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(LOGO)
XXX
DISCLOSURE STATEMENT
&
ADOPTION AGREEMENT
LONGLEAF
PARTNERS FUNDS
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INVESTMENT COUNSEL:
SOUTHEASTERN ASSET MANAGEMENT, INC.
MEMPHIS, TN
PLAN ADMINISTRATIVE AGENT:
PFPC INC.
WESTBOROUGH, MA
TRUSTEE:
XXXXX XXXXXX XXXX XXX XXXXX XX.
XXXXXX, XX
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TABLE OF CONTENTS
INTRODUCTION
Investments............................................... 1
Investment Minimums....................................... 1
What's New in the World of IRAs?.......................... 1
What's in This Kit?....................................... 1
What's the Difference Between a Traditional XXX and a Xxxx
XXX..................................................... 2
Is a Xxxx XXX or a Traditional XXX Right for Me?.......... 4
SEPs and SIMPLEs.......................................... 4
Instructions for Opening Your Account..................... 4
PART ONE: DESCRIPTION OF TRADITIONAL IRAS
Your Traditional XXX...................................... 6
Eligibility............................................... 6
Contributions............................................. 6
Transfers/Rollovers....................................... 9
Withdrawals............................................... 11
PART TWO: DESCRIPTION OF XXXX IRAS
Your Xxxx XXX............................................. 13
Eligibility............................................... 14
Contributions............................................. 14
Xxxx XXX Contribution Limits.............................. 15
Conversion of Existing Traditional XXX.................... 17
Transfers/Rollovers....................................... 19
Withdrawals............................................... 19
PART THREE: RULES FOR ALL IRAS (TRADITIONAL AND XXXX)
General Information....................................... 25
Investments............................................... 25
Fees and Expenses......................................... 26
Tax Matters............................................... 26
Account Termination....................................... 27
XXX Documents............................................. 28
INDIVIDUAL RETIREMENT ACCOUNT TRUST AGREEMENT
Part One: Provisions Applicable to Traditional IRAs....... 29
Part Two: Provisions Applicable to Xxxx IRAs.............. 31
Part Three: Provisions Applicable to Both Traditional &
Xxxx IRAs............................................... 32
FORMS
Retirement Account Application.............. Inside Back Cover
XXX Transfer & Conversion Form.............. Inside Back Cover
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LONGLEAF PARTNERS FUNDS
UNIVERSAL XXX INFORMATION KIT
INTRODUCTION
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INVESTMENTS
The Longleaf Partners Funds, managed by Southeastern Asset Management, are the
sponsors of this XXX. All investments must be made in Longleaf Partners Fund,
Longleaf Partners International Fund, Longleaf Partners Realty Fund, Longleaf
Partners Small-Cap Fund and any other mutual funds formed by the Longleaf
Partners Funds. The Longleaf Partners Small-Cap Fund is closed to new investors.
INVESTMENT MINIMUMS
The minimum initial investment for Traditional XXX accounts and Xxxx XXX
accounts in all of the Longleaf Partners Funds is $10,000, which must be
satisfied primarily by transferring assets from another XXX, Converting a
Traditional XXX to a Xxxx XXX or rolling over assets from a qualified retirement
plan. The Longleaf Partners Funds will not accept Xxxx XXX contribution accounts
until they meet our $10,000 investment minimum.
WHAT'S NEW IN THE WORLD OF IRAS?
An Individual Retirement Account ("XXX") has always provided an attractive means
to save money for the future on a tax-advantaged basis. Recent changes to
Federal tax law have now made the XXX an even more flexible investment and
savings vehicle. Among the changes is the creation of the Xxxx Individual
Retirement Account ("Xxxx XXX"), which was first available for use starting
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 Traditional XXX, to replace an existing Traditional XXX, or
complement a Traditional XXX you wish to continue maintaining.
Taxpayers with adjusted gross income of up to $100,000 are eligible to convert
existing Traditional IRAs into Xxxx IRAs. If you convert early in a year and
later turn out to be ineligible because your gross income exceeds $100,000 (or
for other reasons you wish to reverse the conversion), you can "recharacterize"
the conversion by transferring the amount in the converted Xxxx XXX back to a
Traditional XXX. The details on conversion (and recharacterization) are found
later in this booklet.
