EXHIBIT NO. 99.14(d)
11/13/97
MFS XXXX INDIVIDUAL RETIREMENT ACCOUNT TRUST AGREEMENT
(For taxable years beginning after December 31. 1997)
This AGREEMENT (the "Agreement"), entered into as of the date of the
related Application, by and between the individual whose signature appears on
that Application (the "Individual") and BankBoston, N.A. (the "Trustee"),
WITNESSES THAT:
WHEREAS, the Individual desires to provide for retirement and for the
support of beneficiaries upon death by establishing with the Trustee a Xxxx
individual retirement account described in Section 408A of the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, the Trustee accepts its appointment as Trustee of such individual
retirement account trust (the "Xxxx XXX Account");
NOW, THEREFORE, by executing the Application the Individual and the Trustee
agree as follows:
ARTICLE I CREATION OF THE XXXX XXX ACCOUNT
The Trustee shall, in accordance with the terms of this Agreement,
establish and maintain a Xxxx XXX Account for the exclusive benefit of the
Individual and the Individual's Beneficiary. The Individual's Xxxx XXX Account
will be established when (i) the Individual has completed and signed the
Application and has mailed or delivered that Application and contribution to MFS
Fund Distributors, Inc., or any successor thereto ("MFS Fund Distributors,
Inc.") and (ii) the Trustee has accepted that Application and contribution. If
that Application and contribution are accepted by the Trustee, the Xxxx XXX
Account will be effective as of the date they were mailed or, if otherwise
delivered, the date delivered. (If the contribution and Application are sent
separately, the Xxxx XXX Account will be established as of the mailing or
delivery date (as applicable) of the contribution or, if later, of the
Application.) The Trustee shall hold in trust for the purposes hereinafter set
forth, and shall manage and administer in accordance with the terms and
conditions hereof, contributions to the Xxxx XXX Account and any income or gain
therefrom. The Xxxx XXX Account is created and assets thereunder shall be held
for the exclusive benefit of each Individual or Beneficiary.
ARTICLE 2 REGULAR CONTRIBUTIONS
2.1. Permitted Contributions. All regular contributions to the Xxxx XXX
Account shall be in cash, and may be made under this Paragraph 2.1 by the
Individual or the Individual's spouse (the "Spouse"). An Individual may make
contributions to the Xxxx XXX Account even if
the Individual has attained age 70-1/2. In general, the maximum amount that an
Individual may contribute as a regular contribution to any Xxxx XXX Account for
any taxable year is (i) the lesser of $2,000 or 100% of the Individual's
compensation, (ii) reduced by the amount of any other regular contribution for
that year to any other Xxxx XXX or individual retirement plan under Code Section
408 ("XXX") for the benefit of the Individual. If the Individual is married, the
maximum amount the higher compensated spouse may contribute for the year is the
lesser of $2,000 or 100% of that spouse's compensation, and the maximum amount
the lower compensated spouse may contribute is the lesser of $2,000 or 100% of
that spouse's compensation plus the amount by which the higher compensated
spouse's compensation exceeds the amount the higher compensated spouse
contributes to his or her Xxxx XXX (even if one spouse has no compensation). The
maximum annual contribution amount will be reduced, however, if the Individual
is single and has an adjusted gross income between $95,000 and $110,000, is
married filing a joint return and has an adjusted gross income between $150,000
and $160,000, or is married filing separately and has an adjusted gross income
between $0 and $10,000. An Individual cannot make a contribution to a Xxxx XXX
if that person's adjusted gross income exceeds $110,000 for single individuals,
$160,000 for married individuals filing jointly, or $10,000 for married
individuals filing separately. Contributions to the Xxxx XXX Account will not be
deductible for federal income tax purposes. The Trustee may, but is under no
obligation to, refuse to accept annual Xxxx XXX Account contributions that
exceed $2,000.
2.2. Return of Excess. To the extent that any contributions to this
Xxxx XXX Account under Paragraph 2.1 for a taxable year constitute "excess
contributions" within the meaning of Code Section 4973(f) for that year, the
Individual may direct the Trustee in an appropriate written request to pay such
excess, together with any net income attributable thereto, to the Individual, on
or before the Individual's due date for filing his or her federal income tax
return for the year (including extensions), and the Trustee will make such
payment as soon as practicable after receipt of such request. If the Individual
fails to withdraw excess contributions and earnings thereon as described
immediately above, such excess amounts will be subject to a 6% excise tax.
However, excess contributions for one year may be carried forward and treated as
a contribution in the next year to the extent that the excess, when aggregated
with contribution (if any) for the subsequent year, does not exceed the maximum
contribution amount for that year.
2.3. Nature of Contribution. Cash contributions may be made by wire
order. However, in making a wire order contribution the Individual agrees to
indemnify the Trustee, MFS Fund Distributors, Inc., and their affiliates and
hold them harmless from all losses, claims, expenses and liabilities that may
result from such wire order, the failure of such wire order to be received or
the failure of the wire order to be received in a timely manner. In addition,
the Individual understands and agrees that if a contribution is made by wire
order at a time when the Individual has not established an MFS Xxxx XXX, no Xxxx
XXX Account shall be established until the Application is both received and
accepted by the Trustee.
