EXHIBIT 99.14
STATE STREET BANK AND TRUST COMPANY
EDUCATION INDIVIDUAL RETIREMENT
CUSTODIAL ACCOUNT AGREEMENT
Articles I - X are in the form promulgated by the Internal Revenue Service in
form 5305-EA.
ARTICLE I.
The Custodian may accept additional cash contributions. These contributions
may be from the Depositor, or from any other individual, for the benefit of the
Designated Beneficiary, provided the Designated Beneficiary has not attained the
age of 18 as of the date such contributions are made. Total contributions that
are not rollover contributions described in section 530(d) (5) are limited to a
maximum amount of $500 for the taxable year.
ARTICLE II.
The maximum aggregate contribution that an individual may make to the
Custodial Account in any year may not exceed the $500 in total contributions
that the Custodial Account can receive. In addition, the maximum aggregate
contribution that an individual may make to the Custodial Account in any year is
phased out for unmarried individuals who have modified adjusted gross income
(AGI) between $95,000 and $110,000 for the year of the contribution and for
married individuals who file joint returns with modified AGI between $150,000
and $160,000 for the year for the contribution. Unmarried individuals with
modified AGI above $110,000 for the year and married individuals who file joint
returns and have modified AGI above $160,000 for the year may not make a
contribution for that year. Modified AGI is defined in section 530(c)(2).
ARTICLE III.
No part of the Custodial Account 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 investment fund (within the meaning of section
530(b)(1)(D).
ARTICLE IV.
1. Any balance to the credit of the Designated Beneficiary on the date on
which such Designated Beneficiary attains age 30 shall be distributed to the
Designated Beneficiary within 30 days of such date.
2. Any balance to the credit of the Designated Beneficiary shall be
distributed to the estate of the Designated Beneficiary within 30 days of the
date of such Designated Beneficiary's death.
ARTICLE V.
The Depositor shall have the power to direct the Custodian regarding the
investment of the above-listed amount assigned to the Custodial Account
(including earnings thereon) in the investment choices offered by the Custodian.
The Responsible Individual, however, shall have the power to redirect the
Custodian regarding the investment of such amounts, as well as the power to
direct the Custodian regarding the investment of all additional contributions
(including earnings thereon) to the Custodial Account. In the event that the
Responsible Individual does not direct the Custodian regarding the investment of
additional contributions (including earnings thereon), the initial investment
direction of the Depositor also will govern all additional contributions made to
the Custodial Account until such time as the Responsible Individual otherwise
directs the Custodian. Unless otherwise provided in this agreement, the
Responsible Individual also shall have the power to direct the Custodian
regarding the administration, management, and distribution of the Account.
ARTICLE VI.
The "Responsible Individual" named by the Depositor shall be a parent or
guardian of the designated beneficiary. The Custodial Account shall have only
one Responsible Individual at any time. If the Responsible Individual becomes
incapacitated or dies while the Designated Beneficiary is a minor under state
law, the successor Responsible Individual shall be the person named to succeed
in that capacity by the preceding Responsible Individual in a witnessed writing
or, if no successor is so named, the successor Responsible Individual shall be
the Designated Beneficiary's other parent or successor guardian. At the time
that the Designated Beneficiary attains the age of majority under state law, the
Designated Beneficiary becomes the Responsible Individual.
ARTICLE VII.
The Responsible Individual may change the Beneficiary designated under this
agreement to another member of the Designated Beneficiary's family described in
section 529(e)(2) in accordance with the Custodian's procedures.
ARTICLE VIII.
1. The Depositor agrees to provide the Custodian with the information
necessary for the Custodian to prepare any reports required under section
530(h).
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Responsible Individual as prescribed by the Internal Revenue Service.
ARTICLE IX.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV will be controlling. Any additional articles
that are not consistent with section 530 and related regulations will be
invalid.
ARTICLE X.
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 Depositor and the Custodian whose signatures appear on the
Adoption Agreement.
ARTICLE XI.
1. As used in this Custodial Agreement the following terms have the following
meanings:
"Account" or "Custodial Account" means the Education Individual Retirement
Account established using the terms of this Agreement and the Adoption Agreement
signed by or on behalf of the Student.
The term "Student" means the person designated as such in the Adoption
Agreement (or on a form acceptable to the Custodian for use in connection with
the Custodial Account, and filed with the Custodian). The individual who is the
"Student" (as used in this Article XI) and the individual who is the "Designated
Beneficiary" (as used in Articles I through XI) are the same.
The Student may, in writing on such form as may be acceptable to the Custodian
designate another person, who is a "family member" of the Student (with in the
meaning of section 529(e)(2) of the Code) who is under the age of 30 as the
successor Designated Beneficiary and Student with respect to the Custodial
Account hereunder, and thereafter such individual will be the Designated
Beneficiary and the Student for purposes of Articles I through X and Article XI
respectively.
The term "Donor" means the person designated as such in the Adoption Agreement
(or on a form acceptable to the Custodian for use in connection with the
Custodial Account, and filed with the Custodian.) The individual who is the
"Donor" (as used in this Article XI) and the individual who is the "Depositor"
(as used in Articles I through XI) are the same.
"Custodian" means State Street Bank and Trust Company.
The term "Parent" means the person designated as such in the Adoption
Agreement (or a form acceptable to the Custodian for use in connection with the
Custodial Account). The individual who is the "Parent" (as used in this Article
XI) and the individual who is the "Responsible Individual" (as used in Articles
I through XI) are the same.
"Fund" means any registered investment company which is specified in the
Adoption Agreement, or 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 Student'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 Century Capital Management.
2. (a) Subject to the last paragraph of this Section 2(a), the Donor may
revoke the Custodial Account established hereunder by mailing or delivering a
written notice of revocation to the Custodian within seven days after the Donor
first 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 Donor will receive a
payment equal to the initial contribution, without adjustment for administrative
expenses, commissions or sales charges, fluctuations in market value or other
changes.
The Donor may certify in the Adoption Agreement that the Donor received the
Disclosure Statement related to the Custodial Account at least seven days before
signing the Adoption Agreement to establish the Custodial Account, and the
Custodian may rely on such certification.
(b) After making a contribution to the Custodial Account for the benefit of
the Student, and specifying the initial investment elections, all rights and
obligations to, in and for the Account shall irrevocably inure to, and be
enjoyed and exercised by, Student, and Donor shall have no such rights or
obligations (unless Donor and Student or Parent are the same person or unless
Donor revokes the Account in accordance with subsection (a) above).
The Donor must sign the Adoption Agreement, and, for purposes of maintaining
the Account, the Parent (identified in the Adoption Agreement) must execute all
forms, applications, certifications and other documents on behalf of any Student
who has not yet attained the age of majority as recognized by the laws of the
Student's state of residence ("age of majority"). Any right, power,
responsibility, authority or requirement given to the Student under this
Agreement or any related document shall be exercised or carried out by such
Parent on behalf of any Student who has not yet attained the age of majority.
The Custodian's acceptance of the Account on behalf of a minor Student is
expressly conditioned upon the Parent's acceptance of the rights and
responsibilities accorded hereunder. Upon attainment of the age of majority
under the laws of the Student's state of residence at such time, the Student may
advise the Custodian in writing (accompanied by such documentation as the
Custodian may require) that he or she is assuming sole responsibility to
exercise all rights, powers, obligations, responsibilities, authorities or
requirements associated with the Account. Upon such notice to the Custodian, the
Student shall have and shall be responsible for all of the foregoing, the
Custodian will deal solely with the Student as the person controlling the
administration of the Account, and Parent shall thereafter have or exercise none
of the foregoing. (Absent such written notice by Student, Custodian shall be
under no obligation to acknowledge Student's right to exercise such powers and
authority.)
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
initially be made in such proportions and/or in such amounts as are specified 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.
Subsequent exchanges among Funds shall be made in accordance with written
instructions from the Student. The Service Company shall be responsible for
promptly transmitting all investment directions by the Student 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 initially from the Donor or
thereafter from the Student as required or, if received, are unclear or
incomplete in the opinion of the Service Company, the contribution may be paid
to the Student, or may be held uninvested (or invested in a money market fund if
available) pending clarification or completion by the Donor or the Student, as
the case may be, in either case without liability for interest or for loss of
income or appreciation. If any other directions or other orders by the Student
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 for depreciation of any asset, pending
receipt of clarification or completion from the Student.
All initial investment directions by the Donor or subsequent investment
directions by the Student 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 Account shall be (unless received in additional shares)
reinvested in full and fractional shares of such Fund (or 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 Student may at any time
direct the Service Company to exchange all or a specified portion of the shares
of a Fund in the Account for shares and fractional shares of one or more other
Funds. The Student 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 XI.)
5. Any purchase or redemption of shares of a Fund for or from the 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 Student'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 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 Student's Custodial Account. Any
Account maintained in connection herewith shall be in the name of the Custodian
for the benefit of the Student. 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.
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 the Custodial Account, nor shall such
parties be liable for any loss or diminution in value which results from
Student's exercise of investment control over the Account. Student shall have
and exercise exclusive responsibility for and control over the investment of the
assets of the 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 Student 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 Student.
The Student'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 Student or the Custodian.
9. (a) Distribution of the assets of the Custodial Account shall be made at
such time and to such person or entity as the Student shall elect by written
order to the Custodian. The Student will be responsible for (and the Custodian
will have no responsibility for) including and reporting any distribution from
the Account in the gross income of the Student in a manner consistent with Code
section 72 and Code section 530 (which sections provide that distributions shall
be considered to consist of principal (not subject to tax) and earnings (which
may or may not be subject to tax), unless such distribution is used to pay the
qualified education expenses of the Student (as defined in Code Section 530) and
such qualified education expenses for the tax year are not less than the
aggregate distributions from the Account during the tax year; and provide
further that, if the aggregate distributions exceed the qualified education
expenses for the Student for that year, the amount that must be included as
income for tax purposes is determined by first determining the ratio that the
qualified higher education expenses bear to the actual withdrawal. The portion
of the withdrawal that is potentially subject to taxation -- the amount of gains
or dividends -- is then multiplied by that percentage amount. The resultant sum
is the amount excludable from income; and additionally provide further that the
Student may waive application of the foregoing sentence and elect tax treatment
in accordance with Code Section 72).
(b) Student acknowledges that any distribution of a taxable amount from the
Custodial Account (except for distributions specified in Code Section 530,
including distribution on account of Student's disability or death, return of an
"excess contribution" referred to in Code section 530(d)(4)(C), a "rollover"
from this Custodial Account, or distributions made on account of a qualified
scholarship, allowance or payment described in Code section 25A(g) (2)), may
subject Student to an additional tax on distributions under Code section
530(d)(4). For these purposes, Student will be considered disabled if Student
can prove, as provided in Code Section 72(m)(7), that Student 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. Neither the Custodian nor
any other party providing services to the Custodial Account assumes any
responsibility for monitoring or approving the purposes for which such
distributions are used, nor for the tax treatment accorded any distribution from
the Custodial Account; such responsibility rests solely with the person ordering
the distribution.
(c) Any balance remaining in the Account when the Student attains age 30 is,
pursuant to Code section 530, to be distributed to the Student. The Student has
the responsibility to notify the Custodian to make such distribution and the
Student will be responsible for any tax consequences of not so directing the
Custodian. However, the Custodian may, based upon its records, make a
distribution to the Student upon the Student's attaining age 30 to the extent
required by law, and/or the Custodian will report the balance in the Account at
such time as a "deemed distribution" to the extent required by law, and the
Custodian will have no responsibility for so doing.
(d) Upon the death of the Student, any balance remaining in the Account will
be distributed to the Student's estate in the manner required by Code section
530, and the Custodian will have no responsibility for making such a
distribution, or for not making such distribution in the absence of instructions
to do so from the legal representative of the Student's estate.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Student containing such
information as the Custodian may reasonably request (provided that the Custodian
may make distributions on its own initiative to the extent specifically provided
for in Section 9 of this Article XI) 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 Xxxxxxxxx, 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 or entity 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 Student 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 530(h) of the Code.
(b) The Custodian or the Service Company will submit reports to the Internal
Revenue Service and the Student at such time and manner and containing such
information as is prescribed by the Internal Revenue Service.
(c) The Student, 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 Internal Revenue Service
thereunder or as may otherwise be necessary for the administration of the
Custodial Account.
(d) The Student and/or the Donor shall file any reports to the Internal
Revenue Service which are required of either of them by law, and neither the
Custodian nor Service Company shall have any duty to advise either concerning or
monitor either's compliance with such requirement.
12. (a) Student 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 16 below.
(b) Student delegates to the Custodian the Student's right so to amend,
provided (i) the Custodian does not change the investments available under the
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 Student, and Student shall be
deemed to have consented thereto unless, within 30 days after such communication
to Student is mailed, Student 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 16 below.
Pending the adoption of any amendment necessary or desirable to conform this
Custodial Account document to the requirements of the Code, or any amendment
thereto or to any applicable provision of the regulations or rulings thereunder,
the Custodian and the Service Company may operate the Student'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 or otherwise necessary to meet all legal requirements.
(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 12 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by Section 15 below, and no
such substitution shall be deemed to be an amendment of this Agreement.
13. (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 16, Student 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
Student, subject to Custodian's right to reserve funds as provided in Section
16.
(b) Upon termination of the Custodial Account, this Custodial Account document
shall have no further force and effect (except for Sections 14(f), 16(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.
14. (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.
(b) The Service Company shall be responsible for receiving all instructions,
notices, forms and remittances from Student 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 required distribution amounts), tax treatment or propriety of any
distribution hereunder, which matters are the sole responsibility of Student.
(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 Student 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 Student, 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
Student shall have filed written objections with the Custodian or Service
Company within such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to Student
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 Student.
(f) Student and Parent shall always fully indemnify Service Company, Sponsor,
Distributor, the Fund(s) 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 9, 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 Student, and unless fully
indemnified for so doing to that party's satisfaction. The Custodian's
acceptance of the contributions to this Account is expressly conditioned upon
Xxxxxx's and Student's agreement with the foregoing, and with all other
provisions of this Agreement. Exercise of any right, duty or responsibility by
Xxxxxx (or Student, as the case may be) in connection with the Student's account
shall be deemed to constitute acceptance of this condition.
(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 Student, 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.
15. (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 Student. 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 Student.
(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 Student 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 Student 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.
16. (a) Upon 30 days' prior written notice to the Custodian, Student 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, but
is not required to, at any time resign upon 30 days' prior written notice to
Sponsor, whereupon Sponsor shall notify the Student, 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 Student, or Sponsor and the Student or Sponsor will be
deemed to have consented to such successor unless the Student or Sponsor
designates a different successor custodian and provides written notice thereof
together with such different successor's written acceptance by such date as the
Custodian specifies in its original notice to the Student or Sponsor (provided
that the Student will have a minimum 30 days to designated 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 530(b)
(1)(B). 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.
17. 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.
18. 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.
19. Student 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 Student 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 Student except to the
extent required by law.
20. 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 office of the Custodian is located. Any action involving the Custodian
brought by any other party must be brought in such state.
This Agreement is intended to qualify under Code section 530 as an Education
IRA and to entitle Student to the tax benefits thereof, 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.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Student is referred
to Student's attorney for any such assurances.
21. Student (or Donor) should seek advice from Student's (or Xxxxx's) attorney
regarding the legal consequences (including but not limited to federal and state
tax matters) of entering into this Agreement, making contributions to the
Custodial Account, and ordering Custodian to make distributions from the
Account. Student (and Donor) acknowledges that Custodian and Service Company
(and any company associated therewith) are prohibited by law from rendering such
advice.
22. If any provision of any document governing the Custodial Account provides
for notice, instructions or other communication 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.
23. This Agreement and the Adoption Agreement signed by Student or Donor (as
either may be amended) are the documents governing the Student's Custodial
Account. Articles I through X are in the form promulgated by the Internal
Revenue Service in Form 5305-EA for use in establishing and maintaining an
Education IRA under Code section 530. If the Internal Revenue Service amends
such form, the Custodian will amend this Agreement accordingly, and the Student
specifically consents to such amendment in accordance with Section 12(b) hereof.
24. The Donor and/or Student acknowledges that he or she has received and read
the current prospectus for each Fund in which the Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Donor and Student each represent under penalties of perjury that his or her
Social Security number (or other Taxpayer Identification Number) as stated in
the Adoption Agreement is correct.
STATE STREET BANK AND TRUST COMPANY
EDUCATION IRA INFORMATION KIT
INTRODUCTION
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("IRA") has always provided an attractive
means to save money for the future on a tax-advantaged basis. A new law now
makes IRAs an excellent vehicle to save for the expense of higher education.
This new Education IRA allows taxpayers to make annual nondeductible
contributions, which are not subject to any gift tax, of up to $500 on behalf of
any beneficiary who is 18 years old or younger. Earnings and interest grow tax
free, and qualified withdrawals from the Education IRA to pay for eligible
higher education expenses are tax- and penalty-free. The Education IRA
contribution limit phases out at modified adjusted gross income levels between
$95,000 and $110,000 for single filers, and between $150,000 and $160,000 for
married, joint return filers.
Education IRAs are first available starting January 1, 1998.
This Kit provides information on EDUCATION IRAS only. To learn more about the
benefits and features of our Regular IRA or our new Xxxx XXX, call or write us
at the phone number or address appearing below.
WHAT'S IN THIS KIT?
In this Kit you will find detailed information about Education IRAs and
everything needed to establish an Education IRA.
The first section of this Kit contains the instructions and forms you will
need to open a new Education IRA, or to transfer from another Education IRA to a
State Street Bank Education IRA.
The second section of this Kit contains the Education IRA Custodial Account
Agreement, which provides the legal provisions governing your Education IRA.
The third section of this Kit contains our Education IRA Disclosure Statement,
which describes the basic rules applicable to your Education IRA.
