodial Account to pay the fee. The annual fee in effect on the date of this
Agreement is set forth in the Application. A different fee may be substituted at
any time upon written notice to the Depositor. A Depositor who does not consent
to such new fee should terminate this Agreement pursuant to paragraph 8.5 of
Article VIII within 30 days of the notice of the new fee. If no such termination
is made within 30 days of the notice of the new fee, the Depositor will be
deemed to have consented to the new fee.
Paragraph 8.8 - Other Fees and Expenses. Any income or other taxes of any kind
whatsoever that may be levied or assessed upon or with respect to the Custodial
Account or the income thereof, any transfer taxes incurred in connection with
the investment and reinvestment of the assets of the Custodial Account, all
other reasonable administrative expenses incurred by the Custodian with respect
to any such taxes, or with respect to any controversies concerning the Custodial
Account, including, but not limited to, fees for legal services rendered to the
Custodian and related costs, and such reasonable compensation to the Custodian
for acting in that capacity with respect to any such taxes or controversies,
may, in the discretion of the Custodian, be charged against and paid from the
assets of the Custodial Account. Sufficient shares may be liquidated from the
Custodial Account to pay any such taxes, expenses and compensation.
Paragraph 8.9 - Inalienability of Assets: No interest, right or claim in or to
any part of the Custodial Account, nor any assets held therein or benefits
provided hereunder shall be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause any such
interest, right, claim, assets or benefits to be so subjected shall not be
recognized, except to the extent as may be required by law.
Paragraph 8.10 - Exchange Privilege: With respect to any Company shares held in
the Custodial Account, the Depositor (or beneficiary, where applicable) may,
upon submission of written or oral instructions in a form acceptable to and
filed with the Custodian, cause shares of any fund to be exchanged for shares of
any other fund of the Company meeting the requirements of this Agreement, upon
the terms and within the limitations imposed by the then current prospectus of
the fund of the Company whose shares are acquired in the exchange. By giving
such instructions, the Depositor (or beneficiary) will be deemed to have
acknowledged receipt of such prospectus.
Paragraph 8.11 - Designation of Beneficiary. The Depositor may designate a
beneficiary or change or revoke the designation of a beneficiary, 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. If the Depositor
has 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 Depositor, the Depositor's beneficiary shall be his or her estate. If a
beneficiary dies before receiving his or her entire interest in the Custodial
Account, his or her remaining interest in the Custodial Account shall be paid to
the beneficiary's estate.
Paragraph 8.12 - Responsibility as to Contributions or Distributions. 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.
Paragraph 8.13 - Other Limits on Responsibilities of the Custodian. The
Custodian shall not incur any liability or responsibility in taking or omitting
to take any action based on any notice, election, 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.
Paragraph 8.14 - Notices. All written notices required or permitted to be given
by the Custodian shall be deemed to have been given when sent by mail to the
Depositor at the Depositor's last address of record provided to the Custodian.
All written notices required or permitted to be given to the Custodian shall be
deemed to have been given when received by the Custodian if mailed to the
Custodian at Janus Funds, P.O. Box 173375, Denver, Colorado 80217-3375 or such
other address as the Custodian shall provide to the Depositor from time to time.
Paragraph 8.15 - Timing of Contributions. A contribution is deemed to have been
made on the last day of the preceding taxable year if the contribution is made
by the deadline for filing the Depositor's income tax return (not including
extensions) and if the Depositor designates the contribution as a contribution
for the preceding taxable year in a manner acceptable to the Custodian. However,
shares shall be purchased on the day such contribution is received by the
Custodian. The Custodian will not be liable or responsible for any consequences
of postal delays or delays resulting from an incomplete Application or a
designation made in an unacceptable form. Applications received postmarked after
the deadline will be treated as a contribution for the Depositor's current tax
year. Improperly completed applications will be returned to the sender.
Paragraph 8.16 - Governing Law. This Agreement and the Custodial Account shall
be construed, administered and enforced according to the laws of the State of
Missouri.
Paragraph 8.17 - When Effective. This Agreement shall not become effective until
acceptance of the Application by the Custodian at its principal offices, as
evidenced by a written confirmation to the Depositor.