Other XXX changes effective starting in 1998 are as follows: First, Congress
increased the income levels at which IRA holders who participate in
employer-sponsored retirement plans can make deductible Traditional XXX
contributions. Also the rules for deductible contributions by an XXX xxxxxx
whose spouse is a participant in an employer-sponsored retirement plan have been
liberalized. Second, the 10% penalty tax for premature withdrawals (before age
59 1/2) will no longer apply in the case of withdrawals to pay certain higher
education expenses or certain first-time homebuyer expenses. Also starting in
the year 2000, the 10% penalty tax will not apply to any amount distributed to
the IRS under a levy for unpaid taxes.
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 Traditional IRAs. You will also find everything
you need to establish and maintain either a Traditional or Xxxx XXX, or to
convert all or part of an existing Traditional XXX to a Xxxx XXX.
The first section of this Kit contains the instructions and forms you will need
to open a new Traditional or Xxxx XXX, to transfer from another XXX to a State
Street Bank and Trust XXX, or to convert a Traditional XXX to a Xxxx XXX.
The second section of this Kit contains our Universal XXX Disclosure Statement.
The Disclosure Statement is divided into three parts:
- Part One describes the basic rules and benefits which are specifically
applicable to your Traditional XXX.
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- Part Two describes the basic rules and benefits which are specifically
applicable to your Xxxx XXX.
- Part Three describes important rules and information applicable to all IRAs.
The third section of this Kit contains the Universal XXX Trust Agreement. The
Trust Agreement is also divided into three parts:
- Part One contains provisions specifically applicable to Traditional IRAs.
- Part Two contains provisions specifically applicable to Xxxx IRAs.
- Part Three contains provisions applicable to all IRAs (Traditional and Xxxx).
This Universal Individual Retirement Trust Account Kit contains information and
forms for both Traditional IRAs and Xxxx IRAs. However, you may use the Adoption
Agreement in this Kit to establish only one Traditional XXX or one Xxxx XXX;
separate Adoption Agreements must be completed if you want to establish multiple
(Xxxx or Traditional) XXX accounts.
WHAT'S THE DIFFERENCE BETWEEN A TRADITIONAL XXX AND A XXXX XXX?
With a Traditional XXX, an individual can contribute up to $2,000 per year and
may be able to deduct the contribution from taxable income, reducing current
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 Traditional
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 Traditional XXX, there is no rule against 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.
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The following chart highlights some of the major differences between a
Traditional XXX and a Xxxx XXX:
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CHARACTERISTICS TRADITIONAL XXX XXXX XXX
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ELIGIBILITY - Individuals (and their - Individuals (and their
spouses) who receive spouses) who receive
compensation compensation
- Individuals age 70 1/2 and - Individuals age 70 1/2 and
over may not contribute over may contribute
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TAX TREATMENT OF - Subject to limitations, - No deduction permitted for
CONTRIBUTIONS contributions are deductible amounts contributed
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CONTRIBUTION LIMITS - Individuals may contribute - Individuals may generally
up to $2,000 annually (or contribute up to $2,000 (or
100% of compensation, if 100% of compensation, if
less) less)
- Deductibility depends on - Ability to contribute phases
income level for individuals out at income levels of
who are active participants $95,000 to $110,000
in an employer-sponsored (individual taxpayer) and
retirement plan $150,000 to $160,000
(married taxpayers)
- Overall limit for
contributions to Traditional
and Xxxx IRAs (but not
including SEP or SIMPLE
IRAs) is $2,000 annually (or
100% of compensation, if
less)
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EARNINGS - Earnings and interest are - Earnings and interest are
not taxed when received by not taxed when received by
your XXX your XXX
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ROLLOVER/CONVERSIONS - Individual may rollover - Rollovers from other IRAs
amounts held in employer- only
sponsored retirement - Amounts rolled over (or
arrangements (401(k), SEP converted) from another XXX
XXX, etc.) tax free to are subject to income tax in
Traditional XXX the year rolled over or
converted
- Tax on amounts rolled over
or converted in 1998 may be
spread over four year period
(1998-2001)
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WITHDRAWALS - Total (principal + earnings) - Not taxable as long as a
taxable as income in year qualified distribution--
withdrawn (except for any generally, account open for
prior non-deductible 5 years, and age 59 1/2
contributions) - Minimum withdrawals NOT
- Minimum withdrawals must REQUIRED after age 70 1/2
begin after age 70 1/2
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IS A XXXX OR A TRADITIONAL XXX RIGHT FOR ME?