OTHER POINTS TO NOTE
The Disclosure Statement in this Kit provides you with the basic information
that you should know about State Street Bank Education IRAs. The Disclosure
Statement provides general information about the rules and features of Education
IRAs. However, the State Street Bank and Trust Company Adoption Agreement and
Education IRA Custodial Agreement, are the primary documents governing your
State Street Bank Education IRA, and these shall govern in the case of any
difference with the Disclosure Statement.
Please note that Education IRAs are new under the tax laws and many legal
issues concerning their operation have not yet been resolved. Also, since the
information in this Kit is only a summary, it may not cover all the details that
could affect your personal situation. Finally, this Kit does not address the tax
treatment of Education IRAs under state laws, which may vary. Therefore, you
should consult your own tax advisor or the IRS if you have any questions about
Education IRAs, or about latest developments or state tax treatment of Education
IRAs.
When used in this Kit you or your refers to the person for whom the Education
IRA is established. This individual is also called the Student. Where the use of
you, your or Student refers to an obligation, responsibility or duty of the
Student related to the Student's Education IRA, and the Student has not attained
the age of majority in the state of residence ("age of majority"), the parent or
guardian identified in the Adoption Agreement (the "Parent") must carry out the
obligation, responsibility or duty on the Student's behalf. Acceptance by the
Custodian of the contributions to the Account is expressly conditioned on the
Parent's assumption of such duties and responsibilities.
INFORMATION FOR DONORS
If you are a Donor other than a Student or Parent, read this information
carefully. As a Donor, you must complete and sign the enclosed Adoption
Agreement, designate the Student for whom the Education IRA is to be maintained,
and complete the other required sections of the Agreement -- including the
initial investment elections -- and submit the signed form to the Custodian,
along with your contribution. Once you submit the Agreement with the
contribution, you will have no further control over the account or the amount
contributed (unless you revoke the account). The Student (or Parent) will
control investment choices and can withdraw amounts at any time without your
consent. No amounts will revert to you.
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
INSTRUCTIONS FOR OPENING AN EDUCATION IRA
1. Read carefully the Education IRA Disclosure Statement, the Education
Individual Retirement Custodial Account Agreement document, the
Education IRA Adoption Agreement, and the prospectus(es) for any Fund(s)
you are considering. Consult your lawyer or other tax adviser if you
have any questions about how opening this Education IRA will affect your
financial and tax situation or about the rules for contributions to or
withdrawals from an Education IRA.
2. Complete the Education IRA Adoption Agreement
o In Part 1, provide all of the requested information about the Student
for whose benefit the Education IRA is being opened. The Student must
be under age 18 for an Annual Contribution Education IRA, or under
age 30 for a Rollover or Transfer from another Education IRA.
o In Part 2, provide the requested information about the Parent or
Guardian who will control the Account on behalf of any Student who
has not yet reached the age of majority in his state of residence.
(Leave blank if inapplicable.) Indicate status (mother, father,
guardian). If "guardian," written proof of guardianship must
accompany this form. The Parent's Social Security Number is optional.
Only one person may be listed as the "Parent" in Part 2, even
though the Student lives with both parents, or even if such
person is actually the Student's guardian. In these materials,
the term "Parent" refers to a parent or guardian who is listed in
Part 2. NOTE: CONTRIBUTIONS BENEFITING A PARTICULAR STUDENT ARE
LIMITED TO $500 PER YEAR. IF NECESSARY, THE PARENT SHOULD CHECK
WITH ANY OTHER PARENT OR GUARDIAN OF THE STUDENT TO ENSURE THAT
CONTRIBUTIONS FOR A YEAR ON THAT STUDENT'S BEHALF (FROM ALL OTHER
SOURCES) DO NOT EXCEED THE MAXIMUM LIMIT.
o In Part 3, provide the requested information about the Donor.
The Donor is the individual making a contribution to the Account
and must sign this Agreement where indicated. The Student or
Parent can be the Donor. Once the Donor has made the contribution
and selected the initial investments, the Donor has no further
rights or responsibilities related to the Account, unless the
Donor is the Student or Parent.
If no Donor is making a contribution to the Account (in other
words, if the only contribution is a rollover or transfer from an
existing Education IRA), leave Part 3 blank.
o In Part 4, check the box (or boxes) that shows the type of Education
IRA you are opening.
o If this is an Annual Contribution Education IRA (one to which
contributions may be made each year), check box A and enclose a
check in the amount of the first contribution. UNLIKE REGULAR
IRAS, contributions TO AN EDUCATION IRA MUST BE MADE BY DECEMBER
31 OF A YEAR. CONTRIBUTIONS FOR A PARTICULAR YEAR MAY NOT BE MADE
BY APRIL 15 OF THE FOLLOWING YEAR. (Note: Although a Student may
have more than one Annual Contribution Education IRA, the maximum
annual contribution limit for all Annual Contribution Education
IRAs benefiting that particular Student is $500 per year.)
o If this is a rollover or transfer of funds from an existing
Education IRA, check box B. Check the appropriate box to indicate
whether the transaction is a rollover or direct transfer from
another Education IRA custodian. (NOTE: You can only transfer or
rollover amounts from another Education IRA; transfers or
rollovers from Regular IRAs, Xxxx IRAs, an employer-sponsored
plan, or any other similar arrangement are not permitted under
federal law.) If this is a transfer directly from another
custodian, complete the Transfer of Education IRA Assets Form.
o Check the box to indicate the relationship between the Student
for whom this account is being opened and the person for whose
benefit the transferring account was maintained. This can be the
same Student or a family member. (Note: Under federal law,
transfers or rollovers are permissible only if they are made to
an Education IRA for the same Student or another person who is
under age 30 and a member of the original Student's family.
"Family members" for this purpose are: child, step-child, child's
or step-child's descendant, xxxxxxx, sibling's child, parent,
step- parent, grandparent or the spouse of any of the foregoing.)
o In Part 5, indicate your investment choices.
o Sign and date the Adoption Agreement at the end.
3. If you are transferring assets directly from an existing Education IRA,
complete the Transfer of Education IRA Assets Form.
4. The Custodian fees for maintaining your Education IRA are listed in the
FEES AND EXPENSES section of the Disclosure Statement.
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the first contribution to your Education IRA (if
applicable). Your Education IRA cannot be accepted without the properly
completed documents.
All checks should be payable to "CENTURY SHARES TRUST."
Special Note: If the Student for whose benefit this Education IRA is being
opened is a minor under the laws of the Student's state of residence, acceptance
by the Custodian of the contribution is expressly conditioned on the Parent's
(as identified in Section 2 above) agreement to be responsible for all
requirements of the Student, and to exercise the powers and duties of the
Student, with respect to the operation of the Account, until Student reaches the
age of majority. Upon reaching the age of majority in the state in which the
Student then resides, the Student may advise the Custodian in writing
(accompanied by any supporting documentation the Custodian may require) that he
or she is assuming sole responsibility to exercise all powers and duties
associated with the administration of the Account. Absent such written notice by
Student, Custodian shall have no responsibility to acknowledge Student's
exercise of such powers and duties of administration.
Send the completed forms and checks to:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
ADOPTION AGREEMENT
The undersigned, by signing this Adoption Agreement, hereby establishes an
Education Individual Retirement Account (the "Account") for the benefit of the
Student with State Street Bank and Trust Company as Custodian ("Bank"). The
terms of the Account are contained in the document entitled "State Street Bank
and Trust Company Education Individual Retirement Custodial Account" (which is
incorporated by reference) and this Adoption Agreement. The Account will be
effective upon acceptance by Bank.
1. STUDENT INFORMATION (SEE INSTRUCTIONS)
[ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
--------------------------------------- Student's Social Security Number
Print Full Name of Student
( )
--------------------------------------- -----------------------------------
Address Student's Daytime Telephone Number
Student's Date of Birth: / /
--------------------------------------- -----------------------------------
City State Zip
--------------------------------------------------------------------------------
2. PARENT INFORMATION (SEE INSTRUCTIONS -- ONLY ONE PARENT SHOULD BE LISTED)
--------------------------------------- [ ] Mother [ ] Father [ ] Guardian
*Print Full Name of Parent *If "guardian," submit proof of
guardianship.
[ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
--------------------------------------- Parent's Social Security Number
Address
( )
--------------------------------------- -----------------------------------
City State Zip Parent's Daytime Telephone Number
NOTE: The "Parent" is the same individual described as the "Responsible
Individual" in Articles I - X of the Custodial Account Agreement, as the "RI" on
all account registration materials, and as the "Parent" in Article XI of the
Custodial Account Agreement and the Disclosure Statement.
--------------------------------------------------------------------------------
3. DONOR INFORMATION (SEE INSTRUCTIONS)
--------------------------------------- [ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
Print Full Name Xxxxx's Social Security Number
( )
--------------------------------------- -----------------------------------
Address Donor's Daytime Telephone Number
---------------------------------------
City State Zip
--------------------------------------------------------------------------------
4. TYPE OF EDUCATION XXX
X. [ ] ANNUAL CONTRIBUTION
Contribution for the current year. Check enclosed for $---------- .
This contribution does not exceed the maximum permitted amount as
described in the Education IRA Disclosure Statement.
B. [ ] ROLLOVER OR TRANSFER OF EXISTING EDUCATION IRA
[ ] Transfer of existing Education IRA. Complete the separate Transfer
of Education IRA Assets Form and return it with this form.
[ ] Rollover of distribution from existin g Educati on IRA to me within
60 days after distrib ution. The require ments for a valid rollover
are complex . See the Education IRA Disclosure Statement for
additional information and consult your tax advisor for help if
needed. Check enclosed for $ ---------.
If you are transferring or rolling over an existing Education IRA, check
the appropriate box below for the relationship of the Student in Item 1
above to the person who is the student in the existing Education IRA. The
person in Item 1 is the:
[ ] same person [ ] child or step-child [ ] sibling
[ ] child of sibling [ ] parent [ ] step-parent [ ] grandparent
[ ] spouse of one of foregoing [ ] other ----------
--------------------------------------------------------------------------------
5. INVESTMENTS
Invest contributions to my Account as follows:
CENTURY SHARES TRUST 100%
The undersigned acknowledges having sole responsibility for the foregoing
investment choices and having received a current prospectus. Please read the
prospectus before investing.
--------------------------------------------------------------------------------
6. CERTIFICATIONS AND SIGNATURES
If this is a Rollover Education IRA, the undersigned certifies that any
assets transferred in kind are the same assets received in the distribution
being rolled over; that no rollover into an Education IRA has been made within
the one-year period immediately preceding this rollover; that such distribution
was received within 60 days of making the rollover to the Account; and that the
Student identified in Item 1 above is either the person for whose benefit the
prior Education IRA was maintained or a member of such person's family (within
the meaning of Internal Revenue Code Section 529(e) (2)).
If this is an Annual Contribution Education IRA, the undersigned certifies
that the Student is less than 18 years old and that all Contributions made on
Student's behalf to this or any other Education IRAs do not exceed $500 in a
single tax year. If this is a Transfer or Rollover of an existing Education IRA,
the undersigned certifies that the Student is less than 30 years old and that
the relationship indicated in Section 4 is correct.
The undersigned acknowledges having received and read the "Education IRA
Disclosure Statement" relating to this Account (including the Custodian's fee
schedule), the Education Individual Retirement Custodial Account Agreement, and
the "Instructions" pertaining to this Adoption Agreement.
The undersigned acknowledges receipt of the Custodial Account Agreement and
Education IRA Disclosure Statement at least 7 days before the date of signature
(as indicated below) and acknowledges that there is no further right of
revocation.
CUSTODIAN ACCEPTANCE. State Street
Bank and Trust Company will accept
-------------------------------------- appointment as Custodian of the
Signature of Student Date Account. However, this Agreement is
(If Student HAS obtained the age of not binding upon the Custodian until
majority in his/her state of the Student has received a statement
residence.) of the transaction. Receipt by the
Student of a confirmation of the
purchase of the Fund shares indicated
-------------------------------------- above will serve as notification of
Signature of Donor Date State Street
Bank and Trust Company's acceptance of
appointment as Custodian of the
Account.
STATE STREET BANK AND TRUST COMPANY,
CUSTODIAN
By
------------------------------------
Date
----------------------------------
If Student is a minor under the laws of Student's state of residence,
acceptance by the Custodian of the contribution to this Account is expressly
conditioned upon the Parent's (identified above in Section 2) agreement to be
responsible for all requirements of the Student, and to exercise the powers and
duties of the Student, with respect to the operation of the Account. Upon
reaching the age of majority in the state in which the Student then resides, the
Student may advise the Custodian in writing (accompanied by such supporting
documentation as the Custodian may require) that he or she is assuming sole
responsibility to exercise all powers and duties associated with the
administration of the Account. Absent such written notice by Student, Custodian
shall have no responsibility to acknowledge Student's exercise of such powers
and duties of administration.
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
ALL CHECKS SHOULD BE PAYABLE TO "CENTURY SHARES TRUST"
MAIL COMPLETED FORMS AND CHECKS TO CENTURY SHARES TRUST
P.O. BOX 8329
BOSTON, MA 02266-8329
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
EDUCATION INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
TRANSFER OF EDUCATION IRA ASSETS FORM
1. NAME, ADDRESS AND CONSENT OF PERSON WHO CONTROLS THE CURRENT SENDING ACCOUNT
Name [ ] Mother [ ] Father
----------------------------------------- [ ] Guardian [ ] Student
*If "guardian," submit proof of guardianship.
Address
---------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
----------------- -------------------
By signing below, I authorize and direct the current custodian or trustee to
make the transfer specified in this form.
-------------------------------------
Signature Date
SIGNATURE GUARANTEE (only if required by current custodian or trustee)
Signature guaranteed by: --------------------------------------------------
Name of Bank or Dealer Firm
--------------------------------------------------
Signature of Officer and Title
--------------------------------------------------------------------------------
2. NAME OF STUDENT BENEFITING UNDER THE State Street Bank Education IRA,
(Identified in Section 1 of the State Street Bank Education IRA Adoption
Agreement.)
Name
-------------------------------------------------------------------------
Address
----------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
----------------- -------------------
--------------------------------------------------------------------------------
3. INSTRUCTIONS TO CURRENT EDUCATION IRA CUSTODIAN OR TRUSTEE
Current Account No.
----------------------------
Name of Custodian/Trustee
----------------------------------------------------
Attn: Mr./Ms.
---------------------------------------------------------------
Address
----------------------------------------------------------------------
Street City State Zip
Please transfer assets from the above account to State Street Bank and Trust
Company. Transfer should be in cash according to the following instructions:
[ ] Transfer the total or [ ] Transfer $ and retain the balance.
amount in this Account. ------
Make check payable to: CENTURY SHARES TRUST
--------------------------------------------------------------------------------
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Check one box and complete if necessary)
[ ] Invest the transferred amount in accordance with the investment
instructions currently in effect for the State Street Bank and Trust
Company Education Individual Retirement Custodial Account.
If such an IRA is already open, give account number:
------------------
[ ] Invest the transferred amount as follows: Century Shares Trust 100%
The undersigned acknowledges having sole responsibility for the foregoing
investment choices and having received a current prospectus. Please read the
prospectus before investing.
The undersigned understands that the requirements for a valid transfer
between Education IRAs are complex and acknowledges having responsibility
for complying with all requirements and for the tax results of any such
transfer.
--------------------------------------------------------------------------------
5. SIGNATURE OF STUDENT, PARENT OR GUARDIAN (see Special Note below).
-----------------------------------------------------------------------------
Student/Parent Date
(Please circle one of the above)
--------------------------------------------------------------------------------
6. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company)
State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Student's State Street Bank and Trust Company
Education Individual Retirement Custodial Account, and requests the
liquidation and transfer of assets as indicated above.
Date: By:
------------------------------ ---------------------------------
Special Note: If Student is a minor under the law of Student's state of
residence, the parent or guardian must execute this Transfer of Education IRA
Assets Form.
EDUCATION IRA DISCLOSURE STATEMENT
SPECIAL NOTE
This Disclosure Statement describes the rules applicable to Education IRAs
beginning January 1, 1998. Education IRAs are a new kind of IRA available for
the first time in 1998. Contributions to an Education IRA for 1997 are NOT
permitted. Contributions to an Education IRA are not tax-deductible to the
person making the contribution, but withdrawals that meet certain requirements
are not subject to federal income taxes when received. This makes the dividends
on and growth of the investments held in an Education IRA tax-free for federal
income tax purposes if the requirements are met.
Regular IRAs, which have existed since 1975, are still available. New Xxxx
IRAs are also available after January 1, 1998. Both Regular IRAs and Xxxx IRAs
provide a tax-advantaged savings vehicle that can be used to save for higher
education expenses as well as other needs, including retirement. This Disclosure
Statement does not describe either Xxxx or Regular IRAs. This Disclosure
Statement also does not describe IRAs established in connection with a SIMPLE
IRA program or a Simplified Employee Pension (SEP) plan maintained by your
employer. If you wish to receive information about these IRA products, including
forms and explanatory materials, call the 800 number or write the address listed
at the end of this Disclosure Statement.
ESTABLISHING AN EDUCATION IRA
This Disclosure Statement contains information about an Education Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. An Education IRA provides several tax benefits. While contributions
to an Education IRA are not deductible to the contributor, dividends on and
growth of the assets held in the Education IRA are not subject to federal income
tax. Withdrawals from an Education IRA are excluded from income for federal
income tax purposes if used for qualifying higher education expenses (described
below). State income tax treatment of your Education IRA may differ from federal
treatment; ask your state tax department or your personal tax advisor for
details.
