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CONTENTS
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I. PROCEDURES
Instructions For Opening Your XXX 1
Individual Retirement Custodial Account Disclosure Statement 2
Individual Retirement Custodial Account Agreement
(Under Section 408(a) Of the Internal Revenue Code) 3
II. RETIREMENT ACCOUNT FORMS
Individual Retirement Custodial Account Application And
Adoption Agreement
XXX Transfer Request/Direct Rollover Request
Authorization For Distribution From Individual Retirement Account
Revised 12/96
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INSTRUCTIONS FOR OPENING YOUR XXX
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DISCLOSURE
Accessor Funds, Inc. (the "Fund"), is a multi-managed, no-load, open-end
management investment company, known as a mutual fund, currently with eight
diversified investment portfolios, each with its own investment objective and
policies. While The Fifth Third Bank is the Custodian of your individual
retirement arrangement account ("XXX"), INVESTMENTS IN THE PORTFOLIOS OF THE
FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK.
FURTHER, INVESTMENTS IN THE PORTFOLIOS ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
The Fund's Individual Retirement Custodial Account Plan consists of the
following documents.
DOCUMENTS
XXX Disclosure Statement
XXX Custodial Account Agreement
XXX Application and Adoption Agreement Form
XXX Transfer Request/Direct Rollover Request Form
Authorization For Distribution From XXX
Accessor Funds, Inc. Prospectuses
Please read each of these documents carefully as they contain the information
you need to establish an XXX. Since many of the benefits of an XXX are related
to income taxes, you are encouraged to discuss your XXX plans with your lawyer,
accountant or tax adviser. Neither Bennington Capital Management L.P. nor the
Custodian may act as your tax or investment adviser. You are responsible for
complying with the tax laws and financial considerations as they apply to your
situation.
OPENING YOUR XXX
1. Please complete and sign the XXX APPLICATION AND ADOPTION AGREEMENT FORM.
This sets up an XXX in your name or, if a Spousal XXX, in your spouse's
name, permits rollovers, designates beneficiaries and specifies your
investment choices.
2. Please complete and sign the XXX TRANSFER REQUEST/DIRECT ROLLOVER REQUEST
FORM if your initial investment is from a transfer of assets or rollover
from another XXX or qualified plan. Complete a form for each organization
or account from which an XXX investment is to be transferred.
3. Remove the XXX APPLICATION AND ADOPTION AGREEMENT FORM and the TRANSFER
REQUEST/DIRECT ROLLOVER REQUEST (if applicable) and deliver them to your
investment adviser. Retain the XXX Disclosure Statement and the XXX
Custodial Account Agreement for your records.
DISTRIBUTIONS
Please contact your investment adviser or Bennington Capital Management L.P. at
0-000-000-0000 for information on taking a distribution from your XXX.
FEES AND MINIMUMS
The fees are set out on the Application and Adoption Agreement form. Currently,
there are NO XXX fees if your aggregate XXX investment is $10,000 at year-end.
IRA's under $10,000 will be debited for an annual $25.00 maintenance fee in
January of each year. The fees can be changed with 30 days' written notice to
you.
The minimum initial investment to open an XXX is $1,000 in the aggregate.
Subsequent investments are $100 in the aggregate. These minimums can be changed
with 30 days' written notice to you.
MAILING INSTRUCTIONS Check to be sure you have properly completed all necessary
information and forms. Your XXX cannot be opened without the properly completed
documents. Please deliver all of the completed and signed forms to your
investment adviser, who will deliver them to Accessor Funds, Inc., X.X. Xxx
0000, Xxxxxxx XX 00000.
Accessor Funds, Inc.
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT DISCLOSURE STATEMENT
INTRODUCTION
This disclosure statement contains information about your Individual Retirement
Custodial Account ("XXX") for investment in Accessor Funds, Inc. (the "Fund"), a
multi-managed, no-load, open-end management investment company, known as a
mutual fund. The Fund currently consists of eight diversified investment
portfolios, each with its own investment objective and policies. Your interest
in the XXX is nonforfeitable. All assets of the XXX are registered in the name
of The Fifth Third Bank, a banking company organized under the laws of the State
of Ohio (the "Custodian") or of a suitable nominee as custodian for your
benefit, or that of your beneficiary. Bennington Capital Management L.P.
("Bennington") acts as investment adviser, manager and transfer agent to the
Fund. Through an agreement between the Fund, Bennington and the Custodian,
Bennington provides administrative services on behalf of the Fund and the
Custodian to the XXX. Your XXX is a custodial account established for your
exclusive benefit or that of your named beneficiary or beneficiaries as
described in Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code").
Your XXX is established through the use of the provisions of Internal Revenue
Service ("IRS") Form 5305-A, which is a model custodial account agreement that
meets the requirements of Section 408(a) of the Code and has been automatically
approved as to form by the IRS. The IRS approval applies only to Form 5305-A; it
is not an endorsement of the Fund-sponsored XXX. Accessor Funds, Inc. Individual
Retirement Custodial Account Plan consists of the Individual Retirement
Custodial Account Agreement (the "Custodial Account Agreement"), this Disclosure
Statement, the Application and Adoption Agreement (the "Adoption Agreement") and
the other appropriate forms, which will be amended from time to time to comply
with the provisions of the IRS Code and related regulations. Other amendments
may be made with the consent of the persons whose signatures appear on the
Adoption Agreement.
RIGHT TO REVOKE
You may revoke a newly established XXX at any time within seven days after the
date on which you establish your account. An XXX established more than seven
days after the date of your receipt of this Disclosure Statement may not be
revoked.
To revoke your XXX, mail or deliver a written notice of revocation to:
Accessor Funds, Inc.
