XXXX XXXXX XXXX XXXXXX, INC.
PROTOTYPE INDIVIDUAL RETIREMENT PLAN
AND CUSTODIAL AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE XXXX XXXXX XXXX XXXXXX, INC.
PROTOTYPE INDIVIDUAL RETIREMENT PLAN AND
CUSTODIAL AGREEMENT
1.01 ESTABLISHMENT OF PLAN. By execution of the Xxxx Xxxxx Retirement
Account Adoption Agreement, the Participant hereby establishes this Xxxx Xxxxx
Xxxx Xxxxxx, Inc. Prototype Individual Retirement Plan and Custodial Agreement
and intends to provide contributions to his or her Custodial Account in
accordance with section 408(a) of the Internal Revenue Code. The contributions
to be made to the Custodial Account and earnings thereon will be maintained for
the exclusive benefit of the Participant and his or her Beneficiary.
ARTICLE II
DEFINITIONS
The following terms when used in the Plan with an initial capital letter
shall have the following meaning, unless the context otherwise requires:
2.01 ACTIVE PARTICIPANT means, with respect to any plan year of a
retirement plan described in Code section 219(g)(5), an "active participant" as
defined in Code section 219(g) or its successor.
2.02 ADJUSTED GROSS INCOME means a Participant's "adjusted gross income" as
defined in Code section 219(g)(3).
2.03 ADOPTION AGREEMENT means the Xxxx Xxxxx Retirement Account Adoption
Agreement by which this Plan is adopted by the Participant.
2.04 APPLICABLE DOLLAR AMOUNT means, in the case of a married Participant
filing a joint return, $40,000, in the case of any other individual other than a
married individual filing a separate return, $25,000, and in the case of a
married individual filing a separate return, zero. The Applicable Dollar Amounts
shall increase as provided in Code section 219(g)(2)(A)(ii) and (3)(B).
Effective for Tax Years beginning after December 31, 1997, with respect to an
individual who is not an Active Participant at any time during any plan year
ending with or within the Tax Year, but whose spouse files a joint return with
the individual and is an Active Participant for any part of such plan year, the
Applicable Dollar Amount shall be $150,000.
2.05 APPLICABLE LIFE EXPECTANCY means the life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the Participant
(or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated for purposes of making a Minimum Required Distribution from a
Participant's Custodial Account. If life expectancy is being recalculated, the
Applicable Life Expectancy shall be the life expectancy as so recalculated. The
applicable calendar year shall be the first Distribution Calendar Year, and if
life expectancy is being recalculated, such succeeding calendar year. Life
expectancy and joint and last survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of section 1.72-9 of the Treasury
regulations.
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Effective January 1, 1997, unless otherwise elected by the Participant
(or the Participant's spouse, in the case of distributions described in Section
6.03) by the time distributions are required to begin under Code section
408(a)(6), life expectancies shall be recalculated annually. Any such election
(or deemed election in the case of a failure to elect) shall be irrevocable as
to the Participant (or spouse) and shall apply to all subsequent years after the
election (or deemed election). A Participant shall not be entitled to elect to
have his or her joint and last survivor expectancy recalculated unless the
Participant's Designated Beneficiary is his or her spouse.
2.06 BENEFICIARY means the person, persons, trust or any other entity
designated by any Participant as his or her beneficiary in the Adoption
Agreement or other form acceptable to the Custodian. Effective January 1, 1997,
if no Beneficiary shall have been validly selected at the death of the
Participant, or if all of the Participant's chosen Beneficiaries have
predeceased the Participant or disclaim their interest(s) in the Participant's
XXX in accordance with applicable law, the Participant's spouse (or, in the case
of a Participant who is not married on the date of death, the Participant's
estate) shall be deemed to be his or her Beneficiary for all purposes hereunder.
2.07 CODE means the Internal Revenue Code of 1986, as amended, and any
regulations thereunder.
2.08 COMPENSATION means the wages, salaries, professional fees, or other
amounts derived from or received for personal services actually rendered
(including, but not limited to, commissions paid to salesmen, compensation for
services on the basis of a percentage or profits, commissions on insurance
premiums, and tips and bonuses) and including the net earnings from
self-employment in the trade or business with respect to which the Plan is
established, provided the personal services of the self-employed individual are
a material income-producing factor to those net earnings, reduced by the
deduction taken by the self-employed individual for contributions to his or her
self-employed retirement plan. The term "compensation" does not include amounts
derived from or received as earnings or profits from property (including but not
limited to, interest and dividends) or amounts not includible in gross income.
Compensation also does not include any amount received as a pension or annuity
or as deferred compensation. The term "compensation" shall include any amount
includible in the individual's gross income under Code section 71 with respect
to a divorce or separation instrument described in Code section 71(b)(2)(A).
2.09 CUSTODIAL ACCOUNT means the account established under this Plan for
any Participant's contributions and the earnings thereon.
2.10 CUSTODIAN means Xxxx Xxxxx Xxxx Xxxxxx, Inc. and any successor which
becomes a successor custodian in accordance with this Plan.
2.11 DESIGNATED BENEFICIARY means the "designated beneficiary" of the
Participant as described in proposed Treasury regulations section 1.401(a)(9)
and 1.408-8.
2.12 DESIGNATED NONDEDUCTIBLE CONTRIBUTIONS means any contribution
as described in Code section 408(o)(2)(C) (as limited by Section 3.03), and
designated as such on the Participant's tax return.
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2.13 DISABILITY means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or to be of long continued or
indefinite duration.
2.14 DISTRIBUTION CALENDAR YEAR means a calendar year for which a Minimum
Required Distribution is required under Code section 408(a)(6). For
distributions beginning before the Participant's death, the first Distribution
Calendar Year is the calendar year in which the Participant attains age 70 1/2.
For distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which distributions are
required to begin pursuant to Article VI hereof.
2.15 DOLLAR LIMITATION means $2,000 or, if applicable, the limitation in
Code section 219(c)(1)(A).
2.16 EFFECTIVE DATE means the date as of which this Plan and the Adoption
Agreement are made effective; provided, however, that such date shall not be
prior to the first day of the calendar year for which this Plan is adopted.
2.17 ERISA means the Employee Retirement Income Security Act of 1974 and
any regulations thereunder, as that statute and those regulations shall be
amended and in effect from time to time.
2.18 EXCESS CONTRIBUTION means the portion of any contribution to a
Custodial Account in excess of the amount allowable as a deduction under the
Code and which is treated as an excess contribution under Code section 408(d).
2.19 INDIVIDUAL XXX means any Custodial Account established hereunder other
than a Marital XXX or Rollover XXX.
2.20 XXX means any of the Custodial Accounts described in Section 4.01 of
this Plan.
2.21 MARITAL XXX means the Custodial Account and XXX established under this
Plan for the benefit of a Non-Working Spouse.
2.22 MINIMUM REQUIRED DISTRIBUTION. A distribution required to be made from
a Participant's Custodial Account under Code section 408(a)(6).
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2.23 NONDEDUCTIBLE LIMIT means the Dollar Limitation less, if applicable,
the amount of the Participant's limitation on deductions determined under
Section 3.01 of this Plan, and less any deductible contributions to any of the
Participant's IRAs.
2.24 NON-WORKING SPOUSE means an individual who, for the Tax Year, files a
joint return with the individual's spouse if the amount of the individual's
Compensation, if any, for the Tax Year is less than the Compensation of the
individual's spouse for the Tax Year.
2.25 PARTICIPANT means each individual who is eligible to participate under
this Plan and who has executed the Adoption Agreement. A Non-Working Spouse must
execute an Adoption Agreement in order to establish a Marital XXX.
2.26 PARTICIPANT'S BENEFIT means the Participant's Custodial Account
balance as of the last Valuation Date in the calendar year immediately preceding
the Distribution Calendar Year (the "valuation calendar year") increased by the
amount of any contributions allocated to the Custodial Account balance as of
dates in the "valuation calendar year" after the Valuation Date and decreased by
distributions made in the "valuation calendar year" after the Valuation Date. If
any portion of the minimum distribution for the first Distribution Calendar Year
is made in the second Distribution Calendar Year on or before the Required
Beginning Date, that amount must be treated as having been made for purposes of
this Section 2.26 in the first Distribution Calendar Year.
2.27 PLAN means this Xxxx Xxxxx Xxxx Xxxxxx, Inc. Prototype Individual
Retirement Plan and Custodial Agreement, the Adoption Agreement and the IRAs
provided by the Custodian pursuant to this Plan.
2.28 REQUIRED BEGINNING DATE means the first day of April following the
calendar year in which the Participant attains age 70 1/2.
2.29 ROLLOVER XXX means the Custodial Account and XXX established under
this Plan to accept Rollover Contributions.
2.30 ROLLOVER CONTRIBUTION means that portion of the amount distributed
from a qualified employee retirement plan, tax-sheltered annuity, qualified
annuity plan, or other individual retirement account to the Participant and then
transferred to his or her Custodial Account (by Transfer or by delivery by the
Participant to the Custodian of distributed funds following his or her receipt
of a distribution) and which satisfies the conditions of Code sections 402(c),
403(a)(4), 403(b)(8), 408(d)(3), as applicable.
2.31 TAX YEAR means the tax year of the Participant.
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2.32 TRANSFER means a direct transfer on behalf of a Participant from a
trustee or custodian of a tax-qualified retirement plan, individual retirement
annuity, tax sheltered annuity plan or qualified annuity plan of some or all of
the assets of such a plan, annuity or account to the Custodian and shall include
transfers described in Code sections 401(a)(31), 402(e)(6), 403(c)(5) or
403(b)(10).
2.33 VALUATION DATE means any business day on which the New York Stock
Exchange is open; provided, however, that the Custodian may postpone or
establish a special Valuation Date whenever, in its discretion, it considers
such postponement or establishment necessary.
ARTICLE III
LIMITATIONS ON DEDUCTIONS AND
NONDEDUCTIBLE CONTRIBUTIONS
3.01 LIMITATIONS ON DEDUCTIONS FOR ACTIVE PARTICIPANTS IN CERTAIN PENSION
PLANS -- GENERAL. If a Participant (or, until Tax Years beginning before January
1, 1998, the Participant's Spouse) is an Active Participant in a retirement plan
for any part of the retirement plan's year which ends in a Tax Year, the
Participant's Dollar Limitation for that Tax Year shall be reduced (but not
below zero) by the amount which bears the same ratio to the Dollar Limitation as
the excess of the Participant's Adjusted Gross Income for that Tax Year over the
Applicable Dollar Amount bears to $10,000. A Participant's Dollar Limitation
shall not be reduced below $200 pursuant to the previous sentence unless the
Dollar Limitation (without regard to this sentence) is reduced to zero. Any
amount determined under this Section which is not a multiple of $10 shall be
rounded to the next lowest $10.