Regular annual contributions to Education IRAs must be made in cash, on behalf
of a designated individual (the "Student") who is less than 18 years old at the
time of the contribution, and rollover contributions must be made on behalf of a
Student who is less than age 30 at the time of the rollover. The IRA trustee or
custodian must be a bank or other person who has been approved by the Secretary
of the Treasury. Contributions may not be invested in life insurance or be
commingled with other property except in a common trust or investment fund. The
Student's interest in the account must be nonforfeitable at all times. Upon the
death of the Student, any balance undistributed in the account shall be
distributed to the Student's estate within 30 days of the date of death. You may
obtain further information on Education IRAs from any district office of the
Internal Revenue Service.
The Donor may revoke a newly established Education IRA at any time within
seven days after the date on which he or she receives this Disclosure Statement.
An Education IRA established more than seven days after the date of receipt of
this Disclosure Statement may not be revoked. To revoke the Education IRA, 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 the Education IRA is
revoked within the seven-day period, the Donor will receive payment of the
entire amount originally contributed into the Education IRA, without adjustment
for such items as sales charges, administrative expenses or fluctuations in
market value.
An Education IRA is established on behalf of the Student and is controlled by
the Student (or Parent). The Donor making a contribution, if not the Student or
Parent, may designate the initial investments in the Education IRA Account, but
shall have no further rights, interests or obligations related to the Education
IRA, except that he or she can make additional contributions, subject to the
limits described below.
The Adoption Agreement must be signed by the Donor, and any and all forms,
applications, certifications and other documents must be signed by the Parent,
if the Student has not yet reached the age of majority recognized by the laws of
the state of Student's residence ("age of majority").
While the Student remains a minor, the Parent identified in the Adoption
Agreement, will exercise all of the rights and responsibilities of the Student,
including the selection and exchange of Fund shares in which the Education IRA
is invested. The Custodian's acceptance of the contribution to this Education
IRA account is conditioned on agreement by the Parent of a minor Student to be
bound by all of the terms and conditions of this Disclosure Agreement and the
provisions set out in Articles I-XI of the Custodial Account Agreement. The
Student may notify the Custodian in writing that he or she has reached the age
of majority in the state where the Student then resides (and provide any
documentation the Custodian may request verifying the fact that he or she has
attained such age). Upon receiving such request (and documentation, if
requested), the Custodian will recognize the Student as the individual
controlling the account with power to exercise all rights and responsibilities
related to the Education IRA, and the Parent will thereafter have no control or
power over the account.
------------------------------------------------------------------------------
Note: The Custodian is under no obligation to determine whether any Parent
actually holds the legal right and capacity to direct or control a Student's
Education IRA account.
------------------------------------------------------------------------------
FEES AND EXPENSES
CUSTODIAN'S FEES
The following is a list of the fees charged by the Custodian for maintaining
your Education IRA.
Annual Maintenance Fee $10.00
Termination, Rollover, or Transfer of Account
to Successor Custodian $10.00
GENERAL FEE POLICIES
o Fees may be paid by you directly or the Custodian may deduct them from your
Education IRA.
o Fees may be changed upon 30 days written notice to you.
o The full annual maintenance fee will be charged for any calendar year
during which you have an Education IRA with us. This fee is not prorated
for periods of less than one full year.
o If provided for in the Disclosure Statement or 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.
o 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 Education IRA is invested. Before investing,
be sure to read carefully the current prospectus of any Fund you are considering
as an investment for your Education IRA for a description of applicable charges.
CONTRIBUTIONS
WHO MAY CONTRIBUTE TO AN EDUCATION IRA?
Starting in 1998, anyone, including the Student, may open and contribute to an
Education IRA established on the Student's behalf, as long as the Student is
less than 18 at the time of the contribution. The person making the contribution
-- the "Donor" -- can be anyone, even the Student; the Donor does not have to be
related to the Student.
ARE CONTRIBUTIONS TO AN EDUCATION IRA TAX DEDUCTIBLE?
Contributions to an Education IRA are not deductible. This is a major
difference between Education IRAs and Regular IRAs.
WHEN CAN CONTRIBUTIONS BE MADE TO AN EDUCATION IRA?
A Donor may make a contribution to an Education IRA for a particular
calendar year by the end of that year (December 31). (NOTE: Unlike Regular
IRAs or Xxxx IRAs, contributions for a particular year may NOT be made by the
due date of the Donor's federal income tax return for that year.)
HOW MUCH MAY BE CONTRIBUTED TO AN EDUCATION IRA?
Donors may contribute up to $500 in a calendar year for the benefit of any
one Student. For example, if Uncle Xxx contributes $300 to a State Street Bank
Education IRA on behalf of Xxxxx, his nephew, all other contributions made on
behalf of Xxxxx by Uncle Xxx or any other potential Donor (such as parents or
grandparents) to THIS OR ANY OTHER Education IRA, are limited to $200 for that
tax year.
--------------------------------------------------------------------------------
Note: The Custodian is under no obligation, nor can it be, to determine
whether the maximum limit for any Student has been reached. It is the
Parent's responsibility to consult with the other parent or guardian to
determine whether the maximum limits will be exceeded.
--------------------------------------------------------------------------------
For Donors with high income levels, the contribution limits may be reduced
below $500. This depends upon the Donor's filing status and the amount of his or
her modified adjusted gross income (MAGI). The following table shows how the
contribution limits are restricted.
HOW ARE THE LIMITS CALCULATED FOR MAGI IN THE "REDUCED CONTRIBUTION" RANGE?
If the Donor's MAGI falls in the reduced contribution range, that Xxxxx's
contribution limit must be calculated. To do this, multiply the normal
contribution limit ($500) by a fraction. The numerator is the amount by which
MAGI 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 the
normal limit.
For example, assume that a Xxxxx's MAGI for the year is $157,555 and she is
married, filing jointly. The Education IRA contribution limit would be
calculated as follows:
1. The amount by which MAGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555 - $150,000) = $7,555
$ 7,555
2. Is divided by $10,000: ------- = 0.7555
$10,000
3. Multiply this by $500:
0.7555 x $500 = $377.75
4. Subtract this from the $500 contribution limit:
($500 - $377.75) = $122.25
This is the contribution limit.
Of course, if one Donor is prevented by these rules from making a full $500
contribution on behalf of a Student, another person (who is not the Donor's
spouse) may be willing to contribute so that the full $500 per year that the law
allows will be added to the Student's Education IRA.
NOTE: Any amount contributed to the Education IRA above the maximum is
considered an "excess contribution," which is subject to excise tax of 6% for
each year it remains in the Education IRA.
EDUCATION IRA CONTRIBUTION LIMITS
-----------------------------------------------------------------------------------------------------------------
IF DONOR IS A SINGLE TAXPAYER OR IF DONOR IS MARRIED THEN DONOR
MARRIED FILING SEPARATELY FILING JOINTLY MAY MAKE
-----------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Up to Up to FULL
$95,000 $150,000 CONTRIBUTION
------------------------------------------------------------------------------------------------------------------
MODIFIED
ADJUSTED GROSS ------------------------------------------------------------------------------------------------------------------
INCOME More than More than REDUCED CONTRIBUTION
(MAGI) $95,000 $150,000 (SEE EXPLANATION BELOW)
LEVEL but less than but less than
$110,000 $160,000
------------------------------------------------------------------------------------------------------------------
$110,000 $160,000 ZERO
and up and up (NO CONTRIBUTION)
------------------------------------------------------------------------------------------------------------------
HOW DO I DETERMINE MAGI?
For most taxpayers MAGI is the same as adjusted gross income, which is their
gross income minus those deductions which are available to all taxpayers even if
they don't itemize. (Instructions to calculate AGI are provided with income tax
Form 1040 or 1040A.) Modified AGI is simply regular AGI adjusted to include
certain amounts earned abroad. If a Donor has not earned income in any foreign
country, Guam, American Samoa, the Northern Mariana Islands or Puerto Rico,
normal AGI should be used in the calculations above.
ARE THERE ANY OTHER LIMITS ON THE AMOUNT THAT MAY BE CONTRIBUTED TO AN EDUCATION
IRA?
A Donor cannot contribute to an Education IRA in any year in which a
contribution is made to a state prepaid tuition plan for the same Student. (A
state tuition plan allows taxpayers to pay their child's tuition in advance.)
Any amount contributed to an Education IRA in the same year that a contribution
is made to a state prepaid tuition plan on behalf of the Student is an excess
contribution, subjecting the Student (or the Parent, if the Student is under 14)
to the 6% penalty tax.
HOW ARE EXCESS CONTRIBUTIONS CORRECTED?
Excess contributions may be corrected without paying a 6% penalty. To do so,
the excess and any earnings on the excess must, in accordance with directions
from the Student (or Parent) to the Custodian, be paid to the Student before the
due date (including extensions) for filing his or her federal income tax return
for the year for which the excess contribution was made. The earnings must be
included in the Student's income for the tax year for which the contribution was
made.
One other way to eliminate excess contributions (and possibly avoid the 6%
excess contribution penalty tax) is to contribute an amount out of the Education
IRA to a qualified state tuition program, if there is one available to receive
the contribution from the Education IRA. This must be done in the same year that
the excess contribution was made.
WHAT HAPPENS IF THE EXCESS CONTRIBUTION IS NOT CORRECTED BY THE TAX RETURN DUE
DATE?
Any excess contribution withdrawn after the tax return due date (including any
extensions) for the year for which the contribution was made will subject the
Student to the 6% excise tax.
Unless an exception applies, the excess contribution and any earnings on it
withdrawn after tax filing time will be includible in the Student's (or the
Parent's, if the Student is under 14) taxable income and may be subject to a 10%
withdrawal penalty.
INVESTMENTS
HOW ARE EDUCATION IRA CONTRIBUTIONS INVESTED?
The Donor indicates the initial investment elections on the Adoption
Agreement. Thereafter, the Student controls the investment by making choices
among the available Fund(s) in accordance with the Fund rules. Investments must
be in one or more of the Fund(s) available from time to time as listed in the
Adoption Agreement for the Education IRA or in an investment selection form
provided with the Education IRA Adoption Agreement or from the Fund Distributor
or Service Company. The investments of your Education IRA are directed by giving
the investment instructions to the Distributor or Service Company for the
Fund(s). Since the Student controls the investment of the Education IRA, he or
she is responsible for the investment results achieved; 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 the Education IRA 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 under consideration as an investment for the Education IRA. 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 your Education IRA and
because mutual fund shares fluctuate in value, the growth in value of the
Education IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF THE EDUCATION IRA ASSETS?
The tax-exempt status of the Education IRA will be revoked if you engage in
any of the prohibited transactions listed in Section 4975 of the tax code. Upon
such revocation, the Education IRA is treated as distributing its assets to the
Student. The taxable portion of the amount in the Education IRA will be subject
to income tax unless the requirements for a tax-free withdrawal are satisfied
(see below). Also, you may be subject to a 10% penalty tax on the taxable
amount.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in your
Education IRA. Some examples of prohibited transactions are:
o Direct or indirect sale or exchange of property between you and your
Education IRA.
o Transfer of any property from your Education IRA to yourself or from
yourself to your Education IRA.
The Education IRA could lose its tax exempt status if you use all or part of
your interest in your Education IRA as security for a loan or borrow any money
from your Education IRA. Any portion of your Education IRA 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.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY EDUCATION IRA?
You may make a withdrawal from the Education IRA at any time. If the
withdrawal meets the requirements discussed below, it is tax-free. This means
that no federal income tax is due, even though the withdrawal includes dividends
or gains on the Fund shares while held in the Education IRA.
WHEN ARE DISTRIBUTIONS MANDATORY?
Any amount remaining in the account as of your 30th birthday must be
distributed to you, and any dividends or gains will be then subject to income
tax and penalty (unless an exception applies.) You can avoid these tax
implications if, before you reach age 30, you roll-over or transfer your account
balance, or change the designated beneficiary of your Education IRA, to another
member of your family. (See TRANSFERS/ROLLOVERS below.)
If you die before withdrawing your entire account balance, your Education IRA
must be distributed to your estate within 30 days after your death.
WHAT ARE THE REQUIREMENTS FOR A TAX-FREE WITHDRAWAL?
To be tax-free, a withdrawal from your Education IRA must meet two
requirements. First, the amounts withdrawn must be made to cover the cost of
"qualified higher education expenses" incurred by you while attending an
"eligible educational institution."
These two important terms are defined as follows:
o QUALIFIED HIGHER EDUCATION EXPENSES for all students include expenses for
tuition, books, supplies, and equipment required for enrollment or
attendance at an eligible educational institution. For students attending
an eligible educational institution at least half time, qualified higher
education expenses also include room and board. (Note: These costs will
generally be the school's posted room and board charge, or $2,500 per year
if the Student lives off-campus and not at home.) Also, qualified expenses
include amounts contributed to a qualified state tuition program.
o An ELIGIBLE EDUCATIONAL INSTITUTION includes most colleges, universities,
vocational schools, or other postsecondary educational institutions. The
Student should check with his or her school to verify that it is an
eligible educational institute as described in section 481 of the Higher
Education Act of 1965.
Second, the amount of the withdrawal in a year must not exceed your qualified
higher education expenses for that year.
HOW ARE WITHDRAWALS FROM AN EDUCATION IRA TAXED IF THE TAX-FREE REQUIREMENTS ARE
NOT MET?
If the withdrawal does not meet the tax-free requirements discussed above, the
general rule is that the amount equal to the principal contributions will not be
taxed, nor will the 10% withdrawal penalty apply to principal. However, that
portion of the account attributable to dividends or gains is includible in the
Student's (or the Parent's) gross income in the taxable year it is received, and
may be subject to the 10% withdrawal penalty.
A special rule may apply if the amount withdrawn exceeds the Student's
qualified higher education expenses in a year. In this case, the amount that
must be included as income for tax purposes is determined by first determining
the ratio that the qualified higher education expenses bear to the actual
withdrawal. The portion of the withdrawal that is potentially subject to
taxation -- the amount of gains or dividends -- is then multiplied by that
percentage amount. The resultant sum is the amount excludable from income. The
following example explains this formula:
In 2010, Xxxx withdraws $9,000 from his Education IRA, of which $4,000 is
attributable to dividends or gains. Xxxx's qualified education expenses total
only $7,000 for that year. Therefore, 77% ($7,000/$9,000) of the withdrawal is
attributable to educational expenses. So, $3,080 (77% of $4,000) is excludible
as income and the difference, $920, is includible as income and possibly
subject to the 10% penalty tax.
Taxable withdrawals of dividends and gains from an Education IRA are treated
as ordinary income. Withdrawals of taxable amounts from an Education IRA 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.
The receipt of any taxable withdrawal from an Education IRA may also be
subject to a 10% penalty tax, unless:
o The withdrawal is paid to your estate within thirty days of your death;
o The withdrawal is paid to you on account of your disability; or
o The withdrawal is equal to or less than the amount of a scholarship or
other tax-free educational assistance you receive.
--------------------------------------------------------------------------------
Note: The Custodian is not responsible for monitoring withdrawals or
determining whether any withdrawal is being made by any individual for
education expenses, nor is the Custodian responsible for determining what
taxes or penalties, if any, may apply.
--------------------------------------------------------------------------------
HOW DOES RECEIPT OF A TAX-FREE, QUALIFIED WITHDRAWAL AFFECT AVAILABLE EDUCATION
TAX CREDITS?
If the Student receives a tax-free distribution from an Education IRA in a
particular tax year, none of the Student's education expenses for that year may
be claimed as the basis for a Hope Scholarship Credit or Lifetime Learning
Credit for that year.
However, the tax-free treatment of the Education IRA withdrawal may be waived
(thus subjecting the withdrawal to the imposition of tax, as discussed above),
and the Student or Student's Parents, as the case may be, may elect instead to
claim a Hope Scholarship Credit or Lifetime Learning Credit for the education
expenses.
You should consult with your tax advisor to determine whether you qualify for
either credit and whether waiving the tax-free withdrawal of the Education IRA
is right for you.
TRANSFERS/ROLLOVERS
CAN A DISTRIBUTION BE TRANSFERRED OR ROLLED OVER FROM AN EMPLOYER'S RETIREMENT
PLAN INTO AN EDUCATION IRA?
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 an Education IRA. Nor are withdrawals from other
types of IRAs.
CAN ROLLOVERS BE MADE FROM ONE EDUCATION IRA TO ANOTHER EDUCATION IRA?
Amounts rolled over from one Education IRA to another Education IRA are
permitted only if the receiving Education IRA is for your benefit or for the
benefit of a member of your family. Such a rollover must be completed with 60
days after the withdrawal from the first Education IRA. Only one rollover from
an Education IRA to another is permitted in a full year (365 days).
CAN THE BENEFICIARY OF AN EDUCATION IRA BE CHANGED?
Instead of rolling over an Education IRA account to another Education IRA
account, the Student may simply change the designated beneficiary of his account
to another member of his family who is under the age of 30. This can be done at
any time. (Note: This approach can be used up to the day before your 30th
birthday to avoid the tax and penalty that may otherwise apply if a distribution
is required because you reach age 30.) (See WHEN ARE DISTRIBUTIONS MANDATORY?
above.)
WHO IS A MEMBER OF THE STUDENT'S FAMILY?
Family members include the Student and any of the following who are under age
30: the Student's children and their descendants, stepchildren and their
descendants, siblings and their children, parents and grandparents, stepparents,
and spouses of all of the foregoing.
HOW DO ROLLOVERS AFFECT EDUCATION IRA CONTRIBUTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers from one Education IRA to another can be made even
during a year when the Donor is not eligible to contribute to an Education IRA
(for example, because MAGI for that year is too high).
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on the
appropriate form.
The Custodian will report to the IRS the year-end value of the Account and the
amount of any rollovers or regular contribution made during a calendar year.
WHAT TAX INFORMATION MUST THE STUDENT REPORT TO THE IRS?
The appropriate tax reporting form must be filed with the IRS for each
taxable year for which there is made an excess contribution or in which there is
a premature withdrawal that is subject to the 10% penalty tax.
