Traditional IRA Disclosure Statement
and Custodial Account
agreement
Grand Prix Funds, Inc.
P.O. Box 1177
Milwaukee, Wisconsin 00000-0000
Telephone: 0-000-000-0000
For Fund information, prices,
literature, account balances and other information
about your Grand Prix Funds account, call 1-800-432-
4741.
Please note that the Custodial Account, model IRS
Form 5305-A (Rev. January 1998), has not been updated
yet to reflect recent changes in the law due to the
Internal Revenue Service Restructuring and Reform Act
of 1998 (the "1998 Act"), which was enacted on July 22,
1998. However, the Disclosure Statement has been
updated to reflect those provisions of the 1998 Act
that affect Traditional IRAs.
Grand Prix Funds Prospectus
Contents
Disclosure Statement 1
Power to Revoke 1
Legal Requirements with Respect to Your Traditional IRA
1
Tax Treatment of Contributions to Your Traditional IRA
2
Tax Treatment of Distributions from Your Traditional
IRA 4
Tax Status of Your Traditional IRA 4
Limits on Contributions to Your Traditional IRA 4
Spousal IRA 4
Simplified Employee Pension ("SEP") Plan 5
Rollover 5
Rollover Contributions and Tax-Free Transfers 5
Excess Contributions 6
Use of Your Custodial Account as Security for a Loan
7
Prohibited Transactions 7
Effect of Divorce or Legal Separation 8
Withdrawals Prior to Age 59 1/2 8
Minimum Distributions Required Starting at Age 70 1/2
9
Excise Tax for Failure to Meet Minimum Distribution
Requirements 9
Designation of a Beneficiary or Beneficiaries 9
Distributions Following Death of Depositor 10
Custodian to Assume Depositor is Calendar Year Taxpayer
Unless Otherwise Informed 10
Custodian Not Legal Adviser or Tax Counselor _
Depositor Should Consult Own Adviser 10
Investment of Custodial Account 11
Financial Guarantees and Projections 11
Custodian Not Liable 11
Termination of This Custodial Account 11
Duty to File Tax Returns 11
Internal Revenue Service Approval 12
Additional Information 12
Ministerial Agent 12
Annual Schedule of Fees 12
Custodial Account 13
Article I 13
Article II 13
Article III 13
Article IV 14
Article V 16
Article VI 16
Article VII 16
Article VIII 16
Section 1 - Investment of Custodial Account 16
Section 2 - Beneficiary Designations 18
Section 3 - Miscellaneous 20
Grand Prix Funds, Inc.
Traditional IRA Disclosure Statement
Power to Revoke
For a period of seven (7) days following the date
on which you enter into an IRA Custodial Agreement with
UMB Bank, n.a. ("UMB"), you have the right to revoke
the custodial account. To effect revocation, please
write or call Grand Prix Funds, Inc., P.O. Box 1177,
Milwaukee, WI 53201-1177 or 0-000-000-0000. In the
event notice is mailed, the postmark date (or date of
certification or registration, if sent by certified or
registered mail) will be deemed the date of delivery,
provided that normal mailing procedures are followed.
If you revoke your custodial account, you are entitled
to a return of the entire amount deposited to your
custodial account without reduction for any fees,
expenses or commissions and without any adjustment for
any investment gain or loss.
Legal Requirements with Respect to Your Traditional IRA
Current tax law requires that your Custodial
Agreement be in writing and that it contain the
following provisions.
1. All contributions must be in the form of cash and
cannot be in excess of the lesser of your compensation
or $2,000 per year, unless the contribution is a
rollover contribution as defined in the Internal
Revenue Code. Employer contributions to a Simplified
Employee Pension plan may exceed the limitations
applicable to individuals.
2. The Custodian must be a bank such as UMB, or other
institution (or person) that has satisfied the
Secretary of the Treasury that it is able to administer
your custodial account in accordance with tax laws.
3. None of the funds of your custodial account may be
invested in life insurance contracts.
4. Your interest in the balance of the custodial
account cannot be forfeited.
5. With the exception of investments in a common trust
fund or common investment fund such as a mutual fund,
none of your custodial account assets may be
commingled.
6. Distribution of your interest in the custodial
account must begin no later than the April 1 next
following the year in which you attain age 70 1/2. Any
balance in the custodial account at that time must be
distributed to you in a lump sum or commence to be paid
in a series of payments which do not exceed your life
expectancy or the joint and survivor life expectancies
of yourself and your designated beneficiary. However,
you may increase withdrawals. If you should die prior
to receiving the entire custodial account, the balance
must be distributed to your beneficiary in accordance
with Treasury Department regulations (unless the
beneficiary is your spouse and elects to treat the
custodial account as his or her own IRA).
7. You may not invest the assets of your IRA in
collectibles (within the meaning of IRC Section
408(m)). A collectible is defined as any work of art,
rug or antique, metal or gem, stamp or coin, alcoholic
beverage or other tangible personal property specified
by the Internal Revenue Service ("IRS"). However,
specially minted United States gold and silver bullion
coins and certain state-issued coins are permissible
investments. Beginning January 1, 1998, platinum coins
and certain gold, silver, platinum or palladium bullion
(as described in IRC Section 408(m)(3)) are also
permitted as IRA investments.
Tax Treatment of Contributions to Your Traditional IRA
Without regard to qualifying rollover
contributions or to contributions made by your employer
to a Simplified Employee Pension plan, under present
tax law, you are permitted to make an annual
contribution to your custodial account in any amount up
to the lesser of your compensation or $2,000
("applicable limit"). Such annual contributions may be
made anytime during the year (and up to your tax return
due date for the taxable year, not including
extensions).