3.02 SPECIAL RULE FOR MARRIED INDIVIDUALS FILING SEPARATELY; POST-1997
ACTIVE PARTICIPANT RULES. Subject to the calculation of the Participant's
Applicable Dollar Amount, in the case of a Participant who is married and files
a separate tax return for a Tax Year beginning before January 1, 1998, and in
the case of any married Participant for a Tax Year beginning after December 31,
1997, the limitation in Section 3.01 shall be applied without regard to whether
the Participant's spouse is an active Participant for that Tax Year.
3.03 DESIGNATED NONDEDUCTIBLE CONTRIBUTIONS.
(a) A Participant may make a Designated Nondeductible Contribution to
the extent of his or her Nondeductible Limit.
(b) A Participant who makes a Designated Nondeductible Contribution or
who receives any amount from an XXX for any Tax Year shall include on his or her
tax return such information as is required by the Internal Revenue Service under
Code section 408(a) or its successor.
ARTICLE IV
TYPES OF INDIVIDUAL RETIREMENT ACCOUNTS:
CONTRIBUTIONS AND TRANSFERS TO THE PLAN
4.01 CONTRIBUTIONS TO VARIOUS CUSTODIAL ACCOUNTS. Subject to the
limitations in Article III hereof, the Custodian may accept contributions from
each Participant, as follows:
(a) Individual XXX. An Individual XXX may be opened by anyone who has
Compensation and who will be less than 70 1/2 by the end of the calendar year.
Except in the case of a Rollover Contribution, no contribution will be accepted
by the Custodian to an Individual XXX unless it is in cash. Except in the case
of a Rollover Contribution or a contribution to a simplified employee plan (as
defined in Code section 408(k)), no contribution will be accepted by the
Custodian to an Individual XXX if the total of such contributions exceeds the
lesser of $2,000 or 100% of the Participant's Compensation for the applicable
Tax Year (subject to the limits on deductions described in Article III hereof).
The contribution must be received by the due date of the Participant's tax
return for the applicable Tax Year without regard to extensions received for the
filing of such tax return.
(b) Marital XXX. A Marital XXX may be opened for a Non-Working Spouse
who will be less than age 70 1/2 by the end of the calendar year. Except in the
case of a Rollover Contribution, no contribution will be accepted to a Marital
XXX unless it is in cash. Except in the case of a Rollover Contribution or a
contribution to a simplified employee plan, no contribution will be accepted by
the Custodian to a Marital XXX if the total of such contributions exceeds the
lesser of (i) $2,000 or (ii) the total combined Compensation of the Non-Working
Spouse and of the Non-Working Spouse's spouse for the Tax Year minus the amount
allowed as a deduction under Code section 219(a) to the Non-Working Spouse's
spouse for the Tax Year. The contribution must be received by the due date of
the Participant's tax return for the applicable Tax Year without regard to
extensions received for filing of such tax return.
(c) Rollover XXX. A Rollover XXX may be opened for an eligible
individual who received a Rollover Distribution and then rolled-over that amount
as a Rollover Contribution to a Rollover XXX within 60 days of receipt thereof.
The Participant must have been a member of his or her prior employer's qualified
retirement plan, tax shelter annuity or qualified annuity plan or another
individual retirement account and received a qualifying Rollover Distribution.
If property other than cash is distributed from the Participant's former
qualified plan, then the property may, but shall not be required to, be accepted
by the Custodian. The Custodian may, in its discretion, limit acceptance of
Rollover Contributions which are other than cash to only those assets traded by
Xxxx Xxxxx Xxxx Xxxxxx, Inc. The Custodian also may, in its sole discretion,
accept into a Rollover XXX a Transfer or Rollover Contribution directly from the
former custodian or trustee or from the Participant. By accepting either a
Transfer or a Rollover Contribution, the Custodian does not accept any
responsibility for the tax results of the Transfer or Rollover Contribution. If
accepted, the Custodian, if requested by the Participant, shall hold the
Rollover Contribution in a separate Custodial Account that consists only of
Rollover Contributions and/or assets attributable to a Transfer and the earnings
thereon. An individual may also open a Rollover XXX by rolling over part or all
of the assets withdrawn from another XXX as provided under Code section
408(d)(3).
(d) No SIMPLE XXX Contributions Accepted. No individual and no
employer of an individual shall contribute amounts to a Custodial Account
maintained under this Plan if the contribution is made pursuant to the terms of
a SIMPLE plan of the individual's employer or former employer. In addition,
amounts maintained by an individual in a SIMPLE XXX may not be transferred as a
Transfer or Rollover Contribution to a Rollover XXX or any other Custodial
Account maintained under this Plan if the amount is Transferred or rolled over
from a SIMPLE XXX maintained by or for the individual if such Transfer or
Rollover Contribution occurs prior to the expiration of the 2-year period
beginning on the date the individual first participated in the SIMPLE XXX that
makes the distribution sought to be rolled over or maintains the assets sought
to be Transferred. The Custodian shall have no liability with respect to
contributions, Rollover Contributions or Transfers made in violation of this
Section 4.01(d), compliance herewith being the sole and exclusive responsibility
of the individual.
4.02 NON-FORFEITABILITY; EXCLUSIVE BENEFIT. All contributions made to any
Custodial Account established hereunder and all investments of those assets as
well as all earnings thereon shall immediately become and at all times remain
non-forfeitable. Each Custodial Account maintained hereunder has been
established and shall be maintained for the exclusive benefit of the Participant
for whom it has been established and maintained or his or her Beneficiary.
4.03 EXCESS CONTRIBUTIONS. At the written direction of the Participant, and
on a form acceptable to the Custodian, the Custodian shall refund to the
Participant any Excess Contribution (or, if less, the total value of the
Participant's Custodial Account as of the date of the refund); provided,
however, that the Custodian shall have no obligation to verify or inquire in any
way into the correctness of a contribution or Rollover Contribution or to
determine if the limitations of Code section 219 have been exceeded.
4.04 PARTICIPANT'S RESPONSIBILITY. The Participant shall be responsible for
the continued qualification of his or her XXX under the Code. The Participant
also shall be solely responsible for properly establishing his or her XXX prior
to the date his or her first contribution is made.
4.05 SEPARATE RECORDS. The Participant who makes contributions to an XXX
and its Custodial Account must establish and maintain records reflecting the
amount of contributions (including Rollover Contributions or Transfers) made
thereto.
4.06 DIRECT TRANSFERS OF ASSETS. The Custodian, in its discretion, may
accept a Transfer of assets, on behalf of any Participant from a trustee or
custodian of a trust or Custodial Account of an Individual Retirement Account or
of a retirement plan for self-employed individuals or of a qualified retirement
plan, tax sheltered annuity or qualified annuity plan and deposit that Transfer
to a separate Rollover XXX. The Custodian, by accepting a Transfer of assets,
does not accept any responsibility for the tax results of the Transfer. The
individual who directs or consents to the Transfer shall remain solely
responsible for the tax results of any Transfer.
4.07 NONTRANSFERABILITY OF XXX. Except as required by law, this XXX and the
interest of a Participant in his or her Custodial Account shall not be
transferred or assigned by voluntary or involuntary act of the Participant, nor
shall it be subject to alienation, assignment, garnishment, attachment,
receivership, execution, or levy of any kind. Notwithstanding the preceding, in
the event of a property settlement between a Participant and his or her former
spouse pursuant to which the transfer of the interest thereunder, or of a
portion thereof, is incorporated in a divorce decree or in a written instrument
incident to such divorce, the interest so decreed to be the property of such
former spouse shall be re-registered in a separate Custodial Account then
established hereunder for the benefit of such former spouse. In the event of
such a transfer incident to a divorce, such former spouse shall be deemed to be
a "Participant" under this Plan.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS
5.01 ESTABLISHMENT OF CUSTODIAL ACCOUNTS. The Custodian shall establish a
Custodial Account to hold investments permitted herein for the benefit of each
Participant to which the Participant's contributions (including Rollover
Contributions and Transfers) and the earnings thereon shall be credited.
5.02 INVESTMENT OF CUSTODIAL ACCOUNTS.
(a) Contributions to IRAs established hereunder (including Rollover
Contributions and Transfers) shall be allocated to the Participant's Custodial
Account as of the Valuation Date next following receipt of such contributions by
the Custodian.
(b) Dividends, net long-term or short-term capital gains and realized
earnings with respect to investments held by a Custodial Account shall be
allocated to the Participant's Custodial Account as of the Valuation Date next
following their declaration (or realization, if later). Gains realized in cash
and other cash distributions in respect of Custodial Account investments shall
be held uninvested (and shall be credited with interest to the extent required
by Article XIV) pending the Participant's investment instruction with respect to
such assets as provided in Section 5.03. The Custodian shall not be required to
make special elections with respect to whether a Custodial Account shall receive
distributions in respect of an investment in the form of cash or additional
shares of the investment, but the Custodian shall be permitted to make such
special elections at the request of a Participant or Beneficiary on a form
acceptable to the Custodian.
5.03 DIRECTION OF INVESTMENTS.
(a) Each Participant shall direct the Custodian with respect to the
investment of all of his or her contributions and earnings thereon. In the
absence of specific Participant direction, the Custodian shall have no
investment responsibility. The Custodian retains the discretion to refuse to
accept an investment direction for any reason. The Custodian may condition its
acceptance or continued holding of an investment to be held in or already held
by the Custodial Account upon the receipt of an agreement from the Participant
or Beneficiary containing such terms, conditions and representations and
warranties as the Custodian shall determine. The Custodian's decision to permit
the acceptance or continued holding of any investment in the Custodial Account
shall constitute neither approval of the investment merits of the investment nor
a judgement as to the prudence or advisability of the investment. The Custodian
reserves the absolute right to revoke its decision to permit the holding in the
Custodial Account of any investment at any time and for any reason (or to
condition the continued holding of an investment upon the receipt of an
agreement from the Participant or Beneficiary containing such terms, conditions
and representations and warranties as the Custodian shall determine), and the
Custodian shall have no liability for any loss, damage or expense suffered or
incurred by the Participant or Beneficiary by reason of the revocation of the
Custodian's decision (or imposition of such condition). If the Custodian
notifies the Participant or Beneficiary that it revokes its decision or that it
desires to condition its prior acceptance as aforesaid, then, within 30 days
after such notice is given to the Participant or Beneficiary, the Participant or
Beneficiary shall instruct the Custodian as to the liquidation, distribution,
transfer, or other disposition of the investment to which the revocation of the
Custodian's decision or conditioning applies or as to the acceptance of
conditions, as applicable. If the Participant or Beneficiary fails to provide
the Custodian with instructions or fails to satisfy the condition(s) required by
the Custodian within such 30-day period, the Participant or Beneficiary shall be
deemed to have elected to receive an in-kind distribution of such investment or,
if the Custodian is imposing a condition to its continued holding of any
investment and the condition solely is the payment of an additional
administration fee to the Custodian, the Custodian shall assess the fee in
accordance with Section 12.01 against the Participant or Beneficiary.
