Common use of Limitations on Contributions Clause in Contracts

Limitations on Contributions. In addition to the initial contribution made at the time the Account is established, the Custodian may accept additional cash contributions from, or on behalf of, the Participant for a taxable year of the Participant except as limited below. Except in the case of a Rollover Contribution as that term is described in Code Sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3), or an employer contribution to a Simplified Employee Pension as defined in Section 408(k), only cash contributions will be accepted, and such contribution shall not exceed the lesser of $2,000 or 100% of compensation. Two applications are necessary if both spouses are establishing an IXX. The maximum combined contribution in the event of a non-working spouse is the lesser of 100% of compensation or $2250. The maximum contribution must be split between the two accounts so no more than $2000 is placed in either account. Excess Contributions A retirement savings deduction will not be allowed for contributions to an IXX in excess of the 100%-$2,000/$2,250 limits, or in the case of a Simplified Employee Pension, 15%-$30,000 limitation discussed above; nor will the deduction be allowed for any contribution made during the year in which or after the Participant reaches 70 1/2 (except in the case of a Simplified Employee Pension), or in the case of a Participant who is a non-working spouse, the year in which or after the working spouse reaches age 70 1/2. (A deductible spousal contribution can be made to the IXX of the non-working spouse as long as the non-working spouse is under age 70 1/2 and the working spouse has earned income.) Additionally, a nondeductible federal excise tax penalty in the amount of 6% of such excess contributions will be imposed on any Participant who has excess contributions in his IXX. This penalty will be imposed each year until the excess contributions are removed. An excess contribution may be removed from an IXX by withdrawing the amount of the excess or by applying the excess toward the retirement savings deduction of the Participant in a subsequent year. If an excess contribution is withdrawn from the Retirement Account, together with the net income of such excess contribution, prior to the due date for filing the Participant's income tax return for the year in which the excess contribution was made (including extensions of time), the 6% nondeductible excise tax will not be imposed, the contribution withdrawn will not be included in the Participant's gross income for the year in which received, and the federal 10% tax on premature distributions (see Distributions) will not be imposed on the excess withdrawn. The net income on such excess contribution that is withdrawn will be deemed to have been earned and is taxable in the taxable year in which such excess contribution was made. If an excess contribution is withdrawn after the due date for filing the Participant's income tax return for the taxable year (including extensions of time) and no deduction was taken for the excess portion of the contribution, the excess withdrawn will not be included in the Participant's federal gross income for the year in which received, and the 10% federal tax on premature distributions will not be imposed on the excess withdrawn, provided that the total contributions during the year, including the excess contribution, did not exceed $2,250. Any earnings of such excess contributions withdrawn after the due date for filing the Participant's income tax return (including extensions of time) will be subject to the taxes on premature distributions and will be included in federal gross income. If an excess contribution is withdrawn after the due date for filing the Participant's income tax return for the taxable year (including extensions of time) and the total contribution for the taxable year exceeded $2,250, the excess contribution that is withdrawn will be included in the Participant's federal gross income for the year in which received, the 10% federal tax on premature distributions will be imposed on the amount withdrawn, and the 6% nondeductible excise tax will be imposed for each year until the excess contribution is removed.

Limitations on Contributions. In addition to the initial contribution made at the time the Account is established, the Custodian may accept additional cash contributions from, or on behalf of, the Participant for a taxable year of the Participant except as limited below. Except Only cash contributions will be accepted, and such contribution shall not exceed the lesser of $2,000 or 100% of compensation, except in the case of a Rollover Contribution as that term is described in Code Sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3), or an employer contribution to a Simplified Employee Pension as defined in Section 408(k), only cash contributions will be accepted, and such contribution shall not exceed the lesser of $2,000 or 100% of compensation. Two applications are necessary if both spouses are establishing an IXXIRA. The maximum maxxxxm combined contribution in the event of a non-working spouse is the lesser of 100% of compensation or $22504,000. The maximum contribution must be split between the two accounts so no more than $2000 is placed in either account. Excess Contributions A retirement savings deduction will not be allowed for contributions to an IXX IRA in excess excexx of the 100%-$2,000/$2,250 100%-$2,000/$4,000 limits, or in the case of a Simplified Employee Pension, 15%-$30,000 limitation discussed above; nor will the deduction be allowed for any contribution made during the year in which or after the Participant reaches 70 1/2 (except in the case of a Simplified Employee Pension), or in the case of a Participant who is a non-working spouse, the year in which or after the working spouse reaches age 70 1/2. (A deductible spousal contribution can be made to the IXX IRA of the nonxxx-working spouse as long as the non-working spouse is under age 70 1/2 and the working spouse has earned income.) Additionally, a nondeductible federal excise tax penalty in the amount of 6% of such excess contributions will be imposed on any Participant who has excess contributions in his IXXIRA. This penalty pxxxlty will be imposed each year until the excess contributions are removed. An excess contribution may be removed from an IXX IRA by withdrawing withdxxxing the amount of the excess or by applying the excess toward the retirement savings deduction of the Participant in a subsequent year. If an excess contribution is withdrawn from the Retirement Account, together with the net income of such excess contribution, prior to the due date for filing the Participant's income tax return for the year in which the excess contribution was made (including extensions of time), the 6% nondeductible excise tax will not be imposed, the contribution withdrawn will not be included in the Participant's gross income for the year in which received, and the federal 10% tax on premature distributions (see Distributions) will not be imposed on the excess withdrawn. The net income on such excess contribution that is withdrawn will be deemed to have been earned and is taxable in the taxable year in which such excess contribution was made. If an excess contribution is withdrawn after the due date for filing the Participant's income tax return for the taxable year (including extensions of time) and no deduction was taken for the excess portion of the contribution, the excess withdrawn will not be included in the Participant's federal gross income for the year in which received, and the 10% federal tax on premature distributions will not be imposed on the excess withdrawn, provided that the total contributions during the year, including the excess contribution, did not exceed $2,2504,000. Any earnings of such excess contributions withdrawn after the due date for filing the Participant's income tax return (including extensions of time) will be subject to the taxes on premature distributions and will be included in federal gross income. If an excess contribution is withdrawn after the due date for filing the Participant's income tax return for the taxable year (including extensions of time) and the total contribution for the taxable year exceeded $2,2504,000, the excess contribution that is withdrawn will be included in the Participant's federal gross income for the year in which received, the 10% federal tax on premature distributions will be imposed on the amount withdrawn, and the 6% nondeductible excise tax will be imposed for each year until the excess contribution is removed.