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ARTICLE 3 QUALIFIED ROLLOVER CONTRIBUTIONS
In addition to contributions under Article 2, the Individual may contribute
to the Xxxx XXX Account a qualified rollover contribution within the meaning of
Code Section 408A(e) that is a rollover from another Xxxx XXX. The Individual
also may contribute to the Xxxx XXX Account a qualified rollover contribution
that is a rollover from an XXX, but only if the Individual's adjusted gross
income for the taxable year does not exceed $100,000 and the Individual is not a
married individual filing a separate federal income tax return. A qualified
rollover contribution is defined in part as a rollover from another Xxxx XXX, or
from an XXX, if the rollover meets the requirements of Code Section 408(d)(3). A
qualified rollover contribution may be in cash or property or both, provided
that the Trustee shall not accept as a rollover amount any property other than
cash unless it consists of (i) "marketable securities" which in the opinion of
the Trustee may be sold by it in accordance with all applicable federal
securities and other laws or which the Trustee otherwise agrees to accept and
retain; or (ii) an annuity contract (other than an annuity contract including a
life insurance element) or endowment contract which in the opinion of the
Trustee may be promptly surrendered by it to the issuer for cash. A rollover may
not include certain amounts, such as the amount of any required minimum
distributions. The Trustee also will accept (i) qualified rollover contributions
that are transferred to it directly from another trustee or custodian, (ii) the
conversion of an XXX to a Xxxx XXX in accordance with Code Section
408A(d)(3)(C), and (iii) the transfer, no later than the Individual's due date
for filing his or her federal income tax return for a taxable year (without
regard to extensions), from a traditional XXX to a Xxxx XXX of contributions for
that year (and earnings allocable to such contributions) in accordance with Code
Section 408A(d)(3)(D), each upon receipt of documentation satisfactory to the
Trustee. Any contribution by the Individual under this Article 3 shall be
accompanied by a written declaration from the Individual that it is a valid
rollover amount.
ARTICLE 4 NONFORFEITABILITY
The interest of the Individual in the balance of the Xxxx XXX Account shall
at all times be nonforfeitable within the meaning of Code Section 408(a)(4).
ARTICLE 5 INVESTMENT OF XXX ASSETS
5.1. Cash Contributions. The Trustee shall apply each cash contribution to
the Xxxx XXX Account to the purchase of MFS Fund Shares (including fractional
shares carried to the third decimal place) in accordance with the Individual's
written instructions.
5.2. Contributions in Property. The Trustee shall liquidate contributions
of rollover amounts to the Xxxx XXX Account that are in property other than
cash, provided that if such property consists of or includes MFS Fund Shares the
Trustee will, if so instructed by the Individual, hold such assets in the Xxxx
XXX Account. The Trustee shall invest the proceeds from such liquidation, after
deduction for all expenses and charges, including fees of the Trustee, incurred
in effecting such liquidation, in accordance with the provisions of Paragraph
5.1.
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5.3. Dividends and Other Payments. Dividends, capital gain distributions
and any other cash payments attributable to MFS Fund Shares held in the Xxxx XXX
Account shall be invested in the same shares to which such payments are
attributable unless the Individual otherwise directs. If dividend or capital
gain distributions are payable in MFS Fund Shares or cash, at the option of the
holder, the Trustee shall elect payment in full and fractional shares.
5.4. Change in Investment. The Individual may direct the Trustee at any
time and from time to time: (i) to exchange the MFS Fund Shares held in the Xxxx
XXX Account for other MFS Fund Shares in accordance with the then current
prospectuses relating to such shares, and (ii) to liquidate any investments then
held in the Xxxx XXX Account and invest the net proceeds in any form of
investment permitted under this Article 5.
5.5. Prohibited Investments. No part of the Xxxx XXX Account assets shall
be invested in life insurance contracts or in collectibles (within the meaning
of Code Section 408(m) and the Regulations thereunder); nor may the assets of
the Xxxx XXX Account be commingled with other property except in a common trust
fund or a common investment fund (within the meaning of Code Section 408(a)(5)).
ARTICLE 6 DISTRIBUTIONS
6.1. Early Distributions. The Individual may elect to withdraw all or any
part of the assets held in the Xxxx XXX Account at any time and from time to
time, upon written notice to the Trustee, provided that such written notice (i)
shall include a declaration of the Individual's intention as to the proposed use
of any distribution that occurs prior to his attainment of age 59-1/2 other than
on account of death or disability (as defined in Code Section 72(m)(7)), (ii)
shall include a statement of whether such distribution should be treated as a
"qualified distribution" that is not includable in gross income under Code
Section 408A(d), and (iii) shall be accompanied by a written election with
respect to federal income tax withholding.
6.2. Forms of Distribution. The Individual may, by providing written
distribution instructions and such other documentation as the Trustee may
reasonably require, elect to receive distributions from the Xxxx XXX Account in
any of the following forms:
(a) a single payment;
(b) monthly, quarterly, semiannual or annual payments made over a
certain period specified by the Individual which does not extend
beyond (i) the Individual's life expectancy, or (ii) the joint
life and last survivor expectancy of the Individual and his or
her Beneficiary.