X.X. Xxx 0000
Xxxxxxx XX 00000-0000
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 XXX within the seven-day period, you are
entitled to a return of the entire amount you contributed into your XXX, without
adjustment for such items as sales charges, administrative expenses or
fluctuations in market value. Your initial investment in the XXX will be
invested in the U.S. Government Money Portfolio for seven days and then invested
in the Portfolios of the Fund in accordance with the directions on your Adoption
Agreement.
TAX ADVANTAGES
Your XXX gives you several tax benefits. Earnings on the assets held in your XXX
are not subject to federal income tax until withdrawn by you. You may be able to
deduct all or part of your XXX contribution on your federal income tax return.
State income tax treatment of your XXX may differ from federal treatment; ask
your state tax department or your personal tax adviser for details.
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 XXX. This is a called a "direct rollover." Or, if
your distribution is paid directly to you, you may make a "regular rollover" to
your XXX within 60 days. By making a rollover, you can defer income taxes on the
amount rolled over until you subsequently make withdrawals from your XXX.
Since many of the benefits of an XXX are related to income taxes, you are
encouraged to discuss your XXX plans with your lawyer, accountant or tax
adviser. Neither Bennington nor the Custodian may act as your tax adviser. You
must be responsible for complying with the tax laws and financial considerations
as they apply to your situation.
ESTABLISHING YOUR XXX
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 be commingled with other property except in a
common trust or investment fund. Your interest in the account must be
nonforfeitable at all times. The annual earnings for your XXX consist of all
dividends and distributions on the Portfolio shares held in your account. Fund
dividends and distributions are reinvested in additional shares and accumulate
on a tax deferred basis.
You may obtain further information on IRAs from any district office of the IRS
or by requesting Publication 590, "Individual Retirement Arrangement" from the
IRS.
FEES AND EXPENSES
Fees and other expenses of maintaining your XXX account are described in the
Adoption Agreement and in the letter you receive confirming the acceptance of
your XXX and may be changed from time to time, as provided in the Custodial
Agreement.
ELIGIBILITY
Whether you are an employee or a self-employed individual, you are eligible to
contribute to an XXX even if you are already covered under another tax-qualified
plan. Your employer may contribute to an XXX established by you and you may
contribute to an XXX used as part of a Simplified Employee Pension Plan ("SEP")
or Savings Incentive Match Plan for Employees ("SIMPLE") described below. You
are eligible to establish and contribute to an XXX for any year if you received
taxable compensation during the year for personal services you rendered and you
did not reach age 70 1/2 during the year. Taxable compensation includes wages,
salaries, tips, commissions, fees, bonuses, taxable alimony and separate
maintenance payments. Income not considered compensation includes pension income
or earnings and profits from property, such as dividend, interest, rental or
capital gains income.
TYPES OF IRAS
REGULAR XXX
If you have taxable compensation and are under age 70 1/2, you may make a
contribution to a Regular XXX of $2,000 or 100% of your compensation, whichever
is less. To determine the tax deductibility of your contribution, see
"Deductible XXX Contributions" on page 17. However, rollover contributions and
contributions to a simplified employee pension (SEP) or a simple retirement plan
(SIMPLE), as explained below, can be more than $2,000 per year.
SPOUSAL XXX
You may be eligible to establish an additional but separate and independent
account for your unemployed spouse. To qualify, you must be married at the end
of the tax year, you and your spouse must file a joint return, your spouse must
be under age 70 1/2, at least one of the spouses must have compensation or
earned income from personal services rendered. For a spousal XXX, your spouse
must set up a different XXX, separate from yours, to which you contribute. The
maximum total contribution to your XXX and to a Spousal XXX may not exceed the
lesser of $2,250 (potentially, $4,000 for tax years beginning after 1996) or
100% of your compensation. The contribution does not have to be equally divided
between the two accounts; however, the maximum contribution to either account is
$2,000 or 100% of compensation. (Beginning January 1, 1997, the total combined
contribution is limited to the lesser of $4,000 or 100% of the couple's combined
earned income.) To determine the amount of your income tax deduction for your
XXX contribution and the amount that can be contributed to each account, see the
IRS instruction booklets for Forms 1040 and 1040A. Although you may not continue
contributing to your XXX once you have reached age 70 1/2, you may continue
contributing to a Spousal XXX until the year in which your spouse reaches age 70
1/2. With the exception of the contribution limits, all rules that apply to a
Regular XXX also apply to a Spousal XXX.
If you or your spouse earn more than $250 in taxable compensation in any tax
year, you or your spouse may make contributions to your respective regular IRAs
equal to the lesser of $2,000 or 100% of taxable compensation.
ROLLOVER XXX
Generally, a rollover is a tax-free transfer of cash or other assets from one
retirement program to which you contribute to another. The rollover must be
completed by the 60th day after the day you receive the distribution to be valid
and may only be done once in any one-year period (measured from the date you
receive the distribution). This rule applies separately to each XXX you own,
although for purposes of the rule, the Fund-sponsored XXX is considered one XXX
regardless of how many Portfolios of the Fund you choose. Exchanges of XXX money
between the Portfolios are restricted by the Fund's exchange policies, but not
by this rule. See IRS Publication 590 for more information about rollover IRAs.
There are two types of rollover contributions:
ROLLOVER FROM ONE XXX TO ANOTHER. You may withdraw part or all of the
assets from one XXX and reinvest them in another XXX. You are not required
to receive a complete distribution from your XXX in order to make a
rollover contribution to another XXX, nor are you required to roll over the
full amount you received. Any amount you keep will generally be taxable
(unless it is a return of nondeductible contributions) in the year it is
received, and it will generally be subject to a 10% penalty tax if you are
under age 59 1/2. Once you reach age 70 1/2, your required minimum
distributions are not eligible for rollover treatment. However, you may
make rollover contributions, even though you may not make regular XXX
contributions.
