Exhibit 14(a)
GENERAL SECURITIES, INCORPORATED
APPLICATION
INDIVIDUAL RETIREMENT ACCOUNT ADOPTION AGREEMENT
USE THIS FORM TO OPEN A NEW XXX, XXX R/O (CONDUIT), XXXX XXX, XXXX CONVERSION
XXX, SEP XXX, AND/OR SAR SEP. If you have an existing XXX of one of the types
listed above invested in General Securities, Inc., you may open an add'l XXX of
a different type by completion of a shorter form, "AUTHORIZATION TO ADD AN XXX".
(Do not use this application to open a SIMPLE XXX or Education XXX.) You may use
this form to establish only one type of XXX. For Xxxx IRAs, only annual
contributions may be accepted in a non-deductible Contribution Xxxx XXX account.
If a conversion, rollover or transfer from a regular XXX to a Xxxx XXX is being
made, only amounts converted, rolled over or transferred during the same year
(not annual contributions) will be accepted in the Xxxx XXX account.
For information or to request forms call 0-000-000-0000.
Send all completed documentation to: General Securities, Inc., c/o IFTC, X.X.
Xxx 000000, Xxxxxx Xxxx, XX 00000-0000
PARTICIPANT INFORMATION:
------------------------------ ------------------------------
Name Social Security Number
------------------------------ ------------------------------
Address Daytime phone number & Home phone #
------------------------------ ------------------------------
City State Zip Date of Birth
---------------------------------- ----------------------------------
Name and firm of representative Representative's phone number
NEW ACCOUNT INFORMATION
PLEASE CHECK-XXXX XXX TYPE, CHECK-XXXX INVESTMENT TYPE, AND COMPLETE REQUESTED
INVESTMENT INFORMATION.
- XXX TYPE
-------- DOLLARS CONTRIBUTION SPECIAL
- INVESTMENT TYPE INVESTED TAX YEAR FORM
--------------- ------- -------- ----
- 1) Regular XXX
- XXX deductible or non-deductible Contribution $______ ______
- Direct Transfer from existing XXX $______ *
- Rollover within 60 days of receipt from a regular XXX $______
- 2) Rollover XXX (Conduit)
- Direct Rollover payable to General Securities, Inc. from 403(b) or employer
qualified plan $______ *
- Direct Transfer from existing Conduit XXX $______ *
- Rollover within 60 days of receipt from 403(b) or qualified plan $______
- employer qualified plan
- 3) Xxxx XXX
- Contributory Xxxx XXX non-deductible Contribution $______ ______
- Direct Transfer from existing Xxxx XXX with original start date _______ $______ *
- Rollover within 60 days from Xxxx XXX with original start date _______ $______
- 4) Xxxx Converted XXX
- Convert my existing GSI regular XXX to a Xxxx Converted XXX. I
elect not to have income tax withheld unless this box is checked:
______withhold at 10% (or _______%) $______
- Convert my existing regular XXX with another custodian
to a GSI Xxxx Converted XXX $______ *
- Direct Transfer from existing Xxxx Converted XXX
with original start date of ________ $______ *
- Rollover within 60 days from Xxxx Converted XXX
with original start date of ________ $______
- 5) SEP XXX
- SEP Employer (or self employed) Contribution $______ ______
- Direct Transfer from existing SEP XXX $______ *
- Rollover within 60 days of receipt from a SEP XXX $______
- 6) SAR SEP XXX plan established before 1997
- SEP Employee Salary Reduction $______ ______
- Direct Transfer from existing SAR SEP XXX $______ *
- Rollover within 60 days of receipt from a SAR SEP XXX $______
CUSTODIAN'S FEE: $12.00 PER YEAR. THIS AMOUNT MAY BE DEDUCTED FROM
YOUR XXX IF NOT PAID SEPARATELY. MAKE CHECK PAYABLE TO GENERAL
SECURITIES, INC.
*Complete and Enclose "Authorization for XXX Transfer, Direct Rollover & Conversion".
DESIGNATION OF BENEFICIARY(IES):
I designate the individual(s) named below the Beneficiary(ies) of this XXX. I
revoke all prior XXX beneficiary designations, if any, made by me for these
assets. I understand that I may change or add Beneficiaries at any time by
written notice to the Custodian. If I am not survived by any Beneficiary, my
Beneficiary shall be my estate. (If no percentage is specified, primary
beneficiaries will share the account balance equally.)
Primary Name________________________________ % of acct.____% SS#_________
Beneficiary(ies) Birthdate __________ Relationship: ______________________
Address____________________________________
Name________________________________ % of acct.____% SS#_________
Birthdate __________ Relationship: ______________________
Address____________________________________
Contingent Name________________________________ % of acct.____% SS#_________
Beneficiary(ies) Birthdate __________ Relationship: ______________________
Address____________________________________
Name________________________________ % of acct.____% SS#_________
Birthdate __________ Relationship: ______________________
Address____________________________________
SPOUSAL CONSENT:
(This section should be reviewed if the accountholder is married, is a resident
of a community property or marital property state, and designates a beneficiary
other than the spouse. It is the accountholder's responsibility to determine
if this section applies. The accountholder may need to consult with legal
counsel. Neither the Custodian nor the Sponsor are liable for any consequences
resulting from a failure of the accountholder to provide proper spousal
consent.)
I am the spouse of the above named accountholder. I acknowledge that I
have received a full and reasonable disclosure of my spouse's property and
financial obligations. Due to any possible consequences of giving up my
community property interest in this XXX, I have been advised to see a tax
professional or legal advisor.
I hereby consent to the beneficiary designation(s) indicated above. I
assume full responsibility for any adverse consequence that may result. No
tax or legal advice was given to me by the Custodian or Sponsor.
_________________________________________ ___________
SIGNATURE OF SPOUSE DATE
_________________________________________ ___________
SIGNATURE OF WITNESS FOR SPOUSE DATE
CERTIFICATION AND SIGNATURES
If the Depositor has indicated a Regular XXX Rollover or Direct Rollover
above, Depositor certifies that the contribution does not include any
employee contributions to any qualified plan (other than accumulated
deductible employee contributions) or 403(b) arrangement; that any assets
transferred in kind by Depositor are the same assets received by the
Depositor in the distribution being rolled over; if the distribution is
from another Regular XXX, that Depositor has not made another rollover
within the one-year period immediately preceding this rollover; that such
distribution was received within 60 days of making the rollover to this
Account; and that no portion of the amount rolled over is a required
minimum distribution under the required distribution rules.
If Depositor has indicated a Conversion, Transfer or Rollover of an
existing Regular XXX to a Xxxx XXX, Depositor acknowledges that the amount
converted will be treated as taxable income (except for prior nondeductible
contributions) for federal income tax purposes. If Depositor has indicated
a Rollover from another Xxxx XXX, Depositor certifies that the information
given above is correct and acknowledges that adverse tax consequences or
penalties could result from giving incorrect information.
Depositor has received and read the applicable sections of the Disclosure
Statement relating to this Account (including the Custodian's fee
schedule), the Custodial Account document, and the "Instructions"
pertaining to this Adoption Agreement.
Depositor acknowledges and understands that the beneficiaries named herein
may be changed or revoked at any time by filing a new designation in
writing with the Custodian. All forms must be acceptable to the Custodian
and dated and signed by the Depositor.
___________________________________ CUSTODIAN ACCEPTANCE. Investors
Signature of Depositor Fiduciary Trust Company will accept
appointment as Custodian of the
Depositor's Account. However, this
Agreement is not binding upon the
Date ______________________________ Custodian until the Depositor has
received a statement of the
transaction. Receipt by the
Depositor of a confirmation of the
purchase of the Fund shares
indicated above will serve as
notification of Investors Fiduciary
Trust Company's acceptance of
appointment as Custodian of the
Depositor's Account.
INVESTORS FIDUCIARY TRUST COMPANY,
CUSTODIAN
Signature of Custodian
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must sign the Adoption Agreement. Until the
Depositor reaches the age of majority, the parent or guardian will exercise the
powers and duties of the Depositor. (If guardian, provide a copy of letters of
appointment.)
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
GENERAL SECURITIES, INCORPORATED
AUTHORIZATION TO ADD AN XXX
USE THIS FORM TO OPEN AN ADDITIONAL XXX IF YOU HAVE AN EXISTING IFTC XXX
INVESTED IN GENERAL SECURITIES, INC.
YOU MAY USE THIS FORM TO ESTABLISH ONLY ONE TYPE OF XXX. FOR XXXX IRAS, ONLY
ANNUAL CONTRIBUTIONS MAY BE ACCEPTED IN A NON-DEDUCTIBLE CONTRIBUTION XXXX XXX
ACCOUNT. IF A CONVERSION, ROLLOVER OR TRANSFER FROM A REGULAR XXX TO A XXXX XXX
IS BEING MADE, ONLY AMOUNTS CONVERTED, ROLLED OVER OR TRANSFERRED DURING THE
SAME YEAR (NOT ANNUAL CONTRIBUTIONS) WILL BE ACCEPTED IN THE XXXX XXX ACCOUNT.
REQUEST FOR ADDITIONAL XXX
PLEASE OPEN AN ADDITIONAL INDIVIDUAL RETIREMENT ACCOUNT (XXX) FOR WHICH I
AUTHORIZE THE IDENTICAL MUTUAL FUND FOR INVESTMENT, ADDRESS, ACCOUNTHOLDER
BIRTHDATE, SOCIAL SECURITY NUMBER, AND BENEFICIARY INFORMATION AS THAT SHOWN ON
THE EXISTING ACCOUNT REFERENCED BELOW. FOR INFORMATION ON HOW TO MAKE FUTURE
CHANGES TO YOUR XXX, CALL 0-000-000-0000.
EXISTING ACCOUNT INFORMATION
EXISTING XXX ACCOUNT NUMBER __________________ FUND: GENERAL SECURITIES,
INCORPORATED
NAME (ON EXISTING XXX)___________________ SOCIAL SECURITY # ____________
TELEPHONE #_______________
IF CONVERTING A REGULAR XXX TO A XXXX XXX, I ELECT NOT TO HAVE FEDERAL INCOME
TAX WITHHELD UNLESS THIS BOX IS CHECKED:
____ WITHHOLD AT 10% (OR _____% {INSERT PERCENTAGE})
NEW ACCOUNT INVESTMENT INFORMATION
PLEASE CHECK-XXXX XXX TYPE, CHECK-XXXX INVESMENT TYPE, AND COMPLETE REQUESTED
INVESTMENT INFORMATION.
- XXX TYPE
-------- DOLLARS CONTRIBUTION SPECIAL
- INVESTMENT TYPE INVESTED TAX YEAR FORM
--------------- ------- -------- ----
- Regular XXX
- XXX deductible or non-deductible Contribution $______ ______
- Direct Transfer from existing XXX $______ *
- Rollover from a regular XXX $______ ______
- Rollover XXX (Conduit)
- Direct Rollover payable to General Securities, Inc. from 403(b) or qualified plan $______ *
- Direct Transfer from existing Conduit XXX $______ *
- Rollover from 403(b) or employer qualified plan $______
- Xxxx Contributory XXX
- Xxxx XXX non-deductible Contribution $______ ______
- Direct Transfer from existing Xxxx Contributory XXX with original start date _________ $______ *
- Rollover within 60 days from Xxxx Contributory XXX with original start date _________ $______
- Xxxx Converted XXX
- Convert my existing General Securities, Inc. regular XXX to a Xxxx Converted XXX $______ *
- Convert my existing regular XXX with another custodian
to a General Securities, Inc. Xxxx Converted XXX $______ *
- Direct Transfer from existing Xxxx Converted XXX with $______ *
original start date of _________
- Rollover within 60 days from Xxxx Converted XXX with $______
original start date of _________
- SEP XXX
- SEP Employer (or self employed) Contribution $______ ______
- Direct Transfer from existing SEP XXX $______ *
- Rollover within 60 days of receipt from a SEP XXX $______
- SAR SEP XXX plan established before 1997
- SEP Employee Salary Reduction $______ ______
- Direct Transfer from existing SAR SEP XXX $______ *
- Rollover within 60 days of receipt from a SAR SEP XXX $______
Custodian's Fee: $12.00 PER YEAR. This amount may be deducted from
your XXX if not paid separately. Make check payable to General $______
Securities, Inc.
* Complete and enclose "Authorization for XXX Transfer, Direct Rollover & Conversion".
CERTIFICATION AND SIGNATURES
If Depositor has indicated a Regular XXX Rollover or Direct Rollover above,
Depositor certifies that the contribution does not include any employee
contributions to any qualified plan (other than accumulated deductible
employee contributions) or 403(b) arrangement; that any assets rolled over by
Depositor are the same assets received by the Depositor in the distribution
being rolled over; if the distribution is from another Regular XXX, that
Depositor has not made another rollover within the one-year period
immediately preceding this rollover; that such distribution was received
within 60 days of making the rollover to this Account; and that no portion of
the amount rolled over is a required minimum distribution under the required
distribution rules.
If Depositor has indicated a Conversion, Transfer or Rollover of an
existing Regular XXX to a Xxxx XXX, Depositor acknowledges that the amount
converted will be treated as taxable income (except for prior nondeductible
contributions) for federal income tax purposes. If Depositor has indicated a
Rollover from another Xxxx XXX, Depositor certifies that the information given
above is correct and acknowledges that adverse tax consequences or penalties
could result from giving incorrect information.