Whenever an Individual elects to receive a distribution, the Individual
shall also specify in the distribution instructions whether the distribution is
to be made in cash or in MFS Fund Shares.
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Even if the Individual has begun to receive distributions pursuant to one
of the above options, the Individual may at any time direct the Trustee to
distribute all or any portion of the balance of the Xxxx XXX Account.
6.3. Required Distributions after Death.
(a) Minimum Distribution Requirements. Upon the death of an
Individual, the distribution of the Individual's interest in the Xxxx XXX
Account shall be made in accordance with Code Section 408(a)(6) and the minimum
distribution requirements of Code Section 401(a)(9), except that subparagraph
(A) of Section 401(a)(9) and the incidental death benefit requirements of Code
Section 401(a) shall not apply. The relevant provisions of Code Section
408(a)(6) and 401(a)(9) and regulations thereunder relating to such provisions
are incorporated herein by this reference. In general, the minimum distribution
requirements under Code Section 401(a)(9)(B) applicable upon the death of the
Individual provide that if the Individual dies on or after the date payments are
deemed to have begun, the Individual's entire Account balance must be
distributed to the Individual's designated Beneficiary at least as rapidly as
under the method of distribution in effect on the Individual's date of death,
or, if more rapid, over a period that does not exceed the life expectancy of the
Individual or the joint life expectancy of the Individual and the Beneficiary.
If the Individual dies before the date payments from the Account are deemed to
have begun, the general rule is that the Individual's entire Account balance
must be distributed in a lump sum or installments on or before December 31 of
the calendar year during which the fifth anniversary of the date of the
Individual's death occurs. However, if the balance of the Individual's Account
is payable to a designated Beneficiary, the designated Beneficiary may elect
that the amount be paid in substantially equal installments over a fixed period
not exceeding the designated Beneficiary's life expectancy beginning no later
than December 31 of the calendar year immediately following the calendar year in
which the Individual dies. However, if the Individual's Spouse is the designated
Beneficiary, such a distribution need not commence until December 31 of the
calendar year during which the Individual would have reached age 70-1/2 had the
Individual survived. Alternatively, if the Individual's designated Beneficiary
is his or her Spouse, the Spouse may elect to treat the Account as his or her
own. If the Individual's designated Beneficiary makes no election, the five year
rule described above is to be applied.
(b) Life Expectancy. Life expectancy must be determined by using the
expected return multiples specified in Tables V and VI of Treasury Regulation
Section 1.72-9. Such multiples shall be applied by using the Individual's or the
Beneficiary's age at the nearest birthday or if determination is made as of age
70-1/2, by using age 70. The life expectancy of the Individual's Spouse, if the
Spouse is the designated Beneficiary, may be redetermined once annually. The
surviving Spouse must make an irrevocable written election to have life
expectancy redetermined; if no election is made, life expectancy will not be
redetermined. The life expectancy of a non-spouse Beneficiary shall not be
redetermined. If life expectancy is not annually redetermined, the life
expectancy used for the first year of distribution will be reduced by one for
each year thereafter.
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6.4. Return of Excess. Notwithstanding anything to the contrary
contained in this Agreement, the Trustee shall distribute excess contributions,
and net income thereon, in accordance with section 2.2 upon receipt of an
appropriate written request from the Individual.
ARTICLE 7 AMENDMENT AND TERMINATION
7.1. Amendment. This Agreement may be amended by written instrument
signed by the Trustee and by the Individual, or by the Trustee and the
Beneficiary of the Individual if such Beneficiary is then receiving benefits
under Paragraph 6.3. In addition, the Individual hereby delegates to MFS Fund
Distributors, Inc. the power to amend this Agreement on behalf of the Individual
or Beneficiary. MFS Fund Distributors, Inc. shall notify the Individual or
Beneficiary of any such amendment. The Individual or Beneficiary shall be deemed
to have consented to any such amendment if he or she fails to object thereto
within 30 calendar days from the date such notice is mailed.
7.2. Termination. This Agreement shall terminate upon the complete
distribution of the assets held in the Xxxx XXX Account or in the event that a
determination is made by the Internal Revenue Service that the Xxxx XXX Account
does not qualify as a Xxxx individual retirement account within the meaning of
Code Section 408A. In the event the Xxxx XXX Account is terminated, the balance
in the Xxxx XXX Account shall be distributed to the Individual or to the
Beneficiary, as the case may be.
ARTICLE 8 TRUSTEE
8.1. Communications to Trustee. All notices, requests, directions,
instructions and other communications to the Trustee shall be in writing, and in
such form as the Trustee may from time to time prescribe; the Trustee shall be
entitled to rely on any such communication believed by it to be genuine or
properly given and shall have no duty of inquiry with respect to any of the
matters stated therein or the consequences to the Individual or Beneficiary
thereof, and shall be fully protected in acting or omitting to take any action
in reliance upon any such communication.