ROLLOVER FROM AN EMPLOYER'S QUALIFIED PLAN TO AN XXX. This type of rollover
XXX is an XXX that contains only eligible distributions from an employer's
qualified retirement plan (e.g., profit sharing, pension, 401(k), or 403(b)
plan). By maintaining a separate XXX for this money (called a "CONDUIT
XXX"), you may subsequently roll it over into another employer's qualified
retirement plan (provided that the employer's plan accepts rollovers). If
you commingle this money with your regular XXX contributions, you may not
roll it over into another employer's qualified retirement plan. These
rollover contributions, if properly made, are not included in your gross
income and therefore are not deductible from it; neither will rollover
contributions count toward the maximum allowable nondeductible
contribution. When you deposit an eligible irrevocable election indicating
that the distribution be treated as a rollover contribution. Consult your
tax adviser before electing to roll over to an XXX. By signing the
Application, you are irrevocably electing to treat your qualified plan
distribution as a rollover. If you receive an eligible rollover
distribution from a qualified retirement plan, you may roll over the amount
you have received to an XXX, as long as the rollover is completed by the
60th day after the day you receive such amount. Any part of an eligible
rollover distribution that is made payable to you, even if you intend to
roll it over into an individual retirement account (or eligible retirement
plan) is subject to mandatory 20% withholding for Federal income tax by the
employer. You can avoid this withholding by using the DIRECT ROLLOVER
OPTION discussed below. Your plan or 403(b) sponsor is required to provide
you with information about direct and regular rollovers and withholding
taxes before you receive your distribution and must comply with your
directions to make a direct rollover. READ THIS INFORMATION CAREFULLY
BEFORE RECEIVING ANY DISTRIBUTIONS FROM A QUALIFIED RETIREMENT PLAN OR
403(B) ANNUITY. THE RULES GOVERNING ROLLOVERS ARE COMPLICATED. BE SURE TO
CONSULT YOUR TAX ADVISER OR THE XXX IF YOU HAVE A QUESTION ABOUT ROLLOVERS.
DIRECT ROLLOVER OPTION. If you are entitled to an eligible distribution of
$200 or more from a qualified retirement plan, you may ask your employer to
make a direct rollover of the distribution to the Custodian. By electing a
direct rollover you are exempt from the 20% tax withholding requirements
that would apply if the distribution were made payable to you. The employer
must make the check payable to the Custodian/Trustee of the receiving XXX;
however, the employer has the option of giving the check to you for
delivery or mailing it directly to the XXX. The employer must report a
direct rollover on Form 1099-R and the Custodian will report the rollover
contribution on Form 5498.
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, 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.
Once you have established a Rollover XXX, you will not be taxed until you take
distributions.
SPECIAL RULES FOR SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES.
If you are a surviving spouse, you may have an eligible rollover distribution
rolled directly into an XXX or paid to you. If you have the distribution paid to
you, you can keep it or roll it over to an XXX, but you cannot roll it over to
an employer's qualified plan. If you are a beneficiary other than the surviving
spouse, you cannot choose a direct rollover, and you cannot roll over the
distribution. If you are the spouse or former spouse alternate payee under a
Qualified Domestic Relations Order, you may have an eligible rollover
distribution rolled directly into an XXX or a qualified employer plan or have it
paid to you. If the distribution is paid to you, you may roll it over to an XXX
or another employer's qualified plan.
EXCEPTIONS TO ROLLOVER CONTRIBUTIONS. Almost all distributions from employer
plans or 403(b) arrangements (for employees of tax-exempt employers) are
eligible for rollover to an XXX. The main exceptions are
o payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
o installment payments for a period of 10 years or more,
o required distributions after age 70 1/2, and
o payments of employee after-tax contributions.
TRANSFER TO A SUCCESSOR TRUSTEE/CUSTODIAN. A transfer is the movement of your
XXX funds directly from one trustee or custodian to another. You and the
accepting trustee or custodian use a Transfer Request to direct the current
trustee to transfer the XXX. Because you do not take physical receipt of the
money, the transaction is not reported to the IRS. Institutional transfers are
not subject to the one-year restriction that applies to rollovers; you may
transfer XXX money from one trustee or custodian to another as often as you
wish.
SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP")
A separate XXX may be established for use by your employer as part of a SEP
arrangement. Your employer may contribute to your SEP-XXX up to a maximum of 15%
of your compensation or $30,000, whichever is less. If your SEP-XXX is used as
part of a salary reduction SEP ("SAR-SEP), you may elect to reduce your annual
compensation, up to a maximum of 15% of your compensation or $7,000 (indexed to
reflect cost-of-living adjustments), whichever is less, and have your employer
contribute that amount to your SEP-XXX. Beginning January 1, 1997, the SAR-SEP
plan was discontinued, although employers may continue to operate already
existing plans. If your employer maintains both a salary reduction SEP and a
regular SEP, the annual contribution limit to both SEPs together is 15% of your
compensation or $30,000, whichever is less. You may contribute, in addition to
the amount contributed by your employer to your SEP-XXX, an amount not in excess
of the limits referred to under the Regular XXX above. It is your and your
employer's responsibility to see that contributions in excess of normal XXX
limits are made under a valid SEP and are, therefore, proper. The amount of
compensation that may be used in 1997 for calculating contributions is $160,000.
The compensation limit reduces the maximum dollar amount that can be contributed
to a SEP-XXX in any given year from $30,000 to $24,000 (0.15 x $160,000).
Employer contributions under a SEP-XXX are immediately vested and belong to the
employee even if the employee leaves the company. The 70 1/2 age limit for
contributing to a Regular XXX does not apply to employer contributions made for
the benefit of eligible SEP participants.