Eligible taxpayers who are not covered by an
employer-sponsored retirement plan can continue to
deduct the entire contribution up to the applicable
limit. However, for an individual who is an active
participant in an employer-sponsored retirement plan,
the contributions may be totally deductible, partially
deductible, or not deductible depending on the
taxpayer's adjusted gross income ("AGI"). If your AGI
is lower than the bottom of the range in the chart
below, you may deduct your entire contribution, up to
the applicable limit. When your AGI falls within the
range, you must calculate the deductible portion of
your contribution. When your AGI exceeds the top of
the range, none of your contribution is deductible.
See examples below.
Limitations on Allowable Deductions by AGI
Married Filing
Jointly: Individual Married Filing
Single Filer: is Nonactive but Jointly: Individual Married
Tax Single Filer: Active Spouse is Active is Active Filing
Year Nonactive Participant Participant Participant Separately
1997 No AGI $25-$35,000 $ 40-$ 50,000 $40-$ 50,000 $0-$10,000
1998 Limitation $30-$40,000 $150-$160,000 $50-$ 60,000
1999 $31-$41,000 $51-$ 61,000
2000 $32-$42,000 $52-$ 62,000
2001 $33-$43,000 $53-$ 63,000
2002 $34-$44,000 $54-$ 64,000
2003 $40-$50,000 $60-$ 70,000
2004 $45-$55,000 $65-$ 75,000
2005 $50-$60,000 $70-$ 80,000
2006 $50-$60,000 $80-$100,000
2007 $50-$60,000 $80-$100,000
on
The deductible portion of your IRA contribution is
calculated using the
following formula:
For single filer active participant:
(Highest number in the range of AGI bracket - Adjusted
Gross Income) x $2,000
$10,000
Example: Assume your AGI is $35,000 for 1998. Your
maximum deductible contribution is $1,000. This is
calculated as follows: $40,000 less $35,000 which
equals $5,000. $5,000 divided by $10,000 equals 50%.
50% times $2,000 is the deductible amount allowed.
For joint filer active participant:
(Highest number in the range of AGI bracket - Adjusted
Gross Income) x $2,000
$10,000
($20,000 in the case of a joint return for a taxable
year beginning after December 31, 2006.)
Example: Assume your AGI is $56,000 for 1998. Your
maximum deductible contribution is $800. This is
calculated as follows: $60,000 less $56,000 which
equals $4,000. $4,000 divided by $10,000 equals 40%.
40% times $2,000 is $800.
The examples are for illustration only. Please consult
your tax advisor for calculating your deductible
amount.
Tax Treatment of Distributions from Your Traditional
IRA
Amounts distributed to you from the custodial
account (except for refunds of certain excess
contributions and non-deductible contributions which
are discussed below) will be taxable as ordinary income
in the year received. The benefits of capital gain
treatment and 5-year and 10-year
forward averaging (now being phased out) which may
apply to distributions from your employer's qualified
retirement plan, are not available
with respect to distributions from your custodial
account. Distributions
of non-deductible contributions are not taxable. If you
have made non-deductible contributions to an IRA, then
distributions from the IRA will be excluded from tax in
the proportion that all non-deductible contributions to
your IRAs bear to the aggregate balances of all your
IRAs at the end of the year of distribution. All
distributions are subject to federal income tax
withholding requirements unless the recipient elects
not to have withholding apply by written notice to the
Custodian at the time such distribution is requested.
Tax Status of Your Traditional IRA
The funds in your IRA are not subject to income
tax until distributed to you. The earnings accumulate
on a tax-deferred basis to compound the growth of your
custodial account.
Limits on Contributions to Your Traditional IRA
Except in the case of a rollover contribution,
during any year the maximum contribution you can make
is $2,000 or 100% of your compensation, whichever is
less. For purposes of determining the amount of your
contributions, "compensation" means wages, commissions,
salaries, tips, professional fees, bonuses and other
amounts you receive for providing personal services.
Alimony is also treated as compensation which you may
contribute to your IRA. No contributions can be made in
the year that you attain age 70 1/2 or subsequent
years.
Spousal IRA
If your spouse is employed, he or she can
establish his or her own IRA subject to the same rules
that apply to your IRA. If you file a joint return with
a spouse whose compensation for the taxable year is
less than yours, the maximum contribution amount is the
lesser of $4,000 or 100% of the total compensation of
you and your spouse for the year. In such case the
amount contributed can be divided between your IRA and
the spousal IRA in any manner you desire, provided that
no more than $2,000 can be contributed to either IRA.
No contributions may be made to a spousal IRA during or
after the year in which the spouse reaches age 70 1/2.
However, if you are ineligible to make contributions to
your own IRA because of age, you may (if you have
sufficient compensation) nevertheless make
contributions of up to $2,000 to an IRA for your spouse
if he or she has not reached age 70 1/2.
Simplified Employee Pension ("SEP") Plan
An IRA may also be used in connection with a SEP
plan established by your employer (or by you if you are
self-employed). Under a SEP plan, your employer may
make a contribution to your IRA, and an IRA for all
other eligible employees, of up to 15% of compensation
up to $160,000 (as indexed for inflation) or $30,000,
whichever is less, for 1998. Refer to IRS Publications
560 and 590 or IRS Form 5305-SEP. It is your
responsibility and that of your employer to see that
contributions are made under and in accordance with a
valid SEP plan. Specific limit amounts can be found in
the instructions for Form 5305-SEP.
Rollover
If your custodial account represents a rollover
from a pension or profit-sharing plan qualified under
IRC Section 401(a), you should not make non-rollover
additional contributions to the same account if you
desire to preserve its eligibility for future rollover
to another qualified
plan. Similarly, if your custodial account represents a
rollover from an IRC Section 403(b) annuity or
custodial account, you should not make non-rollover
additional contributions to the same account if you
desire to preserve its eligibility for future rollover
to another IRC Section 403(b) annuity or custodial
account. A rollover IRA is eligible to accept future
rollover contributions. In addition, you may establish
another IRA to which non-rollover annual cash
contributions may be made.