8.2. Voting. MFS Fund Shares held in the Xxxx XXX Account shall be
voted by, or in accordance with the instructions of, the Individual or
Beneficiary. The Trustee shall deliver, or cause to be delivered, to the
Individual or to the Beneficiary if the Beneficiary is then receiving benefits
under Paragraph 6.3, all notices, financial statements, prospectuses, contracts,
proxies and proxy materials relating to the MFS Fund Shares in the Xxxx XXX
Account. The Trustee shall vote MFS Fund Shares held in the Xxxx XXX Account in
accordance with proper voting instructions from the Individual or Beneficiary.
Absent such instructions the Trustee is hereby directed to and shall vote such
MFS Fund Shares for or against any proposition in the same proportion as all MFS
Fund Shares of the relevant MFS Fund for which instructions have been received.
8.3. Powers of Trustee. Except as otherwise limited under the terms of
this Agreement, the Trustee shall have the power and authority in the
administration of the Xxxx XXX Account to do all acts, to execute and deliver
all instruments and to exercise for the sole benefit of the Individual
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and his Beneficiary any and all powers which would be lawful were it in its own
right the actual owner of the property held, including by way of illustration,
but not in limitation of the powers conferred by law, the following:
(a) To sell or exchange any part of the assets of the Xxxx XXX
Account;
(b) To register any asset held by the Trustee in its own name, or in
nominee or bearer form that will pass by delivery;
(c) To consent to or participate in dissolutions, reorganization,
mergers, sales, transfers or other changes in securities held by
the Trustee, and in such connection to delegate the Trustee's
powers and to pay assessments, subscriptions, and other charges;
(d) To make distributions from the Xxxx XXX Account in cash or in
kind pursuant to the provisions of the Agreement; and
(e) To invest and reinvest all or a part of the contributions made to
the Xxxx XXX Account and dividends, capital gain distributions or
any other income thereon in MFS Fund Shares (including fractional
shares carried to the third decimal place) and to retain such
Shares without any duty of further diversification.
8.4. Compensation and Expenses. The Trustee shall receive such compensation
for its services hereunder as may be agreed upon from time to time by the
Trustee and the Individual, or by the Trustee and the Beneficiary of the
Individual if the Beneficiary is then receiving benefits under Paragraph 6.3.
The Application contains a statement of the Trustee's compensation. MFS Fund
Distributors, Inc. is hereby delegated the power to agree to such compensation
on behalf of the Individual or Beneficiary, provided that after at least 30
days' notice to the Individual or Beneficiary of any increase in compensation,
no objection shall have been made thereto. Any compensation of the Trustee, and
any expenses, liabilities or other charges incurred by the Trustee in the
administration of the Xxxx XXX Account, shall be paid from the Xxxx XXX Account
unless paid by the Individual. In addition, the Trustee may, upon such terms and
conditions (including without limitation receipt of such documentation) as the
Trustee deems necessary, agree to pay directly from the Xxxx XXX Account certain
advisory or other similar fees at the written direction of the Individual or
Beneficiary, or his or her designee.
8.5. Resignation and Removal. The Trustee may resign at any time upon
notice in writing to MFS Fund Distributors, Inc. and may be removed by MFS Fund
Distributors, Inc. at any time upon notice in writing to the Trustee. Any such
notice of resignation or removal shall take effect on the date specified
therein, which shall not be less than 30 days after the delivery thereof, unless
such notice shall be waived by the party entitled to the notice. Upon such
resignation or removal, MFS Fund Distributors, Inc. shall appoint a successor
trustee, which successor shall be a "bank" (as defined in Code Section 408(n))
or such other person who has demonstrated to the satisfaction of the
Commissioner of Internal Revenue that he will administer the trust in a manner
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consistent with the law. In the event that MFS Fund Distributors, Inc. exercises
this power, the Individual or Beneficiary, if such Beneficiary is then receiving
benefits under Paragraph 6.3, shall be deemed to have consented to such change
of Trustee if no objection is received by MFS Fund Distributors, Inc. within 30
days after the Individual or Beneficiary receives written notice of the change.
If within 30 days after the Trustee's resignation or removal MFS Fund
Distributors, Inc. has not appointed a successor trustee that has accepted such
appointment, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor trustee.
Upon receipt by the Trustee of written acceptance of appointment by the
successor trustee, the Trustee shall transfer and pay over to such successor the
assets of the Xxxx XXX Account and all records pertaining thereto. The Trustee
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 liabilities constituting a charge on or against the assets of the Xxxx
XXX Account or on or against the Trustee. Any balance remaining after payment of
such items shall be paid over to the successor trustee. The successor trustee
shall thereafter be deemed to be the Trustee under this Agreement.
If a new sponsor is used as a successor trustee, then the new sponsor
cannot rely upon the opinion letter issued to MFS Fund Distributors, Inc.