SIMPLE RETIREMENT PLANS ("SIMPLE IRAS")
A SIMPLE XXX may be established for use by your employer as part of a SIMPLE
retirement plan. If your employer maintains a SIMPLE retirement plan, you may
elect to reduce your annual compensation by a percentage you choose (up to
$6,000, indexed to reflect cost-of-living adjustments) and have your employer
contribute that amount to your SIMPLE XXX. Your employer will either make a
matching contribution equal to 100% of your contributions (up to 3% of your
compensation) or make a non-elective contribution of 2% of compensation for each
eligible employee. You may contribute, in addition to the amount contributed by
your employer to your SIMPLE XXX, an amount not in excess of the limits referred
to under the Regular XXX above. It is your and your employer's responsibility to
see that contributions in excess of normal XXX limits are made under a valid
SIMPLE retirement plan and are, therefore, proper. Employer contributions under
a SIMPLE XXX are immediately vested and belong to the employee even if the
employee leaves the company. The 70 1/2 age limit for contributing to a Regular
XXX does not apply to employer contributions made for the benefit of eligible
SIMPLE retirement plan participants.
CONTRIBUTIONS
You may make a contribution to your existing XXX or establish a new XXX for a
taxable year at any time from the beginning of the tax year up to the date for
filing your federal tax return for that year (NOT including any extensions).
Usually this is April 15 of the following year. You do not have to contribute to
an XXX every year. Contributions must be in the form of a check, money order, or
similar cash item. No part of your XXX can be used to buy a life insurance
policy. Your account's assets cannot be commingled with other property, except
in a common trust fund or common investment fund. Your XXX may not be invested
in collectibles, such as gems, art or coins (other than certain gold and silver
coins issued by the United States).
DEDUCTIBLE CONTRIBUTIONS. The amount of your deduction depends upon whether you
are (or your spouse is) an active participant in any employer-sponsored
retirement plan. If neither you nor your spouse is an active participant of any
employer-sponsored retirement plan, the entire XXX contribution is deductible.
If you are covered by an employer-sponsored retirement plan at any time during a
year, you are an "active participant" for that year, even if you are not vested
in your retirement benefit or are not currently making contributions to the
plan.
As an active participant to an employer-sponsored retirement plan, there may be
limitations on the deductibility of your contribution to your XXX. This depends
on the amount of your income.
Your Form W-2 (or your spouse's W-2) should indicate if you were an active
participant in an employer-sponsored retirement plan during a year. If you have
a question, you should ask your employer or the plan administrator.
In one situation, your spouse's "active participant" status will not affect the
deductibility of your contributions to your XXX.
This rule applies only if you and your spouse file separate tax returns for the
taxable year and you lived apart at all times during the taxable year. The
portion of your contribution that is deductible depends upon your filing status
and the amount of your adjusted gross income ("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. The following table shows the deduction rules.
FOR ACTIVE RETIREMENT PLAN -- PARTICIPANTS
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IF YOU ARE MARRIED THEN YOUR XXX
IF YOU ARE SINGLE FILING JOINTLY CONTRIBUTION IS
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Up to Up to Fully
$25,000 $40,000 Deductible
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ADJUSTED Over $25,000 Over $40,000 Partly
GROSS but less than but less than Deductible
INCOME $35,000 $50,000
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$35,000 $50,000 Not
and up and up Deductible
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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 in which the numerator is the amount by which your AGI exceeds the
lower limit of the partly deductible range and the denominator is $10,000.
Subtract this from your contribution and then round up 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 XXX in a year in
which you are an active participant in your employer's retirement plan. Also
assume that your AGI for the year is $47,555 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: ($47,555-$40,000) = $7,555
2. Divide this by 10,000: $7,555
----- = 0.7555
$10,000
3. Multiply this by your contribution: 0.7555 x $2,000 = $1,511
4. Subtract this from your contributions: ($2,000 - $1,551) = $489
5. Round this up to the nearest $10: = $490
6. Your deductible contribution is the greater of this amount or $200.
NONDEDUCTIBLE XXX CONTRIBUTIONS. Even though part or all of your contribution is
not deductible, you may still contribute to your XXX up to the limit on
contributions ($2,000, or $2,250 for spousal IRAs or $4,000 for tax years
beginning after 1996). To the extent that your contribution exceeds the
deductible limits, it will be nondeductible. However, earnings on all XXX
contributions are tax deferred until distribution. When you file your tax return
for the year (including extensions), you must designate the amount of
nondeductible XXX contributions for the year by using IRS Form 8606. If you
overstate the amount of nondeductible contributions for a taxable year, a
penalty of $100 will be assessed for each overstatement unless you can show that
the overstatement was due to a reasonable cause.
EXCESS CONTRIBUTIONS. The maximum contribution you can make to an XXX is $2,000
($2,250 for your XXX and a spousal XXX or $4,000 for tax years beginning after
1996) 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.
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. Earnings on the amount withdrawn must also be
withdrawn. 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.
Any excess contribution withdrawn after 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 year the
excess remains in your account. You, not your account, are liable for the excise
tax.
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 includible in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
IRAs do not exceed $2,250 or $4,000 for tax years beginning after 1996 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).
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 includible 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.
INVESTMENTS
You control the investment and reinvestment of contributions to your XXX.
Investments must be in one or more of the Portfolios available from time to time
as listed in the Application. You direct the investment of your XXX by giving
your investment instructions to Bennington. Since you control the investment of
your XXX, you are responsible for any losses; neither the Custodian, the Fund
nor Bennington has any responsibility for any loss or diminution in value
occasioned by your exercise of investment control. Transactions for your XXX
will generally be effected at the applicable public offering price or net asset
value for shares of the Portfolios involved next established after Bennington
receives proper investment instructions from you; consult the current prospectus
for the Portfolios involved for additional information.
Before making any investment, read carefully the current prospectus for any
Portfolio you are considering as an investment for your XXX. The prospectus will
contain information about the Portfolio's investment objective 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 XXX, the growth in
value of your XXX cannot be guaranteed or projected.