DISCLOSURE STATEMENT
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INTRODUCTION
The following information is provided to you in accordance with the requirements
of the Internal Revenue Code (the "Code") and Treasury regulations and should be
reviewed in conjunction with the Individual Retirement Custodial Account
Agreement (the "Custodial Agreement"), the Application for your IRA (the
"Application"), and the prospectus for the Janus mutual funds that are allowable
investments for your IRA. The provisions of the Custodial Agreement, Application
and prospectus govern in any instance where the Disclosure Statement is
incomplete or appears to conflict. This Disclosure Statement reflects the
provisions of the Internal Revenue Code in effect on January 1, 1993. This
Disclosure Statement provides a nontechnical summary of the law. Please consult
with your tax advisor for more complete information and refer to IRS Publication
590, Individual Retirement Arrangements.
I. IRA STATUTORY REQUIREMENTS
An IRA is a trust or custodial account established for the exclusive benefit of
you and your beneficiaries. Current law requires that your IRA agreement be in
writing and that it meet the following requirements:
1. All contributions should be in U.S. dollars and should be drawn on U.S. banks
and, for any taxable year, cannot exceed 100% of your compensation or $2,000,
whichever is less, unless the contribution is a rollover contribution or an
employer contribution to a simplified employee pension plan ("SEP").
2. The custodian or trustee must be a bank or other institution or person that
is approved by the Internal Revenue Service to administer your IRA in accordance
with current tax laws.
3. None of your IRA assets may be invested in life insurance contracts or
commingled with the assets of other people except in a common trust fund or
common investment fund.
4. Your interest in your IRA account is nonforfeitable.
5. Distribution from your IRA must be in accordance with certain minimum
distribution rules, which are explained in Section VII.
II. RIGHT TO REVOKE
You may revoke your IRA at any time within seven days of the time your
Application is signed. To revoke your IRA, mail or deliver a written notice
stating "I hereby elect to revoke my Xxxxx Funds XXX." Sign your name exactly as
it appears on your Application, include your social security number, and mail
the notice to:
Janus Funds
P.O. Box 173375
Denver, Colorado 80217-3375
Your notice will be considered mailed on the date of postmark, or the date of
certification or registration if it is sent by certified or registered mail.
When the Custodian receives the proper notice of revocation, you will be
entitled to a refund of your full IRA contribution, without any adjustment for
expenses or market fluctuations. If your have any questions concerning your
right of revocation, please call 0-000-000-0000.
III. ELIGIBILITY
You may make regular contributions to an IRA if you receive compensation from
employment, earnings from self-employment, or alimony, and you have not reached
age 701/2 by the end of the tax year for which the contribution is made. In
addition, if you are married and file a joint tax return, you may make
contributions to an IRA for your spouse whether or not your spouse receives
compensation. You may make a rollover contribution to an IRA if you have
received an eligible rollover distribution from a qualified retirement plan or
tax-sheltered annuity or an eligible distribution from another IRA and elect
rollover treatment within 60 days. You may also make a trustee-to-trustee
transfer from another IRA. Finally, your employer may contribute to your IRA,
and if your employer sponsors a simplified employee pension ("SEP"), your
employer can make contributions to a SEP/IRA on your behalf.
IV. CONTRIBUTIONS
A. REGULAR CONTRIBUTIONS
You may contribute each year up to $2,000 or 100% of your compensation,
whichever is less, to your IRA. If you also establish a spousal IRA for your
spouse, you may contribute up to $2,250 or 100% of your compensation, if less,
which may be split between the two IRA's as you choose, provided that no more
than $2,000 may be contributed to either your IRA or the spousal IRA. If your
spouse has compensation in excess of $250, you and your spouse can make a larger
total contribution if you each contribute to a regular IRA. If your employer
contributes to your IRA, the contribution is treated as compensation paid to
you, whether or not the contribution is deductible, unless the contribution is
made under a SEP (see below). Compensation for these purposes means wages,
salaries, professional fees, or other amounts derived from or received for
personal services actually rendered. It includes earned income from self
employment and alimony or separate maintenance payments includable in income. It
does not include pension or annuity payments or deferred compensation.