Rollover Contributions and Tax-Free Transfers
A rollover contribution is a contribution to your
IRA of cash and/or property other than cash which you
received as a distribution from another IRA or as a
qualified distribution from an IRC Section 403(b)
annuity, or a qualified employer-sponsored retirement
plan, such as a profit-sharing plan, 401(k) plan, or
ESOP, etc. In the case of a tax-free transfer,
the transfer is made directly between the fiduciaries,
that is, the trustees, custodians etc., of the IRAs
and/or the qualified plan, as the case may be.
If you receive a distribution from another IRA you may
make a tax-free rollover contribution of all or part of
the assets you receive to your IRA, provided that you
complete the rollover within 60 days of the date you
receive the distribution. You may make only one such
rollover during any 12-month period. A direct transfer
from the trustee or custodian of another IRA to your
IRA may be made without regard to the 12-month
limitation applicable to IRA rollovers.
If you receive a distribution from your employer's
qualified retirement plan, or an IRC Section 403(b)
annuity or custodial account, you may be eligible to
make a rollover contribution to your IRA of all or part
of the distribution, less the amount of any non-
deductible contributions to the plan. Most
distributions, with the notable exceptions of
installments paid over
a ten or more year period, minimum distribution amounts
received after age 70 1/2, and hardship distributions
made after December 31, 1998 from Section 401(k) plans
or Section 403(b) annuities or custodial accounts, are
eligible for rollover. The rollover contribution must
be made within 60 days of the date you receive the
distribution. If the distribution included property
other than cash, the property itself (or the proceeds
from its sale) must be included in the rollover
contribution to the extent possible, before any cash
received in the distribution may be included.
In order to avoid 20% federal income tax
withholding on the amount distributed from the
qualified retirement plan or IRC Section 403(b) annuity
or custodial account, you should direct that the
distribution be transferred to your IRA in a "direct
rollover." You should receive information about the
"direct rollover" option from your plan administrator
prior to distribution of your account.
Excess Contributions
An excess contribution is any contribution amount
which exceeds your contribution limit, excluding
rollover and direct transfer amounts. In addition, any
contributions that are made to an IRA for the year in
which the IRA owner reaches age 70 1/2, or for any
later year, are considered excess contributions. If
excess contributions are made to your account in any
year and the excess (including income attributed to
that excess) is withdrawn prior to the due date for
your tax return for that year (including extensions),
no excise tax will be imposed on the amount
contributed. Income attributed to such excess
contributions refunded is taxable, and may be subject
to a 10% additional income tax.
If the withdrawal of excess contributions occurs
after the due date for your tax return (including
extensions), a 6% cumulative excise tax will be imposed
on the excess. Excess contributions left in the
account and applied to a later tax year's contributions
are still subject to the 6% excise tax and will
continue to remain so until the excess has been
corrected. A further 10% additional income tax will be
imposed upon the withdrawn excess amount if a deduction
was allowed for the excess contribution and the total
contributions for the year exceeded the maximum
deductible amount, unless you have reached age
59 1/2 or are disabled by the time of the withdrawal.
Use of Your Custodial Account as Security for a Loan
You may not pledge any part of your custodial
account as security for a loan. If you use all or any
part of your custodial account as security for a loan,
the portion used for that purpose is treated as though
it were distributed to you and you must include that
amount in your gross income for the year in which that
transaction takes place. If the pledge occurs prior to
your attaining age 59 1/2, an additional income tax
equal to 10% of the amount included in your taxable
income is added to your tax liability.
Prohibited Transactions
Tax laws also prohibit certain other transactions
between a "Disqualified Person" and your custodial
account. A "Disqualified Person" includes UMB, you, a
beneficiary of your custodial account, members of your
family or of a beneficiary's family or any business or
trust in which a controlling interest is held by any of
these individuals. The prohibited transactions are as
follows:
1. Sale or exchange or leasing of property between your
custodial account and a Disqualified Person;
2. Lending of money or other extension of credit
between your custodial account and a Disqualified
Person;
3. Furnishing of goods, services or facilities between
your custodial account and a Disqualified Person;
4. Transfer to or use by or for the benefit of a
Disqualified Person of the income or assets of your
custodial account;
5. Any act by a Disqualified Person who is a fiduciary
whereby he or she deals with the income or assets of
your custodial account in his or her own interest or
for his or her own account; or
6. Receipt of any consideration for his or her own
personal account by any Disqualified Person who is a
fiduciary from any party dealing with your custodial
account in connection with a transaction involving the
income or assets of the account.
If either you or your beneficiary engages in a
prohibited transaction, your IRA will lose its tax
exemption, and its full value will be added to your
other taxable income for the year in which the
transaction takes place. If any of these transactions
occurs prior to your attaining age 59 1/2, an
additional income tax equal to 10% of the amount
included in your taxable income is added to your tax
liability.
Effect of Divorce or Legal Separation
The general rule is that the Depositor will be
liable for income tax and any penalties on any amount
distributed from his or her IRA to meet the obligation
specified in a divorce decree or legal separation
agreement. However, the transfer may be structured so
as to avoid taxation to the Depositor if the
requirements of IRC Section 408(d)(6) are met. Those
requirements are:
1. A written court order clearly specifying the amount
to be transferred into an IRA of the spouse or former
spouse; and
2. (a) A direct transfer of the funds to the IRA of the
spouse or former spouse;
(b) Changing the name on the XXX from your name to
the name of your spouse or former spouse; or
(c) Making a rollover of IRA assets from your IRA to
the IRA of your spouse or former spouse.