PROHIBITED TRANSACTIONS
The tax-exempt status of your XXX will be revoked if you or your beneficiary
engages in any of the prohibited transactions listed in Section 4975 of the tax
code. The fair market value of your XXX will be includible in your taxable
income in the year in which such prohibited transaction takes place. The fair
market value of your XXX may also be subject to a 10% penalty tax 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 XXX is
treated as a taxable withdrawal; the only exception involves certain types of
government-sponsored coins.
Generally, a prohibited transaction is any improper use of the assets in your
XXX. Some examples of prohibited transactions are: o Direct or indirect sale or
exchange of property between you and your XXX or a family member. o Transfer of
any property from your XXX to yourself or a family member or from yourself or a
family member to your XXX.
Your XXX could lose its tax exempt status if you use all or part of your
interest in your XXX as security for a loan or borrow any money from your XXX.
Any portion of your XXX used as security for a loan will be taxed as ordinary
income in the year in which the money is borrowed. If you are under age 59 1/2,
this amount will also be subject to a 10% penalty tax as a premature
distribution.
WITHDRAWALS AND DISTRIBUTIONS
You may withdraw from your 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). Amounts withdrawn by you are includible in your gross income in the
taxable year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from an XXX are not eligible for averaging treatment available to
certain lump sum distributions from qualified employer retirement plans.
METHODS OF DISTRIBUTION. Assets may be distributed from your XXX according to
one or more of the following methods selected by you:
o total distribution;
o distribution over a specified period
o purchase of an annuity contract
(See Article IV of your XXX Custodial Agreement for a full description of these
distribution methods.)
LATEST TIME TO WITHDRAW. If you have not withdrawn your entire XXX by the April
1 following the year in which you reach 70 1/2, you must begin minimum
withdrawals by April 1 of that year in order to avoid penalty taxes. Subsequent
distributions must be made by December 31 of each following year over the
distribution period. If you maintain more than one XXX, you may take from any of
your IRAs the aggregate amount to be withdrawn.
MINIMUM DISTRIBUTIONS. Once distributions are required to begin, they must not
be less than the amount each year (determined by actuarial tables) which
exhausts the value of the account over the required distribution period, which
is generally your life expectancy or the joint life expectancy of you and your
beneficiary. The minimum withdrawal rules are complex. Consult your tax adviser
for assistance. The penalty tax for not withdrawing enough is 50% of the
difference between the minimum withdrawal amount and your actual withdrawals
during a year.
PREMATURE WITHDRAWALS. Since the purpose of the XXX is to accumulate funds for
retirement, your receipt or use of any portion of your 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: o
was a result of your death or disability, or o covers deductible medical
expenses (applies after 1996), or
o pays health insurance premiums for individuals who have received
unemployment compensation for at least 12 consecutive weeks (applies after
1996), or
o 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), or
o the distribution is rolled over to another qualified retirement plan.
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 receive the remaining amount in your 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.
DISTRIBUTION UPON DISABILITY. A distribution on account of your disability will
not be subject to the "additional tax on early distributions" under Code Section
72(t). For that purpose, you will be considered disabled if you can prove, as
provided in Code Section 72(m)(7), that you are 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. For additional information about
Disabilities see IRS Publication No. 522.
DISTRIBUTION UPON DEATH. The assets remaining in your XXX will be distributed
upon your death to the Beneficiary(ies) named by you on record with the
Custodian. If there is no Beneficiary designated for your XXX in the Custodian's
records, or if the Beneficiary you had designated dies before you do, your XXX
will be paid to your surviving spouse, or if none, to your estate. If your
spouse was your Primary Beneficiary and you had started to receive distributions
from your XXX, but die before receiving the balance of your XXX, your spouse has
several options. Your spouse can either keep receiving distributions from your
XXX at least as rapidly, or roll over all or part of your XXX into an XXX in his
or her name. If distributions from your XXX had not yet begun, your spouse may
defer taking distributions until April 1 of the year you would have turned 70
1/2, and then receive distributions over his or her life expectancy, or roll
over the account into an XXX in his or her name, and treat the XXX as his or her
own. If your Beneficiary is not your spouse, and distributions had begun from
your account, your Beneficiary may continue to receive them at least as rapidly
as the payment schedule you had established. If distributions had not yet begun,
your Beneficiary must deplete your account within 5 years of your death, or
start taking distributions from your account within one year of your death over
his or her own life expectancy.
MINIMUM DISTRIBUTION INCIDENTAL BENEFIT (MDIB) RULE. This rule specifies that
benefits provided under a retirement plan must be for the primary benefit of a
participant rather than for the beneficiary or beneficiaries. If your spouse is
your sole beneficiary, this special MDIB rule does not apply. In some cases, the
distribution under the MDIB rule may exceed the amount required under the normal
age 70 1/2 required minimum distribution rules. If someone other than, or in
addition to, your spouse is a named beneficiary, the minimum distribution
required is the greater of either the amount determined under the regular rules
or the amount determined under the MDIB rule. For additional information, please
see IRS Publication 590 and consult your tax adviser.
DISTRIBUTION OF NONDEDUCTIBLE CONTRIBUTIONS. To the extent that a withdrawal
constitutes the return of your nondeductible contributions (not including
earnings), it will be tax-free. However, if you made both deductible and
nondeductible XXX contributions, 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 XXX contributions bear to the total balance of all your IRAs
(including rollover IRAs and SEPs).
For example, in 1996 a participant's XXX comprised the following:
Total Deductible Contributions $5,000
Total Nondeductible Contributions $2,000
Earnings On IRAs as of 12/31/96 $1,000
Less 1996 Withdrawal $ 500
Total Account Balance as of 12/31/96 $7,500
To determine the nontaxable portion of your 1996 withdrawal, the total 1996
withdrawal ($500) must be multiplied by a fraction, in which the numerator of
the fraction is the total of all nondeductible contributions remaining in the
account before the 1996 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-96 ($7,500) plus the 1996 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 1996 will not be included in your taxable
income. The remaining $375 will be taxable for 1996. In addition, for future
calculations the remaining nondeductible contribution total will be $2,000 minus
$125, or $1,875.