B. Time for Making Regular Contributions
You may make regular contributions to your IRA and/or your spousal IRA anytime
during a year, up to and including the due date for filing your tax return for
the year (without extensions). No regular contributions may be made to an IRA
for the calendar year in which you reach age 701/2 or later years. No regular
contributions to a spousal IRA may be made for years in which your spouse is age
701/2 or older.
C. Deductibility
Regular IRA contributions are fully deductible unless you or your spouse are
active participants in a tax-qualified plan of an employer. If you or your
spouse are active participants in such a plan, then your allowable deduction for
regular IRA contributions is reduced or eliminated if your Adjusted Gross Income
("AGI") exceeds certain levels. (If you file separately and are married but live
apart from your spouse at all times during the year, you will be considered to
be single when applying the following rules regarding deduction limitations.)
The deductible amount is determined as follows:
1. If you (and your spouse) are not active participants in a tax-qualified plan,
any contribution up to the maximum amount is deductible.
2. If you (or your spouse) are an active participant in a tax-qualified plan,
and
(a) your AGI is $25,000 or less ($40,000 for a married couple filing a
joint return and $0 for a married person filing separately), any
contribution up to the maximum amount is deductible;
(b) your AGI is $35,000 or more ($50,000 for a married couple filing a
joint return and $10,000 for a married person filing separately), no
IRA contribution is deductible;
(c) your AGI is between $25,000 and $35,000 ($40,000 and $50,000 for a
married couple filing a joint return and $0 to $10,000 for a married
person filing separately), the deductible amount is reduced. In the
case of a regular IRA, the reduction is $0.20 for each $1.00 of AGI
over $25,000 ($40,000 for a married couple filing a joint return and
$10,000 for a married person filing separately). For a spousal IRA,
the reduction is $0.225 for each $1.00 of AGI over $40,000 if filing
jointly. The limit will not be reduced below $200 unless it is
eliminated entirely.
To the extent that the deductibility of IRA contributions is reduced or
eliminated, then nondeductible contributions may be made to your IRA. Earnings
on all IRA contributions, whether or not the contributions themselves are
deductible, are tax-deferred until receipt. You must designate the amount of
nondeductible IRA contributions when filing your tax return for the year. If you
overstate the amount of your nondeductible contributions you must pay a $100
penalty, unless you can show that such overstatement was due to reasonable
cause. If you fail to report nondeductible IRA contributions you will be subject
to a $50 penalty, unless your failure was due to reasonable cause.
DISCLOSURE STATEMENT
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D. Rollover Contributions
1. Amounts Eligible for Rollover from Plans
and Tax-Sheltered Annuities
You may make a rollover contribution to your IRA of an "eligible rollover
distribution" from an employer tax-qualified plan (an "employer plan") or a
tax-sheltered annuity (including a 403(b)(7) account). The administrator of the
employer plan or the payor of a distribution from the tax-sheltered annuity
should be able to tell you what portion of your payment is an eligible rollover
distribution. The following types of payments cannot be rolled over:
Non-Taxable Payments. In general, only the "taxable portion" of your payment is
an eligible rollover distribution. If you have made "after-tax" employee
contributions to the plan or annuity, these contributions will be non-taxable
when they are paid to you, and they cannot be rolled over. (After-tax employee
contributions generally are contributions you made from your own pay that were
already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if it is part
of a series of equal (or almost equal) payments that are made at least once a
year and that will last for
o your lifetime (or your life expectancy), or
o your lifetime and your beneficiary's lifetime (or life expectancies), or
o a period of ten years or more.
Required Minimum Payments. Beginning in the year you reach age 701/2, a certain
portion of your payment cannot be rolled (or transferred) over because it is a
"required minimum payment" that must be paid to you.
2. Direct Rollover
Generally, payment from an employer plan or a tax-sheltered annuity that is an
"eligible rollover distribution," as described above, will be subject to a
mandatory 20% income tax withholding. However, to avoid the 20% withholding you
can choose to perform a direct rollover. In a direct rollover, the eligible
rollover distribution is paid directly from the plan or tax-sheltered annuity to
your IRA. If you choose a direct rollover, you are not taxed on a payment until
you later take it out of the IRA.