(b) Each Participant shall also direct the Custodian with respect to
the handling of funds either awaiting investment or held pending distribution
through Xxxx Xxxxx Xxxx Xxxxxx, Inc. In the absence of direction from the
Participant or the Participant's legal representative, the Custodian shall
credit interest to those funds to the extent provided in Article XIV.
(c) The Custodian may follow any written instructions from the
Participant, without liability and without any duty to ascertain whether the
instructions are proper under the Code, ERISA or under any other plan.
5.04 INVESTMENT IN LIFE INSURANCE. No portion of the Participant's
Custodial Account or the earnings thereon shall be invested in life insurance
contracts or, except as provided in Section 6.01(b), annuity contracts.
5.05 INVESTMENT IN COLLECTIBLES. No portion of a Participant's Custodial
Account may be invested in any work of art, any rug or antique, any metal or
gem, any stamp or coin (except for certain coins and bullion described in Code
section 408(m) as in effect at the time of the investment and continued
investment), any alcoholic beverage, or any other tangible personal property
designated as a collectible by the Secretary of the Treasury pursuant to Code
section 408(m). If there is an investment in collectibles within the meaning of
Code section 408(m) that are not excepted coins or bullion under Code section
408(m)(3), the amount so invested shall be treated as a distribution to the
Participant. However, gold and silver coins issued by the United States
government and coins issued under the laws of any State shall not be treated as
collectibles.
ARTICLE VI
DISTRIBUTION OF BENEFITS
6.01 COMMENCEMENT AND FORM OF BENEFITS. Within a reasonable time after
receipt of a written direction to commence distribution of a Custodial Account,
payments may be distributed in the form directed, provided that such form is
acceptable to the Custodian. Further, notwithstanding any other Plan provision
to the contrary, the distribution of an individual's interest in a Custodial
Account shall be made in accordance with the minimum distribution requirements
of section 408(a)(6) or section 408(b)(3) of the Code, as applicable, and the
regulations thereunder, including the incidental death benefit provisions of
section 1.401(a)(9)-2 of the proposed Treasury regulations. An individual may
satisfy the minimum distribution requirements under sections 408(a)(6) and
408(b)(3) of the Code by receiving a distribution from one individual retirement
account that is equal to the amount required to satisfy the minimum
distributions requirements for two or more individual retirement accounts. For
this purpose, the owner of two of more individual retirement accounts may use
the "alternative method," described in I.R.S. Notice 88-33, 1988-1 C.B. 524, to
satisfy the minimum distribution requirements under Code sections 408(a)(6) and
408(b)(3).
(a) (1) The amount required to be distributed to or on behalf of a
Participant for each calendar year, beginning with distributions for the first
Distribution Calendar Year, must be at least equal to the amount determined by
dividing the Participant's Benefit by the Applicable Life Expectancy.
(2) Notwithstanding anything in this Article to the contrary, for
calendar years beginning before January 1, 1989, if the Designated Beneficiary
is not the Participant's spouse, the method of distribution selected must assure
that at least 50% of the present value of the amount available for distribution
will be paid within the life expectancy of the Participant.
(3) Notwithstanding anything in this Article to the contrary, for
calendar years beginning after December 31, 1988, the amount to be distributed
each year, beginning with distributions for the first Distribution Calendar Year
shall not be less than the amount obtained by dividing the Participant's Benefit
by the lesser of (i) the Applicable Life Expectancy or (ii) if the Participant's
spouse is not the Designated Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 or Q&A-5, as applicable, of proposed Treasury
regulation section 1.401(a)(9)-2. Distributions after the death of the
Participant shall be distributed using the Applicable Life Expectancy, as
applied in Section 6.03(a)(2)(ii), as the relevant divisor without regard to
proposed Treasury regulation section 1.401(a)(9)-2.
(4) The Minimum Required Distribution for the Participant's first
Distribution Calendar Year must be made on or before the Participant's Required
Beginning Date. The Minimum Required Distribution for other Distribution
Calendar Years must be made on or before December 31 of that Distribution
Calendar Year.
(b) If the Participant or Beneficiary chooses an annuity form of
distribution, the Participant or Beneficiary shall direct the Custodian to
purchase a commercially available annuity specified by the Participant or
Beneficiary and the Custodian shall follow such direction and send the annuity
payments therefrom to the Participant or his or her Beneficiary, as applicable.
The purchase of the appropriate type of annuity may be made from any insurance
company acceptable to the Custodian which, in the regular course of its
business, provides annuities in accordance with generally accepted insurance
practices existing at the time of such purchase. The annuity contract must meet
the requirements of section 408(b) of the Code and the distributions thereunder
must be made in accordance with the requirements of Code section 408(a)(6) and
the Treasury regulations proposed thereunder. The Custodian shall not be liable
to the Participant, Beneficiary or the Participant's spouse for any damage
caused by the choice of a commercially available annuity or for any action taken
or not taken by the insurance company that issues the annuity.
(c) Notwithstanding anything in this Section 6.01 to the contrary, the
Participant is responsible for advising the Custodian, on forms acceptable to
the Custodian, of the amount and timing of all distributions from the
Participant's Custodial Account necessary for complying with the minimum
distribution requirements under Code section 408(a)(6).
6.02 DISABILITY. If the Participant becomes subject to a Disability,
benefits under the Plan shall be distributed to the Participant commencing on
the first day of the month following notice in writing to the Custodian, from
the Participant or his legal representative, advising the Custodian that the
Participant has incurred a Disability and desires a distribution. The Custodian
is entitled to rely on such notice and shall have no duty to ascertain the fact
of Disability.
6.03 DEATH.
(a) If a Participant dies before his or her entire Custodial Account
is distributed to him, the following distribution rules shall apply:
(1) If the Participant dies after distribution of his or her
Custodial Account has begun, the remaining portion of the Participant's
Custodial Account shall continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Participant's death.
(2) If the Participant dies before distribution of his or her
Custodial Account begins, the Participant's entire Custodial Account balance
shall be subject to the following provisions as elected by the Participant prior
to his or her death or, if the Participant had not made an election prior to his
or her death, by the Participant's Designated Beneficiary:
(i) The Participant's entire Custodial Account balance shall
be paid on or before December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(ii) Notwithstanding (i), above, if the Participant's
Designated Beneficiary so elects on or before December 31 of the calendar year
immediately following the calendar year of the Participant's death, the
Designated Beneficiary may receive the entire interest in substantially equal
installments over the Applicable Life Expectancy or over a period certain not
greater than the Applicable Life Expectancy of the Designated Beneficiary
commencing on or before December 31 of the calendar year immediately following
the calendar year in which the Participant died. The Designated Beneficiary may
elect at any time to receive a form of payment permitted hereunder which is more
rapid than the form originally elected by the Designated Beneficiary pursuant to
the previous sentence.
(iii) Notwithstanding (i) and (ii), above, if the Designated
Beneficiary is the Participant's surviving spouse, the date distributions are
required to begin shall not be earlier than the later of (i) December 31 of the
calendar year immediately following the calendar year in which the Participant
died or (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2. The surviving spouse may elect at any time to receive
a form of payment permitted hereunder which is more rapid that the form
originally elected by the surviving spouse pursuant to the previous sentence.
The surviving spouse may elect to treat the Participant's Custodial Account as
the spouse's own XXX. This election to treat the Participant's Custodial Account
as the surviving spouse's own XXX shall be deemed to have been made if the
surviving spouse makes a contribution to the Custodial Account, makes a Rollover
Contribution or Transfer to or from the Custodial Account or files a written
election with the Custodian, in a form acceptable to the Custodian, following
the Participant's death, to treat the Custodial Account as the surviving
spouse's own XXX.
(iv) Elections of method of distribution under this
paragraph (2) must be made no later than the earlier of (i) December 31 of the
calendar year in which the distributions would be required to begin under this
Section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(3) Any amount paid to a child of the Participant will be treated
as if it had been paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of majority.
(4) For purposes of this Section, distributions are considered to
have begun if the distributions are made on account of the individual reaching
his or her Required Beginning Date. If the individual received distributions
prior to his or her Required Beginning Date and the individual dies before his
or her Required Beginning Date, distributions will be considered not to have
begun for purposes of this Section.
(b) No distribution shall be made to any Beneficiary unless the
Custodian receives written notice of the Participant's death in a form
acceptable to the Custodian. Notwithstanding anything in this Section to the
contrary, the Participant is responsible for advising the Custodian, on forms
acceptable to the Custodian, of the amount and timing of all distributions from
his or her Custodial account and for complying with the minimum distribution
requirements necessary to avoid the imposition of interest and penalties on
either the Participant or the Custodian and the taxability of the Custodial
Account.
6.04 NOTIFICATION OF DISTRIBUTION, TRANSFER OR WITHDRAWAL. Each
Participant who desires a distribution, rollover, transfer or withdrawal from
his or her Custodial Account shall send a signed declaration of his or her
intentions as to the amount to be distributed, rolled over, transferred or
withdrawn on a form acceptable to the Custodian and, if applicable, the annuity
contract which the Participant or Beneficiary desires to be purchased for
purposes of making distributions. The Custodian shall be fully justified and not
liable for any damage resulting from a delay in distribution, rollover or
transfer caused by the Participant's failure to send the signed declaration in a
complete and timely manner and the Custodian shall be permitted to withhold the
making of any distributions unless and until it determines that the signed
declaration is complete.
ARTICLE VII
AMENDMENT OF THE PLAN AND
SUBSTITUTION OF CUSTODIAN
7.01 AMENDMENT. This Plan and Custodial Agreement may be amended from time
to time, and retroactively, if necessary, in order to comply with the Code or
ERISA. The Custodian may amend any or all provisions of this Plan at any time
without obtaining the approval or consent of the Participant, the Participant's
spouse or the Participant's Beneficiary, as the case may be, provided that no
amendment shall authorize or permit any part of a Participant's Custodial
Account to be used for or diverted to purposes other than for his or her
exclusive benefit, except as required by the Code or ERISA. Each Participant,
and each Beneficiary of each deceased participant with respect to whom the
Custodian has received formal notice of death, shall be furnished a copy of any
amendment to the Plan.
7.02 AMENDMENT BY THE PARTICIPANT. In the event the Participant,
Beneficiary or spouse, as applicable, amends this Plan, the amended Plan shall
no longer be considered as approved by the Internal Revenue Service as a
prototype plan and the Custodian shall not be bound by any such amendment unless
it consents in writing.