A loss in your XXX investment may be deductible. You should consult your tax
adviser for further details on the appropriate calculation for this deduction if
applicable.
EXCESS DISTRIBUTIONS. There is a 15% excise tax assessed against annual
distributions from tax-favored retirement plans, including IRAs, which exceed
the greater of $150,000 or $112,500 (indexed to reflect cost-of-living
increases), although the tax will be suspended for distributions in 1997, 1998
and 1999. To determine whether you have distributions in excess of this limit,
you must aggregate the amounts of all distributions received by you during the
calendar year from all retirement plans, including IRAs. Please consult your tax
adviser for more complete information, including the availability of favorable
elections.
TAX WITHHOLDING. Federal income tax will be withheld from distributions you
receive from an XXX unless you elect not to have tax withheld. However, if XXX
distributions are to be delivered outside of the United States, this tax is
mandatory and you may not elect otherwise unless you certify to the Custodian
that you are not a U.S. citizen residing overseas or a "tax avoidance
expatriate" as described in Code Section 877. Federal income tax will be
withheld at the rate of 10%. The tax withheld from an annuity or a similar
periodic payment is based on your marital status and the number of withholding
allowances you claim on your withholding certificate (Form W-4P). If you have
not filed a certificate, the tax withheld will be determined by treating you as
a married individual claiming three withholding allowances. Generally, tax will
be withheld at a 10% rate on lump-sum distributions.
TAX MATTERS
You will receive a report from the Custodian and Bennington not later than 60
days after the close of each calendar year (or after the Custodian's resignation
or removal) reflecting the transactions effected by the Custodian or Bennington
during the calendar year and the assets of your XXX custodial account at its
close. You must respond within 60 days to correct any information on these
reports.
State tax treatment of your distributions may differ from federal treatment.
Consult your state tax authorities or personal tax adviser for details.
CUSTODIAN IRS REPORTING
The Custodian will report all withdrawals from your account to the IRS and the
recipient on the appropriate form. This report will include a description (e.g.
premature, normal, etc.) of the distribution. 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 or accumulated contributions 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 for the prior year made between January and April 15th be clearly
designated as such.
HOW TO FILE XXX INFORMATION WITH THE IRS
Contributions to your XXX must be reported on your federal income tax return
(see Form 1040 or 1040A instructions for details). If you make a designated
nondeductible contribution to any XXX for any tax year, you must attach Form
8606 to your tax return for that year. If you make nondeductible XXX
contributions and you do not file Form 8606, Nondeductible IRAs (Contributions,
Distributions, and Basis), with your tax return, you may have to pay a $50
penalty. 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
IRAs in that year; (3) the amount by which your total nondeductible
contributions for all years exceeds the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your 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.
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, or you withdraw less
than the required minimum amount from your XXX.
If you overstate the amount of nondeductible contributions for a taxable year, a
$100 penalty will be assessed unless you can justify the overstatement with a
reasonable cause.
Federal income tax will be withheld at a flat rate of 10% from any withdrawal
from your XXX, unless you elect not to have tax withheld. Withdrawals from an
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.
Any earnings on investments held in your XXX are generally exempt from federal
income taxes and will not be taxed until withdrawn by you, unless the tax exempt
status of your XXX is revoked.
ACCOUNT TERMINATION
You may terminate your XXX at any time after its establishment by sending a
complete withdrawal form, or a transfer authorization form, to:
Accessor Funds, Inc.
X.X. Xxx 0000
Xxxxxxx XX 00000-0000
Your XXX with Accessor Funds, Inc. will terminate upon the first to occur of the
following:
o The date your properly executed withdrawal form (as described above) is
received and accepted by Bennington or, if later, the termination date
specified in the withdrawal form.
o The date the XXX ceases to qualify under the tax code. This will be deemed
a termination.
o The transfer of the XXX to another custodian/trustee.
o The rollover of the amounts in the XXX to another custodian/trustee.
o Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your XXX will be treated as a withdrawal, and thus
the rules relating to 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 on the amount you receive.
IRS DOCUMENTS
For additional information, please consult the district office of the IRS, or
the following IRS publications:
Publication 522, "Disability Payments";
Publication 560, "Retirement Plans for the Self-Employed";
Publication 575, "Pension and Annuity Income (Including Simplified General
Rule)";
Publication 590, "Individual Retirement Arrangements (IRAs)."
Accessor Funds, Inc.
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT AGREEMENT (UNDER SECTION 408(A) OF THE
INTERNAL REVENUE CODE)
The Depositor whose name appears on the attached Individual Retirement Custodial
Account Application and Adoption Agreement (the "Adoption Agreement") is
establishing an individual retirement account under Section 408(a) of the
Internal Revenue Code to provide for the Depositor's retirement. The Custodian
has given the Depositor the disclosure statement required under Regulation
section 1.408-6. 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.
The Depositor has deposited with Custodian an initial contribution in cash, as
set forth in the attached Adoption Agreement and the Depositor and the Custodian
make the following agreement.
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) (but only after December 31, 1992),
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). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code 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 and silver coins and
coins issued under the laws of any state.
ARTICLE IV.
1. Notwithstanding any provision 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 non spouse 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 (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.
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.
ARTICLE VIII.
1. DEFINITIONS. As used in this Article VIII the following terms have the
following meanings:
"Account" or "Custodial Account" means the custodial account established
hereunder in the name of the Custodian for the benefit of Depositor.
"Agreement" means the Accessor Funds, Inc. Individual Retirement Account
Custodial Agreement, as may be amended from time to time, including the
information and provisions set forth in any Account Adoption Agreement that
goes with this Agreement.