Depositor has received and read the applicable sections of the
Disclosure Statement relating to this Account (including the Custodian's fee
schedule), the Custodial Account document, and the "Instructions" pertaining to
this Adoption Agreement.
Depositor acknowledges and understands that the beneficiaries named
herein may be changed or revoked at any time by filing a new designation in
writing with the Custodian. All forms must be acceptable to the Custodian and
dated and signed by the Depositor.
CUSTODIAN ACCEPTANCE. Investors
Fiduciary Trust Company will
accept appointment as Custodian of
________________________________________ the Depositor's Account. However,
Signature of Depositor this Agreement is not binding upon
the Custodian until the Depositor
has received a statement of the
transaction. Receipt by the
Depositor of a confirmation of the
purchase of the Fund shares
indicated above will serve as
notification of Investors Fiduciary
Trust Company's acceptance of
appointment as Custodian of the
Depositor's Account.
Date _________________________ INVESTORS FIDUCIARY TRUST COMPANY,
CUSTODIAN
Signature of Custodian
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must sign the Adoption Agreement. Until the
Depositor reaches the age of majority, the parent or guardian will exercise
the powers and duties of the Depositor. (If guardian, provide copy of letters
of appointment.)
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
GENERAL SECURITIES, INCORPORATED
AUTHORIZATION FOR XXX TRANSFER, DIRECT ROLLOVER & CONVERSION
You may use this form to effect a direct transfer from an existing XXX to an XXX
with General Securities, Inc.; a direct rollover from a Qualified Plan or 403(b)
to an XXX; or a conversion from a regular XXX to a Xxxx XXX. The assets may be
from another fund family. Make sure you attach a copy of your existing account
statement, any other forms required by your current custodian/trustee, and an
XXX Application or an Authorization to Add an XXX form if you do not have an
existing XXX of the type necessary to receive the assets. Send all completed
documentation to: General Securities, Inc., X.X. Xxx 000000, Xxxxxx Xxxx, XX
00000-0000.
PARTICIPANT INFORMATION:
___________________________________ ______________________________
Name Social Security Number
___________________________________ ______________________________
Address Daytime phone number
___________________________________ ______________________________
Representative's phone number
_____________________________________________________________________
Name and firm of representative
CURRENT CUSTODIAN ACCOUNT INFORMATION:
___________________________________ ______________________________
___________________________________ ______________________________
Custodian Name Current Fund Name/Class
_____________________________________________________________________
Custodian Address Current Account Number
_____________________________________________________________________
Additional Fund Name/Class
_____________________________________________________________________
Custodian Telephone Number Additional Account Number
INSTRUCTIONS TO MY CURRENT CUSTODIAN
I have established a General Securities, Inc. Individual Retirement Account with
Investors Fiduciary Trust Company as Custodian. Please transfer-in-kind or
withdraw assets from my account in your custody in the following manner and send
a check payable to Investors Fiduciary Trust Company (IFTC) Individual
Retirement Account FBO my name and social security number. Mail to IFTC, C/O
General Securities, Inc., P. O. Xxx 000000, Xxxxxx Xxxx, XX 00000-0000.
TYPE OF ACCOUNT TO BE TRANSFERRED (CHECK ONE)*
_IRA
_Conduit XXX (direct rollover from my current qualified plan or 403(b))
_Roth Contributory Account (Account start date __________ )
_Roth Conversion Account (Account start date ___________ )
_SEP XXX
_SAR-SEP XXX (For plans established prior to 1/1/97)
_Employer Qualified Plan, 403(b), 401(k), etc.
*Note: You may not transfer from a Xxxx XXX to a Regular XXX or a simplified
employee pension (SEP) or SAR-SEP XXX. Transfers to a Regular XXX or SEP XXX
may be made from another Regular XXX or SEP XXX or a SIMPLE XXX account (but not
until at least 2 years after the first contribution to your SIMPLE XXX account).
Transfers to a Xxxx XXX are possible only from another Xxxx XXX or from a
Regular XXX, not from other types of tax-deferred accounts. A conversion from a
Regular XXX will trigger federal income tax on the taxable amount converted from
the Regular XXX. If a conversion, rollover or transfer from a Regular XXX to a
Xxxx XXX is being made, only amounts converted, rolled over or transferred
during the same year (not annual contributions) will be accepted in the Xxxx XXX
account. A separate Xxxx XXX must be established to hold such amounts from a
different tax year. Annual contributions may not be deposited in a Xxxx XXX
holding such converted, rolled over or transferred amounts.
PORTION OF ACCOUNT TO BE TRANSFERRED (CHECK ONE):
__All of the assets in my account OR $___________ or ___ % of my account.
__Transfer of General Securities, Inc. shares in kind. Check here to
authorize a transfer-in-kind of General Securities, Inc. shares only from your
existing trustee/custodian to Investors Fiduciary Trust Company.
IF YOU ARE TRANSFERRING A CERTIFICATE OF DEPOSIT XXX CHOOSE ONE OPTION:
_Liquidate prior to maturity date. I am aware that I may incur a penalty for
early withdrawal.
_Liquidate at maturity. (Maturity date must be within 60 days. If the maturity
date is less than 15 days from the date of this request, you may want to contact
your custodian bank to prevent automatic reinvestment of the account.)
INSTRUCTIONS TO INVESTORS FIDUCIARY TRUST COMPANY:
Invest my assets into the XXX and investment type indicated below.
XXX TYPES: (CHOOSE ONE) INVESTMENT TYPES: (CHOOSE ONE)
__Regular XXX
__Direct Transfer from existing XXX
__Rollover XXX (Conduit)
__Direct Rollover payable to IRTC from 403(b)
or employer qualified plan
__Direct Transfer from existing Conduit XXX
__Roth Contributory XXX
__Direct Transfer from existing Xxxx XXX--
original start date __________
__Roth Converted XXX
__Convert my existing regular XXX to a Xxxx
Converted XXX. I elect not to have federal
income taxes withheld unless this box is
checked: _______withhold at 10% (or ____%)
__Direct Transfer from existing Xxxx
Converted XXX--original start date ________
__SEP XXX
__Direct Transfer from existing SEP XXX
__SAR SEP XXX plan established before 1997
__Direct Transfer from existing SAR SEP XXX
SIGNATURE OF DEPOSITOR
The undersigned certifies to the present XXX custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial Account
meeting the requirements of Internal Revenue Code Section 408(a) or 408A (as the
case may be) to which assets will be transferred, and certifies to Investors
Fiduciary Trust Company that the XXX from which assets are being transferred
meets the requirements of Internal Revenue Code Section 408(a) or 408A (as the
case may be).
_________________________________ ___________________________________
Date Signature of Depositor
SIGNATURE GUARANTEE (only if required by current Custodian or Trustee)
Signature guaranteed by:___________________________________________________
Name of Bank or Dealer Firm
___________________________________________________
Signature of Officer and Title
ACCEPTANCE BY NEW CUSTODIAN
Investors Fiduciary Trust Company agrees to accept transfer of the above amount
for deposit to the Depositor's Investors Fiduciary Trust Company Individual
Retirement Custodial Account, and requests the liquidation and transfer of
assets as indicated above.
INVESTORS FIDUCIARY TRUST COMPANY
Signature of Custodian
GENERAL SECURITIES,
INCORPORATED
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
INFORMATION KIT
(EFFECTIVE JANUARY 1, 1998)
CAREFULLY READ ALL THE ENCLOSED INFORMATION INCLUDING THE DISCLOSURE STATEMENT
INSTRUCTIONS FOR -
NEW APPLICATION:
1. Complete Application - Individual Retirement Account Adoption
Agreement
2. Attach Custodian's Fee of $12.00
3. Return in the self-addressed envelope provided
TRANSFER OF FUNDS
1. Complete Application - Individual Retirement Account Adoption
Agreement
2. Complete Authorization for XXX Transfer, Direct Rollover &
Conversion
3. Attach Custodian's Fee of $12.00
4. Return in the enclosed self-addressed envelope
AN EXISTING GENERAL SECURITIES, INC. XXX CLIENT
1. Complete Authorization to ADD an XXX
2. Complete Authorization for XXX Transfer, Direct Rollover &
Conversion if specified on Authorization to Add an XXX form
3. Attach Custodian's Fee of $12.00
4. Return in the enclosed self-addressed envelope
GENERAL SECURITIES,
INCORPORATED
UNIVERSAL XXX INFORMATION KIT
INTRODUCTION
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("XXX") has always provided an
attractive means to save money for the future on a tax-advantaged basis.
Recent changes to Federal tax law have now made the XXX an even more flexible
investment and savings vehicle. Among the new changes is the creation of the
Xxxx Individual Retirement Account ("Xxxx XXX"), which will be available for
use after January 1, 1998. Under a Xxxx XXX, the earnings and interest on an
individual's nondeductible contributions grow without being taxed, and
distributions may be tax-free under certain circumstances. Most taxpayers
(except for those with very high income levels) will be eligible to
contribute to a Xxxx XXX. A Xxxx XXX can be used instead of a Regular XXX,
to replace an existing Regular XXX, or complement a Regular XXX you wish to
continue maintaining.
Taxpayers with adjusted gross income of up to $100,000 are eligible
to convert existing IRAs into Xxxx IRAs. The details on conversion are found
in the description of Xxxx IRAs in this booklet.
Congress has also made significant changes to Regular IRAs. First,
Congress increased the income levels at which IRA holders who participate in
employer-sponsored retirement plans can make deductible Regular XXX
contributions. Also the rules for deductible contributions by an XXX xxxxxx
whose spouse is a participant in an employer-sponsored retirement plan have
been liberalized. Second, the 10% penalty tax for premature withdrawals
(before age 59 1/2) will no longer apply in the case of withdrawals to pay
certain higher education expenses or certain first-time homebuyer expenses.
WHAT'S IN THIS KIT?
In this Kit you will find detailed information about Xxxx IRAs and
about the changes that have been made to Regular IRAs. You will also find
everything you need to establish and maintain either a Regular or Xxxx XXX,
or to convert all or part of an existing Regular XXX to a Xxxx XXX.
The first section of this Kit contains the instructions and forms
you will need to open a new Regular or Xxxx XXX, to transfer from another XXX
to a General Securities, Incorporated (GSI) XXX, or to convert a Regular XXX
to a Xxxx XXX.
The second section of this Kit contains our Universal XXX
Disclosure Statement. The Disclosure Statement is divided into three parts:
-Part One describes the basic rules and benefits which are
specifically applicable to your Regular XXX.
-Part Two describes the basic rules and benefits which are
specifically applicable to your Xxxx XXX.
-Part Three describes important rules and information applicable to
all IRAs.
The third section of this Kit contains the Universal XXX Custodial
Agreement. The Custodial Agreement is also divided into three parts:
-Part One contains provisions specifically applicable to Regular IRAs.
-Part Two contains provisions specifically applicable to Xxxx IRAs.
-Part Three contains provisions applicable to all IRAs (Regular and
Xxxx).
This Universal Individual Retirement Custodial Account Kit contains
information and forms for both Regular IRAs and Xxxx IRAs. However, you may
use the Adoption Agreement in this Kit to establish only one Regular XXX or
one Xxxx XXX; separate Adoption Agreements must be completed if you want to
establish multiple (Xxxx or Regular) XXX accounts.
1
WHAT'S THE DIFFERENCE BETWEEN A REGULAR XXX AND A XXXX XXX?
With a Regular XXX, an individual can contribute up to $2,000 per
year and may be able to deduct the contribution from taxable income, reducing
income taxes. Taxes on investment growth and dividends are deferred until the
money is withdrawn. Withdrawals are taxed as additional ordinary income when
received. Nondeductible contributions, if any, are withdrawn tax-free.
Withdrawals before age 59 1/2 are assessed a 10% penalty in addition to
income tax, unless an exception applies.
With a Xxxx XXX, the contribution limits are essentially the same as
Regular IRAs, but there is no tax deduction for contributions. All dividends
and investment growth in the account are tax-free. Most important with a Xxxx
XXX: there is NO INCOME TAX on qualified withdrawals from your Xxxx XXX.
Additionally, unlike a Regular XXX, there is no prohibition on making
contributions to Xxxx IRAs after turning age 70 1/2, and there's no requirement
that you begin making minimum withdrawals at that age.