8.6. Failure to Consent. If the Individual or Beneficiary does not
consent to an appointment of a successor trustee, a change in the Trustee's
compensation, or an amendment to this Agreement made or agreed to by MFS Fund
Distributors, Inc., this Agreement shall be deemed amended by the Individual or
Beneficiary, with the result that MFS Fund Distributors, Inc. shall cease to be
the sponsor of this Agreement and there will be no further reliance on the
opinion letter issued by the Internal Revenue Service to MFS Fund Distributors,
Inc. Further, the Trustee shall notify the Individual or Beneficiary as soon as
possible following such objection of its resignation as trustee of this Xxxx XXX
Account as of the thirtieth day following the date of such notice. If within
thirty (30) days from the date of such notice the Individual or Beneficiary
fails to appoint a new trustee or take other appropriate action with respect to
the Xxxx XXX Account, the Individual or Beneficiary directs the Trustee to
distribute all assets held under the Xxxx XXX Account in a lump sum as soon as
administratively reasonable after the close of said thirty day period.
ARTICLE 9 RETURNS AND REPORTS
9.1. Annual Accounting. The Trustee and/or its nominee shall mail to the
Individual, or to the Beneficiary if such Beneficiary is then receiving benefits
under Paragraph 6.3, at least once during each calendar year, a report
concerning the status of an Individual's Xxxx XXX Account including statements
of all transactions in the Xxxx XXX Account during the preceding calendar year,
and statements showing the value of each asset held in the Xxxx XXX Account as
of December 31 of such preceding year. The Individual or Beneficiary should give
the Trustee written notice of any exception or objection to the annual
accounting within 60 days after it is so mailed.
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9.2. Notice. The annual accounting referred to in Paragraph 9.1 hereof, and
all other notices from the Trustee hereunder shall be mailed to the Individual's
address appearing on the Application or to such other address as the Individual,
or the Individual's Beneficiary if such Beneficiary is then receiving benefits
under Paragraph 6.3, has notified the Trustee in writing for this purpose.
9.3. Filing of Returns and Reports. The Trustee shall file such returns or
reports with respect to the Xxxx XXX Account as are required to be filed by it
under the Code and regulations thereunder, including reports required under Code
Section 408(i), or by the Department of Labor or the Department of Treasury, and
the Individual or Beneficiary shall provide the Trustee with such information as
it may require to file such reports.
ARTICLE 10 ADDITIONAL DEFINITIONS
As used herein:
(a) "Beneficiary" shall mean the person or persons currently
designated by the Individual (including individuals, trusts,
estates, partnerships, corporations, associations, charitable or
educational organizations or other similar entities), or by his
Beneficiary if such Beneficiary is then receiving benefits under
Paragraph 6.3, as the Beneficiary or Beneficiaries on the form
provided for this purpose by the Trustee or, if no such
Beneficiary has been designated or is alive at the time of
distribution, the executor or other legal representative of the
Individual (or his Beneficiary). The initial Beneficiary shall be
the person or persons designated as such on the Application.
Where there is more than one Beneficiary designated,
distributions from the Xxxx XXX Account shall be made pro rata
among those Beneficiaries who are alive at the time of the
distribution, unless specified otherwise in the designation form.
(b) "MFS Fund Shares" means shares of any regulated investment
company or companies within the meaning of Code Section 851(a) as
may be designated by MFS Fund Distributors, Inc.
(c) "Marketable Securities" shall mean:
(i) shares of regulated investment companies registered under
the Investment Company Act of 1940, as amended; (ii)
securities that are traded on a national securities exchange
or listed for trading on a national quotation service; and
(iii) such other securities as the Trustee, in its
discretion, deems to be marketable securities.
Masculine words will be read and construed in the feminine where required
by the context.
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ARTICLE 11 MISCELLANEOUS
This Xxxx XXX Account is established with the intent that it qualify as a
Xxxx Individual Retirement Account under Code Section 408A, and the provisions
hereof shall be construed in accordance with such intent. This Agreement shall
be governed by the laws of the Commonwealth of Massachusetts, to the extent not
superseded by federal law.
This Xxxx XXX Account is intended to be a prototype Xxxx individual
retirement account trust designed to meet the requirements imposed upon
prototype Xxxx individual retirement accounts. MFS will submit this Xxxx XXX
Account to the National Office of the Internal Revenue Service (IRS) for an
Opinion Letter as soon as practicable after the IRS announces the procedures for
Opinion Letter applications for prototype Xxxx individual retirement account
trusts. MFS will provide to the Individual or Beneficiary a copy of such Opinion
Letter once it has been received.
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11/19/97
MFS XXXX XXX DISCLOSURE STATEMENT
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(For taxable years beginning after December 31, 1997)
The following information is being provided to you by BankBoston, N.A. (the
"Trustee") in accordance with the requirements of the Internal Revenue Code of
1986 and regulations thereunder, as amended (the "Code"). This Statement should
be read in conjunction with the MFS Xxxx XXX Agreement and Application
(collectively, the "Agreement"), and the prospectus for each investment option
you have selected. The provisions of the Agreement and prospectus(es) must
prevail over this Statement in any instance where this Statement is incomplete
or unclear.
This Statement summarizes the requirements for establishing an MFS Xxxx XXX
and provisions of federal tax law applicable to Xxxx IRAs. The state tax
treatment of your Xxxx XXX may be different; state tax information should be
available from your state taxing authority or your own tax adviser.
