403(b) Tax-Sheltered
Custodial Account agreement
This Agreement allows you to establish a tax-sheltered custodial account
authorized under Section 403(b)(7) of the Internal Revenue Code. By electing to
reduce your Compensation and have your Employer/Payor contribute into your
tax-sheltered custodial Account, you will not be taxed on the amounts
contributed or earnings attributable to such amounts until the funds are
withdrawn from your Account.
SECTION ONE: DEFINITIONS
The following words and phrases when used in this Agreement with initial capital
letters shall have the meanings set forth below.
1.01 Account - Means the tax-sheltered custodial Account established pursuant to
this Agreement for the benefit of the Employee/Participant and when the
context so implies refers to the assets, if any, then held by the Custodian
hereunder.
1.02 Agreement - Means this 403(b)(7) Tax-Sheltered Custodial Account Agreement.
1.03 Beneficiary - Means the person or persons designated by the
Employee/Participant in accordance with Section 4.04 to receive any
distributions from the Account upon the Employee/Participant's death.
1.04 Code - Means the Internal Revenue Code of 1986, as amended from time to
time.
1.05 Custodian - Means Investors Bank and Trust Company or any successor thereto
which qualifies to serve as Custodian in the manner prescribed by Section
401(f)(2) of the Code.
1.06 Employer/ Payor - Means the entity so designated on the 403(b) Enrollment
Application. The Employer/Payor must be an entity described in Section
501(c)(3) of the Code which is exempt from tax under Section 501(a) of the
Code, an educational organization described in Section 170(b)(1)(A)(ii) of
the Code or any other entity eligible under Section 403(b) of the Code to
make contributions to tax-sheltered custodial accounts.
1.07 Employee/Participant - Means any person who is regularly employed by the
Employer/Payor who elects to participate in this Agreement by completing
and signing a Salary Deferral Agreement or such other form as may be
acceptable to the Employer/Payor.
1.08 Salary Deferral Agreement - Means the Salary Reduction Agreement signed by
the Employee/Participant and delivered to the Employer/Payor whereby the
Employee/Participant authorizes a reduction of salary to be contributed by
the Employer/Payor to the Employee/Participant's Account established
hereunder.
1.09 Sponsor - Means Investors Bank and Trust Company or any successor thereto.
SECTION TWO: CONTRIBUTIONS
2.01 Salary Deferral Agreement - The Custodian may accept contributions from the
Employer/Payor on behalf of a Employee/Participant made pursuant to a
Salary Deferral Agreement. A Employee/Participant shall designate the
amount or percentage of such Employee/Participant's compensation which is
to be deferred in the Salary Deferral Agreement. Such amount or percentage
shall be effective until otherwise modified in writing by the
Employee/Participant. A Employee/Participant may amend or terminate his or
her Salary Deferral Agreement at such times as may be permitted by the
Employer/Payor, however the Employee/Participant may not change his or her
election more than once per tax year.
2.02 Maximum Contribution Limits - In no event shall the contributions to the
Account for a tax year on behalf of a Employee/Participant exceed the
maximum allowable deferrals permitted under current law or regulation.
a. The maximum salary deferral made during a tax year on behalf of a
Employee/Participant, when aggregated with other salary deferral
amounts made through the Employer/Payor (or controlled group of
Employers/Payors under IRC 414(b), (c), (m) or (o)), shall not exceed
the lesser of the maximum permitted amount for a Employee/Participant
under Sections 403(b)(2) and 415(c) of the Code for that year.
b. The maximum of all salary deferrals made during the
Employee/Participant's tax year shall not exceed the limitations set
forth in Section 402(g) of the Code.
c. The maximum salary deferrals may be based on a valid election by the
Employee/Participant to use available special increase options.
2.03 Transfer to Custodial Account - The Employee/Participant may transfer (or
arrange for the transfer of) assets from another annuity contract or
custodial account described in Section 403(b) of the Code to this Account.