7.03 SUBSTITUTION OF CUSTODIAN. The Custodian may substitute another person
or entity in its place as successor Custodian or trustee hereunder upon at least
30 days' prior written notice to the Participant or Beneficiary, as applicable,
which successor Custodian or trustee may be or may not be an affiliate of the
Custodian, provided that such successor Custodian or trustee qualifies to hold
XXX assets under Code section 408(h). The Participant shall substitute another
custodian in place of the Custodian upon notification by the Commissioner of the
Internal Revenue Service or his or her delegate that such substitution is
required because the Custodian has failed to comply with the requirements of
Treasury regulation section 1.401-12(n) or is not keeping such records, making
such returns, or rendering such statements as are required by law.
ARTICLE VIII
TERMINATION OF AND TRANSFER FROM THE PLAN
8.01 TERMINATION. Any Participant may terminate this Plan at any time by
advising the Custodian in writing, in a form acceptable to the Custodian, of the
termination. Upon a request to terminate, the Custodian shall continue to hold
the assets and then shall transfer them in accordance with the instructions of
the Participant and the relevant provisions of this Plan. The Custodian may
follow any instructions from the Participant, without liability and without any
duty to ascertain whether the instructions are proper under the Code or ERISA or
under any other plan or XXX. In the absence of complete instruction from the
Participant, the Custodian shall hold the assets in the Participant's Custodial
Account as invested at the time the Custodian receives the incomplete
instruction or, if the assets are cash, shall credit interest to such cash to
the extent provided in Article XIV until complete instructions are received.
8.02 PAYMENT OF FEES. Prior to the transfer of any or all amounts in any
Participant's Custodial Account to another plan or to the Participant or
Beneficiary, as considered appropriate, the Custodian is authorized to reserve
such sums of money as it may deem advisable for payment of all of its fees,
compensation, costs and expenses, or for any other liabilities, all of which
shall constitute a charge against the assets of the Participant's Custodial
Account or XXX, with any balance remaining after the payment of all such items
to be paid to the successor custodian or trustee; provided, however, that, if
the Participant terminates this Custodial Account in writing within 7 days
following the date of the Participant's execution of the Adoption Agreement, the
Custodian shall return to the Participant the full amount of the payment made on
or after the date of such execution. Custodial Account assets may be retained
and disposed of to accomplish the purposes of this Section (in accordance with
the provisions of Section 12.01) without liability to the Custodian.
8.03 ACCOUNTING PROCEDURES. In the event of any transfer described in this
Article, the Custodian's accounting procedures set forth in Articles XI and XII
hereof shall apply.
ARTICLE IX
RESIGNATION OR REMOVAL OF CUSTODIAN
9.01 RESIGNATION OR REMOVAL. The Custodian may resign at any time upon 30
days' prior notice in writing to the Participant or Beneficiary, as applicable,
and may be removed by the Participant or Beneficiary at any time upon 30 days'
prior written notice in a form acceptable to the Custodian. Upon such
resignation or removal, the Participant or Beneficiary, as the case may be,
shall appoint a qualified successor trustee or custodian. Upon receipt by the
Custodian of written acceptance of such appointment by the successor trustee or
custodian, the Custodian shall transfer and pay over to the successor the assets
of the Custodial Account and all its records. The Custodian is authorized,
however, to reserve such sums of money as it may deem advisable for payment of
its fees, compensation, costs or expenses, or for payment of any other
liabilities constituting a charge against the assets of the Custodial Account or
against the Custodian. Any portion of the reserve remaining after payment of all
such items shall be paid to the successor trustee or custodian. Any securities
retained for these reasons shall be disposed of pursuant to the provisions of
Article XII hereof.
9.02 REQUIREMENT OF SUCCESSOR CUSTODIAN. The Participant shall not
remove the Custodian until a qualified successor trustee or custodian shall have
been appointed by the Participant. In the event the Custodian resigns and the
Participant fails to appoint a qualified successor, the Custodian may apply to
any court of competent jurisdiction for appointment of a successor and the costs
of such a proceeding shall be treated as an expense under Article XII hereof.
9.03 ACCOUNTING PROCEDURES. In the event of any resignation or removal
described in this Article, the accounting procedures set forth in Articles XI
and XII shall apply.
9.04 CUSTODIAN'S LIABILITY. The Custodian shall not be liable for the acts
or omissions of its successor(s).
ARTICLE X
RESPONSIBILITIES, DUTIES AND
OBLIGATIONS OF THE CUSTODIAN
10.01 AUTHORITY OF THE CUSTODIAN. The Custodian shall have the following
authority in the administration of each Custodial Account under this Plan:
(a) Pursuant to the Participant's directions, to invest and reinvest
the income, gain, earnings or assets of a Custodial Account in any investment
media then available without any need to diversify, without regard to whether
such investment is authorized by the laws of any jurisdiction for trust
investments, without previous application to or subsequent ratification by any
court, tribunal or commission, and without regard to the character of any
investments by any statute, rule of court or custom governing the investment of
trust funds. In this connection, the Custodian is specifically authorized to
invest contributions in separate accounts for each Participant.
(b) Pursuant to the Participant's directions and subject to Section
5.03, to consent to or to participate in dissolutions, reorganizations,
consolidations, mergers, sales, leases, mortgages, transfers or other changes
affecting securities held by the Custodian. In the absence of such directions,
the Custodian shall take no such action.
(c) To hold any securities or other property in the name of the
Custodian without qualification or description or in the name of any nominee.
(d) To make, execute and deliver as Custodian any and all contracts,
waivers, releases or other instruments in writing necessary or proper for the
exercise of any of the Custodian's powers hereunder. The Custodian shall not be
liable for any losses which may result from its failure to take action, as
described in this Section, in the absence of directions from the Participant.
(e) The Custodian shall vote any shares held in a Custodial Account in
accordance with the instructions of the Participant. In the absence of any such
instructions, the Custodian shall not vote any such shares.
(f) Pursuant to the Participant's instructions, to exercise or sell
options, conversion privileges, or rights to subscribe for additional securities
and to make payments therefor. In the absence of such directions, the Custodian
shall take no action with respect to the exercise or sale of options, conversion
privileges or rights to subscribe to additional securities.
(g) Pursuant to the Participant's directions and subject to Section
5.03, to subscribe for additional securities and to make payments therefor. In
the absence of such directions, the Custodian shall take no such action.
10.02 SCOPE OF CUSTODIAN'S DUTIES.
(a) The Custodian shall be under no duty whatsoever except such duties
as are specifically set forth in this Plan. The Custodian shall not make any
investments or dispose of any investments held for any Participant except upon
the direction of the Participant or otherwise as expressly provided under this
Plan. The Custodian shall have no discretion to direct investment of custodial
funds or any other aspects of the business administration of the Custodial
Account held for any Participant except as expressly provided under this Plan or
except as provided by separate written agreement between the Custodian and the
Participant. The Custodian shall be under no duty to question any direction of
the Participant, to review any securities or other property held in the
Participant's Custodial Account, or to make suggestions to the Participant with
respect to the investment, retention or disposition of any assets held in or for
the Participant's Custodial Account.
(b) Although the Custodian may provide the Participant with investment
information, it is not intended that any information given will serve as a
primary basis for investment decision except as provided by separate written
agreement between the Custodian and the Participant, and the Custodian shall
have no liability for providing such information. Each Participant is expected
to use independent judgment in making investment decisions.
(c) The Custodian shall not under any circumstances be responsible for
the timing, purpose or propriety of any contribution or distribution made
hereunder. The Code imposes a tax upon a Participant if an Excess Contribution
is made to the Participant's Custodial Account, if any early distribution under
section 408(f) of the Code is made from a Participant's Custodial Account prior
to his or her attainment of age 59 1/2 (except in the case of death, disability,
or other limited exceptions), if distribution to a Participant is not made or
commenced by the Required Beginning Date, if distributions are made in a timely
fashion but are insufficient in amount, or if distributions from all retirement
accounts held by the Participant exceed certain minimum amounts. The Custodian
shall not incur any liability or responsibility for any such tax or penalty,
which shall be the sole responsibility of the Participant, nor shall the
Custodian have any responsibility to notify the Participant of the Participant's
incurrence of any such tax or penalty.
10.03 NO LIABILITY TO CUSTODIAN FOR FAILURE TO ACT. The Custodian shall be
under no liability for any loss of any kind which may result by reason of any
action taken by it in accordance with directions of the Participant or by reason
of any failure to act because of the absence of any such directions or by reason
of action expressly permitted to be taken hereunder in the absence of
Participant direction.
10.04 INDEMNIFICATION OF CUSTODIAN. The Participant, Beneficiary and the
Participant's spouse, as the case may be, agree to indemnify and hold the
Custodian harmless from any liability which may arise in the performance of the
Custodian's duties under this Plan except liability arising from the gross
negligence or willful misconduct of the Custodian.
ARTICLE XI
RECORDS AND REPORT
11.01 REPORTS OF CUSTODIAN. The Custodian shall keep separate and accurate
records of all contributions, receipts, investments, distributions,
disbursements and all other transactions of the Plan or Custodial Accounts held
for Participants of the Plan. The Custodian shall file such written reports with
the Participant as are required (which may consist of copies of regularly issued
Xxxx Xxxxx Xxxx Xxxxxx, Inc. account statements and shall include calendar year
reporting concerning the status of the Custodial Account as required by Treasury
regulations section 1.408-5) reflecting all transactions affecting the Custodial
Account for the period in question. Unless the Participant files a written
statement of exceptions or objections to the report with the Custodian within 60
days after the mailing of the report, the Participant shall be deemed to have
approved such report and the Custodian shall be released from all liability,
responsibility and accountability for its acts (or failure to act) in regard to
that Custodial Account to anyone (including any spouse or Beneficiary) with
respect to all matters set forth in the report. No person, including a
Participant, Beneficiary or spouse, may require any further accounting.
11.02 PARTICIPANT'S EXAMINATION OF RECORDS. No Participant may examine the
records of any other Participant without the written consent of the Participant
whose records are being examined.
11.03 APPLICATION TO COURT OF COMPETENT JURISDICTION. The Custodian
shall have the right at any time to apply to a court of competent jurisdiction
for judicial settlement of its accounts or for determination of any questions of
construction which may arise or for any instructions. The only necessary party
defendant to any such action shall be the Participant, but the Custodian may, if
it so elects, bring in as a party defendant any other person or persons. The
cost, including attorneys' fees, or any such accounting shall be charged to the
applicable Custodial Accounts of the Plan as an administration expense under
Article XII.
ARTICLE XII
CUSTODIAN'S FEES AND OTHER
ADMINISTRATIVE EXPENSES
12.01 FEES. The Custodian may charge a fee for its services according to
its standard schedule of fees as in effect from time to time. All administrative
expenses of the Plan including any income, excise or other taxes of any kind
that may be levied or assessed upon the assets of any Custodial Account, or any
transfer or similar tax incurred in connection with the investment and
reinvestment of the assets of a Custodial Account and all other expenses
incurred by the Custodian, including fees for legal services rendered to the
Custodian and the Custodian's compensation, shall all be paid by the Participant
and may be assessed as necessary against the assets held in a Custodial Account,
as deemed appropriate by the Custodian.