The following chart highlights some of the major differences between a
Regular XXX and a Xxxx XXX:
-----------------------------------------------------------------------------------------------------------------------------
CHARACTERISTICS REGULAR XXXX
XXX XXX
-----------------------------------------------------------------------------------------------------------------------------
ELIGIBILITY Individuals (and their spouses) who Individuals (and their spouses) who
receive compensation receive compensation
Individuals age 70 1/2 and over MAY NOT Individuals age 70 1/2 and over
contribute MAY contribute
-----------------------------------------------------------------------------------------------------------------------------
TAX TREATMENT OF CONTRIBUTIONS Subject to limitations, contributions No deduction permitted for
are deductible amounts contributed
-----------------------------------------------------------------------------------------------------------------------------
CONTRIBUTION LIMITS Individuals may contribute up to $2,000 Individuals may generally contribute up to
annually (or 100% of compensation, if $2,000 (or 100% of compensation, if less)
less) Ability to contribute phases out at income
Deductibility depends on income level for levels of $95,000 to $110,000 (individual
individuals who are active participants taxpayer) and $150,000 to $160,000
in an employer-sponsored retirement plan (married taxpayers)
Overall limit for contributions to ALL
IRAs (Regular and Xxxx combined) is
$2,000 annually (or 100% of compensation,
if less)
-----------------------------------------------------------------------------------------------------------------------------
EARNINGS Earnings and interest are not taxed when Earnings and interest are not taxed when
received by your XXX received by your XXX
-----------------------------------------------------------------------------------------------------------------------------
ROLLOVER/CONVERSIONS Individual may rollover amounts held in Rollovers from other Xxxx IRAs or Regular
employer-sponsored retirement IRAs ONLY
arrangements (401(k), SEP XXX, etc.) Amounts rolled over (or converted) from
tax free to Regular XXX another Regular XXX are subject to
income tax in the year rolled over or
converted
Tax on amounts rolled over or converted in
1998 is spread over four year period
(1998-2001)
-----------------------------------------------------------------------------------------------------------------------------
WITHDRAWALS Total (principal + earnings) taxable as Not taxable as long as a QUALIFIED
income in year withdrawn (except for any DISTRIBUTION--generally, account open for
prior non-deductible contributions) 5 years, and age 59 1/2
Minimum withdrawals must begin after age Minimum withdrawals NOT REQUIRED after
70 1/2 age 70 1/2
-----------------------------------------------------------------------------------------------------------------------------
IS A XXXX OR A REGULAR XXX RIGHT FOR ME?
We cannot act as your legal or tax advisor and so we cannot tell you
which kind of XXX is right for you. The information contained in this Kit is
intended to provide you with the basic information and material you will need if
you decide whether a Regular or Xxxx XXX is better for you, or if you want to
convert an existing Regular XXX to a Xxxx XXX. We suggest that you consult with
your accountant, lawyer or other tax advisor, or with a qualified financial
planner, to determine whether you should open a Regular or Xxxx XXX or convert
any or all of an existing Regular XXX to a Xxxx XXX. Your tax advisor can also
advise you as to the state tax consequences that may affect whether a Regular or
Xxxx XXX is right for you.
2
SEPS AND SIMPLES.
The GSI Regular XXX may be used in connection with a simplified
employee pension (SEP) plan maintained by your employer. To establish a Regular
XXX as part of your Employer's SEP plan, complete the Adoption Agreement for a
Regular XXX, indicating in the proper box that the XXX is part of a SEP plan. A
Xxxx XXX should NOT be used in connection with a SEP plan.
A Xxxx XXX may NOT be used as part of an employer SIMPLE XXX plan. A
Regular XXX may be used, but only after an individual has been participating for
two or more years (for the first two years, only a special SIMPLE XXX may be
used). SIMPLE XXX plans were added by the 1996 tax law to provide an easy and
inexpensive way for small employers to provide retirement benefits for their
employees. If you are interested in a SIMPLE XXX plan at your place of
employment, call or write to the number or address given at the end of the
Disclosure Statement portion of this Kit.
OTHER POINTS TO NOTE.
The Disclosure Statement in this Kit provides you with the basic
information that you should know about GSI Regular IRAs and Xxxx IRAs. The
Disclosure Statement provides general information about the governing rules for
these IRAs and the benefits and features offered through each type of XXX.
However, the Adoption Agreement and the Custodial Agreement, are the primary
documents controlling the terms and conditions of your personal Regular or Xxxx
XXX, and these shall govern in the case of any difference with the Disclosure
Statement.
YOU or YOUR when used throughout this Kit refer to the person for whom
the Regular or Xxxx XXX is established. A XXXX XXX is either a GSI Xxxx XXX or
any Xxxx XXX established by any other financial institution. A REGULAR XXX is
any non-Xxxx XXX offered by GSI or any other financial institution.
3
GENERAL SECURITIES, INCORPORATED
UNIVERSAL XXX DISCLOSURE STATEMENT
PART ONE: DESCRIPTION OF REGULAR IRAS
SPECIAL NOTE
Part One of the Disclosure Statement describes the rules applicable
to Regular IRAs beginning January 1, 1998. IRAs described in these pages are
called "Regular IRAs" to distinguish them from the new "Xxxx IRAs" first
available starting in 1998. Xxxx IRAs are described in Part Two of this
Disclosure Statement.
For Regular XXX contributions for 1997 (including contributions
made up to April 15, 1998 but designated as contributions for 1997), there
are different rules for determining the deductibility of your contribution on
your federal tax return. For contributions for 1997, the "active
participant" limits on deductibility (described below) apply if EITHER spouse
is an active participant in an employer-sponsored plan. Also, the adjusted
gross income ("AGI") levels for partially deductible or nondeductible Regular
XXX contributions (described below) are lower for 1997 ($25,000 for single
taxpayers, with no deduction if your AGI is above $35,000; and $40,000 for
married taxpayers filing jointly, with no deduction if your AGI is above
$50,000). Also, the exceptions to the 10% early withdrawal penalty for
withdrawals to pay certain higher education or first-time homebuyer
expenses do not apply to withdrawals in 1997.
This Part One of the Disclosure Statement describes Regular IRAs.
It does not describe Xxxx IRAs, a new type of XXX available starting in 1998.
Contributions to a Xxxx XXX are not deductible (regardless of your AGI), but
withdrawals that meet certain requirements are not subject to federal income
tax, so that dividends and investment growth on amounts held in the Xxxx XXX
can escape federal income tax. Please see Part Two of this Disclosure
Statement if you are interested in learning more about Xxxx IRAs.
Regular IRAs described in this Disclosure Statement may be used as
part of a simplified employee pension (SEP) plan maintained by your employer.
Under a SEP your employer may make contributions to your Regular XXX, and
these contributions may exceed the normal limits on Regular XXX
contributions. This Disclosure Statement does not describe IRAs established
in connection with a SIMPLE XXX program maintained by your employer.
Employers provide special explanatory materials for accounts established as
part of a SIMPLE XXX program. Regular IRAs may be used in connection with a
SIMPLE XXX program, but for the first two years of participation a special
SIMPLE XXX (not a Regular XXX) is required.
YOUR REGULAR XXX
This Part One contains information about your Regular Individual
Retirement Custodial Account with Investors Fiduciary Trust Company as
Custodian. A Regular XXX gives you several tax benefits. Earnings on the
assets held in your Regular XXX are not subject to federal income tax until
withdrawn by you. You may be able to deduct all or part of your Regular XXX
contribution on your federal income tax return. State income tax treatment
of your Regular XXX may differ from federal treatment; ask your state tax
department or your personal tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for
important additional information, including information on how to revoke your
Regular XXX, investments and prohibited transactions, fees and expenses, and
certain tax requirements.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A REGULAR XXX?
You are eligible to establish and contribute to a Regular XXX for a
year if:
-You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for XXX purposes.
-You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO A REGULAR XXX FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2,
you can contribute to a separate Regular XXX for your spouse, regardless of
whether your spouse had any compensation or earned income in that year. This
is called a "spousal XXX." To make a contribution to a Regular XXX for your
spouse, you must file a joint tax return for the year with your spouse. For
a spousal XXX, your spouse must set up a different Regular XXX, separate from
yours, to which you contribute.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO A REGULAR XXX?
You may make a contribution to your existing Regular XXX or
establish a new Regular XXX for a taxable year by the due date (NOT including
any extensions) for your federal income tax return for the year. Usually
this is April 15 of the following year.
HOW MUCH CAN I CONTRIBUTE TO MY REGULAR XXX?
For each year when you are eligible (see above), you can contribute
up to the lesser of $2,000 or 100% of your compensation (or earned income, if
you are self-employed). However, under the tax laws, all or a portion of
your contribution may not be deductible.
If you and your spouse have spousal Regular IRAs, each spouse may
contribute up to $2,000 to his or her XXX for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is
less than $4,000, the spouse with the higher amount of compensation may
contribute up to that spouse's compensation amount, or $2,000 if less. The
spouse with the lower compensation amount may contribute any amount up to
that spouse's compensation plus any excess of the other spouse's compensation
over the other spouse's XXX contribution. However, the maximum contribution
to either spouse's Regular XXX is $2,000 for the year.
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If you (or your spouse) establish a new Xxxx XXX and make
contributions to both your Regular XXX and a Xxxx XXX, the combined limit on
contributions to both your (or your spouse's) Regular XXX and Xxxx XXX for a
single calendar year is $2,000.
HOW DO I KNOW IF MY CONTRIBUTION IS TAX DEDUCTIBLE?
The deductibility of your contribution depends upon whether you are
an active participant in any employer-sponsored retirement plan. If you are
not an active participant, the entire contribution to your Regular XXX is
deductible.
If you are an active participant in an employer-sponsored plan,
your Regular XXX contribution may still be completely or partly deductible on
your tax return. This depends on the amount of your income (see below).
Similarly, the deductibility of a contribution to a Regular XXX for
your spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active
participant, the contribution to your spouse's Regular XXX will be
deductible. If your spouse is an active participant, the Regular XXX
contribution will be completely, partly or not deductible depending upon your
combined income.
An exception to the preceding rules applies to high-income married
taxpayers, where one spouse is an active participant in an employer-sponsored
retirement plan and the other spouse is not. A contribution to the
non-active participant spouse's Regular XXX will be only partly deductible at
an adjusted gross income level on the joint tax return of $150,000, and the
deductibility will be phased out as described below over the next $10,000 so
that there will be no deduction at all with an adjusted gross income level of
$160,000 or higher.
HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS?
Your (or your spouse's) Form W-2 should indicate if you (or your
spouse) were an active participant in an employer-sponsored retirement plan
for a year. If you have a question, you should ask your employer or the plan
administrator.
In addition, regardless of income level, your spouse's "active
participant" status will not affect the deductibility of your contributions
to your Regular XXX if you and your spouse file separate tax returns for the
taxable year and you lived apart at all times during the taxable year.
WHAT ARE THE DEDUCTION RESTRICTIONS FOR ACTIVE PARTICIPANTS?
If you (or your spouse) are an active participant in an employer
plan during a year, the contribution to your Regular XXX (or your spouse's
Regular XXX) may be completely, partly or not deductible depending upon your
filing status and your amount of adjusted gross income ("AGI"). If AGI is
any amount up to the lower limit, the contribution is deductible. If your
AGI falls between the lower limit and the upper limit, the contribution is
partly deductible. If your AGI falls above the upper limit, the contribution
is not deductible.
FOR ACTIVE PARTICIPANTS - 1998
-----------------------------------------------------------------------------------
IF YOU ARE IF YOU ARE THEN YOUR REGULAR
SINGLE MARRIED FILING JOINTLY XXX CONTRIBUTION IS
-----------------------------------------------------------------------------------
Up to Up to FULLY
Lower Limit Lower Limit DEDUCTIBLE
($30,000 for 1998) ($50,000 for 1998)
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ADJUSTED More than Lower Limit More than Lower Limit PARTLY
GROSS but less than but less than DEDUCTIBLE
INCOME Upper Limit Upper Limit
(AGI) LEVEL ($40,000 for 1998) ($60,000 for 1998)
-----------------------------------------------------------------------------------
Upper Limit or more Upper Limit or more NOT
DEDUCTIBLE
-----------------------------------------------------------------------------------
The Lower Limit and the Upper Limit will change for 1999 and later years.
The Lower Limit and Upper Limit for these years are shown in the following
table. Substitute the correct Lower Limit and Upper Limit in the table above
to determine deductibility in any particular year. (Note: if you are married
but filing separate returns, your Lower Limit is always zero and your Upper
Limit is always $10,000).
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TABLE OF LOWER AND UPPER LIMITS
--------------------------------------------------------------------------------
YEAR SINGLE MARRIED
FILING JOINTLY
--------------------------------------------------------------------------------
LOWER LIMIT UPPER LIMIT LOWER LIMIT UPPER LIMIT
--------------------------------------------------------------------------------
1999 $31,000 $41,000 $51,000 $61,000
2000 $32,000 $42,000 $52,000 $62,000
2001 $33,000 $43,000 $53,000 $63,000
2002 $34,000 $44,000 $54,000 $64,000
2003 $40,000 $50,000 $60,000 $70,000
2004 $45,000 $55,000 $65,000 $75,000
2005 $50,000 $60,000 $70,000 $80,000
2006 $50,000 $60,000 $75,000 $85,000
2007 and $50,000 $60,000 $80,000 $100,000
later
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HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE?
If your AGI falls in the partly deductible range, you must calculate
the portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit (for 1998: $30,000 if single, or $50,000 if married
filing jointly). The denominator is $10,000 (note that the denominator for
married joint filers is $20,000 starting in 2007). Subtract this from your
contribution and then round down to the nearest $10. The deductible amount is
the greater of the amount calculated or $200 (provided you contributed at least
$200). If your contribution was less than $200, then the entire contribution is
deductible.
For example, assume that you make a $2,000 contribution to your
Regular XXX in 1998, a year in which you are an active participant in your
employer's retirement plan. Also assume that your AGI is $57,555 and you are
married, filing jointly. You would calculate the deductible portion of your
contribution this way:
1. The amount by which your AGI exceeds the lower limit of the
partly - deductible range:
($57,555-$50,000) = $7,555
2. Divide this by $10,000: $ 7,555 = 0.7555
-------
$10,000
3. Multiply this by your contribution limit:
0.7555 x $2,000 = $1,511
4. Subtract this from your contribution:
($2,000 - $1,511) = $489
5. Round this down to the nearest $10: = $480
6. Your deductible contribution is the greater of this amount or
$200.