RIGHT TO REVOKE
You may revoke your Xxxx XXX for any reason within seven calendar days
after the date you signed the Application by mailing or delivering a written
request that your Xxxx XXX be revoked to:
MFS Service Center, Inc.
X.X. Xxx 0000
Xxxxxx, XX 00000-0000
If you revoke your Xxxx XXX, the entire amount of your contribution,
without adjustment for items such as administrative expenses, fees, interest, or
fluctuation in market value, will be returned to you. If you have any questions
concerning this revocation procedure you may phone MFS at 0-000-000-0000.
CONTRIBUTIONS
Who Can Contribute.
In general, an individual may contribute to a Xxxx XXX for a calendar year
as long as the individual or the individual's spouse receives compensation for
the performance of services, including earned income from self-employment,
during that calendar year. An individual cannot make a contribution to a Xxxx
XXX if that person's adjusted gross income exceeds $110,000 for single
individuals, $160,000 for married individuals filing jointly, and $10,000 for
married individuals filing separately. Contributions to a Xxxx XXX may be made
regardless of an individual's age. Rollover contributions can be made to a Xxxx
XXX but certain restrictions apply. An individual can contribute to a Xxxx XXX
even if he or she is an active participant in an employer plan.
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11.1. Regular Xxxx XXX. The maximum contribution that can be made to an
individual's regular Xxxx XXX for any calendar year is the lesser of (i) $2,000
or (ii) the compensation the individual earns for the year. If you are married
and file a joint federal income tax return, each of you may establish your own
regular Xxxx XXX. The maximum amount the higher compensated spouse may
contribute for the year is the lesser of $2,000 or 100% of that spouse's
compensation, and the maximum amount the lower compensated spouse may contribute
is the lesser of $2,000 or 100% of that spouse's compensation plus the amount by
which the higher compensated spouse's compensation exceeds the amount the higher
compensated spouse contributes to his or her Xxxx XXX (even if one spouse has no
compensation). If you are divorced, all taxable alimony you receive under a
decree of divorce or separate maintenance will be treated as compensation.
However, the maximum annual contribution amount will be phased out if the
individual is single and has an adjusted gross income between $95,000 and
$110,000, is married filing a joint return and has an adjusted gross income
between $150,000 and $160,000, or is married filing separately and has an
adjusted gross income between $0 and $10,000. No amount you contribute to a Xxxx
XXX will be deductible for federal income tax purposes. The maximum annual
amount you may contribute to a Xxxx XXX must be reduced by any amount you
contribute to an XXX established under Code Section 408 (a "traditional XXX") or
to any other Xxxx XXX for that year.
11.2. Rollovers. You may roll over into a Xxxx XXX a distribution from
another Xxxx XXX. You may make a rollover contribution from a traditional XXX to
a Xxxx XXX only if your adjusted gross income for the year in which the rollover
occurs does not exceed $100,000 and you are not a married individual filing a
separate federal income tax return. Any amount rolled over from a traditional
XXX to a Xxxx XXX will be includable in income in the year the rollover is made
in accordance with the traditional XXX tax rules, except that amounts rolled
over on or before December 31, 1998 will be includable in income ratably over a
four-year period. Under the XXX tax rules, you will be taxed on the amount
rolled over from a traditional XXX to a Xxxx XXX to the extent that the amount
rolled over represents deductible contributions made to your traditional XXX and
earnings on any amount contributed to your traditional XXX. The amount rolled
over will not be subject to the 10% excise tax on premature distributions.
Alternatively, you may convert a traditional XXX to a Xxxx XXX in accordance
with Code Section 408A(d)(3)(C); such a conversion will be treated as a
rollover. In addition, you may, no later than the due date for filing your
federal income tax return for a taxable year (without regard to extensions),
transfer from a traditional XXX to a Xxxx XXX contributions made for that year
to the traditional XXX (and earnings allocable to such contributions), in which
case none of the amount so transferred will be includible in your income to the
extent the amount transferred was not deductible.
The MFS Xxxx XXX trustee will accept rollovers, direct rollovers, or
amounts that are transferred directly to it from the trustee or custodian of a
Xxxx XXX or a traditional XXX, as long as all applicable requirements are met.
You also may roll over or transfer the amounts held in your MFS Xxxx XXX into
another Xxxx XXX. However, rollovers from one Xxxx XXX to another may only be
made once during any twelve month period. There is no limit on the dollar amount
of a rollover contribution to a Xxxx XXX. Strict limitations apply to rollovers;
although it is possible that the Trustee or MFS may provide you with general
information concerning
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rollovers, you should seek competent tax advice from your own adviser in order
to comply with all of the rules governing rollovers.
You may make a contribution to your Xxxx XXX for any calendar year
beginning after December 31, 1997 up to the due date for filing your federal
income tax return (excluding extensions) for that year. If you do not specify
the year for which your contribution is being made, it will be deemed to be made
for the year in which it is actually made.
Nature and Investment.
Contributions other than rollover contributions must be made in cash.