The Custodian may establish charges that it may impose as a condition
of holding investments or as a condition of continuing to hold already accepted
investments in the Participant's Custodial Account in cases where extraordinary
carrying costs or other expenses associated with such holding by the Custodian
justify the additional charge, as determined by the Custodian in its discretion.
Any such charges shall be assessed and determined in the sole and absolute
discretion of the Custodian; provided, however, that such charge shall be
assessed only after advance written notice of such assessment has been delivered
by the Custodian to the Participant or Beneficiary, such written notice to be
mailed at least 30 days (or such longer period as the Custodian, in its
discretion, shall determine and state in the notice) prior to the date on which
such charge will be assessed in the absence of instruction from the Participant
or Beneficiary.
If any request for payment by the Custodian under this Section is not
honored by the Participant or Beneficiary within 30 days following the mailing
of the request by the Custodian (or following such longer notice period as is
established by the Custodian as provided above), or if the Participant or
Beneficiary elects to have fees, charges, expenses and taxes deducted from the
Participant's Custodial Account or from any trading, brokerage or similar
account maintained with the Custodian or an affiliate of the Custodian in the
name of the Participant or Beneficiary, as applicable (collectively with any and
all of such accounts of the Participant or Beneficiary, as applicable, the
"Other Account"), the Custodian shall deduct such fees, administrative charges,
expenses, and/or the taxes from the Participant's Custodial Account or Other
Account, in the following order:
(a) any uninvested cash and then any shares of a money market fund or
money market-type fund in the Custodial Account;
(b) any uninvested cash and then any shares of a money market fund or
money market-type fund in the Other Account;
(c) any securities or other assets in the Custodial Account;
(d) any securities or other assets in the Other Account.
If the Custodian must liquidate securities or other assets under (c) or
(d), above, it shall liquidate equity investments before fixed income
obligations, selling the last investment purchased, with any additional
liquidations being done in reverse order of the date of purchase.
ARTICLE XIII
MISCELLANEOUS
13.01 PARTICIPANT LOOKS TO CUSTODIAL ACCOUNT'S ASSETS. It is a
condition of this Plan that each Participant herein agrees to look solely to the
assets of his or her Custodial Account for the payment of any benefits to which
he or she is entitled.
13.02 ANTI-ALIENATION. The benefits payable hereunder shall not be subject
to alienation, assignment, garnishment, attachment, execution or levy of any
kind and any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent required by law and except as permitted in
Section 4.07.
13.03 NO COMMINGLING OF ASSETS. The assets of a Participant's Custodial
Account shall not be commingled with other property except in a common trust
fund or common investment fund.
13.04 MASCULINE/FEMININE; SINGULAR/PLURAL. Masculine pronouns shall be
deemed to include feminine pronouns and the singular shall be deemed to include
the plural and vice versa.
13.05 CONFLICT WITH THE CODE AND ERISA. The Plan shall be construed,
whenever possible, to be in conformity with the requirements of the Code and
ERISA, as and if applicable. To the extent not in conflict with the preceding
sentence, the Plan shall be construed, administered and governed in all respects
under and by the laws of the State of Maryland (without regard to the conflict
of laws provisions thereof).
ARTICLE XIV
INTEREST ON CASH BALANCES
14.01 INTEREST ON CASH BALANCES. The following conditions shall apply to
interest earnings with respect to cash balances in a Participant's Custodial
Account:
(a) Interest will be paid only on cash balances of $10 or more.
(b) Interest will be paid for each day during the month in which the
cash balance equals or exceeds the minimum $10 requirement.
(c) The rate of interest will be established on the first business day
of each month; provided, however, that the Custodian retains the right to change
the rate at any time to any rate permitted by law.
XXXX XXXXX XXXX XXXXXX, INC.
CUSTODIAL AGREEMENT FOR SIMPLE XXX PLANS
ARTICLE I
ESTABLISHMENT OF THE XXXX XXXXX XXXX XXXXXX, INC.
CUSTODIAL AGREEMENT FOR SIMPLE PLANS
1.01 ESTABLISHMENT OF CUSTODIAL ACCOUNT. By execution of the Xxxx Xxxxx
Retirement Account Adoption Agreement in accordance with a SIMPLE XXX Plan of
the Participant's Employer, the Participant hereby establishes this Xxxx Xxxxx
Xxxx Xxxxxx, Inc. Custodial Agreement for SIMPLE XXX Plans and intends to have
contributions under the Employer's SIMPLE XXX Plan made to the Participant's
Custodial Account in accordance with Section 408(p) of the Internal Revenue
Code. The contributions to be made to the Custodial Account and earnings thereon
will be maintained for the exclusive benefit of the Participant and his or her
Beneficiary. This Agreement shall not be used other than in connection with a
SIMPLE XXX Plan maintained by the Participant's Employer or former Employer,
which Plan satisfies the applicable requirements of Internal Revenue Code
section 408(p).
ARTICLE II
DEFINITIONS
The following terms when used in this Agreement with an initial capital
letter shall have the following meaning, unless the context otherwise requires:
2.01 ADOPTION AGREEMENT means the Xxxx Xxxxx Retirement Account Adoption
Agreement by which this Agreement is adopted by the Participant and the
Custodial Account to be maintained hereunder is established.
2.02 AGREEMENT means, collectively, this Xxxx Xxxxx Xxxx Xxxxxx, Inc.
Custodial Agreement for SIMPLE XXX Plans and the Adoption Agreement.
2.03 APPLICABLE LIFE EXPECTANCY means the life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the Participant
(or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated for purposes of making a Minimum Required Distribution from a
Participant's Custodial Account. If life expectancy is being recalculated, the
Applicable Life Expectancy shall be the life expectancy as so recalculated. The
applicable calendar year shall be the first Distribution Calendar Year, and if
life expectancy is being recalculated, such succeeding calendar year. Life
expectancy and joint and last survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of section 1.72-9 of the Treasury
regulations.
Unless otherwise elected by the Participant (or the Participant's
spouse, in the case of distributions described in Section 6.03) by the time
distributions are required to begin under Code section 408(a)(6), life
expectancies shall be recalculated annually. Any such election (or deemed
election in the case of a failure to elect) shall be irrevocable as to the
Participant (or spouse) and shall apply to all subsequent years after the
election (or deemed election). A Participant shall not be entitled to elect to
have his or her joint and last survivor expectancy recalculated unless the
Participant's Designated Beneficiary is his or her spouse.
2.04 BENEFICIARY means the person, persons, trust or any other entity
designated by any Participant as his or her beneficiary in the Adoption
Agreement or other form acceptable to the Custodian. If no Beneficiary shall
have been validly selected at the death of the Participant, or if all of the
Participant's chosen Beneficiaries have predeceased the Participant or disclaim
their interest(s) in the Participant's XXX in accordance with applicable law,
the Participant's spouse (or, in the case of a Participant who is not married on
the date of death, the Participant's estate) shall be deemed to be his or her
Beneficiary for all purposes hereunder.
2.05 CODE means the Internal Revenue Code of 1986, as amended, and any
regulations thereunder.
2.06 CUSTODIAL ACCOUNT means the account established under this Agreement
for any Participant's contributions and the earnings thereon.
2.07 CUSTODIAN means Xxxx Xxxxx Xxxx Xxxxxx, Inc. and any successor which
becomes a successor custodian in accordance with this Agreement.
2.08 DESIGNATED BENEFICIARY means the "designated beneficiary" of the
Participant as described in proposed Treasury regulations section 1.401(a)(9)
and 1.408-8.
2.09 DISABILITY means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or to be of long continued or
indefinite duration.
2.10 DISTRIBUTION CALENDAR YEAR means a calendar year for which a Minimum
Required Distribution is required under Code section 408(a)(6). For
distributions beginning before the Participant's death, the first Distribution
Calendar Year is the calendar year in which the Participant attains age 70 1/2.
For distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which distributions are
required to begin pursuant to Article VI hereof.
2.11 EFFECTIVE DATE means the date as of which this Agreement and the
Adoption Agreement are made effective; provided, however, that such date shall
not be prior to the first day of the calendar year for which this Agreement is
adopted.
2.12 EMPLOYER means the Participant's Employer or former Employer, as
applicable, that maintains the SIMPLE XXX Plan under which contributions are
made to the Custodial Account maintained hereunder.
2.13 ERISA means the Employee Retirement Income Security Act of 1974 and
any regulations thereunder, as that statute and those regulations shall be
amended and in effect from time to time.
2.14 MINIMUM REQUIRED DISTRIBUTION. A distribution required to be made from
a Participant's Custodial Account under Code section 408(a)(6).
2.15 PARTICIPANT means the individual who is employed or was employed by
the Employer and who establishes with the Custodian this Agreement by executing
the Adoption Agreement.
2.16 PARTICIPANT'S BENEFIT means the Participant's Custodial Account
balance as of the last Valuation Date in the calendar year immediately preceding
the Distribution Calendar Year (the "valuation calendar year") increased by the
amount of any contributions allocated to the Custodial Account balance as of
dates in the "valuation calendar year" after the Valuation Date and decreased by
distributions made in the "valuation calendar year" after the Valuation Date. If
any portion of the minimum distribution for the first Distribution Calendar Year
is made in the second Distribution Calendar Year on or before the Required
Beginning Date, that amount must be treated as having been made for purposes of
this Section in the first Distribution Calendar Year.
2.17 REQUIRED BEGINNING DATE means the first day of April following the
calendar year in which the Participant attains age 70 1/2.
2.18 ROLLOVER CONTRIBUTION means that portion of the amount distributed
from a SIMPLE XXX to the Participant and then transferred to his or her
Custodial Account (by Transfer or by delivery by the Participant to the
Custodian of distributed funds following his or her receipt of a distribution)
and which satisfies the tax-free rollover conditions of the Code.
2.19 TAX YEAR means the tax year of the Participant.
2.20 TRANSFER means a direct transfer on behalf of a Participant from a
trustee or custodian of a SIMPLE XXX of the Participant of some or all of the
assets of such SIMPLE XXX to the Custodian.
2.21 VALUATION DATE means any business day on which the New York Stock
Exchange is open; provided, however, that the Custodian may postpone or
establish a special Valuation Date whenever, in its discretion, it considers
such postponement or establishment necessary.
ARTICLE III
CONTRIBUTIONS
3.01 CONTRIBUTIONS. This Custodial Account shall accept only cash
contributions made on behalf of the Participant pursuant to the terms of a
SIMPLE XXX Plan describe in Code section 408(p). Rollover Contributions or a
Transfer from another SIMPLE XXX of the Participant also will be accepted. No
other contributions, Rollover Contributions or Transfers will be accepted.