Even though part or all of your contribution is not deductible, you may still
contribute to your Regular XXX (and your spouse may contribute to your spouse's
Regular XXX) up to the limit on contributions. When you file your tax return
for the year, you must designate the amount of non-deductible contributions to
your Regular XXX for the year. See IRS Form 8606.
HOW DO I DETERMINE MY AGI?
AGI is your gross income minus those deductions which are available
to all taxpayers even if they don't itemize. Instructions to calculate your
AGI are provided with your income tax Form 1040 or 1040A.
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY REGULAR XXX?
The maximum contribution you can make to a Regular XXX generally
is $2,000 or 100% of compensation or earned income, whichever is less. Any
amount contributed to the XXX above the maximum is considered an "excess
contribution." The excess is calculated using your CONTRIBUTION limit, not
the DEDUCTIBLE limit. An excess contribution is subject to excise tax of 6%
for each year it remains in the XXX.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty.
To do so, you must withdraw the excess and any earnings on the excess before
the due date (including extensions) for filing your federal income tax return
for the year for which you made the excess contribution. A deduction should
not be taken for any excess contribution. The earnings must be included in
your income for the tax year for which the contribution was made and may be
subject to a 10% premature withdrawal tax if you have not reached age 59 1/2.
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WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE
DATE?
Any excess contribution not withdrawn by the tax return due date
(including any extensions) for the year for which the contribution was made
will be subject to the 6% excise tax. There will be an additional 6% excise
tax for each subsequent year the excess remains in your account.
Under limited circumstances, you may correct an excess contribution
after tax filing time by withdrawing the excess contribution (leaving the
earnings in the account). This withdrawal will not be includable in income
nor will it be subject to any premature withdrawal penalty if (1) your
contributions to all Regular IRAs do not exceed $2,000 and (2) you did not
take a deduction for the excess amount (or you file an amended return (Form
1040X) which removes the excess deduction).
HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY?
Unless an excess contribution qualifies for the special treatment
outlined above, the excess contribution and any earnings on it withdrawn
after tax filing time will be includable in taxable income and may be subject
to a 10% premature withdrawal penalty. No deduction will be allowed for the
excess contribution for the year in which it is made.
Excess contributions may be corrected in a subsequent year to the
extent that you contribute less than your maximum amount. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you
may be able to take an income tax deduction for the amount of excess that was
reduced or eliminated, depending on whether you would be able to take a
deduction if you had instead contributed the same amount.
ARE THE EARNINGS ON MY REGULAR XXX FUNDS TAXED?
Any dividends on or growth of the investments held in your Regular
XXX are generally exempt from federal income taxes and will not be taxed
until withdrawn by you, unless the tax exempt status of your Regular XXX is
revoked (this is described in Part Three of this Disclosure Statement).
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO A REGULAR XXX?
Almost all distributions from employer plans or 403(b) arrangements
(for employees of tax-exempt employers) are eligible for rollover to a
Regular XXX. The main exceptions are payments over the lifetime or life
expectancy of the participant (or participant and a designated beneficiary),
installment payments for a period of 10 years or more, required
distributions (generally the rules require distributions starting at age 70
1/2 or for certain employees starting at retirement, if later), and payments
of employee after-tax contributions.
If you are eligible to receive a distribution from a tax qualified
retirement plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your Regular XXX. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover
to your Regular XXX within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your XXX.
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are
over age 70 1/2 and are required to take minimum distributions under the tax
laws, you may not roll over any amount required to be distributed to you
under the minimum distribution rules. Also, if you are receiving periodic
payments over your or your and your designated beneficiary's life expectancy
or for a period of at least 10 years, you may not roll over these payments.
A rollover to a regular XXX must be completed within 60 days after the
distribution from the employer retirement plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST
WITHHOLD 20% OF YOUR DISTRIBUTION for federal income taxes UNLESS you elect a
direct rollover. Your plan or 403(b) sponsor is required to provide you with
information about direct and traditional rollovers and withholding taxes
before you receive your distribution and must comply with your directions to
make a direct rollover.
The rules governing rollovers are complicated. Be sure to consult
your tax advisor or the IRS if you have a question about rollovers.
ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO A REGULAR XXX, CAN I
SUBSEQUENTLY ROLL OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN?
Yes. Part or all of an eligible distribution received from a
qualified plan may be transferred from the Regular XXX holding it to another
qualified plan. However, the XXX must have no assets other than those which
were previously distributed to you from the qualified plan. Specifically,
the XXX cannot contain any contributions by you (or your spouse). Also, the
new qualified plan must accept rollovers. Similar rules apply to Regular
IRAs established with rollovers from 403(b) arrangements.
CAN I MAKE A TRADITIONAL ROLLOVER FROM MY REGULAR XXX TO ANOTHER REGULAR XXX?
You may make a rollover from one Regular XXX to another Regular XXX
you have or you establish to receive the rollover. Such a rollover must be
completed within 60 days after the withdrawal from your first Regular XXX.
After making a traditional rollover from one Regular XXX to another, you must
wait a full year (365 days) before you can make another such rollover.
(However, you can instruct a Regular XXX custodian to transfer amounts
directly to another Regular XXX custodian; such a direct transfer does not
count as a rollover.)
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY NORMAL CONTRIBUTIONS IN
ONE XXX?
If you wish to make both a normal annual contribution and a
rollover contribution, you may wish to open two separate Regular IRAs by
completing two Adoption Agreements and two sets of forms. You should consult
a tax advisor before making your annual contribution to the XXX you
established with rollover contributions (or make a rollover contribution to
the XXX to which you make your annual contributions). This is because
combining your annual contributions and rollover contributions originating
from an employer plan distribution would prohibit the future rollover out of
the XXX into another qualified plan. If despite this, you still wish to
combine a rollover contribution and the XXX holding your annual
contributions, you should establish the account as a Regular XXX on the
Adoption Agreement (not a Rollover XXX or Direct Rollover XXX) and make the
contributions to that account.
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HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS?
Rollover contributions, if properly made, do not count toward the
maximum contribution. Also, rollovers are not deductible and they do not
affect your deduction limits as described above.
WHAT ABOUT CONVERTING MY REGULAR XXX TO A XXXX XXX?
The rules for converting a Regular XXX to a new Xxxx XXX, or making
a rollover from a Regular XXX to a new Xxxx XXX, are described in Part Two
below.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY REGULAR XXX?
You may withdraw from your Regular XXX at any time. However,
withdrawals before age 59 1/2 may be subject to a 10% penalty tax in addition
to regular income taxes (see below).
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn your entire XXX by the April 1 following
the year in which you reach 70 1/2, you must make minimum withdrawals in
order to avoid penalty taxes. The rule allowing certain employees to
postpone distributions from an employer qualified plan until actual
retirement (even if this is after age 70 1/2) does NOT apply to Regular IRAs.
The minimum withdrawal amount is determined by dividing the balance
in your Regular XXX (or IRAs) by your life expectancy or the combined life
expectancy of you and your designated beneficiary. The minimum withdrawal
rules are complex. Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum
withdrawal amount and your actual withdrawals during a year. The IRS may
waive or reduce the penalty tax if you can show that your failure to make the
required minimum withdrawals was due to reasonable cause and you are taking
reasonable steps to remedy the problem.
HOW ARE WITHDRAWALS FROM MY REGULAR XXX TAXED?
Amounts withdrawn by you are includable in your gross income in the
taxable year that you receive them, and are taxable as ordinary income. Lump
sum withdrawals from a Regular XXX are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.
Since the purpose of a Regular XXX is to accumulate funds for
retirement, your receipt or use of any portion of your Regular XXX before you
attain age 59 1/2 generally will be considered as an early withdrawal and
subject to a 10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if:
-The distribution was a result of your death or disability.
-The purpose of the withdrawal is to pay certain higher education expenses
for yourself or your spouse, child, or grandchild. Qualifying expenses
include tuition, fees, books, supplies and equipment required for
attendance at a post-secondary educational institution. Room and board
expenses may qualify if the student is attending at least half-time.
-The withdrawal is used to pay eligible first-time homebuyer expenses.
These are the costs of purchasing, building or rebuilding a principal
residence (including customary settlement, financing or closing costs).
The purchaser may be you, your spouse, or a child, grandchild, parent or
grandparent of you or your spouse. An individual is considered a "first-
time homebuyer" if the individual (or the individual's spouse, if married)
did not have an ownership interest in a principal residence during the two-
year period immediately preceding the acquisition in question. The
withdrawal must be used for eligible expenses within 120 days after the
withdrawal. (If there is an unexpected delay, or cancellation of the home
acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer
expenses of $10,000 per individual.
-The distribution is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint lives
or life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments,
the 10% penalty tax may apply. The 10% penalty will not apply if you
make no change in the series of payments until the end of five years
or until you reach age 59 1/2, whichever is later. If you make a
change before then, the penalty will apply. For example, if you begin
receiving payments at age 50 under a withdrawal program providing for
substantially equal payments over your life expectancy, and at age 58
you elect to receive the remaining amount in your Regular XXX in a
lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2.
-The distribution does not exceed the amount of your deductible
medical expenses for the year (generally speaking, medical expenses
paid during a year are deductible if they are greater than 71/2% of
your adjusted gross income for that year).
-The distribution does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This
exception applies only if you have been unemployed and received
federal or state unemployment compensation payments for at least 12
weeks; this exception applies to distributions during the year in
which you received the unemployment compensation and during the
following year, but not to any distributions received after you have
been reemployed for at least 60 days.
HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN?
A withdrawal of nondeductible contributions (not including
earnings) will be tax-free. However, if you made both deductible and
nondeductible contributions to your Regular XXX, then each distribution will
be treated as partly a return of your nondeductible contributions (not
taxable) and partly a distribution of deductible contributions and earnings
(taxable). The nontaxable amount is the portion of the amount withdrawn
which bears the same ratio as your total nondeductible Regular XXX
contributions bear to the total balance of all your Regular IRAs (including
rollover IRAs and SEPs, but not including Xxxx IRAs).
For example, assume that you made the following Regular XXX
contributions:
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Year Deductible Nondeductible
---- ---------- -------------
1995 $2,000
1996 $2,000
1997 $1,000 $1,000
1998 $1,000
------ ------
$5,000 $2,000
In addition assume that your Regular XXX has total investment
earnings through 1998 of $1,000. During 1998 you withdraw $500. Your total
account balance as of 12-31-98 is $7,500 as shown below.
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On XXX $1,000
Less 1998 Withdrawal $ 500
------
Total Account Balance as of 12/31/98 $7,500
To determine the nontaxable portion of your 1998 withdrawal, the
total 1998 withdrawal ($500) must be multiplied by a fraction. The numerator
of the fraction is the total of all nondeductible contributions remaining in
the account before the 1998 withdrawal ($2,000). The denominator is the
total account balance as of 12-31-98 ($7,500) plus the 1998 withdrawal ($500)
or $8,000. The calculation is:
Total Remaining
Nondeductible Contributions $2,000 x $500 = $125
--------------------------- ------
Total Account Balance $8,000
Thus, $125 of the $500 withdrawal in 1998 will not be included in
your taxable income. The remaining $375 will be taxable for 1998. In
addition, for future calculations the remaining nondeductible contribution
total will be $2,000 minus $125, or $1,875.
A loss in your Regular XXX investment may be deductible. You
should consult your tax advisor for further details on the appropriate
calculation for this deduction if applicable.
IS THERE A PENALTY TAX ON CERTAIN LARGE WITHDRAWALS OR ACCUMULATIONS IN MY XXX?
Earlier tax laws imposed a "success" penalty equal to 15% of
withdrawals from all retirement accounts (including IRAs, 401(k) or other
employer retirement plans, 403(b) arrangements and others) in a year
exceeding a specified amount (initially $150,000 per year). Also, there was
a 15% estate tax penalty on excess accumulations remaining in IRAs and other
tax-favored arrangements upon your death. These 15% penalty taxes have been
REPEALED.
IMPORTANT: Please see Part Three below which contains important information
applicable to ALL GSI IRAs.
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PART TWO: DESCRIPTION OF XXXX IRAS
SPECIAL NOTE
Part Two of the Disclosure Statement describes the rules generally
applicable to Xxxx IRAs beginning January 1, 1998.
Xxxx IRAs are a new kind of XXX available for the first time in 1998.
Contributions to a Xxxx XXX for 1997 are NOT permitted. Contributions to a Xxxx
XXX are not tax-deductible, but withdrawals that meet certain requirements are
not subject to federal income taxes. This makes the dividends on and growth of
the investments held in your Xxxx XXX tax-free for federal income tax purposes
if the requirements are met.
Regular IRAs, which have existed since 1975, are still available.
Contributions to a Regular XXX may be tax-deductible. Earnings and gains on
amounts while held in a Regular XXX are tax-deferred. Withdrawals are subject
to federal income tax (except for prior after-tax contributions which may be
recovered without additional federal income tax).
This Part Two does not describe Regular IRAs. If you wish to review
information about Regular IRAs, please see Part One of this Disclosure
Statement.
This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE XXX program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Xxxx IRAs may not be used in connection with a
SIMPLE XXX program or a SEP plan.
YOUR XXXX XXX
Your Xxxx XXX gives you several tax benefits. While contributions to
a Xxxx XXX are not deductible, dividends on and growth of the assets held in
your Xxxx XXX are not subject to federal income tax. Withdrawals by you from
your Xxxx XXX are excluded from your income for federal income tax purposes if
certain requirements (described below) are met. State income tax treatment of
your Xxxx XXX may differ from federal treatment; ask your state tax department
or your personal tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for important additional
information, including information on how to revoke your Xxxx XXX, investments
and prohibited transactions, fees and expenses and certain tax requirements.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A XXXX XXX?