Withdrawals Prior to Age 59 1/2
You may make withdrawals from your IRA at any
time. However, amounts withdrawn (except for the return
of non-deductible contributions) are includible in your
taxable income for the year of withdrawal. If you have
not yet reached age 59 1/2 when a withdrawal is made, a
10% additional income tax must be paid on the amount
withdrawn, unless one of the exceptions described below
applies. After age 59 1/2, you may make such
withdrawals as you wish, free of any additional income
tax. Until you reach age 70 1/2 you are not required to
make a withdrawal. A withdrawal from your IRA before
you reach age 59 1/2 will not be subject to the
additional income tax if it is made on account of your
permanent and total disability, death, a qualifying
rollover, a direct transfer, the timely withdrawal of
an excess contribution, to pay for medical expenses
incurred by you, your spouse or your dependent to the
extent that the medical expenses exceed 7.5% of your
adjusted gross income, in certain situations, to pay
for medical insurance premiums if you are unemployed,
or if the distribution is a part of a series of
substantially equal periodic payments made (at least
annually) over your life (or life expectancy) or the
joint lives (or joint life expectancies) of you and
your beneficiary. For tax years beginning after
December 31, 1997, the exception from the early
withdrawal penalty is expanded to apply to withdrawals
for qualifying post-secondary education expenses for
yourself, your spouse, your (or your spouse's) children
or grandchildren, as well as for a qualifying first
home purchase for yourself, your spouse, your (or your
spouse's) children or grandchildren, or your (or your
spouse's) parents (limited to a lifetime maximum of
$10,000). Also, the early withdrawal penalty does not
apply to distributions made from your IRA after
December 31, 1999 on account of an IRS levy.
Minimum Distributions Required Starting at Age 70 1/2
You must begin withdrawals from your IRA by the
April 1 of the year next following the year in which
you reach age 70 1/2. With respect to the
year during which you reach age 70 1/2, and each
subsequent year, you must withdraw at least an amount
sufficient to cause the entire balance of your IRA to
be distributed over your remaining life expectancy or
the joint life expectancies of you and your designated
beneficiary, determined by actuarial tables. If you
elect to receive your first required distribution
between January 1 and April 1 following the year in
which you reach age 70 1/2, you must receive a second
required distribution prior to the end of that year.
You may choose (within the limits set forth in the
IRS distribution rules) how you want your required
minimum distributions structured. You must make your
payment election no later than the April 1 of the year
next following the year in which you reach age 70 1/2.
If you name someone other than your spouse as your
beneficiary, and your beneficiary is more than ten
years younger than you, your required minimum
distributions must also satisfy the Minimum
Distribution Incidental Benefit rule (which calculates
your distributions as if your beneficiary were exactly
ten years younger than you).
Excise Tax for Failure to Meet Minimum Distribution
Requirements
If the amount distributed to you with respect to
any year in which you are at least age 70 1/2 is less
than the minimum required distribution, an excise tax
of 50% of the difference between the actual
distribution and the minimum required distribution will
be imposed upon the payee of such distribution.
Designation of a Beneficiary or Beneficiaries
You have the right to designate one or more
beneficiaries to whom your custodial account, or any
undistributed portion thereof, is to be paid in the
event of your death. You may also at any time revoke a
prior beneficiary designation and, if desired,
designate different individuals as beneficiaries.
You may designate your beneficiary(ies) on the IRA
Application, or on a form acceptable to the Custodian.
Write or call Grand Prix Funds, Inc., P.O. Box 1177,
Milwaukee, WI 53201-1177 or 0-000-000-0000.
In the absence of a valid beneficiary designation,
the Custodian will make distribution of any death
benefit to your surviving lawful spouse; but, if none,
then to your surviving natural and adoptive children in
equal shares; but, if none, then to the personal
representative of your estate. Notwithstanding the
foregoing sentence, the Custodian may, in any case
where reasonable doubt exists as to the proper course
of action, request instructions from a court of
competent jurisdiction. All costs and expenses
(including time expended by the Custodian) in such
cases will be charged against your custodial account.
Distributions Following Death of Depositor
As a general rule, the entire balance of the IRA
must be distributed to beneficiaries by December 31 of
the year in which the 5th anniversary of the
Depositor's death occurs. If this rule is violated, an
excise tax equal to 50% of the undistributed balance
will be imposed. There are three exceptions to the
general rule: (1) If the Depositor's designated
beneficiary is
the surviving spouse of the Depositor, such spouse may
elect to treat the Depositor's IRA as his or her own
IRA, and in that case, the five-year limitation will
not apply; (2) Where installment payments have
commenced over the life expectancies of the Depositor
and designated beneficiary before the Depositor's
death, then payments will continue to the surviving
beneficiary at a rate at least as rapidly as in effect
at the time of the Depositor's death, and the five-year
limitation will not apply. In such case, the surviving
beneficiary has the same right to designate
beneficiaries as the Depositor had while living. (The
five-year limitation will apply to distributions to any
such second-level beneficiaries.) (3) If the Depositor
dies before his or her required beginning date (that
is, the April 1 of the year next following the year in
which he or she reaches age 70 1/2) and the designated
beneficiary elects that the account balance be
distributed in substantially equal payments over his or
her life expectancy, the beneficiary must make this
election and commence distributions by December 31 of
the year following the year of the Depositor's death
(distributions need not commence for a surviving spouse
beneficiary until December 31 of the year the Depositor
would have attained age 70 1/2).
Custodian to Assume Depositor is Calendar Year Taxpayer
Unless Otherwise Informed
Unless and until specifically notified that you
file your federal income tax returns on another basis,
the Custodian will assume for all purposes, including
the preparation and furnishing of accounting
statements, reports, etc., that such tax returns are
filed on a calendar year basis.