The transfer shall be accepted by the Custodian if the Employee/Participant
certifies the transaction satisfies all current requirements for such a
transaction. The Custodian may request the Employee/Participant to provide
such information it deems necessary prior to accepting the transfer. The
Custodian shall not be responsible for determining whether any transfer is
proper.
SECTION THREE: INVESTMENT OF CONTRIBUTIONS
3.01 Shares of Regulated Investment Companies - All Contributions by a
Employee/Participant to his or her Account shall be invested by the
Custodian pursuant to written instructions concerning investment delivered
by the Employee/Participant to the Custodian prior to or at the time a
contribution is made to the Account. The Custodian shall, within a
reasonable time following receipt of written instructions from the
Employee/Participant, invest such contributions in full or fractional
shares of certain regulated investment companies.
For purposes of this Agreement, "regulated investment companies" means any
regulated investment company or companies within the meaning of Section
851(a) of the Code or any series issued by such company which has an
investment advisory agreement and/or a distribution agreement with the
sponsor, or any of its affiliated or associated companies and which has
agreed to offer shares for use as funding vehicles for the Account.
If the investment instructions provided by the Employee/Participant to the
Custodian are not received by the Custodian or are, in the opinion of the
Custodian, ambiguous, the Custodian may hold or return all or a portion of
the contribution uninvested without liability for loss of income or
appreciation, without liability for interest, dividends or any other gain
whatsoever, pending receipt of proper instructions or clarification. The
Custodian shall advise the Employee/Participant of the form and manner in
which investment instructions must be given.
3.02 Employee/Participant Change of Investment - Subject to rules and procedures
adopted by the Custodian, a Employee/Participant may, at his or her
election, direct the Custodian to redeem any or all regulated investment
company shares held by the Custodian pursuant to this Agreement and to
reinvest the proceeds in such other regulated investment company shares as
directed. Transactions of this character must conform with the provisions
of the current prospectus for the regulated investment company shares
subject to purchase.
3.03 Dividends and Distributions - Dividends and other distributions received by
the Custodian on shares of any regulated investment company held in the
Account shall be reinvested in additional shares of the regulated
investment company from which the dividend or other distribution
originates, unless the Employee/Participant directs the Custodian to act
otherwise. Should a Employee/Participant have the choice of receiving a
distribution of shares from a regulated investment company in additional
shares, cash or other property, the Custodian shall nonetheless elect to
receive such distribution in additional shares.
3.04 Registered Owner, Voting Rights - All regulated investment company shares
acquired by the Custodian pursuant to this Agreement shall be registered in
the name of the Custodian or its nominee. The Custodian shall deliver or
cause to be executed and delivered to the Employee/Participant all notices,
prospectuses, financial statements, proxies and related proxy information.
The Custodian shall vote the shares in accordance with instructions from
the Employee/Participant.
3.05 Sales Charges - All sales charges, transfer fees, investment fees or other
administrative charges associated with the purchase of transfer of or sale
of regulated investment company shares shall be charged to the Account of
the Employee/Participant.
SECTION FOUR: DISTRIBUTIONS
4.01 Limitations on Distributions - Subject to the limitations described in this
Agreement, a Employee/Participant may request a distribution from the
Account. A Employee/Participant's Account may not be distributed prior to
the Employee/Participant's
(a) attainment of age 59 1/2,
(b) incurring a disability within the meaning of Section 72(m)(7) of the
Code, (c) death, (d) encountering a financial hardship, or (e) separation
from service.
No distribution shall be made to a Employee/Participant (or Beneficiary, if
applicable) until he or she completes such written forms and provides such
additional information and documentation as the Custodian, in its sole
discretion, may deem necessary.
If the value of the Account immediately preceding the 1989 Plan Year is
ascertainable, such pre-1989 amounts are not subject to the limitations of
Section 4.01.