Starting with 1998, you are eligible to establish and contribute to a
Xxxx XXX for a year if you received compensation (or earned income if you are
self employed) during the year for personal services you rendered. If you
received taxable alimony, this is treated like compensation for XXX purposes.
In contrast to a Regular XXX, with a Xxxx XXX you may continue making
contributions after you reach age 70 1/2.
CAN I CONTRIBUTE TO A XXXX XXX FOR MY SPOUSE?
Starting with 1998, if you meet the eligibility requirements you can
not only contribute to your own Xxxx XXX, but also to a separate Xxxx XXX for
your spouse out of your compensation or earned income, regardless of whether
your spouse had any compensation or earned income in that year. This is called
a "spousal Xxxx XXX." To make a contribution to a Xxxx XXX for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal Xxxx
XXX, your spouse must set up a different Xxxx XXX, separate from yours, to which
you contribute.
Of course, if your spouse has compensation or earned income, your
spouse can establish his or her own Xxxx XXX and make contributions to it in
accordance with the rules and limits described in this Part Two of the
Disclosure Statement.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO A XXXX XXX?
You may make a contribution to your Xxxx XXX or establish a new Xxxx
XXX for a taxable year by the due date (NOT including any extensions) for your
federal income tax return for the year. Usually this is April 15 of the
following year. For example, you will have until April 15, 1999 to establish
and make a contribution to a Xxxx XXX for 1998.
CAUTION: Since Xxxx IRAs are available starting January 1, 1998, you
may NOT make a contribution by April 15, 1998 to a Xxxx XXX for 1997.
HOW MUCH CAN I CONTRIBUTE TO MY XXXX XXX?
For each year when you are eligible (see above), you can contribute up
to the lesser of $2,000 or 100% of your compensation (or earned income, if you
are self-employed).
Annual contributions may be made only to a Xxxx XXX annual
contribution account which does not contain converted or transferred funds from
a Regular XXX.
Your Xxxx XXX limit is reduced by any contributions for the same year
to a Regular XXX. For example, assuming you have at least $2,000 in
compensation or earned income, if you contribute $500 to your Regular XXX for
1998, your maximum Xxxx XXX contribution for 1998 will be $1,500.
If you and your spouse have spousal Xxxx IRAs, each spouse may
contribute up to $2,000 to his or her Xxxx XXX for a year as long as the
combined compensation of both spouses for the year (as shown on your joint
income tax return) is at least $4,000. If the combined compensation of both
spouses is less than $4,000, the spouse with the higher amount of compensation
may contribute up to that spouse's compensation amount, or $2,000 if less. The
spouse with the lower compensation amount may contribute any amount up to that
spouse's compensation plus any excess of the other spouse's compensation over
the other spouse's Xxxx XXX contribution. However, the maximum contribution to
either spouse's Xxxx XXX is $2,000 for the year.
As noted above, the spousal Xxxx XXX limits are reduced by any
contributions for the same calendar year to a Regular XXX maintained by you or
your spouse.
10
For taxpayers with high income levels, the contribution limits may be
reduced (see below).
ARE CONTRIBUTIONS TO A XXXX XXX TAX DEDUCTIBLE?
Contributions to a Xxxx XXX are NOT deductible. This is a major
difference between Xxxx IRAs and Regular IRAs. Contributions to a Regular XXX
may be deductible on your federal income tax return depending on whether or not
you are an active participant in an employer-sponsored plan and on your income
level.
ARE THE EARNINGS ON MY XXXX XXX FUNDS TAXED?
Any dividends on or growth of investments held in your Xxxx XXX are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Xxxx XXX is revoked. If the
withdrawal qualifies as a tax-free withdrawal (see below), amounts reflecting
earnings or growth of assets in your Xxxx XXX will not be subject to federal
income tax.
WHICH IS BETTER, A XXXX XXX OR A REGULAR XXX?
This will depend upon your individual situation. A Xxxx XXX may be
better if you are an active participant in an employer-sponsored plan and your
adjusted gross income is too high to make a deductible XXX contribution (but not
too high to make a Xxxx XXX contribution). Also, the benefits of a Xxxx XXX vs.
a Regular XXX may depend upon a number of other factors including: your current
income tax bracket vs. your expected income tax bracket when you make
withdrawals from your XXX, whether you expect to be able to make nontaxable
withdrawals from your Xxxx XXX (see below), how long you expect to leave your
contributions in the XXX, how much you expect the XXX to earn in the meantime,
and possible future tax law changes.
Consult a qualified tax or financial advisor for assistance on this
question.
ARE THERE ANY RESTRICTIONS ON CONTRIBUTIONS TO MY XXXX XXX?
Taxpayers with very high income levels may not be able to contribute
to a Xxxx XXX at all, or their contribution may be limited to an amount less
than $2,000. This depends upon your filing status and the amount of your
adjusted gross income (AGI). The following table shows how the contribution
limits are restricted:
XXXX XXX CONTRIBUTION LIMITS
--------------------------------------------------------------------------------
IF YOU ARE IF YOU ARE THEN YOU MAY MAKE
SINGLE TAXPAYER MARRIED FILING JOINTLY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Up to Up to Full
$95,000 $150,000 Contribution
--------------------------------------------------------------------------------
--------------------------------------------------------------------
ADJUSTED More than $95,000 More than $150,000 Reduced Contribution
GROSS but less than but less than (see explanation
INCOME $110,000 $160,000 below)
(AGI)
LEVEL
---------------------------------------------------------------------
$110,000 $160,000 Zero (No
and up and up Contribution)
---------------------------------------------------------------------
Note: If you are a married taxpayer filing separately, your maximum
Xxxx XXX contribution limit phases out over the first $15,000 of adjusted gross
income. If your AGI is $15,000 or more, you may not contribute to a Xxxx XXX
for the year. (Note: Pending legislation in Congress may reduce this number
from $15,000 to $10,000. Consult your tax advisor or the IRS for the latest
developments.)
HOW DO I CALCULATE MY LIMIT IF I FALL IN THE "REDUCED CONTRIBUTION" RANGE?
If your AGI falls in the reduced contribution range, you must
calculate your contribution limit. To do this, multiply your normal
contribution limit ($2,000 or your compensation if less) by a fraction. The
numerator is the amount by which your AGI exceeds the lower limit of the reduced
contribution range ($95,000 if single, or $150,000 if married filing jointly).
The denominator is $15,000 (single taxpayers) or $10,000 (married filing
jointly). Subtract this from your normal limit and then round down to the
nearest $10. The contribution limit is the greater of the amount calculated or
$200.
For example, assume that your AGI for the year is $157,555 and you are
married, filing jointly. You would calculate your Xxxx XXX contribution limit
this way:
1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555-$150,000) = $7,555
2. Divide this by $10,000: $7,555
-------
$10,000 = 0.7555
3. Multiply this by $2,000 (or your compensation for the year, if less):
0.7555 x $2,000 = $1,511
4. Subtract this from your $2,000 limit:
($2,000 - $1,511) = $489
5. Round this down to the nearest $10 = $480
6. Your contribution limit is the greater of this amount or $200.
Remember, your Xxxx XXX contribution limit of $2,000 is reduced by any
contributions for the same year to a Regular XXX. If you fall in the reduced
contribution range, the reduction formula applies to the Xxxx XXX contribution
limit left after subtracting your contribution for the year to a Regular XXX.
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HOW DO I DETERMINE MY AGI?
AGI is your gross income minus those deductions which are available to
all taxpayers even if they don't itemize. Instructions to calculate your AGI
are provided with your income tax Form 1040 or 1040A.
There are two additional rules when calculating AGI for purposes of
Xxxx XXX contribution limits. First, if you are making a deductible
contribution for the year to a Regular XXX, your AGI is reduced by the amount
of the deduction. Second, if you are converting a Regular XXX to a Xxxx XXX in
a year (see below), the amount includable in your income as a result of the
conversion is not considered AGI when computing your Xxxx XXX contribution limit
for the year. (Note: a xxxx pending in Congress might affect the first rule --
consult your tax advisor or the IRS for the latest developments.)
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY XXXX XXX?
The maximum contribution you can make to a Xxxx XXX generally is
$2,000 or 100% of compensation or earned income, whichever is less. As noted
above, your maximum is reduced by the amount of any contribution to a Regular
XXX for the same year and may be further reduced if you have high AGI. Any
amount contributed to the Xxxx XXX above the maximum is considered an "excess
contribution."
An excess contribution is subject to excise tax of 6% for each year it
remains in the Xxxx XXX.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty. To
do so, you must withdraw the excess and any earnings on the excess before the
due date (including extensions) for filing your federal income tax return for
the year for which you made the excess contribution. The earnings must be
included in your income for the tax year for which the contribution was made and
may be subject to a 10% premature withdrawal tax if you have not reached age
59 1/2 (unless an exception to the 10% penalty tax applies).
WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE
DATE?
Any excess contribution not withdrawn by the tax return due date
(including any extensions) for the year for which the contribution was made
will be subject to the 6% excise tax. There will be an additional 6% excise tax
for each subsequent year the excess remains in your account.
For subsequent years, you may reduce the excess contributions in your
account by making a withdrawal equal to the excess. Earnings need not be
withdrawn. To the extent that no earnings are withdrawn, the withdrawal will
not be subject to income taxes or possible penalties for premature withdrawals
before age 59 1/2. Excess contributions may also be corrected in a subsequent
year to the extent that you contribute less than your Xxxx XXX contribution
limit for the subsequent year. As the prior excess contribution is reduced or
eliminated, the 6% excise tax will become correspondingly reduced or eliminated
for subsequent tax years.
CONVERSION OF EXISTING REGULAR XXX
CAN I CONVERT AN EXISTING REGULAR XXX INTO A XXXX XXX?
Yes, starting in 1998 you can convert an existing Regular XXX into a
Xxxx XXX if you meet the adjusted gross income (AGI) limits described below.
Conversion may be accomplished either by establishing a Xxxx XXX and then
transferring the amount in your Regular XXX you wish to convert to the new Xxxx
XXX. Or, if you want to convert an existing Regular XXX with Investors
Fiduciary Trust as custodian to a Xxxx XXX, you may give us directions to
convert.
You are eligible to convert a Regular XXX to a Xxxx XXX if, for the
year of the conversion, your AGI is $100,000 or less. The same limit applies to
married and single taxpayers, and the limit is not indexed to cost-of-living
increases. Married taxpayers are eligible to convert a Regular XXX to a Xxxx
XXX only if they file a joint income tax return; married taxpayers filing
separately are not eligible to convert.
NOTE: No contributions other than Xxxx XXX conversion contributions
made during the same tax year may be deposited in a single Xxxx XXX conversion
account.
CAUTION: You should be extremely cautious in converting an existing
XXX into a Xxxx XXX early in a year if there is any possibility that your AGI
for the year will exceed $100,000. Although a xxxx pending in Congress would
permit you to transfer amounts back to your Regular XXX if your AGI exceeds
$100,000, under the current rules, if you have already converted during a year
and you turn out to have more than $100,000 of AGI, there may be adverse tax
results for you. Consult your tax advisor or the IRS for the latest
developments.
WHAT ARE THE TAX RESULTS FROM CONVERTING?
The taxable amount in your Regular XXX you convert to a Xxxx XXX will
be considered taxable income on your federal income tax return for the year of
the conversion. All amounts in a Regular XXX are taxable except for your prior
non-deductible contributions to the Regular XXX.
If you make the conversion during 1998, the taxable income is spread
over four years. In other words, you would include one quarter of the taxable
amount on your federal income tax return for 1998, 1999, 2000 and 2001.
SHOULD I CONVERT MY REGULAR XXX TO A XXXX XXX?
Only you can answer this question, in consultation with your tax or
financial advisors. A number of factors, including the following, may be
relevant. Conversion may be advantageous if you expect to leave the converted
funds on deposit in your Xxxx XXX for at least five years and to be able to
withdraw the funds under circumstances that will not be taxable (see below).
The benefits of converting will also depend on whether you expect to be in the
same tax bracket when you withdraw from your Xxxx XXX as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Xxxx IRAs in the future, but this cannot be
guaranteed.
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO A XXXX XXX?
Distributions from qualified employer-sponsored retirement plans or
403(b) arrangements (for employees of tax-exempt employers) are NOT eligible for
rollover or direct transfer to a Xxxx XXX. However, in certain circumstances
it may be possible to make a direct rollover of an eligible distribution to a
Regular XXX and then to convert the Regular XXX to a Xxxx XXX (see above).
Consult your tax or financial advisor for further information on this
possibility.
CAN I MAKE A ROLLOVER FROM MY XXXX XXX TO ANOTHER XXXX XXX?
You may make a rollover from one Xxxx XXX to another Xxxx XXX you have
or you establish to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first Xxxx XXX. After making a
rollover from one Xxxx XXX to another, you must wait a full year (365 days)
before you can make another such rollover. (However, you can instruct a Xxxx
XXX custodian to transfer amounts directly to another Xxxx XXX custodian; such a
direct transfer does not count as a rollover.)
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HOW DO ROLLOVERS AFFECT MY XXXX XXX CONTRIBUTION LIMITS?
