Common use of Limitations and Restrictions Clause in Contracts

Limitations and Restrictions. Xxxxxxx Xxxx XXX – If you are married and have compensation, you may contribute to a Xxxx XXX established for the benefit of your spouse, regardless of whether your spouse has compensation. You must file a joint income tax return for the year for which the contribution is made. The amount you may contribute to your IRA and your spouse’s IRA is the lesser of 100 percent of your combined eligible compensation or twice the maximum contribution allowed per individual, whichever is lower. This amount may be increased with cost-of-living adjustments each year. However, you may not contribute more than the individual contribution limit to each IRA. Please refer to the attached Supplement to the Xxxx Individual Retirement Account (IRA) Disclosure Statement or consult IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) or a qualified tax professional for more information about eligibility requirements and contribution restrictions. If your spouse is age 50 or older by the close of the taxable year, and is otherwise eligible, you may make an additional contribution to your spouse’s Xxxx XXX. The maximum additional contribution is $1,000 per year. Estate Tax – Amounts payable to your spouse, as your named beneficiary, may qualify for a marital tax deduction for federal estate tax purposes. Special Tax Treatment – Capital gains treatment and 10-year income averaging authorized by IRC Sec. 402 do not apply to Xxxx XXX distributions. Prohibited Transactions – If you or your beneficiary engages in any prohibited transaction as described in the Code Section 4975(c) (such as any sale, exchange, borrowing, or leasing of any property between you and your Xxxx XXX; or any other interference with the independent status of the account), the account will lose its exemption from tax and be treated as having been distributed to you in the tax year in which you or your beneficiary engaged in the prohibited transaction. The distribution may also be subject to additional penalties including a 10% penalty tax if you have not attained age 59½. See IRS Publication 590-B for further instructions on calculating taxable gain, reporting amounts in income, and prohibited transaction penalty taxes. In addition, if you or your beneficiary use (pledge) all or any part of your Xxxx XXX as security for a loan, then the portion so pledged will be treated as if distributed to you and will be taxable to you. Your distribution may also be subject to a 10% penalty tax if you have not attained age 59½ during the year which you make such a pledge. Distributions under $10 will not be reported on IRS Form 1099-R (as allowed under IRS regulations) – However, you must still report these distributions to the IRS on your Form 1040 (as well as other forms that may be required to properly file your tax return).

Limitations and Restrictions. Xxxxxxx Spousal Xxxx XXX – If you are married and have compensation, you may contribute to a Xxxx XXX established for the benefit of your spouse, regardless of whether your spouse has compensation. You must file a joint income tax return for the year for which the contribution is made. The amount you may contribute to your IRA XXX and your spouse’s IRA XXX is the lesser of 100 percent of your combined eligible compensation or twice the maximum contribution allowed per individual, whichever is lower. This amount may be increased with cost-of-living adjustments each year. However, you may not contribute more than the individual contribution limit to each IRAXXX. Please refer to the attached Supplement to the Xxxx Individual Retirement Account (IRAXXX) Disclosure Statement or consult IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) or a qualified tax professional for more information about eligibility requirements and contribution restrictions. If your spouse is age 50 or older by the close of the taxable year, and is otherwise eligible, you may make an additional contribution to your spouse’s Xxxx XXX. The maximum additional contribution is $1,000 per year. Estate Tax – Amounts payable to your spouse, as your named beneficiary, may qualify for a marital tax deduction for federal estate tax purposes. Special Tax Treatment – Capital gains treatment and 10-year income averaging authorized by IRC Sec. 402 do not apply to Xxxx XXX distributions. Prohibited Transactions – If you or your beneficiary engages in any prohibited transaction as described in the Code Section 4975(c) (such as any sale, exchange, borrowing, or leasing of any property between you and your Xxxx XXX; or any other interference with the independent status of the account), the account will lose its exemption from tax and be treated as having been distributed to you in the tax year in which you or your beneficiary engaged in the prohibited transaction. The distribution may also be subject to additional penalties including a 10% penalty tax if you have not attained age 59½. See IRS Publication 590-B for further instructions on calculating taxable gain, reporting amounts in income, and prohibited transaction penalty taxes. In addition, if you or your beneficiary use (pledge) all or any part of your Xxxx XXX as security for a loan, then the portion so pledged will be treated as if distributed to you and will be taxable to you. Your distribution may also be subject to a 10% penalty tax if you have not attained age 59½ during the year which you make such a pledge. Distributions under $10 will not be reported on IRS Form 1099-R (as allowed under IRS regulations) – However, you must still report these distributions to the IRS on your Form 1040 (as well as other forms that may be required to properly file your tax return).