3. Rollover of Plan Payments Paid To You
A payment to you of an eligible rollover distribution from an employer plan or
tax-sheltered annuity is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA (or another plan that accepts rollovers). If
you do not roll it over, special tax rules may apply. If any portion of the
payment to you is an eligible rollover distribution, the payor is required by
law to withhold 20% of that amount. This amount is sent to the IRS as income tax
withholding.
Sixty-Day Rollover Option. If you have an eligible rollover distribution paid to
you, you can still decide to roll over all or part of it to an IRA (or another
employer plan that accepts rollovers). If you decide to roll over, you must make
the rollover within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the IRA
(or the employer plan).
You can roll over up to 100% of the eligible rollover distribution, including an
amount equal to the 20% that was withheld. If you choose to roll over 100%, you
must find other money within the 60-day period to contribute to the IRA or the
employer plan to replace the 20% that was withheld. (On the other hand, if you
roll over only the 80% that you received, you will be taxed on the 20% that was
withheld).
See the Special Tax Notice Regarding Plan Payments, that must be provided by the
plan administrator or payor of your employer plan or tax-sheltered annuity, for
additional information on the rules governing rollover and taxation of plan
distributions, or consult your tax advisor for more details.
You should maintain a separate IRA account for any rollovers of funds from an
employer plan if you want to preserve your ability to later roll over these
funds and earnings into another employer plan. Similarly, you should maintain a
separate account for any rollover of funds from a tax-sheltered annuity.
You can make a rollover from a tax-qualified plan of your spouse's employer if
you received all or a part of your spouse's share as a result of his or her
death. A spouse or former spouse who is a recipient of a distribution made under
a qualified domestic relations order may roll over all or part of the
distribution.
Because complex rules apply to the distribution and rollover of payments from
employer plans and tax-sheltered annuities, you should seek competent tax advice
whenever you contemplate receiving a distribution from a qualified plan or
tax-sheltered annuity or an IRA funded by a rollover from a qualified plan or
tax-sheltered annuity.
4. Rollovers from Other IRAs
You may also make a rollover contribution of amounts held in another IRA. There
are no limits on the amount of rollover contributions made to an IRA from
another IRA, except you may not roll over (or transfer) the required minimum
amount (described in VII.D.). However, the distribution from the first IRA must
be rolled over within 60 days of receipt and no more than one distribution per
year from an IRA may be rolled over into another IRA.
5. Tax-Deferral on IRA Rollover or
Trustee-to-Trustee Transfer
An effective rollover allows you to postpone paying taxes on the amount
distributed from an employer plan, tax-sheltered annuity or IRA until it is
withdrawn from the recipient IRA. You do not report the distribution as income
and you do not take a deduction for the rollover contribution. Earnings on your
rollover IRA are tax- deferred until receipt. (Similarly, a trustee-to-trustee
transfer is not treated as a distribution and the amount transferred and
earnings are tax-deferred until receipt.)
E. SEP Contributions
If your employer has established a simplified employee pension ("SEP"), your
employer may make contributions to your SEP/IRA. If the SEP contains a salary
reduction arrangement, you may elect to reduce your salary by up to the lesser
of 15% of compensation or $7,000 (indexed); and have that amount contributed to
your SEP/IRA. The maximum SEP contribution, including salary reduction amounts
and employer contributions, is the lesser of 15% of compensation or $30,000. SEP
contributions are not included in your taxable income.
V. EXCESS CONTRIBUTIONS
Xxxxxxx contributed to an IRA which exceed the maximum allowable contribution
are treated as "excess contributions" and are subject to a nondeductible 6%
penalty tax for each year in which the excess remains in the IRA. Excess
contributions may be corrected and the 6% penalty tax avoided by withdrawal of
the excess and any earnings thereon before the due date (including extensions)
of the federal income tax return for the tax year for which the excess
contribution was made. No deduction may be taken for the excess contributions
and the earnings must be included in taxable income for the year the
contribution was made. The earnings withdrawn may be subject to a 10% premature
distribution tax if you are under age 591/2. See Section VII.B.