Rollover contributions, if properly made, do not count toward the
maximum contribution. Also, you may make a rollover from one Xxxx XXX to
another even during a year when you are not eligible to contribute to a Xxxx XXX
(for example, because your AGI for that year is too high).
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY XXXX XXX?
You may withdraw from your Xxxx XXX at any time. If the withdrawal
meets the requirements discussed below, it is tax-free. This means that you pay
no federal income tax even though the withdrawal includes earnings or gains on
your contributions while they were held in your Xxxx XXX.
WHEN MUST I START MAKING WITHDRAWALS?
There are no rules on when you must start making withdrawals from your
Xxxx XXX or on minimum required withdrawal amounts for any particular year
during your lifetime. Unlike Regular IRAs, you are not required to start making
withdrawals from a Xxxx XXX by the April 1 following the year in which you reach
age 70 1/2.
After your death, there are IRS rules on the timing and amount of
distributions. In general, the amount in your Xxxx XXX must be distributed by
the end of the fifth year after your death. However, distributions to a
designated beneficiary that begin by the end of the year following the year of
your death and that are paid over the life expectancy of the beneficiary satisfy
the rules. Also, if your surviving spouse is your designated beneficiary, the
spouse may defer the start of distributions until you would have reached age
70 1/2 had you lived.
WHAT ARE THE REQUIREMENTS FOR A TAX-FREE WITHDRAWAL?
To be tax-free, a withdrawal from your Xxxx XXX must meet two
requirements. First, the Xxxx XXX must have been open for 5 or more years
before the withdrawal. Second, at least one of the following conditions must be
satisfied:
-You are age 59 1/2 or older when you make the withdrawal.
-The withdrawal is made by your beneficiary after you die.
-You are disabled (as defined in IRS rules) when you make the
withdrawal.
-You are using the withdrawal to cover eligible first time homebuyer
expenses. These are the costs of purchasing, building or rebuilding a
principal residence (including customary settlement, financing or
closing costs). The purchaser may be you, your spouse or a child,
grandchild, parent or grandparent of you or your spouse. An
individual is considered a "first-time homebuyer" if the individual
(or the individual's spouse, if married) did not have an ownership
interest in a principal residence during the two-year period
immediately preceding the acquisition in question. The withdrawal
must be used for eligible expenses within 120 days after the
withdrawal (if there is an unexpected delay, or cancellation of the
home acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
For a Xxxx XXX that you set up with amounts rolled over or converted
from a Regular XXX, the 5 year period begins with the year in which the
conversion or rollover was made. (Note: a xxxx pending in Congress might
affect this rule -- consult your tax advisor or the IRS for the latest
developments.)
For a Xxxx XXX that you started with a normal contribution, the 5 year
period starts with the year for which you make the initial normal contribution.
HOW ARE WITHDRAWALS FROM MY XXXX XXX TAXED IF THE TAX-FREE REQUIREMENTS ARE NOT
MET?
If the qualified withdrawal requirements are not met, a withdrawal
consisting of your own prior contribution amounts to your Xxxx XXX will not be
considered taxable income in the year you receive it, nor will the 10% penalty
apply. To the extent that the nonqualified withdrawal consists of dividends or
gains while your contributions were held in your Xxxx XXX, the withdrawal is
includable in your gross income in the taxable year you receive it, and may be
subject to the 10% withdrawal penalty. All amounts withdrawn from your Xxxx XXX
are considered withdrawals of your contributions until you have withdrawn the
entire amount you have contributed. After that, all amounts withdrawn are
considered taxable withdrawals of dividends and gains.
Note that, for purposes of determining what portion of any
distribution is includable in income, all of your Xxxx XXX accounts are
considered as one single account. Amounts withdrawn from any one Xxxx XXX
account are deemed to be withdrawn from contributions first. Since all your
Xxxx IRAs are considered to be one account for this purpose, withdrawals from
Xxxx XXX accounts are not considered to be from earnings or interest until an
amount equal to all contributions made to ALL of an individual's Xxxx XXX
accounts is withdrawn. The following example illustrates this:
A single individual contributes $1,000 a year to his GSI Xxxx XXX
account and $1,000 a year to the Brand X Xxxx XXX account over a period of ten
years. At the end of 10 years his account balances are as follows:
PRINCIPAL EARNINGS
CONTRIBUTIONS
GSI XXXX XXX $10,000 $10,000
BRAND X XXXX XXX $10,000 $10,000
------- -------
TOTAL $20,000 $20,000
At the end of 10 years, this person has $40,000 in both Xxxx XXX
accounts, of which $20,000 represents his contributions (aggregated) and $20,000
represents his earnings (aggregated). This individual, who is 40, withdraws
$15,000 from his Brand X Xxxx XXX (not a qualified withdrawal). We look to the
aggregate amount of all principal contributions - in this case $20,000 - to
determine if the withdrawal is from contributions, and thus non-taxable. In
this example, there is no ($0) taxable income as a result of this withdrawal
because the $15,000 withdrawal is less than the total amount of aggregated
contributions ($20,000). If this individual then withdrew $15,000 from his GSI
Xxxx XXX, $5,000 would not be taxable (the remaining aggregate contributions)
and $10,000 would be treated as taxable income for the year of the withdrawal,
subject to regular income taxes and the 10% premature withdrawal penalty (unless
an exception applies).
NOTE: If passed, a xxxx currently pending in Congress will change the
rules and the results discussed above. Under the proposed legislation, in
general, separate Xxxx IRAs established for annual contributions and conversions
for separate years are not aggregated as explained above to determine the tax on
withdrawals. See your tax advisor for more information and the latest
developments.
13
Taxable withdrawals of dividends and gains from a Xxxx XXX are treated
as ordinary income. Withdrawals of taxable amounts from a Xxxx XXX are not
eligible for averaging treatment currently available to certain lump sum
distributions from qualified employer-sponsored retirement plans, nor are such
withdrawals eligible for taxable gains tax treatment.
Your receipt of any taxable withdrawal from your Xxxx XXX before you
attain age 59 1/2 generally will be considered as an early withdrawal and
subject to a 10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if any of the
following exceptions applies:
- The withdrawal was a result of your death or disability.
- The withdrawal is one of a scheduled series of substantially
equal periodic payments for your life or life expectancy (or the joint
lives or life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments,
the 10% penalty tax will apply. For example, if you begin receiving
payments at age 50 under a withdrawal program providing for
substantially equal payments over your life expectancy, and at age 58
you elect to withdraw the remaining amount in your Xxxx XXX in a
lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2 to the extent they
were includable in your taxable income.
- The withdrawal is used to pay eligible higher education
expenses. These are expenses for tuition, fees, books, and supplies
required to attend an institution for post-secondary education. Room
and board expenses are also eligible for a student attending at least
half-time. The student may be you, your spouse, or your child or
grandchild. However, expenses that are paid for with a scholarship or
other educational assistance payment are not eligible expenses.
- The withdrawal is used to cover eligible first time homebuyer
expenses (as described above in the discussion of tax-free
withdrawals).
- The withdrawal does not exceed the amount of your deductible
medical expenses for the year (generally speaking, medical expenses
paid during a year are deductible if they are greater than 7 1/2% of
your adjusted gross income for that year).
- The withdrawal does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This
exception applies only if you have been unemployed and received
federal or state unemployment compensation payments for at least 12
weeks; this exception applies to distributions during the year in
which you received the unemployment compensation and during the
following year, but not to any distributions received after you have
been reemployed for at least 60 days.
WHAT ABOUT THE 15 PERCENT PENALTY TAX?
The rule imposing a 15% penalty tax on very large withdrawals from
tax-favored arrangements (including IRAs, 403(b) arrangements and qualified
employer-sponsored plans), or on excess amounts remaining in such tax-favored
arrangements at your death, has been REPEALED. This 15% tax no longer applies.
IMPORTANT: The discussion of the tax rules for Xxxx IRAs in this Disclosure
Statement is based upon the best available information. However, Xxxx IRAs are
new under the tax laws, and the IRS has not issued regulations or rulings on the
operation and tax treatment of Xxxx XXX accounts. Also, if enacted, legislation
now pending in Congress will change some of the rules. Therefore, you should
consult your tax advisor for the latest developments or for advice about how
maintaining a Xxxx XXX will affect your personal tax or financial situation.
Also, please see Part Three below which contains important information
applicable to ALL GSI IRAs.
14
PART THREE: RULES FOR ALL IRAS (REGULAR AND XXXX)
GENERAL INFORMATION
XXX REQUIREMENTS
All IRAs must meet certain requirements. Contributions generally must
be made in cash. The XXX trustee or custodian must be a bank or other person
who has been approved by the Secretary of the Treasury. Your contributions may
not be invested in life insurance or collectibles or be commingled with other
property except in a common trust or investment fund. Your interest in the
account must be nonforfeitable at all times. You may obtain further information
on IRAs from any district office of the Internal Revenue Service.
MAY I REVOKE MY XXX?
You may revoke a newly established Regular or Xxxx XXX at any time
within seven days after the date on which you receive this Disclosure Statement.
A Regular or Xxxx XXX established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.
To revoke your Regular or Xxxx XXX, mail or deliver a written notice
of revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your Regular or Xxxx XXX within
the seven-day period, you are entitled to a return of the entire amount you
originally contributed into your Regular or Xxxx XXX, without adjustment for
such items as sales charges, administrative expenses or fluctuations in market
value.
INVESTMENTS
HOW ARE MY XXX CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your
Regular or Xxxx XXX. Investments must be in one or more of the Fund(s)
available from time to time as listed in the Adoption Agreement for your Regular
or Xxxx XXX or in an investment selection form provided with your Adoption
Agreement or from the Fund Distributor or Service Company. You direct the
investment of your XXX by giving your investment instructions to the Distributor
or Service Company for the Fund(s). Since you control the investment of your
Regular or Xxxx XXX, you are responsible for any losses; neither the Custodian,
the Distributor nor the Service Company has any responsibility for any loss or
diminution in value occasioned by your exercise of investment control.
Transactions for your Regular or Xxxx XXX will generally be at the applicable
public offering price or net asset value for shares of the Fund(s) involved next
established after the Distributor or the Service Company (whichever may apply)
receives proper investment instructions from you; consult the current prospectus
for the Fund(s) involved for additional information.
Before making any investment, read carefully the current prospectus
for any Fund you are considering as an investment for your Regular XXX or Xxxx
XXX. The prospectus will contain information about the Fund's investment
objectives and policies, as well as any minimum initial investment or minimum
balance requirements and any sales, redemption or other charges.
Because you control the selection of investments for your Regular or
Xxxx XXX and because mutual fund shares fluctuate in value, the growth in value
of your Regular or Xxxx XXX cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY XXX ASSETS?
The tax-exempt status of your Regular or Xxxx XXX will be revoked if
you engage in any of the prohibited transactions listed in Section 4975 of the
tax code. Upon such revocation, your Regular or Xxxx XXX is treated as
distributing its assets to you. The taxable portion of the amount in your XXX
will be subject to income tax (unless, in the case of a Xxxx XXX, the
requirements for a tax-free withdrawal are satisfied). Also, you may be
subject to a 10% penalty tax on the taxable amount as a premature withdrawal if
you have not yet reached the age of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your
Regular or Xxxx XXX is treated as a withdrawal; the only exception involves
certain types of government-sponsored coins or certain types of precious metal
bullion.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets
in your Regular or Xxxx XXX. Some examples of prohibited transactions are:
-Direct or indirect sale or exchange of property between you and
your Regular or Xxxx XXX.
-Transfer of any property from your Regular or Xxxx XXX to
yourself or from yourself to your Regular or Xxxx XXX.
Your Regular or Xxxx XXX could lose its tax exempt status if you use
all or part of your interest in your Regular or Xxxx XXX as security for a loan
or borrow any money from your Regular or Xxxx XXX. Any portion of your Regular
or Xxxx XXX used as security for a loan will be treated as a distribution in the
year in which the money is borrowed. This amount may be taxable and you may
also be subject to the 10% premature withdrawal penalty on the taxable amount.
FEES AND EXPENSES
CUSTODIAN'S FEES
The fees charged by the Custodian for maintaining either a Regular XXX
or a Xxxx XXX are listed in the Adoption Agreement.
GENERAL FEE POLICIES
-Fees may be paid by you directly, or the Custodian may deduct them
from your Regular or Xxxx XXX.
-Fees may be changed upon 30 days written notice to you.
-The full annual maintenance fee will be charged for any calendar year
during which you have a Regular or Xxxx XXX with us. This fee is not
prorated for periods of less than one full year.
15
-If provided for in this Disclosure Statement or the Adoption
Agreement, termination fees are charged when your account is closed
whether the funds are distributed to you or transferred to a successor
custodian or trustee.
-The Custodian may charge you for its reasonable expenses for services
not covered by its fee schedule.
OTHER CHARGES
There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Regular XXX or Xxxx XXX is
invested. Before investing, be sure to read carefully the current prospectus of
any Fund you are considering as an investment for your Regular XXX or Xxxx XXX
for a description of applicable charges.
TAX MATTERS
WHAT XXX REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient
on the appropriate form. For reporting purposes, a direct transfer of assets to
a successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your
account and the amount of any rollover (including conversions of a Regular XXX
to a Xxxx XXX) or regular contribution made during a calendar year, as well as
the tax year for which a contribution is made. Unless the Custodian receives an
indication from you to the contrary, it will treat any amount as a contribution
for the tax year in which it is received. It is MOST IMPORTANT that a
contribution between January and April 15th for the prior year be clearly
designated as such.