ARTICLE IV
SIMPLE XXX PLAN RULES
4.01 SIMPLE XXX PLAN. The SIMPLE XXX Plan pursuant to which this Custodial
Account is funded shall be governed exclusively by the SIMPLE XXX Plan document
maintained by the Participant's Employer. The Custodian shall have no
responsibility whatsoever for the qualification of any such Plan with the
requirements imposed on such Plan under applicable law, including such
requirements as may be imposed under Code section 408(p) as a condition of
qualifying as a SIMPLE XXX Plan and including ERISA.
4.02 SUMMARY DESCRIPTION. If contributions made on behalf of the
Participant pursuant to the SIMPLE XXX Plan maintained by the Participant's
Employer are received directly by the Custodian from the Employer, the Custodian
shall provide the Employer with the Summary Description required by Code section
408(l)(2) as required by law.
4.03 PARTICIPANT'S RESPONSIBILITY. The Participant shall be responsible for
the continued qualification of his or her Custodial Account as an XXX under the
Code. The Participant also shall be solely responsible for properly establishing
his or her Custodial Account as an XXX prior to the date any contribution first
is made.
4.04 SEPARATE RECORDS. The Employer and Participant who makes contributions
to the Custodial Account maintained hereunder must establish and maintain
records reflecting the amount of contributions (including Rollover Contributions
or Transfers) made thereto.
4.05 DIRECT TRANSFERS OR ROLLOVERS OF ASSETS. The Custodian, in its
discretion, may accept a Transfer of assets or a Rollover from other SIMPLE IRAs
of the Participant. The Custodian, by accepting a Transfer of assets or a
Rollover, does not accept any responsibility for the tax results of the Transfer
or Rollover. The Participant who directs or consents to the Transfer or Rollover
shall remain solely responsible for the tax results of any such Transfer or
Rollover.
4.06 NONTRANSFERABILITY OF XXX. Except as required by law, the Custodial
Account and the interest of a Participant in his or her Custodial Account shall
not be transferred or assigned by voluntary or involuntary act of the
Participant, nor shall it be subject to alienation, assignment, garnishment,
attachment, receivership, execution, or levy of any kind. Notwithstanding the
preceding, in the event of a property settlement between a Participant and his
or her former spouse pursuant to which the transfer of the interest thereunder,
or of a portion thereof, is incorporated in a divorce decree or in a written
instrument incident to such divorce, the interest so decreed to be the property
of such former spouse shall be re-registered in a separate Custodial Account
then established hereunder for the benefit of such former spouse. In the event
of such a transfer incident to a divorce, such former spouse shall be deemed to
be a "Participant" under this Agreement.
4.07 TRANSFERS OR ROLLOVERS FROM CUSTODIAL ACCOUNT. Prior to the
expiration of the 2-year period beginning on the date the Participant first
participated in any SIMPLE XXX Plan maintained by the Participant's Employer,
any Rollover or Transfer by the Participant of funds from this Custodial Account
must be made to another SIMPLE XXX of the Participant. Any distribution of funds
to the Participant during this 2-year period may be subject to a 25% additional
tax under the Code if the Participant does not Rollover of Transfer the amount
distributed into a SIMPLE XXX. After the expiration of this 2-year period, the
Participant may Rollover or Transfer funds to any XXX of the Participant that is
qualified under Section 4.08(a) or (b) of the Code or to a SIMPLE XXX. The
Custodian shall have no responsibility for the Participant's liability for the
25% tax if made applicable under the foregoing rules.
4.08 NON-FORFEITABILITY; EXCLUSIVE BENEFIT. All contributions made to any
Custodial Account established hereunder and all investments of those assets as
well as all earnings thereon shall immediately become and at all times remain
non-forfeitable. Each Custodial Account maintained hereunder has been
established and shall be maintained for the exclusive benefit of the Participant
for whom it has been established and maintained or his or her Beneficiary.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS
5.01 ESTABLISHMENT OF CUSTODIAL ACCOUNT. The Custodian shall establish a
Custodial Account to hold investments permitted herein for the benefit of each
Participant to which the Participant's contributions (including Rollover
Contributions and Transfers) and the earnings thereon shall be credited.
5.02 INVESTMENT OF CUSTODIAL ACCOUNT.
(a) Contributions to the Custodial Account established hereunder
(including Rollover Contributions and Transfers) shall be allocated to the
Participant's Custodial Account as of the Valuation Date next following receipt
of such contributions by the Custodian.
(b) Dividends, net long-term or short-term capital gains and realized
earnings with respect to investments held by a Custodial Account shall be
allocated to the Participant's Custodial Account as of the Valuation Date next
following their declaration (or realization, if later). Gains realized in cash
and other cash distributions in respect of Custodial Account investments shall
be held uninvested (and shall be credited with interest to the extent required
by Article XIV) pending the Participant's investment instruction with respect to
such assets as provided in Section 5.03. The Custodian shall not be required to
make special elections with respect to whether a Custodial Account shall receive
distributions in respect of an investment in the form of cash or additional
shares of the investment, but the Custodian shall be permitted to make such
special elections at the request of a Participant or Beneficiary on a form
acceptable to the Custodian.
5.03 DIRECTION OF INVESTMENTS.
(a) Each Participant shall direct the Custodian with respect to the
investment of all of his or her contributions and earnings thereon. In the
absence of specific Participant direction, the Custodian shall have no
investment responsibility. The Custodian retains the discretion to refuse to
accept an investment direction for any reason. The Custodian may condition its
acceptance or continued holding of an investment to be held in or already held
by the Custodial Account upon the receipt of an agreement from the Participant
or Beneficiary containing such terms, conditions and representations and
warranties as the Custodian shall determine. The Custodian's decision to permit
the acceptance or continued holding of any investment in the Custodial Account
shall constitute neither approval of the investment merits of the investment nor
a judgement as to the prudence or advisability of the investment. The Custodian
reserves the absolute right to revoke its decision to permit the holding in the
Custodial Account of any investment at any time and for any reason (or to
condition the continued holding of an investment upon the receipt of an
agreement from the Participant or Beneficiary containing such terms, conditions
and representations and warranties as the Custodian shall determine), and the
Custodian shall have no liability for any loss, damage or expense suffered or
incurred by the Participant or Beneficiary by reason of the revocation of the
Custodian's decision (or imposition of such condition). If the Custodian
notifies the Participant or Beneficiary that it revokes its decision or that it
desires to condition its prior acceptance as aforesaid, then, within 30 days
after such notice is given to the Participant or Beneficiary, the Participant or
Beneficiary shall instruct the Custodian as to the liquidation, distribution,
transfer, or other disposition of the investment to which the revocation of the
Custodian's decision or conditioning applies or as to the acceptance of
conditions, as applicable. If the Participant or Beneficiary fails to provide
the Custodian with instructions or fails to satisfy the condition(s) required by
the Custodian within such 30-day period, the Participant or Beneficiary shall be
deemed to have elected to receive an in-kind distribution of such investment or,
if the Custodian is imposing a condition to its continued holding of any
investment and the condition solely is the payment of an additional
administration fee to the Custodian, the Custodian shall assess the fee in
accordance with Section 12.01 against the Participant or Beneficiary.
(b) Each Participant shall also direct the Custodian with respect to
the handling of funds either awaiting investment or held pending distribution
through Xxxx Xxxxx Xxxx Xxxxxx, Inc. In the absence of direction from the
Participant or the Participant's legal representative, the Custodian shall
credit interest to those funds to the extent provided in Article XIV.
(c) The Custodian may follow any written instructions from the
Participant, without liability and without any duty to ascertain whether the
instructions are proper under the Code, ERISA or under any other plan.
5.04 INVESTMENT IN LIFE INSURANCE. No portion of the Participant's
Custodial Account or the earnings thereon shall be invested in life insurance
contracts or, except as provided in Section 6.01(b), annuity contracts.
5.05 INVESTMENT IN COLLECTIBLES. No portion of a Participant's Custodial
Account may be invested in any work of art, any rug or antique, any metal or
gem, any stamp or coin (except for certain coins and bullion described in Code
section 408(m) as in effect at the time of the investment and continued
investment), any alcoholic beverage, or any other tangible personal property
designated as a collectible by the Secretary of the Treasury pursuant to Code
section 408(m). If there is an investment in collectibles within the meaning of
Code section 408(m) that are not excepted coins or bullion under Code section
408(m)(3), the amount so invested shall be treated as a distribution to the
Participant. However, gold and silver coins issued by the United States
government and coins issued under the laws of any State shall not be treated as
collectibles.
ARTICLE VI
DISTRIBUTION OF BENEFITS
6.01 COMMENCEMENT AND FORM OF BENEFITS. Within a reasonable time after
receipt of a written direction to commence distribution of a Custodial Account,
payments may be distributed in the form directed, provided that such form is
acceptable to the Custodian. Further, notwithstanding any other provision of
this Agreement to the contrary, the distribution of an individual's interest in
a Custodial Account shall be made in accordance with the minimum distribution
requirements of section 408(a)(6) or section 408(b)(3) of the Code, as
applicable, and the regulations thereunder, including the incidental death
benefit provisions of section 1.401(a)(9)-2 of the proposed Treasury
regulations. An individual may satisfy the minimum distribution requirements
under sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution
from one individual retirement account that is equal to the amount required to
satisfy the minimum distributions requirements for two or more individual
retirement accounts. For this purpose, the owner of two of more individual
retirement accounts may use the "alternative method," described in I.R.S. Notice
88-33, 1988-1 C.B. 524, to satisfy the minimum distribution requirements under
Code sections 408(a)(6) and 408(b)(3).
(a) (1) The amount required to be distributed to or on behalf of a
Participant for each calendar year, beginning with distributions for the first
Distribution Calendar Year, must be at least equal to the amount determined by
dividing the Participant's Benefit by the Applicable Life Expectancy.
(2) Notwithstanding anything in this Article to the contrary, the
amount to be distributed each year, beginning with distributions for the first
Distribution Calendar Year shall not be less than the amount obtained by
dividing the Participant's Benefit by the lesser of (i) the Applicable Life
Expectancy or (ii) if the Participant's spouse is not the Designated
Beneficiary, the applicable divisor determined from the table set forth in Q&A-4
or Q&A-5, as applicable, of proposed Treasury regulation section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy, as applied in Section 6.03(a)(2)(ii), as the
relevant divisor without regard to proposed Treasury regulation section
1.401(a)(9)-2.
(3) The Minimum Required Distribution for the Participant's first
Distribution Calendar Year must be made on or before the Participant's Required
Beginning Date. The Minimum Required Distribution for other Distribution
Calendar Years must be made on or before December 31 of that Distribution
Calendar Year.