ARE EDUCATION IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax withholding requirements have not been established by the
law or by IRS regulations or rulings. Consult your tax advisor or the IRS for
the latest information on withholding requirements on taxable withdrawals from
and Education IRA.
ARE THE EARNINGS ON EDUCATION IRA FUNDS TAXED?
Any dividends on or growth of investments held in an Education IRA are
generally exempt from federal income taxes and will not be taxed until
withdrawn, unless the tax exempt status of the Education IRA is revoked. If a
withdrawal qualifies as a tax-free withdrawal (see above), amounts reflecting
earnings or growth of assets in the Education IRA will not be subject to federal
income tax.
ACCOUNT TERMINATION
The Student may terminate the Education IRA at any time after its
establishment by sending a completed withdrawal form (or other instructions in a
form acceptable to the Custodian), or a transfer authorization form to:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
An Education IRA with State Street Bank will terminate upon the first to occur
of the following:
o The date the Student's properly executed withdrawal form or instructions
(as described above) withdrawing the total Education IRA balance is
received and accepted by the Custodian.
o The date the Education IRA ceases to qualify under the tax code. This will
be deemed a termination.
o The transfer of the Education IRA to another custodian/trustee.
o The rollover of the amounts in the Education IRA to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of an
Education IRA account.
The amount received from an Education IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Education IRA
withdrawals will apply. For example, if the Education IRA is terminated and
distributions are not made for qualified education expenses, the 10% early
withdrawal penalty may apply to the taxable amount received.
IMPORTANT: THE DISCUSSION OF THE TAX RULES FOR EDUCATION IRAS IN THIS
DISCLOSURE STATEMENT IS BASED UPON THE BEST AVAILABLE INFORMATION. HOWEVER,
EDUCATION IRAS ARE NEW UNDER THE TAX LAWS, AND NOT ALL ISSUES PERTAINING TO THE
OPERATION AND TAX TREATMENT OF EDUCATION IRA ACCOUNTS HAVE BEEN ADDRESSED BY THE
IRS. THEREFORE, THE STUDENT SHOULD CONSULT HIS OR HER TAX ADVISOR FOR THE LATEST
DEVELOPMENTS OR FOR ADVICE ON HOW MAINTAINING AN EDUCATION IRA WILL AFFECT HIS
OR HER (OR PARENT'S) PERSONAL TAX OR FINANCIAL SITUATION.
EDUCATION IRA DOCUMENTS
The terms contained in Articles I to X of the State Street Bank and Trust
Company Education Individual Retirement Custodial Account document are in the
form promulgated by the IRS in Form 5305-EA for use in establishing an Education
IRA under Code section 530. If the IRS issues an amendment to Form 5305-EA, the
Custodian will adopt the provisions of such model form as an amendment,
accordingly. IRS approval relates only to the form of Articles I to X and will
not be an approval of the merits of the Education IRA or of any investment
permitted by the Education IRA.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
000-000-0000
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
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 platium 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.
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. As used in this Article VIII the following terms have the following
meanings:
"Custodian" means State Street Bank and Trust Company.
"Fund" means any registered investment company which is specified in the
Adoption Agreement, or 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 Century Capital Management.
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.
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 without liability for interest
or for loss of income or appreciation. 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
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 or telephonic 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.
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 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 (except for distribution on account of
Depositor's disability or death, return of an "excess contribution" referred
to in Code Section 408(d), 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). 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 the
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) 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 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 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. 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 an order 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 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, but only after Xxxxxxxxx's death, it also means Depositor's
spouse if the spouse elects to treat the Custodial Account as the spouse's own
Custodial Account in accordance with the 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.
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) 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/her 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 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.
(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 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.
(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.
(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) 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 the 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.
(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, Xxxxxxxxx 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.
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. 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.
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 office of the Custodian is located. Any action involving the
Custodian brought by any other party must be brought 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.
However, 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 Xxxxxxxxx'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. 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.
24. 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.
STATE STREET BANK AND TRUST COMPANY
REGULAR IRA (ONLY) INFORMATION KIT
INTRODUCTION
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("IRA") 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 IRA 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 IRA, to replace an existing Regular IRA,
or complement a Regular IRA 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 available
in the State Street Bank and Trust Company Xxxx XXX Package, which you may
obtain by calling or writing us.
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 IRA contributions. Also
the rules for deductible contributions by a Regular 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 the changes that have
been made to Regular IRAs. You will also find everything you need to establish
and maintain a Regular IRA.
The first section of this Kit contains the instructions and forms you will
need to open a new Regular IRA, or to transfer from another IRA to a State
Street Bank and Trust IRA.
The second section of this Kit contains the Regular IRA Custodial Agreement,
which contains provisions specifically applicable to Regular IRAs.
The third section of this Kit contains the Regular IRA Disclosure Statement,
which describes the basic rules and benefits specifically applicable to your
Regular IRA.
WHAT'S THE DIFFERENCE BETWEEN A REGULAR IRA AND A XXXX XXX?
With a Regular IRA, 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 IRA, 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 IRA and a Xxxx XXX:
-------------------------------------------------------------------------------
CHARACTERISTICS REGULAR XXX XXXX XXX
-------------------------------------------------------------------------------
ELIGIBILITY o Individuals (and their o Individuals (and their
spouses) who receive spouses) who receive
compensation compensation
o Individuals age 70 1/2 o Individuals age 70 1/2
and over MAY NOT and over MAY
contribute contribute
-------------------------------------------------------------------------------
TAX TREATMENT OF o Subject to o No deduction permitted
CONTRIBUTIONS limitations, for amounts
contributions are contributed
deductible
-------------------------------------------------------------------------------
CONTRIBUTION LIMITS o Individuals may Individuals may
contribute up to generally contribute
$2,000 annually (or up to $2,000 (or 100%
100% of compensation, of compensation, if
if less) less)
o Deductibility depends Ability to contribute
on income level for phases out at income
individuals who are levels of $95,000 to
active participants in $110,000 (individual
an employer-sponsored taxpayer) and $150,000
retirement plan to $160,000 (married
taxpayers)
Overall limit for
contributions to all
IRAs (Regular and Xxxx
combined) is $2,000
annually (or 100% of
compensation, if less)
-------------------------------------------------------------------------------
EARNINGS o Earnings and interest o Earnings and interest
are not taxed when are not taxed when
received by your IRA received by your IRA
-------------------------------------------------------------------------------
ROLLOVER/CONVERSIONS o Individual may o Rollovers from other
rollover amounts held Xxxx IRAs or Regular
in employer-sponsored IRAs ONLY
retirement
arrangements (401(k), o Amounts rolled over
SEP IRA, etc.) tax (or converted) from
free to Regular IRA another Regular IRA
are subject to income
tax in the year rolled
over or converted
o Tax on amounts rolled
over or converted in
1998 is spread over
four year period
(1998-2001)
-------------------------------------------------------------------------------
WITHDRAWALS o Total (principal + o Not taxable as long as
earnings) taxable as a qualified
income in year distribution-
withdrawn (except for -generally, account
any prior non- open for 5 years, and
deductible age 59 1/ 2
contributions)
o Minimum withdrawals
o Minimum withdrawals NOT REQUIRED after age
must begin after age 70 1/2
70 1/2
-------------------------------------------------------------------------------
IS A XXXX OR A REGULAR IRA RIGHT FOR ME?
We cannot act as your legal or tax advisor and so we cannot tell you which
kind of IRA 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 IRA 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 IRA 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.
SEPS AND SIMPLES.
The State Street Bank Regular IRA may be used in connection with a
simplified employee pension (SEP) plan maintained by your employer. To
establish a Regular IRA as part of your Employer's SEP plan, complete the
Adoption Agreement for a Regular IRA, indicating in the proper box that the
IRA 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 IRA plan. A Regular
IRA 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 IRA may be
used). SIMPLE IRA 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 IRA 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 the State Street Bank and Trust Company Regular
IRA. The Disclosure Statement provides general information about the governing
rules for these IRAs and the benefits and features offered. However, the State
Street Bank and Trust Company Adoption Agreement and the Custodial Agreement,
are the primary documents controlling the terms and conditions of your
personal State Street Bank and Trust Company Regular IRA, 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
State Street Bank and Trust Company Regular or Xxxx XXX is established. A Xxxx
XXX is either a State Street Bank and Trust Company Xxxx XXX or any Xxxx XXX
established by any other financial institution. A Regular IRA is any non-Xxxx
XXX offered by State Street Bank and Trust Company or any other financial
institution.
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
REGULAR INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
INSTRUCTIONS FOR OPENING YOUR IRA
1. Read carefully the Regular IRA Disclosure Statement, the Regular
Individual Retirement Custodial Account document, the Adoption Agreement, and
the prospectus(es) for any Fund(s) you are considering. Consult your lawyer or
other tax adviser if you have any questions about how opening a Regular IRA
will affect your financial and tax situation.
2. Complete the Adoption Agreement
Print the identifying information in Part 1 of the form.
In Part 2, check the box that shows the type of IRA you are
opening.
If this is an IRA to which you expect to make contributions each
year, check box A and enclose a check in the amount of your first
contribution. Be sure to indicate whether this is a contribution for
last year or for the current year.
If this is a transfer directly from another IRA custodian or
trustee, check Box B. Check the appropriate box to indicate whether
the funds transferred were originally from contributions to an
employee qualified plan or a 403(b) arrangement, or whether any of the
funds were originally from your annual contributions to the IRA.
Complete and sign the Universal IRA Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another
IRA or an employer qualified plan or a 403(b) arrangement, check Box
C. Check the appropriate box to indicate whether the transfer is
coming from a qualified plan or a 403(b) arrangement or an IRA that
held only funds that were originally from contributions to a qualified
plan or 403(b) or whether any of the funds were originally from your
annual contributions to the IRA. Enclose a check for the rollover
contribution amount.
If this is a direct rollover from a qualified plan or 403(b)
arrangement, check Box D. Complete and sign the Universal IRA Transfer
of Assets Form.
Check Box E if applicable (for an IRA that will be used to receive
employer contributions under an employer's simplified employee pension
(or SEP) plan or under a grandfathered salary reduction SEP plan (or
"SARSEP")).
In Part 3, indicate your investment choices.
In Part 4, indicate your Primary Beneficiary and Alternate
Beneficiary. Spousal consent required if beneficiary is other than
your spouse.
Sign and date the Adoption Agreement at the end.
3. If you are transferring assets from an existing Regular IRA to this
Regular IRA, complete the Transfer of IRA Assets Form.
4. The Custodian fees for maintaining your Regular IRA are listed in the
FEES AND EXPENSES section of the Disclosure Statement.
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the first contribution to your Regular or Xxxx XXX (if
applicable). Your Regular IRA or Xxxx XXX cannot be accepted without the
properly completed documents.
All checks should be payable to Century Shares Trust.
Send the completed forms and checks to:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
IMPORTANT NOTE
This Kit contains materials to establish a Regular Individual Retirement
Custodial Account. It does not establish a Xxxx XXX, a new type of IRA
available starting in 1998.
This IRA is a called a "Regular IRA" to distinguish it from the new Xxxx
XXX. With a Xxxx XXX, contributions are not deductible (regardless of your
Adjusted Gross Income), but withdrawals that meet certain requirements are not
subject to federal income tax, so that interest and other gains and earnings
on amounts held in a Xxxx XXX can be withdrawn without being subject to
federal income tax. Please write to the address at the end of the Disclosure
Statement included in this Kit (or call the 800 number listed there) to
request material on new Xxxx IRAs.
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
REGULAR INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
ADOPTION AGREEMENT
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish a Regular Individual Retirement Account (the
"Account") with State Street Bank and Trust Company as Custodian. ("Bank") A
Regular Individual Retirement Account operates under Internal Revenue Code
Section 408; I understand that it is not a Xxxx XXX under the Internal Revenue
Code Section 408A. I agree to the terms of my Account, which are contained in
the document entitled "State Street Bank and Trust Company Regular Individual
Retirement Custodial Account" and this Adoption Agreement. I certify the
accuracy of the information in this Adoption Agreement. My Account will be
effective upon acceptance by State Street Bank and Trust Company.
1. DEPOSITOR INFORMATION
[ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
----------------------------------------- Social Security Number
Print Full Name
----------------------------------------- -------------------------------------
Address Date of Birth
( )
----------------------------------------- -------------------------------------
City State Zip Daytime Telephone No.
2. TYPE OF REGULAR INDIVIDUAL RETIREMENT ACCOUNT
A. [ ] ANNUAL CONTRIBUTIONS
Current Contribution for the year 19------. Check enclosed for
$----------.
This contribution does not exceed the maximum permitted amount as
described in the Regular IRA Disclosure Statement.
B. [ ] TRANSFER
Transfer of existing Regular IRA directly from current Custodian or
Trustee. Complete the Universal IRA Transfer of Assets Form.
[ ] The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual
contributions).
[ ] The transferring IRA held only amounts that were originally
contributions to an employer qualified plan or 403(b) plan.
C. [ ] ROLLOVER
The requirements for a valid rollover are complex. See the Regular IRA
Disclosure Statement for additional information and consult your tax
advisor for help if needed. Check enclosed for $----------.
[ ] Rollover of a qualifying rollover distribution to Depositor from
an employer plan or 403(b) arrangement, or rollover from another
Regular IRA which held only assets distributed to Depositor from
an employer plan or 403(b) arrangement and to which Depositor made
no direct contributions.
[ ] Rollover of distribution to Depositor from another Regular IRA
that held amounts that originated from annual contributions by the
Depositor.
D. [ ] DIRECT ROLLOVER
[ ] Direct rollover of an eligible distribution from a qualified plan.
[ ] Direct rollover of an eligible distribution from a 403(b) account
or annuity.
Direct rollovers are described in the Regular IRA Disclosure
Statement.
E. [ ] SEP Provision - check here if the Depositor intends to use this
Account in connection with a SEP Plan or grandfathered SARSEP Plan
established by the Depositor's employer.
3. INVESTMENTS
Invest contributions to my Account as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus. (Please read the prospectus
before investing.)
4. DESIGNATION OF BENEFICIARY
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to
the following Primary Beneficiary or Beneficiaries who survive me. Make
payment in the proportions specified below (or in equal proportions if no
different proportions are specified). If any Primary Beneficiary predeceases
me, his share is to be divided among the Primary Beneficiaries who survive me
in the relative proportions assigned to each such surviving Primary
Beneficiary.
PRIMARY BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
IF NONE OF THE PRIMARY BENEFICIARIES SURVIVES ME, PAY ANY INTEREST I MAY
HAVE UNDER MY ACCOUNT TO THE FOLLOWING ALTERNATE BENEFICIARY OR BENEFICIARIES
WHO SURVIVE ME. MAKE PAYMENT IN THE PROPORTIONS SPECIFIED BELOW (OR IN EQUAL
PROPORTIONS IF NO DIFFERENT PROPORTIONS ARE SPECIFIED). IF ANY ALTERNATE
BENEFICIARY PREDECEASES ME, HIS SHARE IS TO BE DIVIDED AMONG THE ALTERNATE
BENEFICIARIES WHO SURVIVE ME IN THE RELATIVE PROPORTIONS ASSIGNED TO EACH SUCH
SURVIVING ALTERNATE BENEFICIARY.
ALTERNATE BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property
or marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
-------------------------------------------------------------------------------
SPOUSAL CONSENT (This section should be reviewed if the accountholder is
married 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 IRA, 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
-------------------------------------------------------------------------------
5. CERTIFICATIONS AND SIGNATURES
If the Depositor has indicated a 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
IRA, 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.
Depositor has received and read the "State Street Bank and Trust Company
Regular Individual Retirement Account Disclosure Statement" (including the
Custodian's fee schedule), the Custodial Account document, and the
"Instructions" pertaining to this Adoption Agreement. Depositor acknowledges
receipt of the Regular Individual Retirement Custodial Account document and
Regular IRA Disclosure Statement at least 7 days before the date inscribed
below and acknowledges that Depositor has no further right of revocation.
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. State Street Bank and Trust
Company will accept appointment as Custodian of the
Depositor's Account. However, this Agreement is not
------------------------- binding upon the Custodian until the Depositor has
Signature of Depositor 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 State Street Bank and Trust Company's
Date -------------------- acceptance of appointment as Custodian of the
Depositor's Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
By -------------------------------------------------
Date -----------------------------------------------
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
----------------------------------------------------
Signature of Parent or Guardian
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
UNIVERSAL IRA TRANSFER OF ASSETS FORM
1. NAME AND ADDRESS OF DEPOSITOR
Name ---------------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
----------------- --------------------
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
[ ] Regular IRA* [ ] SEP IRA* [ ] Xxxx XXX** [ ] SIMPLE IRA***
* You may not transfer from a Xxxx XXX to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfers to a Regular IRA or SEP IRA may
be made from another Regular IRA or SEP IRA, qualified employer plan,
403(b) arrangement, or a SIMPLE IRA account (but not until at least 2
years after the first contribution to your SIMPLE IRA account).
** Transfers to a Xxxx XXX are possible only from another Xxxx XXX or from
a Regular IRA, not from other types of tax-deferred accounts. A transfer
from a Regular IRA will trigger federal income tax on the taxable amount
transferred from the Regular IRA. Note: If a conversion, rollover or
transfer from a Regular IRA to a Xxxx XXX is being made, only amounts
converted, rolled over or transferred during the same tax year will be
accepted in a single Xxxx XXX. 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.
*** Transfers to a SIMPLE IRA may be made only from another SIMPLE IRA.
During the first two years after a SIMPLE IRA is established,
transfers may be made only to another SIMPLE IRA; after two years,
transfers may be made from a SIMPLE IRA to a Regular IRA.
If you already have a Regular IRA, SEP IRA, Xxxx XXX or SIMPLE IRA,
indicate the Account No.--------------------.
3. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee ------------------------------------------------
Attn: Mr./Ms. ------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Identification of Sending Account (including Account No.) ----------------
Please transfer assets from the above account to State Street Bank and
Trust Company. Transfer should be in cash according to
the following instructions:
[ ] Transfer the total amount or [ ] Transfer $---------- and retain
in my Account the balance.
Make check payable to:
Century Shares Trust
FBO: Shareholder name
P.O. Box 8329
Boston, MA 02266-8329
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor - check one box and complete if necessary)
[ ] Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and
Trust Company Individual Retirement Custodial Account.
[ ] Invest the transferred amount as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus. (Please read the prospectus
before investing.)
I understand that the requirements for a valid transfer to a Regular IRA,
SEP IRA, Xxxx XXX or SIMPLE IRA are complex and that I have the responsibility
for complying with all requirements and for the tax results of any such
transfer.
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial
Account meeting the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be) to which assets will be transferred, and
certifies to State Street Bank and Trust Company that the IRA from which
assets are being transferred meets the requirements of Internal Revenue Code
Section 408(a), 408(p) 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
--------------------------------------------------------------------------
6. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company) State Street Bank and Trust Company agrees to accept transfer of
the above amount for deposit to the Depositor's State Street Bank and Trust
Company Individual Retirement Custodial Account, and requests the
liquidation and transfer of assets as indicated above.
----------------------------------- By:------------------------------------
REGULAR IRA DISCLOSURE STATEMENT
SPECIAL NOTE
This 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 (see below).
For 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 IRA 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 IRA
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 Regular IRA Disclosure Statement does not describe Xxxx IRAs, a new
type of IRA available starting in 1998. With a Xxxx XXX, 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 investments growth on amounts held in the Xxxx XXX can escape
federal income tax. Please write to the address at the end of this Disclosure
Statement (or call the 800 number listed at the end) to request materials on
new 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 IRA, and these
contributions may exceed the normal limits on Regular IRA contributions. This
Disclosure Statement also does not describe IRAs established in connection
with a SIMPLE IRA program maintained by your employer. Employers provide
special explanatory materials for accounts established as part of an
employer's SIMPLE IRA program. However, Regular IRAs may be used in connection
with a SIMPLE IRA program, but for the first two years of participation a
special SIMPLE IRA (not a Regular IRA) is required.
ESTABLISHING YOUR IRA
This disclosure statement contains information about your Regular Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. A Regular IRA gives you several tax benefits. Earnings on the
assets held in your IRA are not subject to federal income tax until withdrawn
by you. You may be able to deduct all or part of your Regular IRA contribution
on your federal income tax return. State income tax treatment of your Regular
IRA may differ from federal treatment; ask your state tax department or your
personal tax advisor for details.
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA 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.
You may revoke a newly established IRA at any time within seven days after
the date on which you receive this Disclosure Statement. An IRA established
more than seven days after the date of your receipt of this Disclosure
Statement may not be revoked.
To revoke your IRA, 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 IRA within the seven-day
period, you are entitled to a return of the entire amount you contributed into
your IRA, without adjustment for such items as sales charges, administrative
expenses or fluctuations in market value.
FEES AND EXPENSES
CUSTODIAN'S FEES
The following is a list of the fees charged by the Custodian for maintaining
your IRA.
Annual Maintenance Fee per account $10.00
Termination, Rollover, or Transfer of Account
to Successor Custodian $10.00
GENERAL FEE POLICIES
-- Fees may be paid by you directly or the Custodian may deduct them from
your IRA.
-- 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 IRA with us. This fee is not prorated for
periods of less than one full year.
-- 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 IRA is invested. Be sure to
read carefully the current prospectus of any Fund you are considering as
an investment for your IRA for a description of applicable charges.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A REGULAR IRA?
You are eligible to establish and contribute to a Regular IRA 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 IRA purposes.
-- You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO A REGULAR IRA FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Regular IRA for your spouse, regardless of whether
your spouse had any compensation or earned income in that year. This is called
a "spousal IRA." To make a contribution to a regular IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal IRA,
your spouse must set up a different Regular IRA, separate from yours, to which
you contribute.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO A REGULAR IRA?
You may make a contribution to your existing Regular IRA or establish a new
regular IRA 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 IRA?
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 IRA 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 the other spouse's compensation over the other
spouse's IRA contribution. However, the maximum contribution to either
spouse's Regular IRA is $2,000 for the year.
If you (or your spouse) establish a new Xxxx XXX and make contributions to
both your Regular IRA and a Xxxx XXX, the combined limit on contributions to
both your (or your spouse's) Regular IRA 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 IRA is
deductible.
If you are an active participant in an employer-sponsored plan, your Regular
IRA 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 IRA 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 IRA will be deductible.
If your spouse is an active participant, the Regular IRA 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 IRA 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 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 AGI level, your spouse's "active participant"
status will not affect the deductibility of your contributions to your Regular
IRA 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 IRA (or your spouse's Regular IRA)
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
SINGLE MARRIED FILING JOINTLY IRA CONTRIBUTION IS
------------------------------------------------------------------------------------------------------------
Up to Lower limit Up to Lower limit FULLY DEDUCTIBLE
($30,000 for 1998) ($50,000 for 1998)
------------------------------------------------------------------------------------------------------------
ADJUSTED More than Lower limit More than Lower limit PARTLY DEDUCTIBLE
GROSS but less than but less than
INCOME Upper limit ($40,000 for 1998) Upper limit ($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
as follows (note: if you are married but filing a separate return, your Lower Limit is always zero and your Upper Limit is always
$10,000). Substitute the correct Lower Limit and Upper Limit on the table above for determining deductibility in any particular
year.
TABLE OF LOWER AND UPPER LIMITS
-------------------------------------------------------------------------------
MARRIED
YEAR SINGLE 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 later $50,000 $60,000 $80,000 $100,000
-------------------------------------------------------------------------------
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 IRA
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
$ 7,555
2. Divide this by $10,000: -------- = 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 - $1,551) = $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 IRA (and your spouse may contribute to your
spouse's Regular IRA) 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 IRA 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 IRA?
The maximum contribution you can make to a regular IRA generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA 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 IRA.
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. 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.
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 includible 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 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.
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO A REGULAR IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Regular IRA.
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 IRA. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Regular IRA 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 IRA.
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
IRA 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 IRA, 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 IRA to another qualified plan. However,
the IRA must have no assets other than those which were previously distributed
to you from the qualified plan. Specifically, the IRA 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 IRA TO ANOTHER IRA?
You may make a rollover from one Regular IRA to another Regular IRA you have
or you established to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first IRA.
After making a traditional rollover from one Regular IRA to another, you
must wait a full year (365 days) before you can make another such rollover.
(However, you can instruct a Regular IRA custodian to transfer amounts to
directly to another Regular IRA custodian; such a direct transfer does not
count as a rollover.)
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY NORMAL CONTRIBUTIONS
IN ONE IRA?
If you wish to make both 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 IRA you established with
rollover contributions (or make a rollover contribution to the IRA 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 IRA into another
qualified plan. If despite this, you still wish to combine a rollover
contribution and the IRA holding your annual contributions, you should
establish the account as an Annual Contributions IRA on the Adoption Agreement
and make the contributions to that account.
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 IRA TO A XXXX XXX?
The rules for converting a Regular IRA to a new Xxxx XXX, or making a
rollover from a Regular IRA to a new Xxxx XXX, are described in the State
Street Bank Xxxx XXX Disclosure Statement. This is available to you by writing
to the address or calling the 800 number at the end of this booklet.
You should not attempt to make a rollover or a transfer from a new Xxxx XXX
to a Regular IRA.
INVESTMENTS
HOW ARE MY REGULAR IRA CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your Regular
IRA. Investments must be in one or more of the Fund(s) available from time to
time as listed in the Adoption Agreement for your IRA or in an investment
selection form included with your IRA Adoption Agreement. You direct the
investment of your IRA by giving your investment instructions to the
Distributor or Service Company for the Fund(s). Since you control the
investment of your IRA, 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 IRA will generally be effected 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 IRA. 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 IRA and because
mutual fund shares fluctuate in value, the growth in value of your IRA cannot
be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY REGULAR IRA ASSETS?
The tax-exempt status of your IRA will be revoked if you engage in any of
the prohibited transactions listed in Section 4975 of the tax code. The fair
market value of your IRA will be includible in your taxable income in the year
in which such prohibited transaction takes place. The fair market value of
your IRA 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 IRA is
treated as a taxable withdrawal; the only exception involves certain types of
government-sponsored coins and bullion.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in
your IRA. Some examples of prohibited transactions are:
-- Direct or indirect sale or exchange of property between you and your IRA.
-- Transfer of any property from your IRA to yourself or from yourself to
your IRA.
Your IRA could lose its tax exempt status if you use all or part of your
interest in your IRA as security for a loan or borrow any money from your IRA.
Any portion of your IRA 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
WHEN CAN I MAKE WITHDRAWALS FROM MY REGULAR IRA?
You may withdraw from your Regular IRA 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 IRA 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 IRA (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 IRA TAXED?
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 a Regular IRA are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.
Since the purpose of a Regular IRA is to accumulate funds for retirement,
your receipt or use of any portion of your Regular IRA 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 individual is attending at least half-time.
-- The distribution is used to pay first-time homebuyer expenses incurred by
you or your spouse, child, grandchild, parent or grandparent. Qualifying
expenses include costs of acquisition, construction or reconstruction of
a principal residence, including usual settlement or closing costs. A
person is considered a "first-time homebuyer" if that person (or his or
her spouse, if married) had no ownership interest in a principal
residence during the two years before the date that the new home is
acquired. For any individual, there is a lifetime limit of $10,000 on
qualifying first-time homebuyer expenses (including withdrawals from this
IRA and any other IRAs you may have).
-- 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 IRA 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 72% of your adjusted gross
income for that year), or
-- 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 IRA, 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 IRA 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 IRA contributions:
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 IRA 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 IRA $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 IRA 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
IRA?
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. This 15% penalty tax has been repealed.
TAX MATTERS
WHAT 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 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 required minimum
amount from your Regular IRA. If your beneficiary fails to make required
minimum withdrawals from your Regular IRA after your death, your beneficiary
may be subject to an excise tax and be required to file Form 5329.
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.
ARE REGULAR IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular IRA, unless you elect not to have tax withheld.
Withdrawals from a Regular IRA 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 IRA.
ARE THE EARNINGS ON MY REGULAR IRA FUNDS TAXED?
Any dividend on or growth of the investments held in your Regular IRA are
generally exempt from federal income taxes and will not be taxed until
withdrawn by you, unless the tax exempt status of your Regular IRA is revoked.
ACCOUNT TERMINATION
You may terminate your Regular IRA 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:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
Your Regular IRA with State Street Bank 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 IRA balance is received
and accepted by the Custodian or, if later, the termination date
specified in the withdrawal form.
-- The date the Regular IRA ceases to qualify under the tax code. This will
be deemed a termination.
-- The transfer of the Regular IRA to another custodian/trustee.
-- The rollover of the amounts in the Regular IRA to another custodian/
trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your Regular IRA will be treated as a
withdrawal, and thus the rules relating to Regular IRA withdrawals will apply.
For example, if the Regular IRA is terminated before you reach age 59 1/2, the
10% early withdrawal penalty may apply on the amount you receive.
REGULAR IRA DOCUMENTS
The terms contained in Articles I to VII of the State Street Bank and Trust
Company Regular Individual Retirement Custodial Account document have been
promulgated by the IRS in Form 5305-A for use in establishing a Regular IRA
custodial account that meets the requirements of the tax laws for a valid IRA.
This IRS approval relates only to the form of Articles I to VII and is not an
approval of the merits of the IRA or of any investment permitted by the IRA.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call
the following telephone number.
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
000-000-0000
STATE STREET BANK AND TRUST COMPANY
XXXX INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
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 IRA, 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 IRA, no contributions
other than IRA 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 Xxxxxxxxx who files jointly, between AGI of $150,000 and $160,000;
and for a married Xxxxxxxxx who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA 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 IRA 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
trust 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.
ARTICLE VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Custodial Account" means the Xxxx Individual Retirement Account
established using the terms of this Agreement and the Adoption Agreement signed
by the Depositor.
"Custodian" means State Street Bank and Trust Company.
"Fund" means 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 Century Capital Management.
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 on 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.
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(f), 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. If the
Depositor's surviving spouse is the Beneficiary, the Depositor or such 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's surviving spouse 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 the 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 Xxxxxxxxx'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.
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.
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) and 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.
(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 the 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.
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 such state.
This Agreement is intended to qualify under Code Section 408A as a Xxxx XXX
and to entitle Depositor to the tax benefits thereof, 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.
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 Xxxxxxxxx'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 communication 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. This Agreement and the Adoption Agreement signed by the Depositor (as
either may be amended) are the documents governing the Depositor's Custodial
Account. Articles I through VII of this Agreement are in the form promulgated or
approved 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, and the
Depositor specifically consents to such amendment in accordance with Section
13(b) hereof.
25. If the Depositor maintains an individual retirement account under Code
section 408(a), Depositor may convert or transfer such other IRA 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
IRA. Alternatively, if available the Depositor may convert or transfer such
other IRA 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.
26. 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.
STATE STREET BANK AND TRUST COMPANY
XXXX XXX (ONLY) INFORMATION KIT
INTRODUCTION
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("IRA") 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 IRA 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 IRA, to replace an existing Regular IRA,
or complement a Regular IRA you wish to continue maintaining.
Taxpayers with adjusted gross income of up to $100,000 are also eligible to
convert existing Regular IRAs into Xxxx IRAs.
You should note that 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
IRA 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.
This Kit provides information on Xxxx IRAs only. To learn more about Regular
IRAs, call or write us at the phone number or address which appears below.
WHAT'S IN THIS KIT?
In this Kit you will find detailed information about Xxxx IRAs. You will
also find everything you need to establish and maintain a Xxxx XXX, or to
convert all or part of an existing Regular IRA to a Xxxx XXX.
The first section of this Kit contains the instructions and forms you will
need to open a new Xxxx XXX, to transfer from another Xxxx XXX to a State
Street Bank and Trust IRA, or to convert a Regular IRA to a Xxxx XXX.
The second section of this Kit contains the Xxxx XXX Custodial Agreement,
with provisions specifically applicable to your Xxxx XXX.
The third section of this Kit contains our Xxxx XXX Disclosure Statement,
which describes the basic rules and benefits which are applicable to your Xxxx
XXX.
WHAT'S THE DIFFERENCE BETWEEN A REGULAR IRA AND A XXXX XXX?
With a Regular IRA, 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 IRA, 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 IRA and a Xxxx XXX:
-------------------------------------------------------------------------------
CHARACTERISTICS REGULAR XXX XXXX XXX
-------------------------------------------------------------------------------
ELIGIBILITY o Individuals (and their o Individuals (and their
spouses) who receive spouses) who receive
compensation compensation
o Individuals age 70 1/2 o Individuals age 70 1/2
and over MAY NOT and over MAY
contribute contribute
-------------------------------------------------------------------------------
TAX TREATMENT OF o Subject to o No deduction permitted
CONTRIBUTIONS limitations, for amounts
contributions are contributed
deductible
-------------------------------------------------------------------------------
CONTRIBUTION LIMITS o Individuals may Individuals may
contribute up to generally contribute
$2,000 annually (or up to $2,000 (or 100%
100% of compensation, of compensation, if
if less) less)
o Deductibility depends Ability to contribute
on income level for phases out at income
individuals who are levels of $95,000 to
active participants in $110,000 (individual
an employer-sponsored taxpayer) and $150,000
retirement plan to $160,000 (married
taxpayers)
Overall limit for
contributions to all
IRAs (Regular and Xxxx
combined) is $2,000
annually (or 100% of
compensation, if less)
-------------------------------------------------------------------------------
EARNINGS o Earnings and interest o Earnings and interest
are not taxed when are not taxed when
received by your IRA received by your IRA
-------------------------------------------------------------------------------
ROLLOVER/CONVERSIONS o Individual may o Rollovers from other
rollover amounts held Xxxx IRAs or Regular
in employer-sponsored IRAs ONLY
retirement
arrangements (401(k), o Amounts rolled over
SEP IRA, etc.) tax (or converted) from
free to Regular IRA another Regular IRA
are subject to income
tax in the year rolled
over or converted
o Tax on amounts rolled
over or converted in
1998 is spread over
four year period
(1998-2001)
-------------------------------------------------------------------------------
WITHDRAWALS o Total (principal + o Not taxable as long as
earnings) taxable as a qualified
income in year distribution-
withdrawn (except for -generally, account
any prior non- open for 5 years, and
deductible age 59 1/ 2
contributions)
o Minimum withdrawals
o Minimum withdrawals NOT REQUIRED after age
must begin after age 70 1/2
70 1/2
-------------------------------------------------------------------------------
IS A XXXX OR A REGULAR IRA RIGHT FOR ME?
We cannot act as your legal or tax advisor and so we cannot tell you which
kind of IRA 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 a Xxxx XXX is better for you, or if you want to convert an
existing Regular IRA 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 IRA 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.
OTHER POINTS TO NOTE.
The Disclosure Statement in this Kit provides you with the basic information
that you should know about State Street Bank and Trust Company Xxxx IRAs. The
Disclosure Statement provides general information about the governing rules
for Xxxx IRAs and the benefits and features offered through them. However, the
State Street Bank and Trust Company Adoption Agreement and the Custodial
Agreement, are the primary documents controlling the terms and conditions of
your personal State Street Bank and Trust Company 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
State Street Bank and Trust Company Xxxx XXX is established. A Xxxx XXX is
either a State Street Bank and Trust Company Xxxx XXX or any Xxxx XXX
established by any other financial institution. A Regular IRA is any non-Xxxx
XXX offered by State Street Bank and Trust Company or any other financial
institution.