WHAT TAX INFORMATION MUST I REPORT TO THE IRS?
You must file Form 5329 with the IRS for each taxable year for which
you made an excess contribution or you take a premature withdrawal that is
subject to the 10% penalty tax, or you withdraw less than the minimum amount
required from your Regular XXX. If your beneficiary fails to make required
minimum withdrawals from your Regular or Xxxx XXX after your death, your
beneficiary may be subject to an excise tax and be required to file Form 5329.
For Regular IRAs, you must also report each nondeductible contribution
to the IRS by designating it a nondeductible contribution on your tax return.
Use Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional information on
your tax return. The information required includes: (1) the amount of your
nondeductible contributions for that year; (2) the amount of withdrawals from
Regular IRAs in that year; (3) the amount by which your total nondeductible
contributions for all the years exceed the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your
Regular IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.
WHICH WITHDRAWALS ARE SUBJECT TO WITHHOLDING?
XXXX XXX
Federal income tax will be withheld at a flat rate of 10% of any
taxable withdrawal from your Xxxx XXX, unless you elect not to have tax
withheld. Withdrawals from a Xxxx XXX are not subject to the mandatory 20%
income tax withholding that applies to most distributions from qualified plans
or 403(b) accounts that are not directly rolled over to another plan or XXX.
REGULAR XXX
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular XXX, unless you elect not to have tax withheld.
Withdrawals from a Regular XXX are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or XXX.
ACCOUNT TERMINATION
You may terminate your Regular XXX or Xxxx XXX at any time after its
establishment by sending a completed withdrawal form (or other withdrawal
instructions in a form acceptable to the Custodian), or a transfer authorization
form, to: General Securities, Incorporated, X.X. Xxx 000000, Xxxxxx Xxxx, Xx
00000-0000.
Your Regular XXX or Xxxx XXX with GSI will terminate upon the first to
occur of the following:
-The date your properly executed withdrawal form or instructions (as
described above) withdrawing your total Regular XXX or Xxxx XXX
balance is received and accepted by the Custodian or, if later, the
termination date specified in the withdrawal form.
-The date the Regular XXX or Xxxx XXX ceases to qualify under the tax
code. This will be deemed a termination.
-The transfer of the Regular XXX or Xxxx XXX to another
custodian/trustee.
-The rollover of the amounts in the Regular XXX or Xxxx XXX to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of
your account.
The amount you receive from your XXX upon termination of the account
will be treated as a withdrawal, and thus the rules relating to Regular XXX or
Xxxx XXX withdrawals will apply. For example, if the XXX is terminated before
you reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
XXX DOCUMENTS
REGULAR XXX
The terms contained in Articles I to VII of Part One of the GSI
Universal Individual Retirement Custodial Account document have been promulgated
by the IRS in Form 5305-A for use in establishing a Regular XXX Custodial
Account that meets the requirements of Code Section 408(a) for a valid Regular
XXX. This IRS approval relates only to the form of Articles I to VII and is not
an approval of the merits of the Regular XXX or of any investment permitted by
the Regular XXX.
XXXX XXX
The terms contained in Articles I to VII of Part Two of the GSI
Universal Individual Retirement Account Custodial Agreement have been
promulgated by the IRS in Form 5305-RA for use in establishing a Xxxx XXX
Custodial Account that meets the requirements of Code Section 408A for a valid
Xxxx XXX. This IRS approval relates only to the form of Articles I to VII and
is not an approval of the merits of the Xxxx XXX or of any investment permitted
by the Xxxx XXX.
16
Based on our legal advice relating to current tax laws and IRS
meetings, GSI believes that the use of a Universal Individual Retirement Account
Information Kit such as this, containing information and documents for both a
Regular XXX or a Xxxx XXX, will be acceptable to the IRS. However, if the IRS
makes a ruling, or if Congress enacts legislation, regarding the use of
different documentation, we will forward to you new documentation for your
Regular XXX or a Xxxx XXX (as appropriate) for you to read and, if necessary, an
appropriate new Adoption Agreement to sign. By adopting a Regular XXX or a Xxxx
XXX using these materials, you acknowledge this possibility and agree to this
procedure if necessary. In all cases, to the extent permitted, Investors
Fiduciary Trust will treat your XXX as being opened on the date your account was
opened using the Adoption Agreement in this Kit.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number.
GENERAL SECURITIES, INCORPORATED
0000 XXXX XXXXXX, XXX 000
XXXXX, XX 00000
0-000-000-0000
17
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT CUSTODIAL
AGREEMENT
PART ONE: PROVISIONS APPLICABLE TO REGULAR IRAS
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-A for use in establishing an
individual retirement custodial account.
ARTICLE I.
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
ARTICLE II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold, silver, and platinum coins, coins
issued under the laws of any state, and certain bullion.
ARTICLE IV.
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years. The
life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and
last survivor lives of the Depositor and his or her
designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life
expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her
designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the
election of the Depositor or, if the Depositor has not so
elected, at the election of the beneficiary or beneficiaries,
either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated
beneficiary or beneficiaries starting by December 31 of
the year following the year of the Depositor's death.
If, however, the beneficiary is the Depositor's
surviving spouse, then this distribution is not
required to begin before December 31 of the year in
which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations
has irrevocably commenced, distributions are treated as
having begun on the Depositor's required beginning date, even
though payments may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the
surviving spouse, no additional cash contributions or
rollover contributions may be accepted in the account.
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5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies.) In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V.
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII.
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Adoption
Agreement.
19
PART TWO: PROVISIONS APPLICABLE TO XXXX IRAS
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-RA for use in establishing a Xxxx
Individual Retirement Custodial Account.
ARTICLE I
1. If this Xxxx XXX is not designated as a Xxxx Conversion XXX,
then, except in the case of a rollover contribution described in section
408A(e), the Custodian will accept only cash contributions and only up to a
maximum amount of $2,000 for any tax year of the Depositor.
2. If this Xxxx XXX is designated as a Xxxx Conversion XXX, no
contributions other than XXX Conversion Contributions made during the same tax
year will be accepted.
ARTICLE IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept XXX Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include XXX Conversion Contributions.
ARTICLE II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles
(within the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
ARTICLE IV
1. If the Depositor dies before his or her entire interest is
distributed to him or her and the Depositor's surviving spouse is not the sole
beneficiary, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year following the year of
the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the
minimum annual payment for each year, divide the Depositor's entire interest in
the custodial account as of the close of business on December 31 of the
preceding year by the life expectancy of the designated beneficiary using the
attained age of the designated beneficiary as of the beneficiary's birthday in
the year distributions are required to commence and subtract 1 for each
subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the
Depositor's date of death, such spouse will then be treated as the Depositor.
ARTICLE V
1. The Depositor agrees to provide the Custodian with
information necessary for the Custodian to prepare any reports required under
sections 408(i) and 408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6,
and under guidance published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal
Revenue Service and the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or
incorporated, the provisions of Articles I through IV and this sentence will be
controlling. Any additional articles that are not consistent with section 408A,
the related regulations, and other published guidance will be invalid.
ARTICLE VII
This agreement will be amended from time to time to comply with
the provisions of the Code, related regulations, and other published guidance.
Other amendments may be made with the consent of the persons whose signatures
appear below.
20
PART THREE: PROVISIONS APPLICABLE TO BOTH REGULAR IRAS AND XXXX IRAS
ARTICLE VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this Universal Individual Retirement Account Custodial Agreement
and the Adoption Agreement signed by the Depositor. The Account may be a
Regular Individual Retirement Account or a Xxxx Individual Retirement Account,
as specified by the Depositor. See Section 24 below.
"Custodian" means Investors Fiduciary Trust Company.
"Fund" means any registered investment company which is advised, sponsored
or distributed by Sponsor; provided, however, that such a mutual fund or
registered investment company must be legally offered for sale in the state of
the Depositor's residence.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned
hereunder to the Service Company will be performed by the Distributor (if any)
or by an entity specified in the second preceding paragraph.
"Sponsor" means General Securities, Incorporated.
2. The Depositor may revoke the Custodial Account established hereunder
by mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
Custodial Account. Mailed notice is treated as given to the Custodian on date
of the postmark (or on the date of Post Office certification or registration in
the case of notice sent by certified or registered mail). Upon timely
revocation, the Depositor's initial contribution will be returned, without
adjustment for administrative expenses, commissions or sales charges,
fluctuations in market value or other changes.
The Depositor may certify in the Adoption Agreement that the Depositor
received the Disclosure Statement related to the Custodial Account at least
seven days before the Depositor signed the Adoption Agreement to establish the
Custodial Account, and the Custodian may rely upon such certification.
3. All contributions to the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's Account shall be (unless received in
additional shares) reinvested in full and fractional shares of such Fund (or of
any other Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum
balance and other exchange rules applicable to a Fund, the Depositor may at any
time direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the Depositor's Account for shares and fractional shares of
one or more other Funds. The Depositor shall give such directions by written
notice acceptable to the Service Company, and the Service Company will process
such directions as soon as practicable after receipt thereof (subject to the
second paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the
Depositor's Account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's Account will be subject to any applicable sales, redemption
or other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases
or sales of shares of one or more Funds for the Depositor's Custodial Account.
Any account maintained in connection herewith shall be in the name of the
Custodian for the benefit of the Depositor. All assets of the Custodial Account
shall be registered in the name of the Custodian or of a suitable nominee. The
books and records of the Custodian shall show that all such investments are part
of the Custodial Account.
21
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
Custodial Account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's Custodial Account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his Custodial Account.
Depositor shall have and exercise exclusive responsibility for and control over
the investment of the assets of his Custodial Account, and neither Custodian nor
any other such party shall have any duty to question his directions in that
regard or to advise him regarding the purchase, retention or sale of shares of
one or more Funds for the Custodial Account.
8. The Depositor may in writing appoint an investment advisor with
respect to the Custodial Account on a form acceptable to the Custodian and the
Service Company. The investment advisor's appointment will be in effect until
written notice to the contrary is received by the Custodian and the Service
Company. While an investment advisor's appointment is in effect, the investment
advisor may issue investment directions or may issue orders for the sale or
purchase of shares of one or more Funds to the Service Company, and the Service
Company will be fully protected in carrying out such investment directions or
orders to the same extent as if they had been given by the Depositor.
The Depositor's appointment of any investment advisor will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the Custodial Account
hereunder without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the Custodial Account shall be made at
such time and in such form as Depositor (or the Beneficiary if Depositor is
deceased) shall elect by written order to the Custodian. Depositor acknowledges
that any distribution of a taxable amount from the Custodial Account (except for
distribution on account of Depositor's disability or death, return of an "excess
contribution" referred to in Code Section 4973, or a "rollover" from this
Custodial Account) made earlier than age 59 1/2 may subject Depositor to an
"additional tax on early distributions" under Code Section 72(t) unless an
exception to such additional tax is applicable. For that purpose, Depositor
will be considered disabled if Depositor can prove, as provided in Code Section
72(m)(7), that Depositor is unable 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 be of long-continued and indefinite duration.
It is the responsibility of the Depositor (or the Beneficiary) by appropriate
distribution instructions to the Custodian to insure that any applicable
distribution requirements of Code Section 401(a)(9) and Article IV above are
met. If the Depositor (or Beneficiary) does not direct the Custodian to make
distributions from the Custodial Account by the time that such distributions are
required to commence in accordance with such distribution requirements, the
Custodian (and Service Company) shall assume that the Depositor (or Beneficiary)
is meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Depositor (or Beneficiary) and the
Custodian and Service Company shall be fully protected in so doing. The
Depositor (or the Depositor's surviving spouse) may elect to comply with the
distribution requirements in Article IV using the recalculation of life
expectancy method, or may elect that the life expectancy of the Depositor and/or
the Depositor's surviving spouse, as applicable, will not be recalculated; any
such election may be in such form as the Depositor (or surviving spouse)
provides (including the calculation of minimum distribution amounts in
accordance with a method that does not provide for recalculation of the life
expectancy of one or both of the Depositor and surviving spouse and instructions
for withdrawals to the Custodian in accordance with such method).
Notwithstanding paragraph 2 of Article IV, unless an election to have life
expectancies recalculated annually is made by the time distributions are
required to begin, life expectancies shall not be recalculated. Neither the
Custodian nor any other party providing services to the Custodial Account
assumes any responsibility for the tax treatment of any distribution from the
Custodial Account; such responsibility rests solely with the person ordering the
distribution.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the Custodial Account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and Custodian has no
duty of further inquiry. Any distributions from the Account may be mailed,
first-class postage prepaid, to the last known address of the person who is to
receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the Custodian's
liability for such payment.
11. (a) The term "Beneficiary" means the person or persons designated as
such by the "designating person" (as defined below) on a
form acceptable to the Custodian for use in connection with
the Custodial Account, signed by the designating person, and
filed with the Custodian. The form may name individuals,
trusts, estates, or other entities as either primary or
contingent beneficiaries. However, if the designation does
not effectively dispose of the entire Custodial Account as
of the time distribution is to commence, the term
"Beneficiary" shall then mean the designating person's
estate with respect to the assets of the Custodial Account
not disposed of by the designation form. The form last
accepted by the Custodian before such distribution is to
commence, provided it was received by the Custodian (or
deposited in the U.S. Mail or with a reputable delivery
service) during the designating person's lifetime, shall be
controlling and, whether or not fully dispositive of the
Custodial Account, thereupon shall revoke all such forms
previously filed by that person. The term "designating
person" means Depositor during his/her lifetime; after
Depositor's death, it also means Depositor's spouse, but
only if the spouse elects to treat the Custodial Account as
the spouse's own Custodial Account in accordance with
applicable provisions of the Code.