An excess contribution may be withdrawn after the due date of the federal income
tax return (including extensions) with the following consequences:
(a) If your total contribution for the tax year for which the excess
contribution was made is $2,250 or less (or below the limit of your
employer's SEP contribution) the excess contribution may be withdrawn
without being included in income or being subject to the 10% premature
distribution tax. No deduction may be taken for the excess
contribution. Any earnings withdrawn will be includable in income in
the year received as a distribution and will be subject to any 10%
premature distribution tax that may apply.
(b) If your total contribution for the tax year the excess contribution
was made exceeds $2,250 (or, if higher, the limit of your employer's
DISCLOSURE STATEMENT
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SEP contribution) any excess contribution and any earnings on the
excess withdrawn after the due date for the federal income tax return
(including extensions), will be includable in income in the year
received and will be subject to any 10% premature distribution tax
that may apply. Additionally, no deduction may be taken for the excess
contribution for the year in which it is made.
(c) Any excess contribution withdrawn after the due date for the tax
filing (including extensions) for the year for which the contribution
was made is subject to the 6% penalty tax on the amount of the excess
contribution for the taxable year in which made and each tax year that
it is still in your IRA at the end of the year.
You may also correct an excess contribution to your IRA by treating the excess
amount as contributed to your IRA in a subsequent year to the extent that the
excess, when aggregated with your IRA contribution (if any) for the subsequent
year, does not exceed the maximum amount for that year. You may be entitled to a
deduction for the amount of the excess contribution that is applied in the
subsequent year.
VI. INVESTMENT OF ACCOUNT AND FINANCIAL DISCLOSURE
The assets in your IRA will be invested in Janus mutual fund shares in
accordance with your instructions and Article VIII, paragraphs 8.2 and 8.10 of
the Custodial Agreement.
Growth in the value of your IRA cannot be guaranteed or projected. However, the
income and operating expenses of each allowable investment that you select for
your IRA will affect the value of its shares and, therefore, the value of your
IRA. The Janus Funds prospectus for such shares contains information regarding
current income and expenses of each of these investments. Reasonable fees and
other expenses of maintaining your IRA may be charged to you or your IRA. The
current annual Custodian's fee is set forth in the Application. A new fee may be
substituted from time to time as provided in paragraph 8.7 of the Custodial
Agreement.
VII. DISTRIBUTIONS
A. Taxation of Distribution as Ordinary Income
In general, you must include distributions from your IRA in your gross income
for the year in which the distributions are received. There is a 10% additional
income tax assessed against premature distributions to the extent such
distributions are includable in income, as described in B. below.
You may exclude from your income that portion of a distribution that constitutes
a return of your properly reported nondeductible contributions. The amount of
the distribution excludable from income is the portion that bears the same ratio
to the total distribution that your aggregate nondeductible contributions (not
distributed in prior years) bear to the balance at the end of the year
(calculated after adding back distributions made during the year) of your IRA.
For this purpose, all of your IRAs are treated as a single IRA, and all
distributions from an IRA during a taxable year are to be treated as one
distribution.
In addition, your gross income does not include any distribution from an IRA
that is properly rolled over. Except as provided in D. below, you may roll over
all or any part of property received in a distribution of assets, within 60 days
of receipt, into another IRA or individual retirement annuity, and maintain the
tax-deferred status of such assets. A rollover from an IRA to another may be
made once every twelve months. Also, certain qualifying distributions which were
rolled over into an IRA from employer tax-qualified plans may be rolled over
into another employer tax-qualified plan. (You should seek competent tax advice
regarding these rollovers.)
As explained in Section V, certain distributions of excess contributions are not
included in income. In addition, IRA contributions for a taxable year which do
not exceed the contribution limits for such year may also be withdrawn without
being included in income or being subject to a 10% premature distribution tax,
as long as such contributions and earnings thereon are withdrawn prior to the
due date (including extensions) of your federal income tax return for the tax
year for which the contribution was made. The earnings withdrawn must be
included in taxable income for the year in which the contribution was made and
may be subject to the 10% premature distribution tax.