Rollover contributions can be made either in cash or in other assets held in the
account from which the rollover is being made. However, a Xxxx XXX cannot be
invested in life insurance or collectibles, nor may Xxxx XXX assets be
commingled with other property except in a common trust fund or common
investment fund. There are also several other restrictions on the use of Xxxx
XXX assets described in "OTHER TAX CONSIDERATIONS" below. The assets in your
Xxxx XXX will be invested as you direct in MFS Fund Shares available for
investment from time to time under the terms of your MFS Xxxx XXX. You should
read all information (e.g., prospectuses) about the permissible investments that
must be provided to you, so that you can make an informed investment decision.
All fees and other charges that must be paid from Xxxx XXX assets in connection
with each investment and the method for computing and allocating earnings for
each investment is described in such informational materials. Growth in the
value of your account invested in MFS Fund Shares cannot be guaranteed or
projected.
Your interest in your Xxxx XXX is at all times nonforfeitable. Your Xxxx
XXX is established for the exclusive benefit of you and your beneficiaries.
Contributions you make to your Xxxx XXX will not be deductible for federal
income tax purposes.
DISTRIBUTIONS
You may withdraw any or all of your Xxxx XXX account at any time upon
written application to the Trustee in suitable form. However, if you make
withdrawals from your Xxxx XXX, a 10% excise tax will be imposed on the amount
of the distribution includible in your gross income unless the distribution is:
(a) For one of the qualified purposes described in Paragraph 4 below
(but without the five year holding period).
(b) An exempt withdrawal of an excess contribution (discussed below).
(c) Rolled over in accordance with Code requirements.
(d) One of a series of substantially equal periodic payments paid not
less frequently than annually for your life or life expectancy or
for the joint lives or joint life expectancies of you and your
beneficiary.
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(e) A transfer to another Xxxx XXX pursuant to a decree of divorce or
separate maintenance or a written instrument incident to such a
decree.
(f) Used to pay qualified higher education expenses. Qualified higher
education expenses are tuition, fees, books, supplies, and
equipment required for the enrollment or attendance at an
eligible educational institution of the Xxxx XXX account holder,
the account holder's spouse, or the child or grandchild of the
account holder or the account holder's spouse. The amount of
these expenses is reduced by any amount excludible from income
under the rules relating to education savings bonds.
(g) Used to pay certain medical care expenses. These are medical
expenses that can be deducted as medical expenses on your income
tax return as itemized deductions (to the extent such expenses
exceed 7.5% of adjusted gross income), whether or not you
actually itemize deductions for that year.
(h) Made to an individual after he or she has received 12 consecutive
weeks of unemployment compensation. These are distributions to a
Xxxx XXX account holder who has received unemployment
compensation for at least 12 weeks under federal or state law and
the distributions are made during the taxable year during which
that unemployment compensation is paid or the next taxable year.
A self-employed individual is treated as meeting the requirements
for unemployment compensation if the individual would have
received such compensation if he or she had not been
self-employed.
2.1. Form of Distribution. You may elect to receive distributions from your
Xxxx XXX in the following forms:
(a) A lump-sum payment of all or any portion of your account;
(b) Monthly, quarterly, semiannual or annual payments over a
specified period that does not extend beyond (i) your life
expectancy or (ii) the joint life and last survivor expectancy of
you and your designated beneficiary.
Even if you have begun receiving distributions in accordance with (2) above, you
can at any time direct that all or any portion of the balance of your Xxxx XXX
be distributed to you.
During your lifetime, you are not required to begin receiving distributions at
any specified age or in any specific amount from your Xxxx XXX.
2.2. On Death. The minimum distribution rules of Code Section 401(a)(9)(B)
apply to the distribution of amounts remaining credited to your Xxxx XXX account
after your death. It is unclear, pending further guidance from the IRS, exactly
how these rules will apply to Xxxx
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IRAs. However, in general those minimum distribution rules require that if you
die on or after the date payments are deemed to have begun, the entire remaining
account balance must be distributed to your designated beneficiary at least as
rapidly as under the method of distribution in effect on your date of death, or,
if more rapid, over a period that does not exceed your life expectancy or the
joint life expectancy of you and your beneficiary, such life expectancy to be
determined based on the expected return multiple tables shown in IRS Publication
590. Further, those rules provide that if you die before the date payments are
deemed to have begun, the general rule is that the entire remaining account
balance must be distributed in a lump sum or installments on or before December
31 of the calendar year during which the fifth anniversary of the date of your
death occurs. However, if the balance of your account is payable to your
designated beneficiary, your designated beneficiary may elect that the amount be
paid in substantially equal installments over a fixed period not exceeding the
designated beneficiary's life expectancy beginning no later than December 31 of
the calendar year immediately following the calendar year in which you died.
Further, those rules provide that if your spouse is your designated beneficiary,
such a distribution need not commence until December 31 of the calendar year
during which you would have reached age 70-1/2 had you survived. Alternatively,
if your designated beneficiary is your spouse, he or she may elect to treat the
account as his or her own. If your designated beneficiary makes no election, the
five year rule described above is to be applied.
