Exhibit 14.2
CONCORDE FINANCIAL CORPORATION
SIMPLIFIED EMPLOYEE PENSION PLAN
_____________________ (hereinafter the "Employer") makes the
following agreement under the terms of Section 408(k) of the Internal
Revenue Code and the instructions to this form.
The Employer agrees to provide for discretionary contributions
in each calendar year to the Individual Retirement Accounts or Individual
Retirement Annuities (IRA's) of all eligible employees who are at least
_______ years old (not over 21 years old) [see instruction "Who May
Participate"] and worked in at least _____ years (not over 3 years) of the
immediately preceding 5 years [see instruction "Who May Participate"].
This [ ] includes [ ] does not include (check one) employees covered under
a collective bargaining agreement and [ ] includes [ ] does not include
(check one) employees whose total compensation during the year is less
than $300.
The Employer agrees that contributions made on behalf of each
eligible employee will:
- Be made only on the first $200,000 of compensation (as adjusted
per Code Section 408(k)(3)(C)).
- Be made in an amount that is the same percentage of total
compensation for every employee.
- Be limited to the smaller of $30,000 (or if greater, 1/4 of the
dollar limitation in effect under Section 415(b)(1)(A)) or 15%
of compensation.
- Be paid to the IRA Custodian, First Wisconsin Trust Company.
Signature of Employer Date
By
CONCORDE FINANCIAL CORPORATION
SIMPLIFIED EMPLOYEE PENSION PLAN
INSTRUCTIONS
This form is to be used by an employer to provide benefits to
all employees under a Simplified Employee Pension plan (SEP) described in
Section 408(k) of the Internal Revenue Code ("Code"). This form is NOT to
be filed with the IRS.
A SEP provides an employer with a simplified way to make
contributions toward an employee's retirement income. Under a SEP, the
employer is permitted to contribute a certain amount (see below) to an
employee's Individual Retirement Account or Individual Retirement Annuity
(IRA's). The employer makes contributions directly to an IRA set up by an
employee. Making the agreement on this form does not establish an
employer IRA as described under Section 408(c).
1. Use of This Form
This form may not be used by an employer who:
- Currently maintains any other qualified retirement plan;
- Has maintained in the past a defined benefit plan, even if now
terminated.
- Has any eligible employees for whom IRA's have not been
established.
- Uses the services of leased employees (as described in Section
414(n)).
- Is a member of an affiliated service group (as described in
Section 414(m)), a controlled group of corporations (as
described in Section 414(b)), or trades or businesses under
common control (as described in Section 414(c)), UNLESS all
eligible employees of all the members of such groups, trades, or
businesses, participate under the SEP.
This form should only be used if the employer will pay the cost
of the SEP contributions. This form is not suitable for a SEP that
provides for contributions at the election of the employee whether or not
made pursuant to a salary reduction agreement.
2. Who May Participate
Any employee who is at least 21 years old and has performed
"service" for the employer in at least 3 years of the immediately
preceding 5 years must be permitted to participate in the SEP. However,
the employer may establish less restrictive eligibility requirements if it
chooses. "Service" is any work performed for the employer for any period
of time, however short. Further, if the employer is a member of an
affiliated service group, a controlled group of corporations, or trades or
businesses under common control, "service" includes any work performed for
any period of time for any other member of such group, trades, or
businesses. Generally, to make the agreement, all eligible employees
(including all eligible employees, if any, of other members of an
affiliated service group, a controlled group of corporations, or trades or
businesses under common control) must participate in the plan. However,
employees covered under a collective bargaining agreement and certain
nonresident aliens may be excluded if Section 410(b)(3)(A) or 410(b)(3)(C)
applies to them. Employees whose total compensation for the year is less
than $300 may be excluded.
3. Amount of Contributions
An employer is not required to make any contributions to an
employee's SEP-IRA in a given year. However, if the employer does make
contributions, it must make them to the IRA's of all eligible employees,
whether or not they are still employed at the time contributions are made.