"Adoption Agreement" means the Individual Retirement Custodial Account
Application and Adoption Agreement form by which this Agreement is
established between the Depositor and the Custodian. The statements
contained herein shall be incorporated into this Agreement.
"Authorized Agent" means an investment adviser appointed by the Depositor
on the Adoption Agreement or on a signed form acceptable to and filed with
Bennington, to issue investment directions or issue orders for the purchase
or sale of shares of one or more of the Portfolios in the Depositor's
Account.
"Beneficiary" means the person or persons (including a trust or estate)
designated as such by the Depositor, and as may be amended from time to
time, on a signed form acceptable to and filed with Bennington pursuant to
Article VIII, paragraph 5 of this Agreement.
"Bennington" means Bennington Capital Management L.P., a Washington limited
partnership and registered investment adviser. Bennington is the manager
and transfer agent of the Fund and has entered into an agreement with the
Custodian to perform various administrative duties of either the Custodian
or the Fund with respect to Accounts, including the services described
herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Custodian" means The Fifth Third Bank, a banking company organized under
the laws of the State of Ohio , or its successors, as specified in the
Account Adoption Agreement.
"Depositor" means the person named in the Account Adoption Agreement. If
Depositor has designated an Authorized Agent on the Adoption Agreement
Form, the Authorized Agent shall have the authority to act as the Depositor
under this Agreement to issue investment directions or issue orders for the
sale or purchase of shares of one or more Portfolios to Bennington and such
authority shall remain in force until terminated in writing by Depositor.
"Fund" means Accessor Funds, Inc., a multi-managed, no-load, open-end
management investment company, known as a mutual fund. The Fund currently
consists of eight diversified investment portfolios, each with its own
investment objective and policies.
"Portfolio" (collectively "Portfolios") means one or more of the
diversified investment portfolios of the Fund which is specified in the
Adoption Agreement, or which is designated by the Fund, as being available
as an investment for the custodial account; provided, however, that the
Fund and the Portfolios must be legally offered for sale in the state of
the Depositor's residence in order to be a Portfolio hereunder.
2. CONTRIBUTIONS. All assets in the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Portfolios. Such
investments shall be made in such proportions and/or in such amounts as
Depositor or the Authorized Agent may direct; provided that the Depositor's
initial contribution to the Custodial Account as indicated on the Adoption
Agreement shall be invested and held in the U.S. Government Money Portfolio
until seven (7) days have elapsed from the date of acceptance of the
Adoption Agreement by or on behalf of the Custodian.
Bennington shall be responsible for promptly executing all investment
directions by the Depositor for the purchase or sale of shares of one or
more of the Portfolios hereunder. Any purchase or redemption of shares of a
Portfolio for or from the Depositor's Account will be effected at the net
asset value of such Portfolio (as described in the then effective
prospectus for such Portfolio) next established after Bennington has
received the Depositor's investment directions in good order. 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 Bennington, the contribution
shall be invested in the U.S. Government Money Portfolio until clear or
complete instructions are received, without liability for loss of income or
appreciation. If Bennington does not receive clear or complete instructions
from the Depositor within a reasonable time, the contribution shall be
returned to the Depositor. If any 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
Bennington, Bennington 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
Portfolio as described in its prospectus. All dividends and capital gains
or other distributions received on the shares of any Portfolio held in the
Depositor's Account shall be retained in the account and (unless received
in additional shares) shall be reinvested in full and fractional shares of
such Portfolio.
3. ROLLOVER CONTRIBUTIONS. Only rollover contributions that are in the form of
a check, money order or similar cash item will be accepted for the
Custodial Account, except that securities may be accepted at the sole
discretion of the Fund, in kind, as described in the prospectuses of the
Fund. The Depositor shall designate each rollover contribution as such to
the Custodian, and by such designation shall confirm to the Custodian that
a proposed rollover contribution qualifies as a rollover contribution
within the meaning of sections 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of
the Code or an employer contribution to a plan described in section 408(k)
or 408(p) of the Code.
The Custodian, upon written direction of the Depositor and after submission
to the Custodian of such documents as it may reasonably require, shall, to
the extent permitted, transfer the assets held under this Agreement
(reduced by any amounts referred to in paragraph 9) to a successor
individual retirement account, individual retirement annuity (other than an
endowment contract) or retirement bond for the Depositor's benefit or to an
exempt employee's trust established under a plan that satisfies the
qualification requirements of section 401(a) of the Code. Any amounts
received or transferred by the Custodian under this paragraph shall be
accompanied by such records and other documents as the Custodian deems
necessary to establish the nature, value and extent of the assets and of
the various interests therein.
Neither Bennington, the Fund, 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 Bennington, the Fund, the
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.
The parties do not intend to confer any fiduciary duties on Custodian, the
Fund or Bennington, and none shall be implied. None of the Custodian, the
Fund or Bennington shall be liable (or assume any responsibility) for the
collection of contributions, the proper amount, time or deductibility 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) or propriety of any distribution
hereunder, which matters are the responsibility of Depositor and
Depositor's Beneficiary.
4. DISTRIBUTIONS. Subject to the provisions of Article IV of the Agreement,
the Custodian shall make distributions from the Account in accordance with
written instructions from the Depositor (or the Beneficiary if Depositor is
deceased). It is the responsibility of the Depositor (or the Beneficiary)
by appropriate distribution instructions to the Custodian to ensure that
the distribution requirements of Code Section 401(a)(9) and Article IV
above are met. Neither 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. The Custodian or
Bennington shall not incur any liability for errors in calculations as a
result of any reliance on information provided by the Depositor (or the
Depositor's Authorized Agent, Beneficiary, executor or administrator).
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.