4.02 Financial Hardship - For purposes of this Agreement, "financial hardship"
shall include a financial need incurred by the Employee/Participant due to
illness, temporary disability, purchase of a home, or educational expenses
of the Employee/Participant or any member of his or her immediate family,
or any other immediate and heavy financial need of the
Employee/Participant; provided, however, no financial hardship shall exceed
or otherwise not conform to the requirements of Section 403(b)(7) of the
Code. No distributions on account of financial hardship shall exceed the
amount determined to be required to meet the immediate financial need
created by the hardship which cannot be otherwise reasonably accommodated
from other resources of the Employee/Participant. Any distribution made on
account of a Employee/Participant's financial hardship shall be made to
such Employee/Participant in a single sum payment in cash pursuant to
written instructions in a form acceptable to the Custodian, and delivered
to the Custodian as may be provided in Section 403(b)(7) of the Code.
Hardship distributions may consist only of the amounts contributed pursuant
to a Employee/Participant's Salary Deferral Agreement.
4.03 Form of Distribution - Distributions for other than a financial hardship
shall be made in any one or more or any combination of the following forms:
(a) single lump sum payment;
(b) monthly, quarterly, semiannual or annual payments over a period
elected by the Employee/Participant not to extend beyond the
Employee/Participant's life expectancy; or
(c) in monthly, quarterly, semiannual or annual payments over a period
selected by the Employee/Participant not to exceed the joint life and
last survivor expectancy of the Employee/Participant and his or her
Beneficiary.
At any time prior to commencement of distribution, the Employee/Participant
may make or change the foregoing distribution forms by delivering a written
notice to the Custodian.
Notwithstanding any other provision to the contrary, the Custodian may make
an immediate single sum distribution to the Employee/Participant or
Beneficiary (if applicable) if the value of the Account does not exceed
$3,500.
At the discretion of the Custodian, other forms of distribution, if allowed
under applicable provisions of the Code, may be allowed.
In the event a Employee/Participant does not elect any of the methods of
distribution described above on or before such Employee/Participant's 70
1/2 birthday, the Employee/Participant shall be deemed to have elected
distribution made on his or her 70 1/2 birthday in the form of periodic
payments over the single life expectancy of the Employee/Participant using
the declining years method of determining the Employee/Participant's life
expectancy multiple; provided, however, the Custodian shall have no
liability to the Employee/Participant for any tax penalty or other damages
which may result from any inadvertent failure by the Custodian to make such
a distribution.
Notwithstanding anything in this Agreement to the contrary distributions
shall conform to the minimum distribution requirements of Section 401(a)(9)
of the Code and the regulations thereunder, including Treasury Regulations
Sections 1.401(a)(9)-2 and 1.403(b)-2.
If the value of the Account prior to 1987 is determinable, the pre-1987
amount need not be subject to a required minimum distribution until the
calendar year the Employee/Participant attains age 75, or such later date
as may be allowed by law or regulation.
4.04 Designation of Beneficiary - Each Employee/Participant may designate, upon
a form provided by the Custodian, any person or persons (including an
entity other than a natural person) as primary or contingent Beneficiary to
receive all or a specified portion of the Employee/Participant's Account in
the event of the Employee/Participant's death. A Employee/Participant may
change or revoke such Beneficiary designation from time to time by
completing and delivering the proper form to the Custodian.
4.05 Distribution Upon Death of Employee/Participant - If a Employee/Participant
dies before his or her entire interest in the Account is distributed to him
or her, or if distribution has commenced to the Employee/Participant and
his or her surviving spouse and such surviving spouse dies before the
entire interest is distributed to such spouse, the entire interest or
remaining undistributed balance of such interest shall be distributed in
the form of a single sum cash payment, or other form of payment as
permitted under current applicable code or regulations, to the Beneficiary
or Beneficiaries, if any, designated by the Employee/Participant or his or
her spouse as the case may be. In the event no such Beneficiary has been
designated, the Employee/Participant's estate shall receive the balance of
the Account.
4.06 Distribution of Excess Amounts - The Custodian may make distribution of any
excess to the Employee/Participant.