(b) When and after distributions from the Custodial Account to
Depositor's Beneficiary commence, all rights and obligations
assigned to Depositor hereunder shall inure to, and be
enjoyed and exercised by, Beneficiary instead of Depositor.
22
12. (a) The Depositor agrees to provide information to the Custodian at
such time and in such manner as may be necessary for the
Custodian to prepare any reports required under Section
408(i) or Section 408A(d)(3)(E) of the Code and the
regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and
manner and containing such information as is prescribed by
the Internal Revenue Service.
(c) The Depositor, Custodian and Service Company shall furnish to
each other such information relevant to the Custodial
Account as may be required under the Code and any
regulations issued or forms adopted by the Treasury
Department thereunder or as may otherwise be necessary for
the administration of the Custodial Account.
(d) The Depositor shall file any reports to the Internal Revenue
Service which are required of him by law (including Form
5329), and neither the Custodian nor Service Company shall
have any duty to advise Depositor concerning or monitor
Depositor's compliance with such requirement.
13. (a) Depositor retains the right to amend this Custodial Account
document in any respect at any time, effective on a stated
date which shall be at least 60 days after giving written
notice of the amendment (including its exact terms) to
Custodian by registered or certified mail, unless Custodian
waives notice as to such amendment. If the Custodian does
not wish to continue serving as such under this Custodial
Account document as so amended, it may resign in accordance
with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to
amend, provided (i) the Custodian does not change the
investments available under this Custodial Agreement and
(ii) the Custodian amends in the same manner all agreements
comparable to this one, having the same Custodian,
permitting comparable investments, and under which such
power has been delegated to it; this includes the power to
amend retroactively if necessary or appropriate in the
opinion of the Custodian in order to conform this Custodial
Account to pertinent provisions of the Code and other laws
or successor provisions of law, or to obtain a governmental
ruling that such requirements are met, to adopt a prototype
or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion
of the Custodian. Such an amendment by the Custodian shall
be communicated in writing to Depositor, and Depositor shall
be deemed to have consented thereto unless, within 30 days
after such communication to Depositor is mailed, Depositor
either (i) gives Custodian a written order for a complete
distribution or transfer of the Custodial Account, or (ii)
removes the Custodian and appoints a successor under Section
17 below.
Pending the adoption of any amendment necessary or desirable
to conform this Custodial Account document to the
requirements of any amendment to any applicable provision of
the Internal Revenue Code or regulations or rulings
thereunder, the Custodian and the Service Company may
operate the Depositor's Custodial Account in accordance with
such requirements to the extent that the Custodian and/or
the Service Company deem necessary to preserve the tax
benefits of the Account.
(c) Notwithstanding the provisions of subsections (a) and (b) above,
no amendment shall increase the responsibilities or
duties of Custodian without its prior written consent.
(d) This Section 13 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner
provided by Section 16 below, and no such substitution shall
be deemed to be an amendment of this Agreement.
14. (a) Custodian shall terminate the Custodial Account if this
Agreement is terminated or if, within 30 days (or such
longer time as Custodian may agree) after resignation or
removal of Custodian under Section 17, Depositor or
Sponsor, as the case may be, has not appointed a successor
which has accepted such appointment. Termination of the
Custodial Account shall be effected by distributing all
assets thereof in a single payment in cash or in kind to
Depositor, subject to Custodian's right to reserve funds as
provided in Section 17.
(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for
Sections 15(f), 17(b) and (c) hereof which shall survive
the termination of the Custodial Account and this document),
and Custodian shall be relieved from all further liability
hereunder or with respect to the Custodial Account and all
assets thereof so distributed.
15. (a) In its discretion, the Custodian may appoint one or more
contractors or service providers to carry out any of its
functions and may compensate them from the Custodial Account
for expenses attendant to those functions. In the event of
such appointment, all rights and privileges of the Custodian
under this Agreement shall pass through to such contractors
or service providers who shall be entitled to enforce them
as if a named party.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor
and for dealing with or forwarding the same to the transfer
agent for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on
Custodian or Service Company (or any other party providing
services to the Custodial Account), and none shall be
implied. Neither shall be liable (or assumes any
responsibility) for the collection of contributions, the
proper amount, time or tax treatment of any contribution to
the Custodial Account or the propriety of any contributions
under this Agreement, or the purpose, time, amount
(including any minimum distribution amounts), tax treatment
or propriety of any distribution hereunder, which matters
are the sole responsibility of Depositor and Depositor's
Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or
after the Custodian's resignation or removal), the Custodian
or Service Company shall file with Depositor a written
report or reports reflecting the transactions effected by it
during such period and the assets of the Custodial Account
at its close. Upon the expiration of 60 days after such a
report is sent to Depositor (or Beneficiary), the Custodian
or Service Company shall be forever released and discharged
from all liability and accountability to anyone with respect
to transactions shown in or reflected by such report except
with respect to any such acts or transactions as to which
Depositor shall have filed written objections with the
Custodian or Service Company within such 60 day period.
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(e) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements
and other reports to shareholders, proxies and proxy
soliciting materials relating to the shares of the Funds(s)
credited to the Custodial Account. No shares shall be
voted, and no other action shall be taken pursuant to such
documents, except upon receipt of adequate written
instructions from Depositor.
(f) Depositor shall always fully indemnify Service Company,
Distributor, the Fund(s), Sponsor and Custodian and save
them harmless from any and all liability whatsoever which
may arise either (i) in connection with this Agreement and
the matters which it contemplates, except that which arises
directly out of the Service Company's, Distributor's,
Fund's, Sponsor's or Custodian's bad faith, gross negligence
or willful misconduct, (ii) with respect to making or
failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which
is in full compliance with Section 10, or (iii) actions
taken or omitted in good faith by such parties. Neither
Service Company nor Custodian shall be obligated or expected
to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed
upon by that party and Depositor, and unless fully
indemnified for so doing to that party's satisfaction.
(g) The Custodian and Service Company shall each be responsible
solely for performance of those duties expressly assigned to
it in this Agreement, and neither assumes any responsibility
as to duties assigned to anyone else hereunder or by
operation of law.
(h) The Custodian and Service Company may each conclusively rely upon
and shall be protected in acting upon any written order from
Depositor or Beneficiary, or any investment advisor
appointed under Section 8, or any other notice, request,
consent, certificate or other instrument or paper believed
by it to be genuine and to have been properly executed, and
so long as it acts in good faith, in taking or omitting to
take any other action in reliance thereon. In addition,
Custodian will carry out the requirements of any apparently
valid court order relating to the Custodial Account and will
incur no liability or responsibility for so doing.
16. (a) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the
applicable fee schedule. The fee schedule originally
applicable shall be the one specified in the Adoption
Agreement or Disclosure Statement, as applicable. The
Custodian may substitute a different fee schedule at any
time upon 30 days' written notice to Depositor. The
Custodian shall also receive reasonable fees for any
services not contemplated by any applicable fee schedule and
either deemed by it to be necessary or desirable or
requested by Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of
any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets
of the Custodial Account, that may be levied or assessed in
respect to such assets, and all other administrative
expenses incurred by the Custodian in the performance of its
duties (including fees for legal services rendered to it in
connection with the Custodial Account) shall be charged to
the Custodial Account. If the Custodian is required to pay
any such amount, the Depositor (or Beneficiary) shall
promptly upon notice thereof reimburse the Custodian.
(c) All such fees and taxes and other administrative expenses charged
to the Custodial Account shall be collected either from the
amount of any contribution or distribution to or from the
Account, or (at the option of the person entitled to collect
such amounts) to the extent possible under the circumstances
by the conversion into cash of sufficient shares of one or
more Funds held in the Custodial Account (without liability
for any loss incurred thereby). Notwithstanding the
foregoing, the Custodian or Service Company may make demand
upon the Depositor for payment of the amount of such fees,
taxes and other administrative expenses. Fees which remain
outstanding after 60 days may be subject to a collection
charge.
17. (a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office
hereunder. Such notice, to be effective, shall designate a
successor custodian and shall be accompanied by the
successor's written acceptance. The Custodian also may at
any time resign upon 30 days' prior written notice to
Sponsor, whereupon the Sponsor shall notify the Depositor
(or Beneficiary) and shall appoint a successor to the
Custodian. In connection with its resignation hereunder,
the Custodian may, but is not required to, designate a
successor custodian by written notice to the Sponsor or
Depositor (or Beneficiary), and the Sponsor or Depositor (or
Beneficiary) will be deemed to have consented to such
successor unless the Sponsor or Depositor (or Beneficiary)
designates a different successor custodian and provides
written notice thereof together with such a different
successor's written acceptance by such date as the Custodian
specifies in its original notice to the Sponsor or Depositor
(or Beneficiary) (provided that the Sponsor or Depositor (or
Beneficiary) will have a minimum of 30 days to designate a
different successor).
(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury
under Code Section 408(a)(2). Upon receipt by Custodian of
written acceptance by its successor of such successor's
appointment, Custodian shall transfer and pay over to such
successor the assets of the Custodial Account and all
records (or copies thereof) of Custodian pertaining thereto,
provided that the successor custodian agrees not to dispose
of any such records without the Custodian's consent.
Custodian is authorized, however, to reserve such sum of
money or property as it may deem advisable for payment of
all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or
against the assets of the Custodial Account or on or against
the Custodian, with any balance of such reserve remaining
after the payment of all such items to be paid over to the
successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of
its predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time, including
successors to such sections.
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19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power
to anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof except
to the extent required by law. At no time shall it be possible for any part of
the assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Depositor or his/her Beneficiary except to
the extent required by law.
21. When accepted by the Custodian, this Agreement is accepted in and
shall be construed and administered in accordance with the laws of the state
where the principal offices of the Custodian are located. Any action involving
the Custodian brought by any other party must be brought in a state or federal
court in such state.
If in the Adoption Agreement, Depositor designates that the Custodial
Account is a Regular XXX, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Adoption Agreement Depositor designates that the Custodial
Account is a Xxxx XXX, this Agreement is intended to qualify under Code Section
408A as a Xxxx individual retirement Custodial Account and to entitle Depositor
to the tax-free withdrawal of amounts from the Custodial Account to the extent
permitted in such Code section.
If any provision hereof is subject to more than one interpretation or
any term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which is
consistent with the intent expressed in whichever of the two preceding sentences
is applicable.
However, the Custodian shall not be responsible for whether or not
such intentions are achieved through use of this Agreement, and Depositor is
referred to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. If any provision of any document governing the Custodial Account
provides for notice, instructions or other communications from one party to
another in writing, to the extent provided for in the procedures of the
Custodian, Service Company or another party, any such notice, instructions or
other communications may be given by telephonic, computer, other electronic or
other means, and the requirement for written notice will be deemed satisfied.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Adoption Agreement the Depositor designated the Custodial Account
as a Regular XXX under Code Section 408(a), the provisions of Part One and Part
Three of this Agreement and the provisions of the Adoption Agreement are the
legal documents governing the Depositor's Custodial Account.
(b) If in the Adoption Agreement the Depositor designated the Custodial Account
as a Xxxx XXX under Code Section 408A, the provisions of Part Two and Part Three
of this Agreement and the provisions of the Adoption Agreement are the legal
documents governing the Depositor's Custodial Account.
(c) In the Adoption Agreement the Depositor must designate the Custodian
Account as either a Xxxx XXX or a Regular XXX, and a separate account will be
established for such XXX. One Custodial Account may not serve as a Xxxx XXX and
a Regular XXX (through the use of subaccounts or otherwise).
25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-A, the Custodian will amend this Agreement correspondingly.
Articles I through VII of Part Two of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-RA. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-RA, the Custodian will amend this Agreement correspondingly.
The Internal Revenue Service has endorsed the use of documentation
permitting a Depositor to establish either a Regular XXX or Xxxx XXX (but not
both using a single Adoption Agreement), and this Kit complies with the
requirements of the IRS guidance for such use. If the Internal Revenue Service
subsequently determines that such an approach is not permissible, or that the
use of a "combined" Adoption Agreement does not establish a valid Regular XXX or
a Xxxx XXX (as the case may be), the Custodian will furnish the Depositor with
replacement documents and the Depositor will if necessary sign such replacement
documents. Depositor acknowledges and agrees to such procedures and to
cooperate with Custodian to preserve the intended tax treatment of the Account.
26. If the Depositor maintains an Individual Retirement Account under
Code section 408(a), Depositor may convert or transfer such other XXX to a Xxxx
XXX under Code section 408A using the terms of this Agreement and the Adoption
Agreement by completing and executing the Adoption Agreement and giving suitable
directions to the Custodian and the custodian or trustee of such other XXX.
Alternatively, the Depositor may convert or transfer such other XXX to a Xxxx
XXX by use of a reply card or by telephonic, computer or electronic means in
accordance with procedures adopted by the Custodian or Service Company intended
to meet the requirements of Code section 408A, and the Depositor will be deemed
to have executed the Adoption Agreement and adopted the provisions of this
Agreement and the Adoption Agreement in accordance with such procedures.
27. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
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