(b) If the Participant or Beneficiary chooses an annuity form of
distribution, the Participant or Beneficiary shall direct the Custodian to
purchase a commercially available annuity specified by the Participant or
Beneficiary and the Custodian shall follow such direction and send the annuity
payments therefrom to the Participant or his or her Beneficiary, as applicable.
The purchase of the appropriate type of annuity may be made from any insurance
company acceptable to the Custodian which, in the regular course of its
business, provides annuities in accordance with generally accepted insurance
practices existing at the time of such purchase. The annuity contract must meet
the requirements of section 408(b) of the Code and the distributions thereunder
must be made in accordance with the requirements of Code section 408(a)(6) and
the Treasury regulations proposed thereunder. The Custodian shall not be liable
to the Participant, Beneficiary or the Participant's spouse for any damage
caused by the choice of a commercially available annuity or for any action taken
or not taken by the insurance company that issues the annuity.
(c) Notwithstanding anything in this Section 6.01 to the contrary, the
Participant is responsible for advising the Custodian, on forms acceptable to
the Custodian, of the amount and timing of all distributions from the
Participant's Custodial Account necessary for complying with the minimum
distribution requirements under Code section 408(a)(6).
6.02 DISABILITY. If the Participant becomes subject to a Disability,
benefits under the Agreement shall be distributed to the Participant commencing
on the first day of the month following notice in writing to the Custodian, from
the Participant or his legal representative, advising the Custodian that the
Participant has incurred a Disability and desires a distribution. The Custodian
is entitled to rely on such notice and shall have no duty to ascertain the fact
of Disability.
6.03 DEATH.
(a) If a Participant dies before his or her entire Custodial Account
is distributed to him, the following distribution rules shall apply:
(1) If the Participant dies after distribution of his or her
Custodial Account has begun, the remaining portion of the Participant's
Custodial Account shall continue to be distributed at least as rapidly as under
the method of distribution being used prior to the Participant's death.
(2) If the Participant dies before distribution of his or her
Custodial Account begins, the Participant's entire Custodial Account balance
shall be subject to the following provisions as elected by the Participant prior
to his or her death or, if the Participant had not made an election prior to his
or her death, by the Participant's Designated Beneficiary:
(i) The Participant's entire Custodial Account balance shall
be paid on or before December 31 of the calendar year containing the fifth
anniversary of the Participant's death.
(ii) Notwithstanding (i), above, if the Participant's
Designated Beneficiary so elects on or before December 31 of the calendar year
immediately following the calendar year of the Participant's death, the
Designated Beneficiary may receive the entire interest in substantially equal
installments over the Applicable Life Expectancy or over a period certain not
greater than the Applicable Life Expectancy of the Designated Beneficiary
commencing on or before December 31 of the calendar year immediately following
the calendar year in which the Participant died. The Designated Beneficiary may
elect at any time to receive a form of payment permitted hereunder which is more
rapid than the form originally elected by the Designated Beneficiary pursuant to
the previous sentence.
(iii) Notwithstanding (i) and (ii), above, if the Designated
Beneficiary is the Participant's surviving spouse, the date distributions are
required to begin shall not be earlier than the later of (i) December 31 of the
calendar year immediately following the calendar year in which the Participant
died or (ii) December 31 of the calendar year in which the Participant would
have attained age 70 1/2. The surviving spouse may elect at any time to receive
a form of payment permitted hereunder which is more rapid that the form
originally elected by the surviving spouse pursuant to the previous sentence.
The surviving spouse may elect to treat the Participant's Custodial Account as
the spouse's own XXX. This election to treat the Participant's Custodial Account
as the surviving spouse's own XXX shall be deemed to have been made if the
surviving spouse makes a contribution to the Custodial Account, makes a Rollover
Contribution or Transfer to or from the Custodial Account or files a written
election with the Custodian, in a form acceptable to the Custodian, following
the Participant's death, to treat the Custodial Account as the surviving
spouse's own XXX.
(iv) Elections of method of distribution under this
paragraph (2) must be made no later than the earlier of (i) December 31 of the
calendar year in which the distributions would be required to begin under this
Section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of the Participant's death. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(3) Any amount paid to a child of the Participant will be treated
as if it had been paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of majority.
(4) For purposes of this Section, distributions are considered to
have begun if the distributions are made on account of the individual reaching
his or her Required Beginning Date. If the individual received distributions
prior to his or her Required Beginning Date and the individual dies before his
or her Required Beginning Date, distributions will be considered not to have
begun for purposes of this Section.
(b) No distribution shall be made to any Beneficiary unless the
Custodian receives written notice of the Participant's death in a form
acceptable to the Custodian. Notwithstanding anything in this Section to the
contrary, the Participant is responsible for advising the Custodian, on forms
acceptable to the Custodian, of the amount and timing of all distributions from
his or her Custodial account and for complying with the minimum distribution
requirements necessary to avoid the imposition of interest and penalties on
either the Participant or the Custodian and the taxability of the Custodial
Account.
6.04 NOTIFICATION OF DISTRIBUTION, TRANSFER OR WITHDRAWAL. Each
Participant who desires a distribution, rollover, transfer or withdrawal from
his or her Custodial Account shall send a signed declaration of his or her
intentions as to the amount to be distributed, rolled over, transferred or
withdrawn on a form acceptable to the Custodian and, if applicable, the annuity
contract which the Participant or Beneficiary desires to be purchased for
purposes of making distributions. The Custodian shall be fully justified and not
liable for any damage resulting from a delay in distribution, rollover or
transfer caused by the Participant's failure to send the signed declaration in a
complete and timely manner and the Custodian shall be permitted to withhold the
making of any distributions unless and until it determines that the signed
declaration is complete.
ARTICLE VII
AMENDMENT OF THE AGREEMENT AND
SUBSTITUTION OF CUSTODIAN
7.01 AMENDMENT. This Agreement may be amended from time to time, and
retroactively, if necessary, in order to comply with the Code or ERISA. The
Custodian may amend any or all provisions of this Agreement at any time without
obtaining the approval or consent of the Participant, the Participant's spouse
or the Participant's Beneficiary, as the case may be, provided that no amendment
shall authorize or permit any part of a Participant's Custodial Account to be
used for or diverted to purposes other than for his or her exclusive benefit,
except as required by the Code or ERISA. Each Participant, and each Beneficiary
of each deceased participant with respect to whom the Custodian has received
formal notice of death, shall be furnished a copy of any amendment to the
Agreement.
7.02 AMENDMENT BY THE PARTICIPANT. In the event the Participant,
Beneficiary or spouse, as applicable, amends this Agreement, the amended
Agreement shall no longer be considered as approved by the Internal Revenue
Service as a prototype plan and the Custodian shall not be bound by any such
amendment unless it consents in writing.
7.03 SUBSTITUTION OF CUSTODIAN. The Custodian may substitute another person
or entity in its place as successor Custodian or trustee hereunder upon at least
30 days' prior written notice to the Participant or Beneficiary, as applicable,
which successor Custodian or trustee may be or may not be an affiliate of the
Custodian, provided that such successor Custodian or trustee qualifies to hold
XXX assets under Code section 408(h). The Participant shall substitute another
custodian in place of the Custodian upon notification by the Commissioner of the
Internal Revenue Service or his or her delegate that such substitution is
required because the Custodian has failed to comply with the requirements of
Treasury regulation section 1.401-12(n) or is not keeping such records, making
such returns, or rendering such statements as are required by law.
ARTICLE VIII
TERMINATION OF AND TRANSFER FROM THE CUSTODIAL ACCOUNT
8.01 TERMINATION. Any Participant may terminate this Agreement at any time
by advising the Custodian in writing, in a form acceptable to the Custodian, of
the termination. Upon a request to terminate, the Custodian shall continue to
hold the assets and then shall transfer them in accordance with the instructions
of the Participant and the relevant provisions of this Agreement. The Custodian
may follow any instructions from the Participant, without liability and without
any duty to ascertain whether the instructions are proper under the Code or
ERISA or under any other plan or XXX. In the absence of complete instruction
from the Participant, the Custodian shall hold the assets in the Participant's
Custodial Account as invested at the time the Custodian receives the incomplete
instruction or, if the assets are cash, shall credit interest to such cash to
the extent provided in Article XIV until complete instructions are received.
8.02 PAYMENT OF FEES. Prior to the transfer of any or all amounts in any
Participant's Custodial Account to another plan or to the Participant or
Beneficiary, as considered appropriate, the Custodian is authorized to reserve
such sums of money as it may deem advisable for payment of all of its fees,
compensation, costs and expenses, or for any other liabilities, all of which
shall constitute a charge against the assets of the Participant's Custodial
Account, with any balance remaining after the payment of all such items to be
paid to the successor custodian or trustee; provided, however, that, if the
Participant terminates this Custodial Account in writing within 7 days following
the date of the Participant's execution of the Adoption Agreement, the Custodian
shall return to the Participant the full amount of the payment made on or after
the date of such execution. Custodial Account assets may be retained and
disposed of to accomplish the purposes of this Section (in accordance with the
provisions of Section 12.01) without liability to the Custodian.
8.03 ACCOUNTING PROCEDURES. In the event of any transfer described in this
Article, the Custodian's accounting procedures set forth in Articles XI and XII
hereof shall apply.
ARTICLE IX
RESIGNATION OR REMOVAL OF CUSTODIAN
9.01 RESIGNATION OR REMOVAL. The Custodian may resign at any time upon 30
days' prior notice in writing to the Participant or Beneficiary, as applicable,
and may be removed by the Participant or Beneficiary at any time upon 30 days'
prior written notice in a form acceptable to the Custodian. Upon such
resignation or removal, the Participant or Beneficiary, as the case may be,
shall appoint a qualified successor trustee or custodian. Upon receipt by the
Custodian of written acceptance of such appointment by the successor trustee or
custodian, the Custodian shall transfer and pay over to the successor the assets
of the Custodial Account and all its records. The Custodian is authorized,
however, to reserve such sums of money as it may deem advisable for payment of
its fees, compensation, costs or expenses, or for payment of any other
liabilities constituting a charge against the assets of the Custodial Account or
against the Custodian. Any portion of the reserve remaining after payment of all
such items shall be paid to the successor trustee or custodian. Any securities
retained for these reasons shall be disposed of pursuant to the provisions of
Article XII hereof.
9.02 REQUIREMENT OF SUCCESSOR CUSTODIAN. The Participant shall not
remove the Custodian until a qualified successor trustee or custodian shall have
been appointed by the Participant. In the event the Custodian resigns and the
Participant fails to appoint a qualified successor, the Custodian may, in its
discretion, apply to any court of competent jurisdiction for appointment of a
successor (and, in such event, the costs of such a proceeding shall be treated
as an expense under Article XII hereof) or make a distribution to the
Participant.
9.03 ACCOUNTING PROCEDURES. In the event of any resignation or removal
described in this Article, the accounting procedures set forth in Articles XI
and XII shall apply.