The contributions made must be the same percentage of each employee's
total compensation (up to a maximum compensation base of $200,000 as
adjusted per Section 408(k)(3)(C) for cost of living changes). The
contributions you make in a year for any one employee may not be more than
the smaller of $30,000 or 15% of that employee's total compensation
(figured without considering the SEP-IRA contributions).
For this purpose, compensation includes:
- Amounts received for personal services actually performed (see
Section 1.219-1(c) of the Income Tax Regulations); and
- Earned income defined under Section 401(c)(2).
In making contributions, you may not discriminate in favor of
any employee who is highly compensated.
Under this form you may not integrate your SEP contributions
with, or offset them by, contributions made under the Federal Insurance
Contributions Act (FICA).
4. Annual Reporting
Currently, employers who have established a SEP using this
agreement and have provided each participant with a copy of this form,
including the questions and answers, are not required to file the annual
information returns, Forms 5500, 5500-C, 5500-R, or 5500EZ for the SEP.
5. Deductibility of Contributions
An employer may deduct all contributions to a SEP subject to the
limitations of Section 404(h). This SEP is maintained on a calendar year
basis and contributions to the SEP are deductible for your taxable year
with or within which the calendar year ends. Contributions made for a
particular taxable year and contributed by the due date of your income tax
return (including extensions) shall be deemed made in that taxable year.
6. Making the Agreement
This agreement is considered made when (1) IRA's have been
established for all of the employer's eligible employees, (2) the employer
has completed all blanks on the agreement form without modification, and
(3) the employer gives all eligible employees copies of the agreement
form, instructions, and questions and answers.
The employer should keep the agreement form with its records; do
not file it with the IRS.
7. Questions and Answers
The information provided explains what a Simplified Employee
Pension plan is, how contributions are made, and how to treat your
employer's contributions for tax purposes.
Please read the questions and answers carefully. For more
specific information, also see the agreement form and instructions to your
employer on this form.
1. Q. What is a Simplified Employee Pension, or SEP?
A. A SEP is a retirement income arrangement under which
your employer may contribute any amount each year up to the smaller of
$30,000 or 15% of your compensation into your own Individual Retirement
Account/Annuity (IRA).
Your employer will provide you with a copy of the agreement
containing participation requirements and a description of the basis upon
which employer contributions may be made to your IRA.
All amounts contributed to your IRA by your employer belong to
you, even after you separate from service with that employer.
The $30,000 limitation referred to above may be increased by 1/4
of the dollar limitation in effect under Section 415(b)(l)(A).
2. Q. Must my employer contribute to my IRA under the SEP?
A. Whether or not your employer makes a contribution to
the SEP is entirely within the employer's discretion. If a contribution
is made under the SEP, it must be allocated to all the eligible employees
according to the SEP agreement. The SEP specifies that the contribution
on behalf of each eligible employee will be the same percentage of
compensation (excluding compensation higher than $200,000) for all
employees.
3. Q. How much may my employer contribute to my SEP-IRA in
any year?
A. Under the SEP that your employer has adopted, your
employer will determine the amount of contribution to be made to your IRA
each year. However, the contribution for any year is limited to the
smaller of $30,000 or 15% of your compensation for that year. The
compensation used to determine this limit does not include any amount
which is contributed by your employer to your IRA under the SEP. The
agreement does not require an employer to maintain a particular level of
contributions. It is possible that for a given year no employer
contribution will be made on an employee's behalf.
Also see Question 5.
4. Q. How do I treat my employer's SEP contributions for my
taxes?
A. The amount your employer contributes for years
beginning after 1986 is excludable from your gross income subject to
certain limitations including the lesser of $30,000 or 15% of compensation
mentioned in 1A above and is not includable as taxable wages on your Form
W-2.
5. Q. May I also contribute to my IRA if I am a participant
in a SEP?
A. Yes. You may still contribute the lesser of $2,000 or
100% of your compensation to an IRA. However, the amount which is
deductible is subject to various limitations.
See also Question 11.
6. Q. Are there any restrictions on the IRA I select to
deposit my SEP contributions in?
A. Under the SEP that is approved by IRS, contributions
must be made to either a Model IRA which is executed on an IRS form or a
master or prototype IRA for which IRS has issued a favorable opinion
letter.