B. Tax on Premature Distributions
To the extent they are included in income, distributions from your IRA made
before you reach age 591/2 will be subject to a 10% additional income tax (in
addition to being taxable as ordinary income) unless the distribution is subject
to an exception, including, a distribution made on account of your death or
disability, or a distribution that is one of a scheduled series of payments over
your life expectancy or the joint life expectancies of you and your beneficiary.
C. Tax on Excess Distributions
There is a 15% excise tax assessed against annual distributions from tax-favored
retirement plans, including IRAs, which exceed the greater of $150,000 or
$112,500 adjusted after 1988 to reflect cost-of-living increases. To determine
whether you have distributions in excess of this limit, you must aggregate the
amounts of all distributions received by you during the calendar year from all
retirement plans, including IRAs. If you had account balances or accrued
benefits equal to at least $562,500 as of August 1, 1986, you may have a portion
of the excess distributions exempted from the 15% additional tax. Please consult
with you tax advisor for more complete information, including the availability
of favorable elections.
D. Required Minimum Distributions
1. During Your Life
The minimum distribution rules require that for your "701/2 year," and each year
thereafter, you must make withdrawals from your IRA accounts that are at least
equal to the "minimum distribution." Your 701/2 year is the calendar year that
contains the date six months after your 70th birthday.
Generally, you must withdraw an amount equal to at least the minimum
distribution by December 31 of each year. However, for your 701/2 year, you may
wait to withdraw the minimum distribution until April 1 of the following year.
(This means that if you wait to make your withdrawal for the 701/2 year until
April 1 of the following year, your total withdrawal in that year must equal the
minimum distributions for two years - a withdrawal by April 1 that is equal to
the minimum distribution for the 701/2 year and a second withdrawal by December
31 that is equal to the minimum distribution for that year.) In each year
thereafter, you must withdraw the minimum distribution for the year by December
31.
The amount of the minimum distribution is usually determined by dividing the
account balance of your IRA, as of December 31 of the prior year, by a divisor
(determined by Internal Revenue Service actuarial tables) that is based on your
life expectancy or the joint life and last survivor expectancy for you and your
beneficiary. See Article IV of the Custodial Agreement for a more detailed
explanation of how to calculate the minimum distribution. The distributions must
also satisfy the minimum distribution incidental benefit rule, which generally
will require distributions over a period less than the joint and last survivor
expectancy of you and your designated beneficiary unless your beneficiary is
your spouse or is no more than ten years younger than you. The IRS provides
tables for determining the distribution needed to satisfy incidental benefit
requirements.
The minimum distribution required must be calculated separately for each IRA you
own, but the amounts so determined may be totalled and taken from any one or
more of your IRAs.
You will be subject to a 50% excise tax on the amount by which the distribution
you actually received in any year falls short of the minimum distribution
required for the year.
You may take your distribution in:
o a lump sum;
o equal or substantially equal payments over a specified period no longer than
your life expectancy or the joint life and last survivor expectancy of you and
your designated beneficiary.
Also, as described in Section VII.A., you may roll over your lump sum
distribution to purchase an individual retirement annuity payable in equal or
substantially equal payments over your life or the joint and last survivor lives
of you and your designated beneficiary. (See Article IV and paragraph 8.4, of
the Custodial Agreement and IRS Publication 590, Individual Retirement
Arrangements, for a full description of permissible distribution methods.)
DISCLOSURE STATEMENT
--------------------------------------------------------------------------------
2. After Your Death
If you die before you reach age 701/2, distribution must be made to your
beneficiary by December 31 of the fifth year following the year of your death
unless, by December 31 of the year following your death, your beneficiary begins
receiving distributions over a period not extending beyond your beneficiary's
life expectancy. When your beneficiary is your spouse, however, distributions
can be postponed until December 31 of the year in which you would have reached
age 701/2, at which time your spouse must take them over a period not extending
beyond his or her life expectancy.
(See Article IV of the Custodial Agreement and IRS Publication 590, Individual
Retirement Arrangements, for a more detailed explanation of how to calculate
your minimum distribution.)
If you die after your required beginning date, the balance in the Custodial
Account must continue to be paid at least as rapidly as under the method of
payment being used prior to your death.