5. DESIGNATION OF BENEFICIARY. The Depositor shall have the right by written
notice to the Custodian to designate or to change a beneficiary to receive
any benefit to which Depositor may be entitled in the event of Depositor's
death prior to the complete distribution of such benefit. 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
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. If
no such designation is in effect at the time of Depositor's death, or if
the designated Beneficiary has predeceased the Depositor, the Depositor's
beneficiary shall be his or her estate.
6. AMENDING THE AGREEMENT. Articles I through VII of this Agreement are in the
form promulgated by the Internal Revenue Service. It is anticipated that if
and when the Internal Revenue Service promulgates changes to Form 5305-A,
the Custodian will amend this Agreement correspondingly. The Custodian
shall amend in the same manner all agreements comparable to this one; and
may 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 gives
Custodian a written order for a complete distribution or transfer of the
Custodial Account in accordance with paragraph 10 of this Article VIII.
Pending the adoption of any amendment necessary or desirable to conform
this Custodial Account document to the requirements of any amendment to the
Internal Revenue Code or regulations or rulings thereunder, the Custodian
and Bennington may operate the Depositor's Custodial Account in accordance
with such requirements to the extent that the Custodian and/or Bennington
deem necessary to preserve the tax benefits of the Account.
This paragraph 6 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by paragraph 9 below,
and no such substitution shall be deemed to be an amendment of this
Agreement.
7. DELIVERY OF PROSPECTUSES, PROXIES. Bennington 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 Portfolios 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.
8. INDEMNIFICATION. Depositor shall always fully indemnify Bennington, the
Fund, the Portfolios 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 Bennington's, the Fund's or Custodian's negligence or
willful misconduct, or (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 paragraph 10.
Neither Bennington 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.
The appointment by the Depositor of an Authorized Agent will be in effect
until written notice to the contrary is received by Bennington. Custodian
and Bennington may each conclusively rely upon and shall be protected in
acting upon any written order from Depositor or Beneficiary, or any
Authorized Agent appointed by the Depositor, 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.
9. FEES AND EXPENSES. The Custodian shall serve as such without compensation
from the Account and the Custodian hereby waives any right it may have
otherwise to have any fees, commissions or other compensation from the
Account. The Depositor shall pay an annual maintenance charge as specified
on the applicable schedule. The schedule originally applicable shall be the
one attached to the Adoption Agreement furnished to the Depositor. The
Custodian may substitute a different schedule at any time upon 30 days'
written notice to Depositor and no such substitution shall be deemed to be
an amendment of this Agreement. Any purchase, exchange, transfer or
redemption of shares of a Portfolio for or from the Depositor's Account
will be subject to any applicable charge as described in the then effective
prospectus for such Portfolio. 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 Bennington 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. All such fees and taxes and other administrative expenses charged
to the Custodial Account shall, to the extent not paid directly by the
Depositor, 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 Portfolios held in the Custodial Account (without liability for any
loss incurred thereby). Conversion into cash of shares of the Portfolio
will occur first from the U.S. Government Money Portfolio, followed in
ascending order of risk through the Portfolios of the Fund. Notwithstanding
the foregoing, Bennington 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. If the Depositor has appointed an Authorized Agent and has elected
on the Adoption Agreement to cause the fees of the Authorized Agent to be
paid from the Custodial Account, the Custodian and Bennington shall pay
such fees upon the written request from the Authorized Agent to the
Authorized Agent from the Custodial Account hereunder. Such election to
authorize the payment of fees by the Depositor shall remain in full force
until terminated in writing by Depositor. The Authorized Agent must make a
written request each time a fee is requested by the Authorized Agent.
10. TERMINATION OF AGREEMENT. This Agreement may be terminated by the Depositor
upon written notice of such termination to the Custodian and Bennington, or
by the receipt by Custodian of a direction from Depositor or his Authorized
Agent to make a complete distribution or transfer of the Custodial Account
assets. Upon termination of the Agreement, Custodian shall terminate the
Custodial Account by distributing all assets thereof in a single payment in
cash or in kind to Depositor or transferring all such assets to another
financial institutional in accordance with the directions of Depositor,
subject to Custodian's right to reserve funds as provided in paragraph 11,
below. Upon termination of the Custodial Account, this Custodial Account
document shall have no further force and effect, and Custodian shall be
relieved from all further liability hereunder or with respect to the
Custodial Account and all assets thereof so distributed.
11. CHANGE OF CUSTODIAN. In the event the Custodian shall be converted into,
merged or consolidated with, shall sell and transfer substantially all of
its assets and business to, or shall transfer substantially all of its
Custodial Accounts maintained pursuant to agreements comparable to this
Agreement to a bank, financial institution or other organization approved
by the Secretary of the Treasury to hold assets of individual retirement
accounts (a "Successor"), such Successor shall thereupon become and be the
Custodian of the Account with the same effect as though specifically so
named. The Depositor shall be provided with 30 days' prior written notice
of any change of Custodian pursuant to this paragraph, and shall be deemed
to have consented thereto unless, within 30 days after such notice to
Depositor is mailed, Depositor gives Custodian a written order for a
complete distribution or transfer of the Custodial Account assets in
accordance with paragraph 10. 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 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. No Custodian shall be liable for the acts or omissions of
its predecessor or its successor.
12. NOTICES. Any notice or distribution from Custodian or Bennington 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. The Custodian shall not be bound by any certificate,
notice, order information or other communication unless and until it has
been received in writing at its place of business.
13. PROHIBITED ACTIONS. 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. 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.
14. ENTIRE AGREEMENT. When accepted by the Custodian, this Agreement together
with the Adoption Agreement attached hereto constitutes the entire
agreement between the parties and is accepted in and shall be construed and
administered in accordance with the laws of the State of Washington. Any
action involving the Custodian brought by any other party must be brought
in a state or federal court in such state. 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, and 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 that intent.
Neither the Custodian nor Bennington shall be responsible for whether or
not such intentions are achieved through use of this Agreement.
SECTION II
RETIREMENT ACCOUNT FORMS