Custodian Not Legal Adviser or Tax Counselor _
Depositor Should Consult Own Adviser
UMB and its ministerial agent expressly disclaim
any right, duty, authority or responsibility to furnish
legal or tax advice respecting any matter or matters
concerning or relating to your custodial account
including, but not limited to, present or future
federal income tax consequences to you or others which
may arise or result from the establishment or
maintenance of your custodial account, the selection of
payment options, beneficiaries and any other matter
whatsoever. You are advised and encouraged to consult
with professional counsel of your own selection
respecting all such matters.
Investment of Custodial Account
Your custodial account may be invested only in
accordance with your direction in the Grand Prix Funds
or any other mutual fund designated by Grand Prix as a
permissible investment alternative. None of the funds
held in your custodial account may be used to purchase
life insurance.
Financial Guarantees and Projections
The value of your custodial account at any point
in time will, of course, depend upon the then current
market value of the investments, retained investment
earnings, if any, etc. No guarantees or projections of
any nature concerning earnings rates or future security
values are made.
Custodian Not Liable
The Custodian and its ministerial agent have no
responsibility or liability for any losses or expenses
relating to any investment or to the sale or exchange
of any asset of your custodial account.
Termination of this Custodial Account
The Custodian may resign at any time upon 60 days'
written notice to you, and may be removed by you at any
time upon 60 days' written notice. In either such event
you must appoint a qualified successor trustee or
qualified custodian to whom the Custodian, upon receipt
of written acceptance of the appointment, shall
transfer the assets (less any amounts deemed necessary
for payment of fees, costs or expenses) and records of
your custodial account.
Duty to File Tax Returns
In any year in which you incur liability for an
excise tax or additional income tax by reason of making
excess contributions, by making early withdrawals
(premature distributions), or by failure to withdraw
the minimum amount from your custodial account, you are
obligated to file Internal Revenue Service Form 5329,
"Return for Individual Retirement Arrangement Taxes"
with your Form 1040 at the time it is filed. Deductible
contributions in any year are reported on your Form
1040. Non-deductible contributions must be reported on
Form 8606.
Internal Revenue Service Approval
The Individual Retirement Custodial Agreement is
comprised of eight articles. The first seven articles
constitute Internal Revenue Service Form 5305-A (REV.
January, 1998) "Individual Retirement Custodial
Account." Under Treasury Department regulations,
custodial accounts which use the provisions of this
Form are considered to meet the requirements of the
Internal Revenue Code. The addition of Article VIII by
UMB does not negate the approved status of the model
form. The Individual Retirement Custodial Agreement, on
IRS Form 5305-A, has been approved as to form by the
Internal Revenue Service. However, in approving the
form, the IRS does not consider the investment merits
of the program.
Additional Information
Additional information about individual retirement
accounts is contained in IRS Publication 590, which can
be obtained from the office of the District Director of
Internal Revenue.
Ministerial Agent
If the Custodian is UMB Bank, n.a., Sunstone
Investor Services, LLC shall be the ministerial agent
for the Custodian in the performance of any ministerial
duties delegated to it by the Custodian. If any other
bank or entity is the Custodian, then Sunstone Investor
Services, LLC shall not be the ministerial agent for
any duties of the Custodian unless it agrees to in
writing with the other Custodian.
Annual Schedule of Fees
The Custodian will charge the following fees for
servicing your
IRA account:
Annual maintenance fee $15
Distribution (including rollover or direct transfers)
$15
Refund of excess contribution $15
Any outgoing wire transfer $10
The annual maintenance fee will be deducted from
your custodial account unless otherwise paid by you.
The charge for refund of excess contributions will be
deducted from your custodial account at the time
of the refund. These fees are subject to change.
Traditional IRA Custodial Account
This Agreement is made between UMB Bank, n.a., as
Custodian or its successor (hereinafter referred to as
"Custodian") and the individual whose name appears on
the IRA Application or other Adoption Agreement
(hereinafter referred to as "Depositor"). If the
Depositor has previously adopted this Individual
Retirement Custodial Account ("IRA") in any earlier
form, by signature to the IRA Application, he or she
adopts the amended IRA in the form as hereby restated.
The Depositor is establishing (or adopting an
amendment to) an individual retirement account (under
Section 408(a) of the Internal Revenue Code) to provide
for his or her retirement, and for the support of his
or her beneficiaries after death. The Custodian has
given the Depositor the disclosure statement required
under Regulations Section 1.408-6. Unless this
Agreement is adopted for an existing IRA, the Depositor
has made an initial cash contribution to the IRA
concurrently with the execution of the IRA Application
or other Adoption Agreement. The Depositor and
Custodian make the following agreement:
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), 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 of 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, silver,
and platinum coins, coins issued under the laws of any
state, and certain bullion.
Article IV
1. Notwithstanding any provision of this agreement to
the contrary, the distribution of the Depositor's
interest in the custodial account shall be made in
accordance with the following requirements and shall
otherwise comply with Section 408(a)(6) and Proposed
Regulations Section 1.408-8, including the incidental
death benefit provisions of Proposed Regulations
Section 1.401(a)(9)-2, the provisions of which are
incorporated by reference.
2. Unless otherwise elected by the time distributions
are required to begin to the Depositor under paragraph
3, or to the surviving spouse under paragraph 4, other
than in the case of a life annuity, life expectancies
shall be recalculated annually. Such election shall be
irrevocable as to the Depositor and the surviving
spouse and shall apply to all subsequent years. The
life expectancy of a nonspouse beneficiary may not be
recalculated.
3. The Depositor's entire interest in the custodial
account must be, or begin to be, distributed by the
Depositor's required beginning date, April 1
following the calendar year end in which the Depositor
reaches age 70 1/2.
By that date, the Depositor may elect, in a manner
acceptable to the Custodian, to have the balance in the
custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or
substantially equal monthly, quarterly, or annual
payments over the life of the Depositor.