If your beneficiary is your spouse, your beneficiary can elect to treat your IRA
as his or her own IRA.
The minimum distribution required must be calculated separately for each IRA,
but the amounts so determined may be totalled and taken from any one or more
IRAs.
A payee is subject to a 50% excise tax on the amount by which a distribution for
the year falls short of the minimum distribution required.
Your beneficiary may take his or her distribution in:
o a lump sum;
o equal or substantially equal payments over a specified period no longer than
his or her life expectancy.
Also, as described in Section VII.A., a spousal beneficiary may roll over a lump
sum distribution to purchase an individual retirement annuity payable in equal
or substantially equal payments over his or her life expectancy. (See Article IV
and paragraph 8.4, of the Custodial Agreement and IRS Publication 590,
Individual Retirement Arrangements, for a full description of permissible
distribution methods.)
3. Further Information
This explanation only summarizes the minimum distribution rules. Other rules and
exceptions may apply to you that are not discussed in this summary, including
rules which, in some cases, would prevent you from using certain options
described above. You should consult your personal tax advisor or IRS Publication
590, Individual Retirement Arrangements, for more detailed information.
VIII. LOSS OF TAX-EXEMPT STATUS OF IRA
If you engage in any of the prohibited transactions listed in Section 4975 of
the Code (such as any sale, exchange, or leasing of any property between you and
your IRA) or if you take a loan from your IRA, your account will be disqualified
and the entire balance of your account will be treated as if it had been
distributed to you as of the first day of the year in which the prohibited
transaction occurred. The fair market value of your IRA will be included in
income in the year the prohibited transaction takes place and, if you are under
age 591/2 at the time, you may be subject to the 10% penalty tax on premature
distributions. Should you or your beneficiary pledge all or any portion of your
IRA as security for a loan, the portion so pledged will be treated as if
distributed to you, will be included in your income, and may be subject to the
10% premature distribution penalty during the year in which the pledge occurred.
IX. OTHER TAX CONSIDERATIONS
A. Federal Income Tax Withholding
Federal income tax will be withheld on amounts distributed from your IRA unless
you elect not to have withholding apply. Generally, tax will be withheld at a
10% rate. At the time of distribution from your IRA, you will be notified of
your right to elect not to have withholding apply and will be provided with the
appropriate election form. If your IRA distribution is to be delivered outside
of the U.S., you may elect not to have withholding apply only if you certify to
the Custodian that you are not a U.S. citizen residing overseas or a "tax
avoidance expatriate" as described in Section 877 of the Internal Revenue Code.
(The distribution may also be subject to state withholding laws.)
B. Distribution not Eligible for Lump-Sum Averaging
or Capital Gains Treatment
No distribution to you or anyone else from your account can qualify for capital
gains treatment under the federal income tax laws or for the five- or ten-year
averaging available with respect to certain lump sum distributions from other
types of retirement plans. The distribution is taxed to the person receiving it
as ordinary income.
C. 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.
D. Reporting for Tax Purposes
You must report deductible IRA contributions and distributions on your tax Form
1040 or 1040A for the taxable year in which the contributions or distributions
were made. If you make any nondeductible contributions, you must include the
amount of such nondeductible contributions and the aggregate account balance of
all your IRAs as of the end of the calendar year on Form 8606. Additional
reporting is required in the event that special taxes or penalties described
herein are due. You must file Form 5329 with the IRS for each taxable year in
which the contribution limits are exceeded, a premature distribution takes
place, less than the required minimum amount is distributed from your IRA, or
excess distributions are made.
X. IRS APPROVAL & INFORMATION
This IRA has not been submitted to the IRS for approval as to form because it
incorporates Form 5305-A issued by the IRS. This Disclosure Statement provides
only a summary of the laws governing IRAs. You should consult your personal tax
advisor or IRS Publication 590, Individual Retirement Arrangements, for more
detailed information. This publication is available from your local IRS office
or by calling 0-000-XXX-XXXXX.
P.O. Box 173375
Denver, CO 80217-3375
0-000-000-0000
[LOGO] JANUS FUNDS
Funds distributed by Janus Distributors, Inc. Member NASD. (6/96)