4.07 Eligible Rollover Distributions - At the election of a Employee/Participant
(or the surviving spouse Beneficiary of a deceased Employee/Participant)
the Custodian shall pay any eligible rollover distribution to an individual
retirement plan described in Section 408 of the Code or another annuity
contract or custodial account described in Section 403(b) of the Code in a
direct rollover for that Employee/Participant (or beneficiary). The term
"eligible rollover distribution" shall have the meaning set forth in
Sections 402(c)(2) and (4) of the Code and Q&A-3 through Q&A-8 of Treasury
Regulations Section 1.402(c)-2T.
The Employee/Participant (or surviving spouse beneficiary) who desires a
direct rollover must specify the individual retirement plan or 403(b) plan
to which the eligible rollover distribution is to be paid and satisfy such
other reasonable requirements as the Custodian may impose.
SECTION FIVE: ADMINISTRATION
5.01 Duties of the Custodian - The Custodian shall have the following
obligations and responsibilities:
(a) To hold contributions to the Account it receives, invest such
contributions pursuant to the Employee/Participant's instructions and
distribute Account assets pursuant to this Agreement;
(b) To register any property held by the Custodian in its own name, or in
nominal bearer form, that will pass delivery;
(c) To maintain records of all relevant information as may be necessary
for the proper administration of the Account;
(d) To allocate earnings, if any, realized from such contributions and
such other data information as may be necessary;
(e) To file such returns, reports and other information with the Internal
Revenue Service and other government agencies as may be required of
the Custodian under applicable laws and regulations.
5.02 Reports - As soon as practicable after December 31st of each calendar year,
and whenever required by regulations under the Code, the Custodian shall
deliver to the Employee/Participant a written report of the Custodian's
transactions relating to the Account during the period from the last
previous accounting and shall file such other reports as may be required
under the Code.
On receipt of the Custodian's report referenced in the preceding paragraph
a Employee/Participant shall have a period of 60 days following receipt to
deliver a written objection to the Custodian concerning information
provided in the report. In the event the Employee/Participant neglects to
file such written objection, the report shall be deemed approved and in
such case, the Custodian shall be forever released and discharged with
respect to all matters and things included herein.
5.03 Custodian Not Responsible for Certain Actions - Notwithstanding the
foregoing, the Custodian shall have no responsibility for determining the
amount of or collecting contributions to the Account made pursuant to this
Agreement; determining the amount, character or timing of any distribution
to a Employee/Participant under this Agreement; determining a
Employee/Participant's maximum contribution amount; maintaining or
defending any legal action in connection with this Agreement, unless agreed
upon by the Custodian, Employer/Payor and Employee/Participant.
5.04 Indemnification of Custodian - The Employer/Payor and Employee/Participant
shall, to the extent permitted under law, indemnify and hold the Custodian
harmless from and against any liability which may occur in the
administration of the Account unless arising from the Custodian's breach of
its responsibilities under this Agreement. By execution of this Agreement,
it is the specific intention of the parties that no fiduciary duties be
conferred upon the Custodian nor shall any be implied from this Agreement
or the acts of this Custodian.
5.05 Custodian's Fees and Expenses - The Custodian may charge fees in connection
with the Account. In addition, the Custodian has the right to be reimbursed
for any taxes or expenses incurred by or on behalf of the Account. All such
fees, taxes or expenses may be charged against the Account or, at the
option of the Custodian, may be paid directly by the Employee/Participant
or Employer/Payor. The Custodian reserves the right to change its fee
schedule, or add new fees, at any time upon 30 days prior written notice to
the Employee/Participant.
SECTION SIX: AMENDMENT AND TERMINATION
6.01 Amendment of Agreement - This Agreement may be amended by an agreement in
writing between the Employee/Participant and Custodian. In addition, by
execution of this Agreement, the Employer/Payor and the
Employee/Participant delegate to the Custodian all authority to amend this
Agreement by written notification from the Custodian to the
Employee/Participant as to any term hereof, at any time (including
retroactively) except that no amendment shall be made which may operate to
disqualify the Account under Section 403(b)(7) of the Code. The effective
date of any amendment hereto shall be the date specified in said amendment
or 30 days subsequent to the time notification of amendment is delivered by
the Custodian to the Employee/Participant.