We cannot act as your legal or tax adviser and so we cannot tell you which kind
of XXX is right for you. The information contained in this Kit is intended to
provide you with the basic information and material you will need if you decide
whether a Traditional or Xxxx XXX is better for you, or if you want to convert
an existing Traditional XXX to a Xxxx XXX. We suggest that you consult with your
accountant, lawyer or other tax adviser, or with a qualified financial planner,
to determine whether you should open a Traditional or Xxxx XXX or convert any or
all of an existing Traditional XXX to a Xxxx XXX. Your tax adviser can also
advise you as to the state tax consequences that may affect whether a
Traditional or Xxxx XXX is right for you.
SEPS AND SIMPLES
The State Street Bank Traditional XXX may be used in connection with a
simplified employee pension (SEP) plan maintained by your employer. To establish
a Traditional XXX as part of your Employer's SEP plan, complete the Adoption
Agreement for a Traditional XXX, indicating in the proper box that the XXX is
part of a SEP plan. A Xxxx XXX should not be used in connection with a SEP plan.
A Xxxx XXX may not be used as part of an employer SIMPLE XXX plan. (However,
after two years amounts contributed to a SIMPLE XXX may be converted to a Xxxx
XXX.) A Traditional XXX may be used, but only after an individual has been
participating for two or more years (for the first two years, only a special
SIMPLE XXX may be used). SIMPLE XXX plans were added by the 1996 tax law to
provide an easy and inexpensive way for small employers to provide retirement
benefits for their employees. If you are interested in a SIMPLE XXX plan at your
place of employment, call or write to the number or address given at the end of
the Disclosure Statement portion of this Kit.
OTHER POINTS TO NOTE
The Disclosure Statement in this Kit provides you with the basic information
that you should know about State Street Bank and Trust Company Traditional IRAs
and Xxxx IRAs. The Disclosure Statement provides general information about the
governing rules for these IRAs and the benefits and features offered through
each type of XXX. However, the State Street Bank and Trust Company Adoption
Agreement and the Trust Agreement, are the primary documents controlling the
terms and conditions of your personal State Street Bank and Trust Company
Traditional 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 Traditional 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 Traditional XXX is any
non-Xxxx XXX offered by State Street Bank and Trust Company or any other
financial institution.
LONGLEAF PARTNERS FUNDS
STATE STREET BANK AND TRUST COMPANY
UNIVERSAL INDIVIDUAL RETIREMENT TRUST ACCOUNT
INSTRUCTIONS FOR OPENING YOUR TRADITIONAL XXX OR XXXX XXX
1. Read carefully the applicable sections of the Universal XXX Disclosure
Statement contained in this Kit, the Traditional or Xxxx Individual
Retirement Trust 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
Traditional XXX or Xxxx XXX will affect your financial and tax situation.
This Universal Individual Retirement Trust Account Kit contains information
and forms for both Traditional IRAs and Xxxx IRAs. However, you may use the
Retirement Account Application to
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establish only one Traditional XXX or one Xxxx XXX; separate Retirement
Account Applications must be completed if you want to establish multiple
(Xxxx or Traditional) XXX accounts.
2. Complete the Retirement Account Application.
3. If you are transferring assets from an existing XXX to this XXX, complete
the XXX Transfer & Conversion Form.
4. Check to be sure you have properly completed all necessary forms. Your
Traditional XXX or Xxxx XXX cannot be accepted without the properly
completed documents.