(c) An annuity contract that provides equal or
substantially equal monthly, quarterly, or annual
payments over the joint and last survivor lives of the
Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments
over a specified period that may not be longer than the
Depositor's life expectancy.
(e) Equal or substantially equal annual payments
over a specified period that may not be longer than the
joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire
interest is distributed to him or her, the entire
remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution
of his or her interest has begun, distribution must
continue to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his
or her interest has begun, the entire remaining
interest will, at the election of the Depositor or, if
the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year
containing the fifth anniversary of the Depositor's
death, or
(ii) Be distributed in equal or substantially
equal payments over the life or life expectancy of the
designated beneficiary or beneficiaries starting by
December 31 of the year following the year of the
Depositor's death. If, however, the beneficiary is the
Depositor's surviving spouse, then this distribution is
not required to begin before December 31 of the year in
which the Depositor would have reached
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 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
Sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the
Internal Revenue Service and the Depositor as
prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be
added or incorporated, the provisions of Articles I
through III and this sentence will be controlling. Any
additional articles that are not consistent with
Section 408(a) and the related regulations will be
invalid.
Article VII
This Agreement will be amended from time to time
to comply with the provisions of the Code and related
regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
Article VIII
Section 1 - Investment of Custodial Account
1. The Depositor has the sole authority and discretion,
fully and completely, to select and to direct the
investment of all assets in the
custodial account, but only in the Grand Prix Funds
portfolios or any other mutual fund designated by Grand
Prix Funds as a permissible investment alternative.
2. Subject to the right and duty of the Depositor to
direct the investments of his or her custodial account,
the Custodian shall have full authority and power:
(a) To invest and reinvest the custodial account in
such mutual funds
as described in paragraph 1 of this Article VIII;
(b) To sell, assign, exchange, convey, or otherwise
transfer any part or
all of the securities or other property of the
custodial account, upon such terms and conditions as
the Depositor shall direct, and no person dealing with
the Custodian shall be bound to see to the application
of the purchase money or inquire into the validity,
expediency, or propriety of such transactions;
(c) To sue or defend any suit or legal proceeding by
or against the custodial account and to compromise,
settle, submit to arbitration, or adjust any suit or
legal proceeding, claim, debt, damage, or undertaking
due or owing from or to the custodial account, but the
Custodian shall not be obligated to take any action
which would subject it to expense or liability unless
it be first indemnified in an amount and manner
satisfactory to it or be furnished with funds
sufficient, in its sole judgment, to cover the same;
(d) To acquire and hold any securities or other
property of the custodial account without disclosing
its fiduciary capacity, or in the name of any other
person, with or without a power of attorney for
transfer thereto attached;
(e) To employ attorneys, accountants, and others as
it may deem advisable for the best interest of the
custodial account, and to pay their reasonable expenses
and compensation out of the custodial account; and
(f) To make, execute and deliver, as Custodian, any
and all instruments in writing necessary or proper for
the effective exercise of any of the Custodian's powers
as stated herein or otherwise necessary to accomplish
the purpose of the custodial account.
3. The following shall constitute charges upon the
custodial account and shall be paid by the Custodian
out of the custodial account unless, and to the extent,
paid by the Depositor:
(a) All taxes of whatever kind or character that may
be imposed, levied or assessed under existing or future
laws upon or in respect of the custodial account, or
upon the Custodian in its capacity as such, or upon the
assets or income of the custodial account;
(b) All expenses incurred by the Custodian in the
performance of its duties hereunder, including the fees
of attorneys, accountants and other persons engaged by
the Custodian for services in connection with the
custodial account; and
(c) The fees and other compensation of the Custodian
for its services hereunder in the amounts agreed upon
from time to time by the Depositor and Custodian.
4. The Depositor shall not borrow any money from the
custodial account nor pledge any part thereof as
security for a loan. Furthermore, neither the Depositor
nor the Custodian shall engage, either directly or
indirectly, in any of the following transactions:
(a) The sale or exchange, or leasing, of any
property between the custodial account and a
Disqualified Person;
(b) The lending of money or other extension of
credit between the custodial account and a Disqualified
Person;
(c) The furnishings of goods, services or facilities
between the custodial account and a Disqualified
Person;
(d) The transfer to, or use by or for the benefit
of, a Disqualified Person of the income or assets of
the custodial account;
(e) An act by a Disqualified Person who is a
fiduciary whereby he or she deals with the income or
assets of the custodial account in his or her own
interest or for his or her own account; or
(f) Receipt of any consideration for his or her own
personal account by any Disqualified Person who is a
fiduciary from any party dealing with the custodial
account in connection with a transaction involving the
income or assets of the custodial account.
For purposes of this paragraph, "Disqualified
Person" shall have the meaning ascribed to that term
under Section 4975(e)(2) of the Code.
Section 2 - Beneficiary Designations
1. At any time and from time to time the Depositor
shall have the right to designate one or more
beneficiaries to whom distribution of his or her
custodial account, or the previously undistributed
portion thereof, shall be made in the event of his or
her death prior to the complete distribution of his or
her custodial account. This right shall extend to the
Depositor's surviving spouse in the event he or she
dies while receiving distributions under the provisions
of Sections 3(e) or 4(b) of Article IV. Any such
beneficiary designation shall be deemed legally valid
only when submitted fully complete, duly executed, and
on a form provided by or acceptable to the Custodian.
Subject to the foregoing sentence,
any such beneficiary designation shall be effective
upon receipt by the Custodian. Any such beneficiary
designation may be revoked by the Depositor at any
time, and shall be automatically revoked upon receipt
by the Custodian of a subsequent beneficiary
designation or beneficiary designations in valid form
bearing a later execution date.