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
XXXX INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
INSTRUCTIONS FOR OPENING YOUR XXXX XXX
1. Read carefully the Xxxx XXX Disclosure Statement, the Xxxx Individual
Retirement Custodial Account document, the Xxxx XXX Adoption Agreement, and the
prospectus for the Fund you are considering. Consult your lawyer or other tax
adviser if you have any questions about how opening this Xxxx XXX will affect
your financial and tax situation.
2. Complete the Xxxx XXX Adoption Agreement
Print the identifying information in Part 1 of the form.
In Part 2, check the box that shows the type of Xxxx XXX you are
opening.
If this is a Xxxx XXX to which you expect to make contributions each
year, check box A and enclose a check in the amount of your first
contribution. Be sure to indicate whether this is a contribution for
last year or for the current year. Only annual contributions may be
accepted in an annual contribution Xxxx XXX account. (NOTE: A
contribution made during 1998 can only be for 1998 because Xxxx IRAs
were not available before January 1, 1998.)
If you are converting an existing Regular IRA with the Bank as IRA
custodian or trustee, check Box B. Indicate your current IRA account
number and how much you are converting. Conversion of an existing
Regular IRA will result in inclusion of taxable amounts in the existing
Regular IRA on your income tax return.
If you are making a rollover from an existing Regular IRA with a
different custodian or trustee, check Box C. A rollover or transfer from
an existing Regular IRA means that the taxable amount in the existing
Regular IRA will be treated as additional income on your income tax
return. NOTE: If a conversion, rollover or transfer from a Regular IRA
to a Xxxx XXX is being made, only amounts converted, rolled over or
transferred during the same tax year will be accepted in a single Xxxx
XXX. A separate Xxxx XXX must be established to hold such amounts from a
different tax year. Annual contributions may never be deposited in a
Xxxx XXX holding such converted, rolled over or transferred amounts.
If you are making a rollover or a transfer from another Xxxx XXX
with a different trustee or custodian, check Box D. Put the requested
information where indicated.
In Part 3, indicate your investment choices.
In Part 4, indicate your Primary Beneficiary and your Alternate
Beneficiary. Spousal consent is required if beneficiary is other than
your spouse.
Sign and date the Adoption Agreement at the end.
3. If you are transferring assets directly from an existing traditional IRA
(also called a Regular IRA) or a Xxxx XXX to this Xxxx XXX, complete the
Universal IRA Transfer of Assets Form. In Part 2 of the form, check the box to
indicate that this is a transfer to a Xxxx XXX.
4. The Custodian fees for maintaining your Xxxx XXX are listed in the FEES
AND EXPENSES section of the Disclosure Statement.
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the first contribution to your Xxxx XXX (if applicable).
Your Xxxx XXX cannot be accepted without the properly completed documents.
6. All checks should be payable to: Century Shares Trust.
Send the completed forms and checks to:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
XXXX INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
ADOPTION AGREEMENT
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish a Xxxx Individual Retirement Account (the "Account")
with State Street Bank and Trust Company as Custodian. ("Bank") A Xxxx XXX
operates under the Internal Revenue Code Section 408A. I agree to the terms of
my Account, which are contained in the document entitled "State Street Bank and
Trust Company Xxxx Individual Retirement Custodial Account" and this Adoption
Agreement. I certify the accuracy of the information in this Adoption Agreement.
My Account will be effective upon acceptance by Bank.
1. DEPOSITOR INFORMATION
[ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
----------------------------------------- Social Security Number
Print Full Name
----------------------------------------- -------------------------------------
Address Date of Birth
( )
----------------------------------------- -------------------------------------
City State Zip Daytime Telephone No.
2. TYPE OF ACCOUNT
A. [ ] ANNUAL CONTRIBUTIONS
Current Contribution for the year 19------.
Check enclosed for $----------. This contribution does not exceed the
maximum permitted amount as described in the Xxxx XXX Disclosure
Statement.
B. [ ] CONVERSION of existing Regular IRA with Bank as Custodian or Trustee
to a Xxxx XXX with Bank.
Current Regular IRA Account No.: ----------------.
Amount Converted
[ ] All
[ ] Part (specify how much): $----------------
C. [ ] ROLLOVER OR TRANSFER from existing Regular IRA with a custodian or
trustee other than Bank to a Xxxx XXX with Bank.
D. [ ] ROLLOVER OR TRANSFER from existing Xxxx XXX with another custodian or
trustee to a Xxxx XXX with Bank Date existing Xxxx XXX was originally
opened: ----------------.
Indicate whether any amount in the existing Xxxx XXX represents amounts
converted or transferred from a Regular IRA into such other Xxxx XXX:
[ ] Yes [ ] No
If yes, date of the most recent conversion or transfer into such other
Xxxx XXX: ----------------.
Complete the Universal IRA Transfer of Assets Form if either C or D is
checked and the transaction is a transfer (as opposed to rollover).
NOTE: If a conversion, rollover or transfer from a Regular IRA to a Xxxx
XXX is being made, only amounts converted, rolled over or transferred
during the same tax year will be accepted in a single Xxxx XXX. 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.
3. INVESTMENTS
Invest contributions to my Account as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus.
(Please read the prospectus before investing.)
4. DESIGNATION OF BENEFICIARY
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Xxxx Individual
Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to
the following Primary Beneficiary or Beneficiaries who survive me. Make
payment in the proportions specified below (or in equal proportions if no
different proportions are specified). If any Primary Beneficiary predeceases
me, his share is to be divided among the Primary Beneficiaries who survive me
in the relative proportions assigned to each such surviving Primary
Beneficiary.
PRIMARY BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
If none of the Primary Beneficiaries survives me, pay any interest I may
have under my Account to the following Alternate Beneficiary or Beneficiaries
who survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
ALTERNATE BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property
or marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
-------------------------------------------------------------------------------
SPOUSAL CONSENT (This section should be reviewed if the accountholder is
married 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 IRA, 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
-------------------------------------------------------------------------------
5. CERTIFICATIONS AND SIGNATURES
If Depositor has indicated a Conversion, Transfer or a Rollover of an
existing Regular IRA 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 (Item D of Part 2), Depositor certifies that
the information given in Item D is correct and acknowledges that adverse tax
consequences or penalties could result from giving incorrect information.
Depositor has received and read the "Xxxx XXX Disclosure Statement"
relating to this Account (including the Custodian's fee schedule), the Xxxx
XXX Custodial Account document, and the "Instructions" pertaining to this
Adoption Agreement.
Depositor acknowledges receipt of the Custodial Account document and IRA
Disclosure Statement at least 7 days before the date specified below with
Depositor's signature and acknowledges that Depositor has no further right of
revocation.
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. State Street Bank and Trust
Company will accept appointment as Custodian of the
Depositor's Account. However, this Agreement is not
------------------------- binding upon the Custodian until the Depositor has
Signature of Depositor 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 State Street Bank and Trust Company's
Date -------------------- acceptance of appointment as Custodian of the
Depositor's Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
By -------------------------------------------------
Date -----------------------------------------------
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
UNIVERSAL IRA TRANSFER OF ASSETS FORM
1. NAME AND ADDRESS OF DEPOSITOR
Name ---------------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
----------------- --------------------
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
[ ] Regular IRA* [ ] SEP IRA* [ ] Xxxx XXX** [ ] SIMPLE IRA***
* You may not transfer from a Xxxx XXX to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfers to a Regular IRA or SEP IRA may
be made from another Regular IRA or SEP IRA, qualified employer plan,
403(b) arrangement, or a SIMPLE IRA account (but not until at least 2
years after the first contribution to your SIMPLE IRA account).
** Transfers to a Xxxx XXX are possible only from another Xxxx XXX or
from a Regular IRA, not from other types of tax-deferred accounts. A
transfer from a Regular IRA will trigger federal income tax on the
taxable amount transferred from the Regular IRA.
*** Transfers to a SIMPLE IRA may be made only from another SIMPLE IRA.
During the first two years after a SIMPLE IRA is established,
transfers may be made only to another SIMPLE IRA; after two years,
transfers may be made from a SIMPLE IRA to a Regular IRA.
If you already have a Regular IRA, SEP IRA, Xxxx XXX or SIMPLE IRA,
indicate the Account No.--------------------.
3. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee ------------------------------------------------
Attn: Mr./Ms. ------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Identification of Sending Account (including Account No.) ----------------
Please transfer assets from the above account to State Street Bank and
Trust Company. Transfer should be in cash according to
the following instructions:
[ ] Transfer the total amount or [ ] Transfer $---------- and retain
in my Account the balance.
Make check payable to:
Century Shares Trust
FBO: Shareholder name
P.O. Box 8329
Boston, MA 02266-8329
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor - check one box and complete if necessary)
[ ] Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and
Trust Company Individual Retirement Custodial Account.
[ ] Invest the transferred amount as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus. (Please read the prospectus
before investing.)
I understand that the requirements for a valid transfer to a Regular IRA,
SEP IRA, Xxxx XXX or SIMPLE IRA are complex and that I have the responsibility
for complying with all requirements and for the tax results of any such
transfer.
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial
Account meeting the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be) to which assets will be transferred, and
certifies to State Street Bank and Trust Company that the IRA from which
assets are being transferred meets the requirements of Internal Revenue Code
Section 408(a), 408(p) 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 (Completed by State Street Bank and Trust
Company)
6. State Street Bank and Trust Company agrees to accept transfer of the
above amount for deposit to the Depositor's State Street Bank and Trust
Company Individual Retirement Custodial Account, and requests the
liquidation and transfer of assets as indicated above.
By:------------------------------------
RETAIN A PHOTOCOPY OF THE COMPLETED TRANSFER OF ASSETS FORM FOR YOUR RECORDS.
XXXX XXX DISCLOSURE STATEMENT
SPECIAL NOTE
This Disclosure Statement describes the rules applicable to Xxxx IRAs
beginning January 1, 1998. Xxxx IRAs are a new kind of IRA 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 IRA may be tax-deductible. Earnings and gains on
amounts while held in a Regular IRA 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 Disclosure Statement does not describe regular IRAs. If you wish to
receive information about regular IRAs, including forms and explanatory
materials, call the 800 number or write the address listed at the end of this
Disclosure Statement.
This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Employers provide special explanatory materials for
accounts established as part of an employer's SIMPLE IRA or SEP program. Xxxx
IRAs may not be used in connection with a SIMPLE IRA program or a SEP plan.
ESTABLISHING YOUR XXXX XXX
This Disclosure Statement contains information about your Xxxx XXX Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. 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.
All IRAs must meet certain requirements. Contributions generally must be made
in cash. The IRA 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.
You may revoke a newly established Xxxx XXX at any time within seven days
after the date on which you receive this Disclosure Statement. A Xxxx XXX
established more than seven days after the date of your receipt of this
Disclosure Statement may not be revoked.
To revoke your 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 Xxxx XXX within the seven-day period, you are
entitled to a return of the entire amount you originally contributed into your
Xxxx XXX, without adjustment for such items as sales charges, administrative
expenses or fluctuations in market value.
FEES AND EXPENSES
CUSTODIAN'S FEES
The following is a list of the fees charged by the Custodian for maintaining
your Xxxx XXX.
Annual Maintenance Fee per account $10.00
Termination, Rollover, or Transfer of
Account to Successor Custodian $10.00
GENERAL FEE POLICIES
-- Fees may be paid by you directly or the Custodian may deduct them from your
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 Xxxx XXX with us. This fee is not prorated for
periods of less than one full year.
-- 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 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 Xxxx XXX for a description of
applicable charges.
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 IRA purposes.
In contrast to a Regular IRA, with a Xxxx XXX you may continue making
contributions after you reach age 70 1/2.
CAN I CONTRIBUTE TO 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 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
IRA.
Your Xxxx XXX limit is reduced by any contributions for the same year to a
regular IRA. For example, assuming you have at least $2,000 in compensation or
earned income, if you contribute $500 to your regular IRA 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 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 IRA maintained by you or your spouse.
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 IRA 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.
WHICH IS BETTER, A XXXX XXX OR A REGULAR IRA?
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 IRA contribution (but not too high
to make a Xxxx XXX contribution). Also, the benefits of a Xxxx XXX vs. a regular
IRA 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
IRA, 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 IRA and
how much you expect the IRA 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
SINGLE TAXPAYER MARRIED FILING JOINTLY MAY MAKE
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Up to $95,000 Up to $150,000 Full Contribution
----------------------------------------------------------------------------------------------------------
Adjusted
Gross More than $95,000 More than $150,000 Reduced Contribution
Income(AGI) but less than but less than (see explanation below)
Level $110,000 $160,000
----------------------------------------------------------------------------------------------------------
$110,000 and up $160,000 and up Zero (No 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 partly
deductible range:
($157,555-$150,000) = $7,555
$ 7,555
2. Divide this by $10,000: ------- = 0.7555
$10,000
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 - $1,551) = $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 IRA. 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 IRA.
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 IRA, your AGI is reduced by the amount of the deduction.
Second, if you are converting a regular IRA to a Xxxx XXX in a year (see below),
the amount includible 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 bill 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 IRA 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 IRA CAN I CONVERT AN EXISTING REGULAR IRA INTO A
XXXX XXX?
Yes, starting in 1998 you can convert an existing regular IRA 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 IRA you wish to convert to the new Xxxx XXX. Or, if you
want to convert an existing regular IRA with State Street Bank as custodian to a
Xxxx XXX, you may give us appropriate directions at the address listed at the
end of this booklet.
You are eligible to convert a regular IRA 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 IRA 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 IRA 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 bill pending in Congress would permit you to
transfer amounts back to your Regular IRA if your AGI exceeds $100,000, under
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 IRA 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 IRA are taxable except for your prior
non-deductible contributions to the Regular IRA.
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 IRA 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 IRA and then to convert the regular IRA to 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.)
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).
INVESTMENTS
HOW ARE MY XXXX XXX CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your 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 Xxxx XXX or in an investment selection
form provided with your Xxxx XXX Adoption Agreement or from the Fund Distributor
or Service Company. You direct the investment of your Xxxx XXX by giving your
investment instructions to the Distributor or Service Company for the Fund(s).
Since you control the investment of your 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 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 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 Xxxx XXX and because
mutual fund shares fluctuate in value, the growth in value of your Xxxx XXX
cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY XXXX XXX ASSETS?
The tax-exempt status of your 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 Xxxx XXX is treated as distributing its assets to you. The
taxable portion of the amount in your IRA will be subject to income tax unless
the requirements for a tax-free withdrawal are satisfied (see below). 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 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
Xxxx XXX. Some examples of prohibited transactions are:
-- Direct or indirect sale or exchange of property between you and your Xxxx
XXX.
-- Transfer of any property from your Xxxx XXX to yourself or from yourself to
your Xxxx XXX.
Your Xxxx XXX could lose its tax exempt status if you use all or part of your
interest in your Xxxx XXX as security for a loan or borrow any money from your
Xxxx XXX. Any portion of your 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.
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:
o You are age 59 1/2 or older when you make the withdrawal.
o The withdrawal is made by your beneficiary after you die.
o You are disabled (as defined in IRS rules) when you make the withdrawal.
o 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.
For Xxxx XXX that you set up with amounts rolled over or converted from a
traditional IRA, the 5 year period begins with the year in which the conversion
or rollover was made. (Note: A bill pending in Congress might effect 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 contribution to any Xxxx XXX
you maintain.
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
includible 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 State Street Bank and
Trust Company 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
CONTRIBUTIONS EARNINGS
STATE STREET BANK 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 state Street Bank
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 bill 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.
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
includible 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.
TAX MATTERS
WHAT IRA 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 an existing regular IRA 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. If your beneficiary fails to make required minimum withdrawals
from your Xxxx XXX after your death, your beneficiary may be subject to an
excise tax and be required to file Form 5329.
ARE XXXX XXX WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax may be withheld at a flat rate of 10% or greater of any
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 IRA.
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 above), amounts reflecting earnings or
growth of assets in your Xxxx XXX will not be subject to federal income tax.
ACCOUNT TERMINATION
You may terminate your 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:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
Your Xxxx XXX with State Street Bank 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 Xxxx XXX balance is received and
accepted by the Custodian.
-- The date the Xxxx XXX ceases to qualify under the tax code. This will be
deemed a termination.
-- The transfer of the Xxxx XXX to another custodian/trustee.
-- The rollover of the amounts in the 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 Xxxx XXX upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Xxxx XXX withdrawals
will apply. For example, if the Xxxx XXX is terminated before you reach age 59
1/2, the 10% early withdrawal penalty may apply to the taxable amount you
receive.
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 on how
maintaining a Xxxx XXX will affect your personal tax or financial situation.
IRA DOCUMENTS
The terms contained in Articles I to VII of the State Street Bank and Trust
Company Xxxx Individual Retirement Custodial Account document 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.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
000-000-0000
STATE STREET BANK AND TRUST COMPANY
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT CUSTODIAL AGREEMENT
PART ONE: PROVISIONS APPLICABLE TO REGULAR IRAS PROVISIONS
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 platium 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.
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.
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 IRA, 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 IRA, no contributions
other than IRA 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 Xxxxxxxxx who files jointly, between AGI of $150,000 and
$160,000; and for a married Xxxxxxxxx who files separately, between $0 and
$10,000. In case of a conversion, the Custodian will not accept IRA 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 IRA
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
trust 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.
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 State Street Bank and Trust Company 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 State Street Bank and 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 Century Capital Management.
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.
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 Xxxxxxxxx'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.
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.
(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.
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 IRA, 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 Xxxxxxxxx'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 IRA 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 IRA, and a separate account will
be established for such IRA. One Custodial Account may not serve as a Xxxx
XXX and a Regular IRA (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 IRA 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 IRA
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 acknowledge 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 IRA 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 IRA. Alternatively, the Depositor may convert or transfer such other IRA
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.