7. Q. What if I don't want a SEP-IRA?
A. Your employer may require that you become a participant
in such an arrangement as a condition of employment. However, if the
employer does not require all eligible employees to become participants
and an eligible employee elects not to participate, all other employees of
the same employer may be prohibited from entering into a SEP-IRA
arrangement with that employer. If one or more eligible employees do not
participate and the employer attempts to establish a SEP-IRA agreement
with the remaining employees, the resulting arrangement may result in
adverse tax consequences to the participating employees.
8. Q. Can I move funds from my SEP-IRA to another tax-
sheltered IRA?
A. Yes, it is permissible for you to withdraw, or receive,
funds from your SEP-IRA, and no more than 60 days later, place such funds
in another IRA, or SEP-IRA. This is called a "rollover" and may not be
done without penalty more frequently than at one-year intervals. However,
there are no restrictions on the number of times you may make "transfers"
if you arrange to have such funds transferred between the trustees, so
that you never have possession.
9. Q. What happens if I withdraw my employer's contribution
from my IRA?
A. If you don't want to leave the employer's contribution
in your IRA, you may withdraw it at any time, but any amount withdrawn is
includable in your income. Also, if withdrawals occur before attainment
of age 59-1/2 and not on account of death or disability, you may be
subject to a penalty tax.
10. Q. May I participate in a SEP even though I'm covered by
another plan?
A. An employer may not adopt this SEP form if the employer
maintains another qualified retirement plan or has ever maintained a
qualified defined benefit plan. However, if you work for several
employers you may be covered by a SEP of one employer and a different SEP
or pension or profit-sharing plan of another employer.
Also see Questions 11 and 12.
11. Q. What happens if too much is contributed to my SEP-IRA
in one year?
A. Any contribution that is more than the yearly
limitations may be withdrawn without penalty by the due date (plus
extensions) for filing your tax return (normally April 15th), but is
includable in your gross income. Excess contributions left in your SEP-
IRA account after that time are subject to a 6% excise tax. Withdrawals
of those contributions may be taxed as premature withdrawals.
Also see Question 10.
12. Q. Do I need to file any additional forms with the IRS
because I participate in a SEP?
A. No.
13. Q. Is my employer required to provide me with information
about SEP-IRA's and the SEP agreement?
A. Yes, your employer must provide you with a copy of the
executed SEP agreement, these questions and answers, and provide a
statement each year showing any contribution to your IRA.
Also see Question 4.
14. Q. Is the financial institution where I establish my IRA
also required to provide me with information?
A. Yes, it must provide you with a disclosure statement
which contains the following items of information in plain, nontechnical
language:
(1) the statutory requirements which relate to your IRA;
(2) the tax consequences which follow the exercise of
various options and what those options are;
(3) participation eligibility rules and rules on the
deductibility and nondeductibility of retirement savings;
(4) the circumstances and procedures under which you may
revoke your IRA, including the name, address, and telephone number of
the person designated to receive notice of revocation (this
explanation must be prominently displayed at the beginning of the
disclosure statement;
(5) explanations of when penalties may be assessed against
you because of specified prohibited or penalized activities
concerning your IRA; and
(6) financial disclosure information which:
(a) either projects value growth of your IRA under
various contribution and retirement schedules, or describes
the method of computing and allocating annual earnings and
charges which may be assessed;
(b) describes whether, and for what period, the
growth projections for the plan are guaranteed, or a
statement of the earnings rate and terms on which the
projection is based;
(c) states the sales commission to be charged in each
year expressed as a percentage of $1,000; and
(d) states the proportional amount of any
nondeductible life insurance which may be a feature of your
IRA.
See Publication 590, Individual Retirement Arrangements (IRA's)
available at most IRS offices, for a more complete explanation of the
disclosure requirements.
In addition to this disclosure statement, the financial
institution is required to provide you with a financial statement each
year. It may be necessary to retain and refer to statements for more than
one year in order to evaluate the investment performance of the IRA and in
order that you will know how to report IRA distributions for tax purposes.