If the amount distributed from your Xxxx XXX in any year is less than the
minimum amount required to be distributed after your death (see paragraph 2(b)
above), your beneficiary will be subject to a 50% excise tax on the difference
between the amount required to be distributed and the amount actually
distributed. It is the Xxxx XXX holder's responsibility to seek assistance from
a tax adviser, to calculate minimum distribution amounts, and to direct the
Trustee, in writing, as to the amount and method of distribution desired.
Distributions from your Xxxx XXX that represent a return of your
contributions are not taxable. To the extent that your Xxxx XXX contains
contributions and earnings, all distributions will be treated as a return of
your contributions until all contributions have been distributed. Only then will
distributions be treated as distributions of earnings. Distributions of earnings
will be taxed as ordinary income in the year they are received unless they are
"qualified distributions," as discussed below. Xxxx XXX distributions do not
qualify for capital gain treatment.
A distribution from a Xxxx XXX will be a qualified distribution, and
therefore not taxable upon distribution, if:
(a) Five year holding period. The distribution is made after the five-
year taxable period beginning with the taxable year in which you first
contributed to your Xxxx XXX; and
(b) Qualified Purpose. The distribution is:
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(1) Age 59-1/2. Made on or after the date you attain age 59-1/2;
(2) Death. Made to a beneficiary or estate on or after your
death;
(3) Disability. Attributable to your being disabled; or
(4) First-time Homebuyer Expenses. Used within 120 days of the
date the distribution is received to pay first-time
homebuyer expenses. First-time homebuyer expenses, in
general, include the costs of acquiring, constructing, or
reconstructing an individual's principal residence, subject
to a lifetime dollar limit of $10,000, as long as the
individual for whom the expenses are paid did not own a
principal residence for the two prior years. The expenses
can be used for the expenses of the Xxxx XXX account holder,
the account holder's spouse, or any child, grandchild or
ancestor of the account holder or the account holder's
spouse.
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OTHER TAX CONSIDERATIONS
If the amount of your Xxxx XXX contributions for a year exceeds the maximum
permissible contribution, the excess contribution amount will be subject to a 6%
excise tax. However, the 6% excise tax will not be imposed if you withdraw the
excess contribution and any earnings on it on or before the due date for filing
your federal income tax return for the year (including extensions). The amount
of the excess contribution withdrawn will not be considered a premature
distribution nor taxed as ordinary income, but the earnings withdrawn will be
taxable income to you. Alternatively, excess contributions for one year may be
carried forward and treated as a contribution in the next year to the extent
that the excess, when aggregated with your Xxxx XXX contribution (if any) for
the subsequent year, does not exceed the maximum contribution amount for that
year. The 6% excise tax will be imposed on excess contributions in each year
they are neither returned nor within the permitted contribution limit.
If you or your beneficiary engage in any transaction prohibited by Code
Section 4975 (such as any sale, exchange or leasing of any property or extension
of credit between you and the account), the account will lose its tax exemption
and the entire balance of the account will be treated as having been distributed
to you as of the first day of the calendar year in which the transaction occurs.
This distribution will be taxable as ordinary income and, if you are under age
59-1/2 at the time, will also be subject to the 10% excise tax on premature
distributions.
If you or your beneficiary use all or any part of your Xxxx XXX assets as
security for a loan, the portion so used will be treated as having been
distributed, and will be taxable as ordinary income and, if you are under age
59-1/2 at the time, may also be subject to the 10% excise tax on premature
distributions.
If you elect during your lifetime to have all or any part of your Xxxx XXX
payable to a beneficiary upon your death, the election will not subject you to
any gift tax liability.
Federal income tax will be withheld from any taxable distributions you
receive from a Xxxx XXX unless you elect not to have taxes withheld. Such an
election must be in writing; election forms are available from MFS Service
Center, Inc.
Contributions to a Xxxx XXX are includible in taxable income for federal
income tax purposes, and therefore must be reported on Form 1040 or 1040A. In
addition, a Form 5329 must be filed for any year in which there is an excess
contribution to, premature distribution from, or insufficient distribution from
your Xxxx XXX. Further information about federal tax reporting can be obtained
from any district office of the Internal Revenue Service.
This Xxxx XXX Account is intended to be a prototype Xxxx individual
retirement account trust designed to meet the requirements of Code Section 408A.
This Xxxx XXX Account is based on the form of prototype traditional XXX trust
sponsored by MFS Fund Distributors, Inc. that was last approved by the Internal
Revenue Service (IRS) in Opinion Letter Serial No. D189707a dated April 24,
1995. MFS Fund Distributors, Inc. will submit this Xxxx XXX Account to the IRS
for an Opinion Letter as soon as practicable after the IRS announces the
procedures for Opinion Letter Applications for prototype Xxxx individual
retirement accounts. MFS Fund Distributors, Inc.
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will provide to the Individual or Beneficiary a copy of such Opinion Letter once
it has been received.
You may obtain further information concerning your Xxxx XXX from any
district office of the Internal Revenue Service, or you may contact MFS at
0-000-000-0000.
NOTE: Although MFS may provide general information concerning your MFS Xxxx
XXX, MFS does not provide tax or other financial, legal or technical advice. You
are urged to contact your own adviser for such guidance.