2. In the absence of a valid beneficiary designation on
file with the Custodian at the time of the Depositor's
death, the Custodian shall, upon receipt of notice of
the death of the Depositor supported by a certified
copy of the death certificate or other appropriate
evidence of the fact of death satisfactory to the
Custodian, make distribution of the Depositor's
custodial account to the beneficiary or beneficiaries
of the Depositor in the following order of preference:
(a) To the Depositor's surviving lawful spouse; but
if no such spouse shall survive the Depositor, then to
(b) The surviving natural and adoptive children of
the Depositor in equal shares per capita and not per
stirpes; but if there shall be no such surviving child
or children, then to
(c) The personal representative of the Depositor's
estate, provided, however, that the Custodian shall
have no duty, obligation, or responsibility to make any
inquiry or conduct any investigation concerning the
identification, address, or legal status of any
individual or individuals alleging the status of
beneficiary (designated or otherwise) nor to make
inquiry or investigation concerning the possible
existence of any beneficiary not reported to the
Custodian within a reasonable period after the
notification of the Depositor's death (or that of his
or her surviving spouse) and previous to the
distribution of the custodial account. The Custodian
may conclusively rely upon the veracity and accuracy of
all matters reported to it by any source ordinarily
presumed to be knowledgeable respecting the matters so
reported. With respect to any distribution made by
reason of the death of the Depositor (or his or her
surviving spouse) the Custodian shall have no higher
duty than the exercise of good faith, shall incur no
liability by reason of any action taken in reliance
upon erroneous, inaccurate or fraudulent information
reported by any source assumed to be reliable, or by
reason of incomplete information in its possession at
the time of such distribution. Upon full and complete
distribution of the custodial account pursuant to the
provisions of this Section, the Custodian shall be
fully and forever discharged from all liability
respecting such custodial account.
3. Any distribution pursuant to the provisions of this
Section may be made in cash or in kind or partly in
both, at the sole discretion of the Custodian, and
shall be made within 30 days following receipt by the
Custodian of information deemed by it sufficient upon
which to base such distribution; provided, however,
that the Custodian shall incur no liability respecting
fluctuations in the value of the custodial account in
the event of a delay occasioned by the Custodian's good
faith decision to await additional evidence or
information bearing on the beneficiary or
beneficiaries.
4. Whenever any distribution hereunder is payable to a
minor or to a person known by the Custodian to be under
a legal disability, the Custodian in its absolute
discretion may make all or any part of such
distribution
to (a) a legal guardian or conservator for such person,
(b) a custodian under the Uniform Transfers to Minors
Act, (c) a parent of such person, or (d) such person
directly.
5. Anything to the contrary herein notwithstanding, in
the event of reasonable doubt respecting the proper
course of action to be taken, the Custodian may in its
sole and absolute discretion resolve such doubt
by judicial determination which shall be binding on all
parties claiming any interest in the custodial account.
In such event all court costs,
legal expenses, reasonable compensation for the time
expended by the Custodian in the performance of its
duties, and other appropriate and pertinent expenses
and costs, shall be collected by the Custodian from the
custodial account.
Section 3 - Miscellaneous
1. The Custodian may make further amendments to this
Agreement, in order to make said Agreement acceptable
in form to the Secretary of the Treasury and the
Secretary of Labor, or for any other purpose. Any such
amendments shall be effective without the signature of
the Depositor to a new Adoption Agreement or IRA
Application and shall, if for the purpose of initially
qualifying the custodial account pursuant to the Code,
be retroactively effective to the date of the captioned
Agreement. The Custodian will mail a copy of any such
amendment to the Depositor.
2. The Custodian shall deliver, or cause to be executed
and delivered, to the Depositor all proxies,
prospectuses and notices pertaining to securities held
in the account. The Custodian shall not vote any such
securities except pursuant to written instructions from
the Depositor. Any notice sent from the Custodian to
the Depositor shall be effective, if sent by mail to
the Depositor's last address of record.
3. The Custodian, within 30 days after the close of
each calendar year, shall provide the Depositor a
record of activity in the custodial account during such
year, including the date and the dollar amount of
contributions, any earnings on such contributions, the
date and dollar amount of any distributions, a
beginning balance and an ending balance. The Custodian
may meet its recordkeeping and reporting requirements
by adopting the records of any investment facility
permitted by this Agreement, and it may delegate
ministerial duties of keeping such records to such
facilities or their managers.
4. Confirmation of transactions and records or
statements of activity in the Depositor's custodial
account shall be conclusive if the Depositor does not
object within 30 days after mailing to the Depositor.
In such case, the Custodian and its officers and
employees shall be forever released and discharged from
any liability with respect to any claim arising out of
any action or omission reflected on such confirmation
or record.
5. The Custodian does not guarantee the custodial
account from loss or depreciation. The liability of the
Custodian to make any payment from the custodial
account at any time is limited to the then available
assets of the custodial account.
6. Subject to the limitations contained in paragraph 1
of Section 1 of this Article VIII, the Depositor shall
have the sole power, right and duty to direct the
Custodian from time to time with respect to the
investment and reinvestment of the assets of the
custodial account. The Custodian shall comply promptly
with all such directions, providing such directions are
clearly stated in writing executed by the Depositor,
and in form acceptable to the Custodian. The Custodian
shall not have any duty to inquire into the propriety
of any such direction nor into its effect upon the
custodial account or the beneficiary or beneficiaries
thereof, nor to apply to a court for instructions
notwithstanding the fact that the Custodian has, or
with reasonable inquiry should have, actual or
constructive notice that any action taken or omitted
pursuant to, or as a result of, the exercise of such
directive power constitutes, or may constitute, a
breach of the terms of the custodial account or a
violation of any law applicable to the investment of
the funds held hereunder. Any such direction so given
the Custodian shall be deemed to be continuing until
revoked or modified by a subsequent direction in
writing, notwithstanding the occurrence of any event or
other development of which the Custodian has or should
have knowledge. The Custodian shall not be liable or
responsible for any loss resulting to the custodial
account or to any present or future beneficiary thereof
by reason of:
(a) Any sale or investment made or other action
taken pursuant to and in accordance with the direction
of the Depositor; or
(b) The retention of any asset, including cash, the
acquisition or retention of which has been directed by
the Depositor.