All checks should be payable to "LONGLEAF PARTNERS FUNDS." Please include
detailed instructions showing the particular Fund and account that you are
investing in.
Send the completed forms and checks to:
LONGLEAF PARTNERS FUNDS
P. O. Box 9694
Providence, RI 02940-9694
STATE STREET BANK AND
TRUST COMPANY
UNIVERSAL INDIVIDUAL
RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
PART ONE: DESCRIPTION OF TRADITIONAL IRAS
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SPECIAL NOTE
Part One of the Disclosure Statement describes the rules applicable to
Traditional IRAs beginning January 1, 1998.
IRAs described in these pages are called "Traditional IRAs" to distinguish them
from the new "Xxxx IRAs" first available in 1998. Xxxx IRAs are described in
Part Two of this Disclosure Statement. 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.
Traditional 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 Traditional XXX, and these
contributions may exceed the normal limits on Traditional XXX contributions.
This Disclosure Statement does not describe IRAs established in connection with
a SIMPLE XXX program maintained by your employer. Employers provide special
explanatory materials for accounts established as part of a SIMPLE XXX program.
Traditional IRAs may be used in connection with a SIMPLE XXX program, but for
the first two years of participation a special SIMPLE XXX (not a Traditional
XXX) is required.
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YOUR TRADITIONAL XXX
This section contains information about your Traditional Individual Retirement
Trust Account with State Street Bank and Trust Company as Trustee. A Traditional
XXX gives you several tax benefits. Earnings on the assets held in your
Traditional XXX are not subject to federal income tax until withdrawn by you.
You may be able to deduct all or part of your Traditional XXX contribution on
your federal income tax return. State income tax treatment of your Traditional
XXX may differ from federal treatment; ask your state tax department or your
personal tax adviser for details.
Be sure to read Part Three of this Disclosure Statement for important additional
information, including information on how to revoke your Traditional XXX,
investments and prohibited transactions, fees and expenses, and certain tax
requirements.
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ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A TRADITIONAL XXX?
You are eligible to establish and contribute to a Traditional XXX for a year if:
- You received compensation (or earned income if you are self employed) during
the year for personal services you rendered. If you received taxable alimony,
this is treated like compensation for XXX purposes.
- You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO A TRADITIONAL XXX FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Traditional XXX for your spouse, regardless of whether
your spouse had any compensation or earned income in that year. This is called a
"spousal XXX." To make a contribution to a Traditional XXX for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal XXX,
your spouse must set up a different Traditional XXX, separate from yours, to
which you contribute.
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CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO A TRADITIONAL XXX?
You may make a contribution to your existing Traditional XXX or establish a new
Traditional XXX for a taxable year by the due date (not including any
extensions) for your federal income tax return for the year. Usually this is
April 15 of the following year.
HOW MUCH CAN I CONTRIBUTE TO MY TRADITIONAL XXX?
For each year when you are eligible (see above), you can contribute up to the
lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.
If you and your spouse have spousal Traditional IRAs, each spouse may contribute
up to $2,000 to his or her XXX for a year as long as the combined compensation
of both spouses for the year (as shown on your joint income tax return) is at
least $4,000. If the combined compensation of both spouses is less than $4,000,
the spouse with the higher amount of compensation may contribute up to that
spouse's compensation amount, or $2,000 if less. The spouse with the lower
compensation amount may contribute any amount up to that spouse's compensation
plus any excess of the other spouse's compensation over the other spouse's XXX
contribution. However, the maximum contribution to either spouse's Traditional
XXX is $2,000 for the year.
If you (or your spouse) establish a new Xxxx XXX and make contributions to both
your Traditional XXX and a Xxxx XXX, the combined limit on contributions to both
your (or your spouse's) Traditional XXX and Xxxx XXX for a single calendar year
is $2,000.
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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 Traditional XXX is deductible.
If you are an active participant in an employer-sponsored plan, your Traditional
XXX contribution may still be completely or partly deductible on your tax
return. This depends on the amount of your income (see below).