STATE STREET BANK AND TRUST COMPANY
UNIVERSAL IRA INFORMATION KIT
INTRODUCTION
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("IRA") 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 IRA 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 IRA, to replace an existing Regular IRA,
or complement a Regular IRA 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 IRA 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 IRA 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 IRA to a
State Street Bank and Trust IRA, or to convert a Regular IRA to a Xxxx XXX.
The second section of this Kit contains our Universal IRA Disclosure
Statement. The Disclosure Statement is divided into three parts:
o Part One describes the basic rules and benefits which are specifically
applicable to your Regular IRA.
o Part Two describes the basic rules and benefits which are specifically
applicable to your Xxxx XXX.
o Part Three describes important rules and information applicable to all IRAs.
The third section of this Kit contains the Universal IRA Custodial
Agreement. The Custodial Agreement is also divided into three parts:
o Part One contains provisions specifically applicable to Regular IRAs.
o Part Two contains provisions specifically applicable to Xxxx IRAs.
o 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 IRA or
one Xxxx XXX; separate Adoption Agreements must be completed if you want to
establish multiple (Xxxx or Regular) IRA accounts.
WHAT'S THE DIFFERENCE BETWEEN A REGULAR IRA AND A XXXX XXX?
With a Regular IRA, 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 IRA, 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 IRA and a Xxxx XXX:
-------------------------------------------------------------------------------
CHARACTERISTICS REGULAR XXX XXXX XXX
-------------------------------------------------------------------------------
ELIGIBILITY o Individuals (and their o Individuals (and their
spouses) who receive spouses) who receive
compensation compensation
o Individuals age 70 1/2 o Individuals age 70 1/2
and over MAY NOT and over MAY
contribute contribute
-------------------------------------------------------------------------------
TAX TREATMENT OF o Subject to o No deduction permitted
CONTRIBUTIONS limitations, for amounts
contributions are contributed
deductible
-------------------------------------------------------------------------------
CONTRIBUTION LIMITS o Individuals may Individuals may
contribute up to generally contribute
$2,000 annually (or up to $2,000 (or 100%
100% of compensation, of compensation, if
if less) less)
o Deductibility depends Ability to contribute
on income level for phases out at income
individuals who are levels of $95,000 to
active participants in $110,000 (individual
an employer-sponsored taxpayer) and $150,000
retirement plan to $160,000 (married
taxpayers)
Overall limit for
contributions to all
IRAs (Regular and Xxxx
combined) is $2,000
annually (or 100% of
compensation, if less)
-------------------------------------------------------------------------------
EARNINGS o Earnings and interest o Earnings and interest
are not taxed when are not taxed when
received by your IRA received by your IRA
-------------------------------------------------------------------------------
ROLLOVER/CONVERSIONS o Individual may o Rollovers from other
rollover amounts held Xxxx IRAs or Regular
in employer-sponsored IRAs ONLY
retirement
arrangements (401(k), o Amounts rolled over
SEP IRA, etc.) tax (or converted) from
free to Regular IRA another Regular IRA
are subject to income
tax in the year rolled
over or converted
o Tax on amounts rolled
over or converted in
1998 is spread over
four year period
(1998-2001)
-------------------------------------------------------------------------------
WITHDRAWALS o Total (principal + o Not taxable as long as
earnings) taxable as a qualified
income in year distribution-
withdrawn (except for -generally, account
any prior non- open for 5 years, and
deductible age 59 1/2
contributions)
o Minimum withdrawals
o Minimum withdrawals NOT REQUIRED after age
must begin after age 70 1/2
70 1/2
-------------------------------------------------------------------------------
IS A XXXX OR A REGULAR IRA RIGHT FOR ME?
We cannot act as your legal or tax advisor and so we cannot tell you which
kind of IRA 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 IRA 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 IRA 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.
SEPS AND SIMPLES.
The State Street Bank Regular IRA may be used in connection with a
simplified employee pension (SEP) plan maintained by your employer. To
establish a Regular IRA as part of your Employer's SEP plan, complete the
Adoption Agreement for a Regular IRA, indicating in the proper box that the
IRA 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 IRA plan. A Regular
IRA 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 IRA may be
used). SIMPLE IRA 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 IRA 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 State Street Bank and Trust Company 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 IRA. However, the State Street Bank and Trust Company Adoption
Agreement and the Custodial Agreement, are the primary documents controlling
the terms and conditions of your personal State Street Bank and Trust Company
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
State Street Bank and Trust Company Regular or Xxxx XXX is established. A Xxxx
XXX is either a State Street Bank and Trust Company Xxxx XXX or any Xxxx XXX
established by any other financial institution. A Regular IRA is any non-Xxxx
XXX offered by State Street Bank and Trust Company or any other financial
institution.
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
UNIVERSAL INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
INSTRUCTIONS FOR OPENING YOUR REGULAR IRA OR XXXX XXX
1. Read carefully the applicable sections of the Universal IRA Disclosure
Statement contained in this Kit, the Regular or Xxxx Individual Retirement
Custodial Account document (as applicable), the Adoption Agreement, and the
prospectus(es) for any Fund(s) you are considering. Consult your lawyer or
other tax adviser if you have any questions about how opening a Regular IRA or
Xxxx XXX will affect your financial and tax situation.
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 to establish only one Regular IRA or one Xxxx XXX;
separate Adoption Agreements must be completed if you want to establish
multiple (Xxxx or Regular) IRA accounts.
2. Complete the Adoption Agreement
Print the identifying information in Part 1 of the Adoption
Agreement.
For a REGULAR IRA, check the box for Part A and check the other
boxes in Part A to specify the type of Regular IRA you are opening and
provide the registered information.
If this is an IRA to which you expect to make contributions each
year, check Box 1 and enclose a check in the amount of your first
contribution. Be sure to indicate whether this is a contribution for
last year or for the current year.
If this is a transfer directly from another IRA custodian or
trustee, check Box 2. Check the appropriate box to indicate whether
the funds transferred were originally from contributions to an
employee qualified plan or a 403(b) arrangement, or whether any of the
funds were originally from your annual contributions to the IRA.
Complete and sign the Universal IRA Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another
IRA or an employer qualified plan or a 403(b) arrangement, check Box
3. Check the appropriate box to indicate whether the transfer is
coming from a qualified plan or 403(b) arrangement, or an IRA that
held only funds that were originally from contributions to a qualified
plan or 403(b), or whether any of the funds were originally from your
annual contributions to the IRA. Enclose a check for the rollover
contribution amount.
If this is a direct rollover from a qualified plan or 403(b)
arrangement, check Box 4. Complete and sign the Universal IRA Transfer
of Assets Form.
Check Box 5 if applicable (for an IRA that will be used to receive
employer contributions under an employer's simplified employee pension
(or "SEP") plan or under a grandfathered salary reduction SEP plan (or
"SARSEP")).
For a XXXX XXX, check the box for Part B. Check the other boxes in
Part B to specify the type of Xxxx XXX you are opening and provide the
requested information.
If this is a Xxxx XXX to which you expect to make contributions
each year, enclose a check in the amount of your first contribution.
Be sure to indicate whether this is a contribution for last year or
for the current year. Only annual contributions may be accepted in an
annual contribution Xxxx XXX account. NOTE: Xxxx IRAs are available
starting January 1, 1998, so you cannot make a contribution for 1997.
If you are converting an existing Regular IRA with the Bank as IRA
custodian or trustee, check Box 2. Indicate your current IRA account
number and how much you are converting. Conversion of an existing
Regular IRA will result in inclusion of taxable amounts in the
existing Regular IRA on your income tax return. NOTE: If a conversion,
rollover or transfer from a Regular IRA to a Xxxx XXX is being made,
only amounts converted, rolled over or transferred during the same tax
year will be accepted in a single Xxxx XXX. A separate Xxxx XXX must
be established to hold such amounts from a different tax year. Annual
contributions may never be deposited in a Xxxx XXX holding such
converted, rolled over or transferred amounts.
If you are making a rollover or a transfer from an existing
Regular IRA with a different custodian or trustee, check Box 3. A
rollover or transfer from an existing Regular IRA means that the
taxable amount in the existing Regular IRA will be treated as
additional income on your income tax return.
If you are making a rollover or a transfer from another Xxxx XXX
with a different trustee or custodian, check Box 4. Put the requested
information where indicated.
-- In Part 3, indicate your investment choices.
-- In Part 4, indicate your Primary and Alternate Beneficiaries.
(Spousal waiver must be signed if beneficiary is other than
your spouse.)
-- Sign and date the Adoption Agreement in Part 5 at the end.
3. If you are transferring assets from an existing IRA to this IRA,
complete the Universal Transfer of Assets Form.
4. The Custodian fees for maintaining your IRA are listed in the FEES AND
EXPENSES section of Part Three of the Disclosure Statement.
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the first contribution to your Regular or Xxxx XXX (if
applicable). Your Regular IRA or Xxxx XXX cannot be accepted without the
properly completed documents.
All checks should be payable to Century Shares Trust.
Send the completed forms and checks to:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
ADOPTION AGREEMENT
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (IRA), which is
either a Regular IRA or a Xxxx XXX, as indicated below, (the "Account") with
State Street Bank and Trust Company as Custodian ("Bank"). A Regular IRA
operates under Internal Revenue Code Section 408(a). A Xxxx XXX operates under
Internal Revenue Code Section 408A. I agree to the terms of my Account, which
are contained in the applicable provisions of the document entitled "State
Street Bank and Trust Company Universal Individual Retirement Custodial
Account" and this Adoption Agreement. I certify the accuracy of the
information in this Adoption Agreement. My Account will be effective upon
acceptance by Bank.
1. DEPOSITOR INFORMATION
[ ] [ ] [ ]-[ ] [ ]-[ ] [ ] [ ] [ ]
----------------------------------------- Social Security Number
Print Full Name
----------------------------------------- -------------------------------------
Address Date of Birth
( )
----------------------------------------- -------------------------------------
City State Zip Daytime Telephone No.
PART 2. IRA ELECTION
INSTRUCTIONS: To establish a REGULAR IRA, check Box A and complete Part A. To
establish a XXXX XXX, check Box B and complete Part B.
(In either case, complete Part 3 to select your investment choices, Part 4 to
designate your Beneficiaries, and sign at the end of Part 5.)
[ ] A. REGULAR IRA -- By checking this box, I designate my Account as a Regular
IRA under Code Section 408(a). (Complete 1, 2, 3 or 4 below to indicate the type
of Regular IRA you are opening. Check box 5, if applicable.)
1. [ ] ANNUAL CONTRIBUTIONS Current Contribution for the year .
Check enclosed for ______________.
This contribution does not exceed the maximum permitted amount as
described in the Regular IRA Disclosure Statement.
2. [ ] TRANSFER
Transfer of existing Regular IRA directly from current Custodian or
Trustee. Complete the Universal IRA Transfer of Assets Form.
[ ] The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual
contributions).
[ ] The transferring IRA held only amounts that were originally
contributions to an employer qualified plan or 403(b) plan.
3. [ ] ROLLOVER
The requirements for a valid rollover are complex. See the Regular
IRA Disclosure Statement for additional information and consult your
tax advisor for help if needed. Check enclosed for $_________.
[ ] Rollover of a qualifying rollover distribution to Depositor from an
employer plan or 403(b) arrangement, or rollover from another Regular
IRA which held only assets distributed to Depositor from an employer
plan or 403(b) arrangement and to which Depositor made no direct
contributions.
[ ] Rollover of distribution to Depositor from another Regular IRA that
held amounts that originated from annual contributions by the
Depositor.
4. [ ] DIRECT ROLLOVER
[ ] Direct rollover of an eligible distribution from a qualified plan.
[ ] Direct rollover of an eligible distribution from a 403(b) account
or annuity. Direct rollovers are described in the Regular IRA
Disclosure Statement.
5. [ ] SEP Provision - check here if the Depositor intends to use this
Account in connection with a SEP Plan or grandfathered SARSEP Plan
established by the Depositor's employer.
[ ] X. XXXX XXX -- By checking this box, I designate my Account as a Xxxx XXX
under Code Section 408A. (Complete 1, 2, 3 or 4 below to indicate the type of
Xxxx XXX you are opening.)
1. [ ] ANNUAL CONTRIBUTIONS Current Contribution for the year_____________.
Check enclosed for $_____________ . This contribution does
not exceed the maximum permitted amount as described in the Xxxx XXX
Disclosure Statement.
2. [ ] CONVERSION of existing Regular IRA with Bank as Custodian or
Trustee to a Xxxx XXX with Bank. Current Regular IRA Account No.:
_____________________
Amount Converted
[ ] All
[ ] Part (specify how much): $_________________
3. [ ] ROLLOVER OR TRANSFER from existing Regular IRA with a custodian
or trustee other than Bank to a Xxxx XXX with Bank.
4. [ ] ROLLOVER OR TRANSFER from existing Xxxx XXX with another
custodian or trustee to a Xxxx XXX with Bank Date existing Xxxx XXX
was originally opened:
Indicate whether any amount in the existing Xxxx XXX represents amounts
converted or transferred from a Regular IRA into such other Xxxx XXX:
[ ] Yes [ ] No
If yes, date of the most recent conversion or transfer into such other Xxxx:
__________________________________________ Complete the Universal IRA Transfer
of Assets Form if eithe 3 or 4 is checked and the transaction is a transfer (as
opposed to a rollover).
NOTE: If a conversion, rollover or transfer from a Regular IRA to a Xxxx XXX is
being made, only amounts converted, rolled over or transferred during the same
tax year will be accepted in a single Xxxx XXX. 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.
------------------------------------
PART 3. INVESTMENTS
Invest contributions to my Account as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus. (Please read the prospectus
before investing.)
PART 4. DESIGNATION OF BENEFICIARY
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account, or Xxxx Individual Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to
the following Primary Beneficiary or Beneficiaries who survive me. Make
payment in the proportions specified below (or in equal proportions if no
different proportions are specified). If any Primary Beneficiary predeceases
me, his share is to be divided among the Primary Beneficiaries who survive me
in the relative proportions assigned to each such surviving Primary
Beneficiary.
PRIMARY BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
If none of the Primary Beneficiaries survives me, pay any interest I may
have under my Account to the following Alternate Beneficiary or Beneficiaries
who survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
ALTERNATE BENEFICIARY OR BENEFICIARIES:
NAME RELATIONSHIP DATE OF BIRTH SOCIAL SECURITY NUMBER PROPORTION
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
------------------------------------ ---------------------- ---------------------- --------------------------- ----------------
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property
or marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
--------------------------------------------------------------------------------
SPOUSAL CONSENT (This section should be reviewed if the accountholder
is married 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 IRA, 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
--------------------------------------------------------------------------------
PART 5. CERTIFICATIONS AND SIGNATURES
If the Depositor has indicated a Regular IRA 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
IRA, 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 a Rollover of an
existing Regular IRA 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 (Item 4 of Part B above), Depositor certifies
that the information given in Item 4 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 "State
Street Bank and Trust Company Universal Individual Retirement Account
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 receipt of the Universal
Individual Retirement Custodial Account document and Universal IRA Disclosure
Statement at least 7 days before the date inscribed below and acknowledges
that Depositor has no further right of revocation.
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. State Street
Bank and Trust Company will accept
-------------------------------------- appointment as Custodian of the
Signature of Depositor Depositor's Account. However, this
Agreement is not binding upon the
Custodian until the Depositor has
Date 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 State Street
Bank and Trust Company's acceptance of
appointment as Custodian of the
Depositor's Account.
STATE STREET BANK AND TRUST COMPANY,
CUSTODIAN
By
------------------------------------
Date
----------------------------------
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
--------------------------------------
Signature of Parent or Guardian
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
CENTURY SHARES TRUST
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
UNIVERSAL IRA TRANSFER OF ASSETS FORM
1. NAME AND ADDRESS OF DEPOSITOR
Name ---------------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
----------------- --------------------
--------------------------------------------------------------------------------
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
[ ] Regular IRA* [ ] SEP IRA* [ ] Xxxx XXX** [ ] SIMPLE IRA***
* You may not transfer from a Xxxx XXX to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfers to a Regular IRA or SEP IRA may
be made from another Regular IRA or SEP IRA, qualified employer plan,
403(b) arrangement, or a SIMPLE IRA account (but not until at least 2
years after the first contribution to your SIMPLE IRA account).
** Transfers to a Xxxx XXX are possible only from another Xxxx XXX or
from a Regular IRA, not from other types of tax-deferred accounts. A
transfer from a Regular IRA will trigger federal income tax on the
taxable amount transferred from the Regular IRA.
*** Transfers to a SIMPLE IRA may be made only from another SIMPLE IRA.
During the first two years after a SIMPLE IRA is established,
transfers may be made only to another SIMPLE IRA; after two years,
transfers may be made from a SIMPLE IRA to a Regular IRA.
If you already have a Regular IRA, SEP IRA, Xxxx XXX or SIMPLE IRA,
indicate the Account No.--------------------.
3. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee ------------------------------------------------
Attn: Mr./Ms. ------------------------------------------------------------
Address ------------------------------------------------------------------
Street City State Zip
Identification of Sending Account (including Account No.) ----------------
Please transfer assets from the above account to State Street Bank and
Trust Company. Transfer should be in cash according to
the following instructions:
[ ] Transfer the total amount or [ ] Transfer $---------- and retain
in my Account the balance.
Make check payable to:
Century Shares Trust
FBO: Shareholder name
P.O. Box 8329
Boston, MA 02266-8329
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor - check one box and complete if necessary)
[ ] Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and
Trust Company Individual Retirement Custodial Account.
[ ] Invest the transferred amount as follows:
CENTURY SHARES TRUST 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus. (Please read the prospectus
before investing.)
I understand that the requirements for a valid transfer to a Regular IRA,
SEP IRA, Xxxx XXX or SIMPLE IRA are complex and that I have the responsibility
for complying with all requirements and for the tax results of any such
transfer.