9.04 CUSTODIAN'S LIABILITY. The Custodian shall not be liable for the acts
or omissions of its successor(s).
ARTICLE X
RESPONSIBILITIES, DUTIES AND
OBLIGATIONS OF THE CUSTODIAN
10.01 AUTHORITY OF THE CUSTODIAN. The Custodian shall have the following
authority in the administration of the Custodial Account established under this
Agreement:
(a) Pursuant to the Participant's directions, to invest and reinvest
the income, gain, earnings or assets of a Custodial Account in any investment
media then available without any need to diversify, without regard to whether
such investment is authorized by the laws of any jurisdiction for trust
investments, without previous application to or subsequent ratification by any
court, tribunal or commission, and without regard to the character of any
investments by any statute, rule of court or custom governing the investment of
trust funds. In this connection, the Custodian is specifically authorized to
invest contributions in separate accounts for each Participant.
(b) Pursuant to the Participant's directions and subject to Section
5.03, to consent to or to participate in dissolutions, reorganizations,
consolidations, mergers, sales, leases, mortgages, transfers or other changes
affecting securities held by the Custodian. In the absence of such directions,
the Custodian shall take no such action.
(c) To hold any securities or other property in the name of the
Custodian without qualification or description or in the name of any nominee.
(d) To make, execute and deliver as Custodian any and all contracts,
waivers, releases or other instruments in writing necessary or proper for the
exercise of any of the Custodian's powers hereunder. The Custodian shall not be
liable for any losses which may result from its failure to take action, as
described in this Section, in the absence of directions from the Participant.
(e) The Custodian shall vote any shares held in a Custodial Account in
accordance with the instructions of the Participant. In the absence of any such
instructions, the Custodian shall not vote any such shares.
(f) Pursuant to the Participant's instructions, to exercise or sell
options, conversion privileges, or rights to subscribe for additional securities
and to make payments therefor. In the absence of such directions, the Custodian
shall take no action with respect to the exercise or sale of options, conversion
privileges or rights to subscribe to additional securities.
(g) Pursuant to the Participant's directions and subject to Section
5.03, to subscribe for additional securities and to make payments therefor. In
the absence of such directions, the Custodian shall take no such action.
10.02 SCOPE OF CUSTODIAN'S DUTIES.
(a) The Custodian shall be under no duty whatsoever except such duties
as are specifically set forth in this Agreement. The Custodian shall not make
any investments or dispose of any investments held for any Participant except
upon the direction of the Participant or otherwise as expressly provided under
this Agreement. The Custodian shall have no discretion to direct investment of
custodial funds or any other aspects of the business administration of the
Custodial Account held for any Participant except as expressly provided under
this Agreement or except as provided by separate written agreement between the
Custodian and the Participant. The Custodian shall be under no duty to question
any direction of the Participant, to review any securities or other property
held in the Participant's Custodial Account, or to make suggestions to the
Participant with respect to the investment, retention or disposition of any
assets held in or for the Participant's Custodial Account.
(b) Although the Custodian may provide the Participant with investment
information, it is not intended that any information given will serve as a
primary basis for investment decision except as provided by separate written
agreement between the Custodian and the Participant, and the Custodian shall
have no liability for providing such information. Each Participant is expected
to use independent judgment in making investment decisions.
(c) The Custodian shall not under any circumstances be responsible for
the timing, purpose or propriety of any contribution or distribution made
hereunder. The Code imposes a tax upon a Participant if an Excess Contribution
is made to the Participant's Custodial Account, if any early distribution under
section 408(f) of the Code is made from a Participant's Custodial Account prior
to his or her attainment of age 59 1/2 (except in the case of death, disability,
or other limited exceptions), if distribution to a Participant is not made or
commenced by the Required Beginning Date, if distributions are made in a timely
fashion but are insufficient in amount, if distributions are made and not rolled
over or transferred as described in Section 4.07 or if distributions from all
retirement accounts held by the Participant exceed certain minimum amounts. The
Custodian shall not incur any liability or responsibility for any such tax or
penalty, which shall be the sole responsibility of the Participant, nor shall
the Custodian have any responsibility to notify the Participant of the
Participant's incurrence of any such tax or penalty.
10.03 NO LIABILITY TO CUSTODIAN FOR FAILURE TO ACT. The Custodian shall be
under no liability for any loss of any kind which may result by reason of any
action taken by it in accordance with directions of the Participant or by reason
of any failure to act because of the absence of any such directions or by reason
of action expressly permitted to be taken hereunder in the absence of
Participant direction.
10.04 INDEMNIFICATION OF CUSTODIAN. The Participant, Beneficiary and the
Participant's spouse, as the case may be, agree to indemnify and hold the
Custodian harmless from any liability which may arise in the performance of the
Custodian's duties under this Agreement except liability arising from the gross
negligence or willful misconduct of the Custodian.
ARTICLE XI
RECORDS AND REPORT
11.01 REPORTS OF CUSTODIAN. The Custodian shall keep separate and accurate
records of all contributions, receipts, investments, distributions,
disbursements and all other transactions of the Custodial Account held for the
Participant under this Agreement. The Custodian shall file such written reports
with the Participant as are required (which may consist of copies of regularly
issued Xxxx Xxxxx Xxxx Xxxxxx, Inc. account statements and shall include
calendar year reporting concerning the status of the Custodial Account as
required by Treasury regulations section 1.408-5) reflecting all transactions
affecting the Custodial Account for the period in question. Unless the
Participant files a written statement of exceptions or objections to the report
with the Custodian within 60 days after the mailing of the report, the
Participant shall be deemed to have approved such report and the Custodian shall
be released from all liability, responsibility and accountability for its acts
(or failure to act) in regard to that Custodial Account to anyone (including any
spouse or Beneficiary) with respect to all matters set forth in the report. No
person, including a Participant, Beneficiary or spouse, may require any further
accounting.
11.02 PARTICIPANT'S EXAMINATION OF RECORDS. No Participant may examine the
records of any other Participant without the written consent of the Participant
whose records are being examined.
11.03 APPLICATION TO COURT OF COMPETENT JURISDICTION. The Custodian
shall have the right at any time to apply to a court of competent jurisdiction
for judicial settlement of its accounts or for determination of any questions of
construction which may arise or for any instructions. The only necessary party
defendant to any such action shall be the Participant, but the Custodian may, if
it so elects, bring in as a party defendant any other person or persons. The
cost, including attorneys' fees, or any such accounting shall be charged to the
applicable Custodial Account as an administration expense under Article XII.
ARTICLE XII
CUSTODIAN'S FEES AND OTHER
ADMINISTRATIVE EXPENSES
12.01 FEES. The Custodian may charge a fee for its services according to
its standard schedule of fees as in effect from time to time. All administrative
expenses of the Custodial Account including any income, excise or other taxes of
any kind that may be levied or assessed upon the assets of the Custodial
Account, or any transfer or similar tax incurred in connection with the
investment and reinvestment of the assets of a Custodial Account and all other
expenses incurred by the Custodian, including fees for legal services rendered
to the Custodian and the Custodian's compensation, shall all be paid by the
Participant and may be assessed as necessary against the assets held in the
Custodial Account, as deemed appropriate by the Custodian.
The Custodian may establish charges that it may impose as a condition
of holding investments or as a condition of continuing to hold already accepted
investments in the Participant's Custodial Account in cases where extraordinary
carrying costs or other expenses associated with such holding by the Custodian
justify the additional charge, as determined by the Custodian in its discretion.
Any such charges shall be assessed and determined in the sole and absolute
discretion of the Custodian; provided, however, that such charge shall be
assessed only after advance written notice of such assessment has been delivered
by the Custodian to the Participant or Beneficiary, such written notice to be
mailed at least 30 days (or such longer period as the Custodian, in its
discretion, shall determine and state in the notice) prior to the date on which
such charge will be assessed in the absence of instruction from the Participant
or Beneficiary.
If any request for payment by the Custodian under this Section is not
honored by the Participant or Beneficiary within 30 days following the mailing
of the request by the Custodian (or following such longer notice period as is
established by the Custodian as provided above), or if the Participant or
Beneficiary elects to have fees, charges, expenses and taxes deducted from the
Participant's Custodial Account or from any trading, brokerage or similar
account maintained with the Custodian or an affiliate of the Custodian in the
name of the Participant or Beneficiary, as applicable (collectively with any and
all of such accounts of the Participant or Beneficiary, as applicable, the
"Other Account"), the Custodian shall deduct such fees, administrative charges,
expenses, and/or the taxes from the Participant's Custodial Account or Other
Account, in the following order:
(a) any uninvested cash and then any shares of a money market fund or
money market-type fund in the Custodial Account;
(b) any uninvested cash and then any shares of a money market fund or
money market-type fund in the Other Account;
(c) any securities or other assets in the Custodial Account;
(d) any securities or other assets in the Other Account.
If the Custodian must liquidate securities or other assets under (c) or
(d), above, it shall liquidate equity investments before fixed income
obligations, selling the last investment purchased, with any additional
liquidations being done in reverse order of the date of purchase.
ARTICLE XIII
MISCELLANEOUS
13.01 PARTICIPANT LOOKS TO CUSTODIAL ACCOUNT'S ASSETS. It is a
condition of this Agreement that the Participant herein agrees to look solely to
the assets of his or her Custodial Account for the payment of any benefits to
which he or she is entitled.
13.02 ANTI-ALIENATION. The benefits payable hereunder shall not be subject
to alienation, assignment, garnishment, attachment, execution or levy of any
kind and any attempt to cause such benefits to be so subjected shall not be
recognized except to the extent required by law and except as permitted in
Section 4.06.
13.03 NO COMMINGLING OF ASSETS. The assets of a Participant's Custodial
Account shall not be commingled with other property except in a common trust
fund or common investment fund.
13.04 MASCULINE/FEMININE; SINGULAR/PLURAL. Masculine pronouns shall be
deemed to include feminine pronouns and the singular shall be deemed to include
the plural and vice versa.
13.05 CONFLICT WITH THE CODE AND ERISA. The Agreement shall be construed,
whenever possible, to be in conformity with the requirements of the Code and
ERISA, as and if applicable. To the extent not in conflict with the preceding
sentence, the Agreement shall be construed, administered and governed in all
respects under and by the laws of the State of Maryland (without regard to the
conflict of laws provisions thereof).
ARTICLE XIV
INTEREST ON CASH BALANCES
14.01 INTEREST ON CASH BALANCES. The following conditions shall apply to
interest earnings with respect to cash balances in a Participant's Custodial
Account:
(a) Interest will be paid only on cash balances of $10 or more.
(b) Interest will be paid for each day during the month in which the
cash balance equals or exceeds the minimum $10 requirement.
(c) The rate of interest will be established on the first business day
of each month; provided, however, that the Custodian retains the right to change
the rate at any time to any rate permitted by law.