7. This Agreement shall be binding upon all persons
entitled to benefits under the custodial account, their
respective heirs and legal representatives, and upon
the Custodian and its successors.
8. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of
the Agreement dictates, the plural shall be read as the
singular and the singular as the plural.
9. As the context requires, the term "Depositor" shall
be deemed to include any beneficiary of this Account
following the death of the Depositor.
10. All questions arising with respect to the
provisions of this Agreement shall be determined by
application of the laws of the State of Missouri except
to the extent federal law supersedes Missouri law. To
the extent permitted by law, none of the creditors of
the Depositor or any beneficiary shall have any power
to execute any levy, lien, assignment, garnishment,
alienation, attachment, or other voluntary or
involuntary transfer on any of the assets of the IRA;
and all sums payable to the Depositor or any
beneficiary shall be free and clear of all liabilities
for debts, levies, attachments and proceedings of any
kind, at law or in equity.
11. The Custodian shall receive reasonable annual
compensation as may be agreed upon from time to time
between the Depositor and Custodian. The Custodian
shall pay all expenses reasonably incurred by it in its
administration from the custodial account unless the
Depositor pays the expenses.
12. The Custodian may resign at any time for any
reason, upon 60 days' notice in writing to the
Depositor and may be removed by the Depositor at any
time upon 60 days' notice in writing to the Custodian.
Upon resignation, Grand Prix Funds, Inc. will appoint a
successor Custodian. The Depositor or Grand Prix
Funds, Inc. may terminate
this Agreement at any time by giving 60 days' notice
filed in a form acceptable to the Custodian. The
notice must include designation of a successor
Custodian. The successor Custodian shall satisfy the
requirements of Section 408(h) of the Code. The
Custodian shall not be liable for any actions or
failures to act on the part of any successor Custodian
nor for any tax consequences the Depositor may incur
that result from the transfer or distribution of his or
her assets pursuant to this Section. If this Agreement
is terminated, the Custodian may hold back from the IRA
a reasonable amount of money that it believes is
necessary to cover any one or more of the following:
Any fees, expenses or taxes chargeable against the
IRA;
Any penalties associated with the early withdrawal
of any savings instrument or other investment in the
IRA.
If the Custodian is merged with another
organization (or comes under the control of any Federal
or State agency) or if the Custodian (or any portion
which includes the IRA) is bought by another
organization, that organization (or agency) shall
automatically become the custodian or trustee
of the IRA, but only if it is the type of organization
authorized to serve as an IRA custodian or trustee. If
the Custodian is required to comply with Regulations
Section 1.401-12(n) and it fails to do so, or the
Custodian is not keeping the records, making the
returns or sending the statements as are required by
forms or regulations, the IRS may, after notifying the
Depositor, require the Depositor to substitute another
custodian.
13. The Custodian shall not be responsible for
determining the permissible amount of contributions to
the custodial account, or for the amount
or timing of distributions from the custodial account,
or for any other actions taken at the request of the
Depositor. The Depositor shall indemnify and hold the
Custodian harmless from any and all liability, claims
and expenses arising from any actions taken at the
Depositor's request or in connection with this
Agreement, except for any liability, claims, or
expenses caused by the negligence of the Custodian.
14. The Depositor agrees to pay to the Custodian fees
for services performed under this Agreement in an
amount specified from time to time by the Custodian.
Such fees may include, but are not limited to, a fee to
establish the custodial account and such account's
annual maintenance fee. The Custodian shall have the
right to change such fees at any time without prior
written notice to the Depositor. As soon as practicable
after any change in fees, the Custodian shall make
available to the Depositor a new fee schedule. All fees
may be billed to the Depositor or deducted from the
custodial account, at the discretion of the Depositor.
The Custodian shall also be entitled to reimbursement
for all reasonable and necessary costs, expenses and
disbursements incurred by it in the performance of
services in its capacity as Custodian of the custodial
account. Such fees and reimbursement shall be paid from
the custodial account if not paid directly by the
Depositor and shall constitute a lien upon the
custodial account until paid.
15. If the Custodian is UMB Bank, n.a., Sunstone
Investor Services, LLC shall be the ministerial agent
for the Custodian in the performance of any ministerial
duties delegated to it by the Custodian. If any other
bank or entity is the Custodian, then Sunstone Investor
Services, LLC shall not be the ministerial agent for
any duties of the Custodian unless it agrees in writing
with the other Custodian.
16. The Depositor must begin taking required minimum
distributions from the custodial account, under Article
IV, on or before the Depositor's required beginning
date (April 1 immediately following the end of the
calendar year in which the Depositor reaches age 70
1/2). Such distributions will be made only upon the
request of the Depositor (or the Depositor's authorized
agent, beneficiary, executor or administrator), in such
form and manner as is acceptable to the Custodian. For
such distributions, life expectancy and joint-life and
last-survivor expectancy are calculated based on
information provided by the Depositor (or the
Depositor's authorized agent, beneficiary, executor or
administrator) using the expected return multiples
under Treasury Regulations Section 1.72-9. The
Custodian will not be liable for errors in such
calculations resulting from its reliance on such
information. If any assets held on the Depositor's
behalf in a custodial account are transferred directly
to a custodian or trustee of another individual
retirement account described in IRC Section 408(a)
established for the Depositor, it shall be the
Depositor's responsibility to ensure that any required
minimum distribution required by Article IV is made
prior to giving the Custodian such transfer
instructions.