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial
Account meeting the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be) to which assets will be transferred, and
certifies to State Street Bank and Trust Company that the IRA from which
assets are being transferred meets the requirements of Internal Revenue Code
Section 408(a), 408(p) 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 (Completed by State Street Bank and Trust
Company)
6. State Street Bank and Trust Company agrees to accept transfer of the
above amount for deposit to the Depositor's State Street Bank and Trust
Company Individual Retirement Custodial Account, and requests the
liquidation and transfer of assets as indicated above.
By:------------------------------------
RETAIN A PHOTOCOPY OF THE COMPLETED TRANSFER OF ASSETS FORM FOR YOUR RECORDS.
STATE STREET BANK AND TRUST COMPANY
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
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 IRA 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 IRA
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 IRA 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 IRA, and these
contributions may exceed the normal limits on Regular IRA contributions. This
Disclosure Statement does not describe IRAs established in connection with a
SIMPLE IRA program maintained by your employer. Employers provide special
explanatory materials for accounts established as part of a SIMPLE IRA
program. Regular IRAs may be used in connection with a SIMPLE IRA program, but
for the first two years of participation a special SIMPLE IRA (not a Regular
IRA) is required.
YOUR REGULAR IRA
This Part One contains information about your Regular Individual Retirement
Custodial Account with State Street Bank and Trust Company as Custodian. A
Regular IRA gives you several tax benefits. Earnings on the assets held in
your Regular IRA are not subject to federal income tax until withdrawn by you.
You may be able to deduct all or part of your Regular IRA contribution on your
federal income tax return. State income tax treatment of your Regular IRA 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
IRA, investments and prohibited transactions, fees and expenses, and certain
tax requirements.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A REGULAR IRA?
You are eligible to establish and contribute to a Regular IRA 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 IRA purposes.
-- You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO A REGULAR IRA FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Regular IRA for your spouse, regardless of whether
your spouse had any compensation or earned income in that year. This is called
a "spousal IRA." To make a contribution to a Regular IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal IRA,
your spouse must set up a different Regular IRA, separate from yours, to which
you contribute.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO A REGULAR IRA?
You may make a contribution to your existing Regular IRA or establish a new
Regular IRA 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 IRA?
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 IRA 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 IRA contribution. However, the maximum contribution to either
spouse's Regular IRA is $2,000 for the year.
If you (or your spouse) establish a new Xxxx XXX and make contributions to
both your Regular IRA and a Xxxx XXX, the combined limit on contributions to
both your (or your spouse's) Regular IRA 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 IRA is
deductible.
If you are an active participant in an employer-sponsored plan, your Regular
IRA 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 IRA 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 IRA will be deductible.
If your spouse is an active participant, the Regular IRA 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 IRA 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
IRA 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 IRA (or your spouse's Regular IRA)
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 IRA CONTRIBUTION IS
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Up to Lower Limit Up to Lower Limit FULLY DEDUCTIBLE
($30,000 for 1998) ($50,000 for 1998)
---------------------------------------------------------------------------------------------------------
ADJUSTED More than Lower Limit More than Lower Limit PARTLY DEDUCTIBLE
GROSS but less than but less than
INCOME (AGI) Upper Limit Upper Limit
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 as follows (note: if you
are married but filing a separate return, your Lower Limit is always zero and
your Upper Limit is always $10,000). Substitute the correct Lower Limit and
Upper Limit on the table above for determining deductibility in any particular
year.
TABLE OF LOWER AND UPPER LIMITS
-----------------------------------------------------------------------------------------------------------------------------------
MARRIED
YEAR SINGLE 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 later $50,000 $60,000 $80,000 $100,000
-----------------------------------------------------------------------------------------------------------------------------------
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 IRA
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
$ 7,555
2. Divide this by $10,000: ------- = 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 - $1,551) = $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 IRA (and your spouse may contribute to your
spouse's Regular IRA) 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 IRA 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 IRA?
The maximum contribution you can make to a Regular IRA generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA 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 IRA.
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. 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.
WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE
DATE?
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.
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 IRA FUNDS TAXED?
Any dividends on or growth of the investments held in your Regular IRA are
generally exempt from federal income taxes and will not be taxed until
withdrawn by you, unless the tax exempt status of your Regular IRA 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 IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Regular IRA.
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 (generally the rules require distributions starting
at age 70 1/2 or for certain employees starting at retirement, if later),
and
o 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 IRA. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Regular IRA 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 IRA.
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
IRA 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 IRA, 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 IRA holding it to another qualified plan.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA 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 IRA TO ANOTHER REGULAR IRA?
You may make a rollover from one Regular IRA to another Regular IRA 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 IRA. After making
a traditional rollover from one Regular IRA to another, you must wait a full
year (365 days) before you can make another such rollover. (However, you can
instruct a Regular IRA custodian to transfer amounts directly to another
Regular IRA custodian; such a direct transfer does not count as a rollover.)
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY NORMAL CONTRIBUTIONS
IN ONE IRA?
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 IRA you established with
rollover contributions (or make a rollover contribution to the IRA 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 IRA into another
qualified plan. If despite this, you still wish to combine a rollover
contribution and the IRA holding your annual contributions, you should
establish the account as a Regular IRA on the Adoption Agreement (not a
Rollover IRA or Direct Rollover IRA) and make the contributions to that
account.
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 IRA TO A XXXX XXX?
The rules for converting a Regular IRA to a new Xxxx XXX, or making a
rollover from a Regular IRA to a new Xxxx XXX, are described in Part Two.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY REGULAR IRA?
You may withdraw from your Regular IRA 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 IRA 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 IRA (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 IRA 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 IRA are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.
Since the purpose of a Regular IRA is to accumulate funds for retirement,
your receipt or use of any portion of your Regular IRA 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 IRA 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 7 1/2% 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 IRA, 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 IRA 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 IRA contributions:
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 IRA 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 IRA $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
Total Account Balance ------ X $500 = $ 125
$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 IRA 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
IRA?
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 which contains important information
applicable to ALL State Street Bank and Trust Company IRAs.
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 IRA 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 IRA may be tax-deductible. Earnings and gains on
amounts while held in a Regular IRA 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 IRA program or a Simplified Employee Pension (SEP)
plan maintained by your employer. Xxxx IRAs may not be used in connection with
a SIMPLE IRA 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 IRA purposes.
In contrast to a Regular IRA, with a Xxxx XXX you may continue making
contributions after you reach age 70 1/2.
CAN I CONTRIBUTE TO 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
IRA.
Your Xxxx XXX limit is reduced by any contributions for the same year to a
Regular IRA. For example, assuming you have at least $2,000 in compensation or
earned income, if you contribute $500 to your Regular IRA 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 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 IRA maintained by you or your spouse.
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 IRA 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 IRA?
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 IRA contribution (but not too
high to make a Xxxx XXX contribution). Also, the benefits of a Xxxx XXX vs. a
Regular IRA 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 IRA, 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 IRA, how much you expect the IRA 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
SINGLE TAXPAYER MARRIED FILING JOINTLY MAY MAKE
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Up to $95,000 Up to $150,000 Full Contribution
------------------------------------------------------------------------------------------------------
ADJUSTED More than $95,000 More than $150,000 Reduced Contribution
GROSS but less than $110,000 but less than $160,000 (see explanation below)
INCOME (AGI)
LEVEL
------------------------------------------------------------------------------------------------------
$110,000 and up $160,000 and up Zero (No 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
$ 7,555
2. Divide this by $10,000: ------- = 0.7555
$10,000
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 - $1,551) = $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 IRA. 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 IRA.
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 IRA, your AGI is reduced by the amount of the deduction.
Second, if you are converting a Regular IRA 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 bill 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 IRA 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. 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 (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 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.
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.
You may reduce the excess contributions 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 IRA
CAN I CONVERT AN EXISTING REGULAR IRA INTO A ROTH IRA?
Yes, starting in 1998 you can convert an existing Regular IRA into a Roth
IRA if you meet the adjusted gross income (AGI) limits described below.
Conversion may be accomplished either by establishing a Roth IRA and then
transferring the amount in your Regular IRA you wish to convert to the new
Roth IRA. Or, if you want to convert an existing Regular IRA with State Street
Bank as custodian to a Roth IRA, you may give us directions to convert.
You are eligible to convert a Regular IRA to a Roth IRA 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 IRA to a Roth
IRA only if they file a joint income tax return; married taxpayers filing
separately are not eligible to convert.
NOTE: No contributions other than Roth IRA conversion contributions made
during the same tax year may be deposited in a single Roth IRA conversion
account.
CAUTION: You should be extremely cautious in converting an existing IRA into
a Roth IRA early in a year if there is any possibility that your AGI for the
year will exceed $100,000. Although a bill pending in Congress would permit
you to transfer amounts back to your Regular IRA 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 IRA you convert to a Roth IRA will be
considered taxable income on your federal income tax return for the year of
the conversion. All amounts in a Regular IRA are taxable except for your prior
non-deductible contributions to the Regular IRA.
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 IRA TO A ROTH IRA?
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 Roth IRA 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 Roth IRA as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Roth IRAs in the future, but his cannot be
guaranteed.
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO A ROTH IRA?
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 Roth IRA. However, in certain circumstances
it may be possible to make a direct rollover of an eligible distribution to a
Regular IRA and then to convert the Regular IRA to Roth IRA (see above).
Consult your tax or financial advisor for further information on this
possibility.
CAN I MAKE A ROLLOVER FROM MY ROTH IRA TO ANOTHER ROTH IRA?
You may make a rollover from one Roth IRA to another Roth IRA you have or
you establish to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first Roth IRA. After making a
rollover from one Roth IRA to another, you must wait a full year (365 days)
before you can make another such rollover. (However, you can instruct a Roth
IRA custodian to transfer amounts directly to another Roth IRA custodian; such
a direct transfer does not count as a rollover.)
HOW DO ROLLOVERS AFFECT MY ROTH IRA CONTRIBUTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, you may make a rollover from one Roth IRA to another even
during a year when you are not eligible to contribute to a Roth IRA (for
example, because your AGI for that year is too high).
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY ROTH IRA?
You may withdraw from your Roth IRA 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 Roth IRA.
WHEN MUST I START MAKING WITHDRAWALS?
There are no rules on when you must start making withdrawals from your Roth
IRA 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 Roth IRA 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 Roth IRA 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 Roth IRA must meet two requirements.
First, the Roth IRA must have been open for 5 or more years before the
withdrawal. Second, at least one of the following conditions must be
satisfied:
o You are age 59 1/2 or older when you make the withdrawal.
o The withdrawal is made by your beneficiary after you die.
o You are disabled (as defined in IRS rules) when you make the withdrawal.
o 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 Roth IRA that you set up with amounts rolled over or converted from a
Regular IRA, the 5 year period begins with the year in which the conversion or
rollover was made. (Note: a bill pending in Congress might affect this rule --
consult your tax advisor or the IRS for the latest developments.)
For a Roth IRA 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 ROTH IRA 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 Roth IRA 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 Roth IRA, 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 Roth
IRA 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 Roth IRA accounts are considered as one
single account. Amounts withdrawn from any one Roth IRA account are deemed to
be withdrawn from contributions first. Since all your Roth IRAs are considered
to be one account for this purpose, withdrawals from Roth IRA accounts are not
considered to be from earnings or interest until an amount equal to all
contributions made to all of an individual's Roth IRA accounts is withdrawn.
The following example illustrates this:
A single individual contributes $1,000 a year to his State Street Bank and
Trust Company Roth IRA account and $1,000 a year to the Brand X Roth IRA
account over a period of ten years. At the end of 10 years his account
balances are as follows:
PRINCIPAL
CONTRIBUTIONS EARNINGS
STATE STREET BANK ROTH IRA $10,000 $10,000
BRAND X ROTH IRA $10,000 $10,000
------- -------
TOTAL $20,000 $20,000
At the end of 10 years, this person has $40,000 in both Roth IRA 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 Roth IRA (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
State Street Bank Roth IRA, $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 bill currently pending in Congress will change the rules
and the results discussed above. Under the proposed legislation, in general,
separate Roth 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.
Taxable withdrawals of dividends and gains from a Roth IRA are treated as
ordinary income. Withdrawals of taxable amounts from a Roth IRA 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 Roth IRA 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 Roth IRA 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 Roth IRAs in this Disclosure
Statement is based upon the best available information. However, Roth IRAs are
new under the tax laws, and the IRS has not issued regulations or rulings on
the operation and tax treatment of Roth IRA 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 Roth IRA will affect your personal tax or financial
situation.
Also, please see Part Three which contains important information applicable
to ALL State Street Bank and Trust Company IRAs.
PART THREE: RULES FOR ALL IRAS (REGULAR AND ROTH)
GENERAL INFORMATION
IRA REQUIREMENTS
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA 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 IRA?
You may revoke a newly established Regular or Roth IRA at any time within
seven days after the date on which you receive this Disclosure Statement. A
Regular or Roth IRA established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.
To revoke your Regular or Roth IRA, 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 Roth IRA within
the seven-day period, you are entitled to a return of the entire amount you
originally contributed into your Regular or Roth IRA, without adjustment for
such items as sales charges, administrative expenses or fluctuations in market
value.
INVESTMENTS
HOW ARE MY IRA CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your Regular
or Roth IRA. 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 Roth IRA
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 IRA by giving your investment instructions to the Distributor or Service
Company for the Fund(s). Since you control the investment of your Regular or
Roth IRA, 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 Roth IRA 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 IRA or Roth IRA.
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 Roth
IRA and because mutual fund shares fluctuate in value, the growth in value of
your Regular or Roth IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS?
The tax-exempt status of your Regular or Roth IRA 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 Roth IRA is treated as
distributing its assets to you. The taxable portion of the amount in your IRA
will be subject to income tax (unless, in the case of a Roth IRA, 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 Roth IRA 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 Roth IRA. Some examples of prohibited transactions are:
-- Direct or indirect sale or exchange of property between you and your
Regular or Roth IRA.
-- Transfer of any property from your Regular or Roth IRA to yourself or
from yourself to your Regular or Roth IRA.
Your Regular or Roth IRA could lose its tax exempt status if you use all or
part of your interest in your Regular or Roth IRA as security for a loan or
borrow any money from your Regular or Roth IRA. Any portion of your Regular or
Roth IRA 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 following is a list of the fees charged by the Custodian for maintaining
either a Regular IRA or a Roth IRA.
Annual Maintenance Fee per account $10.00
Termination, Rollover, or Transfer of
Account to Successor Custodian $10.00
GENERAL FEE POLICIES
-- Fees may be paid by you directly, or the Custodian may deduct them from
your Regular or Roth IRA.
-- 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 Roth IRA with us. This fee is not
prorated for periods of less than one full year.
-- 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 IRA or Roth IRA is
invested. Before investing, be sure to read carefully the current
prospectus of any Fund you are considering as an investment for your
Regular IRA or Roth IRA for a description of applicable charges.
TAX MATTERS
WHAT IRA 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 IRA to a Roth
IRA) 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 IRA. If your beneficiary fails to make required minimum
withdrawals from your Regular or Roth IRA 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?
ROTH IRA
Federal income tax will be withheld at a flat rate of 10% of any taxable
withdrawal from your Roth IRA, unless you elect not to have tax withheld.
Withdrawals from a Roth IRA 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 IRA.
REGULAR IRA
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular IRA, unless you elect not to have tax withheld.
Withdrawals from a Regular IRA 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 IRA.
ACCOUNT TERMINATION
You may terminate your Regular IRA or Roth IRA 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:
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
Your Regular IRA or Roth IRA with State Street Bank 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 IRA or Roth IRA balance
is received and accepted by the Custodian or, if later, the termination
date specified in the withdrawal form.
-- The date the Regular IRA or Roth IRA ceases to qualify under the tax
code. This will be deemed a termination.
-- The transfer of the Regular IRA or Roth IRA to another custodian/trustee.
-- The rollover of the amounts in the Regular IRA or Roth IRA to another
custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your IRA upon termination of the account will be
treated as a withdrawal, and thus the rules relating to Regular IRA or Roth
IRA withdrawals will apply. For example, if the IRA is terminated before you
reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
IRA DOCUMENTS
REGULAR IRA
The terms contained in Articles I to VII of Part One of the State Street
Bank and Trust Company Universal Individual Retirement Custodial Account
document have been promulgated by the IRS in Form 5305-A for use in
establishing a Regular IRA Custodial Account that meets the requirements of
Code Section 408(a) for a valid Regular IRA. This IRS approval relates only to
the form of Articles I to VII and is not an approval of the merits of the
Regular IRA or of any investment permitted by the Regular IRA.
ROTH IRA
The terms contained in Articles I to VII of Part Two of the State Street
Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement have been promulgated by the IRS in Form 5305-RA for use in
establishing a Roth IRA Custodial Account that meets the requirements of Code
Section 408A for a valid Roth IRA. This IRS approval relates only to the form
of Articles I to VII and is not an approval of the merits of the Roth IRA or
of any investment permitted by the Roth IRA.
Based on our legal advice relating to current tax laws and IRS meetings,
State Street Bank believes that the use of a Universal Individual Retirement
Account Information Kit such as this, containing information and documents for
both a Regular IRA or a Roth IRA, will be acceptable to the IRS. However, if
the IRS makes a ruling, or if Congress enacts legislation, regarding the use
of different documentation, State Street Bank will forward to you new
documentation for your Regular IRA or a Roth IRA (as appropriate) for you to
read and, if necessary, an appropriate new Adoption Agreement to sign. By
adopting a Regular IRA or a Roth IRA using these materials, you acknowledge
this possibility and agree to this procedure if necessary. In all cases, to
the extent permitted State Street Bank will treat your IRA 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.
Century Shares Trust
P.O. Box 8329
Boston, MA 02266-8329
800-321-1928