6.02 Termination by Employee/Participant - The Employee/Participant reserves the
right to terminate further contributions to his or her Account pursuant to
this Agreement by executing and delivering to the Custodian an executed
copy of an agreement terminating said contributions. The
Employee/Participant further reserves the right to terminate his or her
adoption of this Agreement in the event that he or she shall be unable to
secure a favorable ruling from the Internal Revenue Service with respect to
the Agreement. In the event of such termination, the Custodian shall
distribute the Account to the Employee/Participant.
6.03 Resignation or Removal of Custodian - The Custodian may resign as Custodian
of any Employee/Participant's Account upon 30 days written notice to the
Employee/Participant. The Employee/Participant may remove a Custodian upon
30 days prior written notice. Upon such resignation or removal, a successor
Custodian shall be named. Upon designation of a successor Custodian, the
Custodian shall transfer the assets held pursuant to the terms of this
Agreement to the successor Custodian. The Custodian may retain a portion of
the assets to the extent necessary to cover reasonable administrative fees
and expenses.
Where the Custodian is serving as a nonbank custodian pursuant to Section
1.401-12(n) of the Treasury Regulations, the Employee/Participant will
appoint a successor custodian upon notification by the Commissioner of
Internal Revenue that such substitution is required because the Custodian
has failed to comply with the requirements of Section 1.401-12(n) or is not
keeping such records or making such returns or rendering such statements as
are required by forms or regulations.
SECTION SEVEN: MISCELLANEOUS
7.01 Applicable Law - This Agreement is established with the intention that it
qualify as a tax-sheltered custodial account under Section 403(b)(7) of the
Code and that contributions to the same be treated accordingly. To the
extent not governed by Federal law, this Agreement shall be construed,
administered and enforced in accordance with the laws of the Custodian's
state of incorporation.
If any provision of this Agreement shall for any reason be deemed invalid
or unenforceable, the remaining provisions shall, nevertheless, continue in
full force and effect and shall not be invalidated.
7.02 Nonalienation - The assets of a Employee/Participant in his or her Account
shall be nonforfeitable at all times and shall not be subject to
alienation, assignment, trustee process, garnishment, attachment, execution
or levy of any kind, nor shall such assets be subject to the claims of the
Employee/Participant's creditors.
7.03 Terms of Employment - Neither the fact of the implementation of this
Agreement nor the fact that a common law employee has become a
Employee/Participant, shall give to such employee any right to continued
employment; nor shall either fact limit the right of the Employer/Payor to
discharge or to deal otherwise with an employee without regard to the
effect such treatment may have upon the employee's rights as a
Employee/Participant under this Agreement.
7.04 Notices - Any notice or other communication which the Custodian may give to
a Employee/Participant shall be deemed given when sent by first class mail
to the Employee/Participant's last known address on the Custodian's
records. Any notice or other communication to the Custodian shall not
become effective until the Custodian actually receives it.
7.05 Loans - If so permitted by the Custodian, the Employee/Participant may
borrow a portion of his or her Account pursuant to the applicable rules
under the Code. The Custodian may charge against the Account, any fees and
expenses incurred in connection with loan processing and/or recordkeeping.
The Employee/Participant acknowledges that failure to repay a loan in the
prescribed manner may result in the immediate taxability of the loan
amount.
7.06 Employer/Payor Contributions - The Employer/Payor may make contributions to
the Account on behalf of the Employee/Participant. The Custodian is not
obligated to operate the Account in accordance with any plan executed by
the Employer/Payor unless the Custodian so agrees and the Employer/Payor
notifies the Custodian and provides to the Custodian a copy of the Plan
Document.
7.07 Matters Relating to Divorce - Upon receipt of a domestic relations order,
the Custodian may retain an independent third party to determine whether
the order is a Qualified Domestic Relations Order pursuant to Section
414(p) of the Code. The Custodian may charge to the Account any and all
expenses associated with the determination.