Similarly, the deductibility of a contribution to a Traditional XXX for your
spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active participant,
the contribution to your spouse's Traditional XXX will be deductible. If your
spouse is an active participant, the Traditional XXX contribution will be
completely, partly or not deductible depending upon your combined income.
An exception to the preceding rules applies to high-income married taxpayers,
where one spouse is an active participant in an employer-sponsored retirement
plan and the other spouse is not. A contribution to the non-active participant
spouse's Traditional XXX will be only partly deductible starting 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
Traditional XXX if you and your spouse file separate tax returns for the taxable
year and you lived apart at all times during the taxable year.
WHAT ARE THE DEDUCTION RESTRICTIONS FOR ACTIVE PARTICIPANTS?
If you (or your spouse) are an active participant in an employer plan during a
year, the contribution to your Traditional XXX (or your spouse's Traditional
XXX) may be completely, partly or not deductible depending upon your filing
status and your amount of adjusted gross income ("AGI"). If AGI is any amount up
to the lower limit, the contribution is deductible. If your AGI falls between
the lower limit and the upper limit, the contribution is partly deductible. If
your AGI falls above the upper limit, the contribution is not deductible.
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FOR ACTIVE PARTICIPANTS
-- 2000
ADJUSTED GROSS INCOME (AGI) LEVEL
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IF YOU ARE IF YOU ARE THEN YOUR
SINGLE MARRIED TRADITIONAL
FILING JOINTLY XXX
CONTRIBUTION
IS
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Up to Up to Fully
Lower Limit Lower Limit Deductible
($32,000 ($52,000
for 2000) for 2000)
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More than More than Partly
Lower Limit Lower Limit Deductible
but less but less
than than
Upper Limit Upper Limit
($42,000 ($62,000
for 2000) for 2000)
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Upper Limit Upper Limit Not
or more or more Deductible
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The Lower Limit and the Upper Limit change for years beginning in 1999. The
Lower Limit and Upper Limit for these years are shown in the following table.
Substitute the correct Lower Limit and Upper Limit in the table above to
determine deductibility in any particular year. (Note: if you are married but
filing separate returns, your
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Lower Limit is always zero and your Upper Limit is always $10,000).
TABLE OF LOWER AND UPPER LIMITS
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MARRIED
SINGLE FILING JOINTLY
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LOWER UPPER LOWER UPPER
YEAR LIMIT LIMIT LIMIT LIMIT
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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
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HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE?
If your AGI falls in the partly deductible range, you must calculate the portion
of your contribution that is deductible. To do this, multiply your contribution
by a fraction. The numerator is the amount by which your AGI exceeds the lower
limit. 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. When you fall in the "partly deductible"
range, the deductible amount is the greater of the amount calculated or $200
(provided you contribute at least $200). If your contribution is less than $200,
then the entire contribution is deductible.
For example, assume that you make a $2,000 contribution to your Traditional XXX
in 1998, a year in which you are an active participant in your employer's
retirement plan. Also assume that your AGI is $57,555 and you are married,
filing jointly. You would calculate the deductible portion of your contribution
this way:
1. The amount by which your AGI exceeds the lower limit of the partly
deductible range:
($57,555 - $50,000) = $7,555
2. Divide this by $10,000:
$ 7,555 = 0.7555
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$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 Traditional XXX (and your spouse may contribute to your
spouse's Traditional XXX) up to the limit on contributions. When you file your
tax return for the year, you must designate the amount of non-deductible
contributions to your Traditional XXX for the year. See IRS Form 8606.
HOW DO I DETERMINE MY AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY TRADITIONAL XXX?
The maximum contribution you can make to a Traditional XXX generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the XXX above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
limit. An excess contribution is subject to excise tax of 6% for each year it
remains in the XXX.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty. To do so, you
must withdraw the excess and any earnings on the excess before the due date
(including extensions) for filing your federal income tax return for the year
for which you made the excess contribution. A deduction should not be taken for
any excess contribution.
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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 includible in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
Traditional 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 contribution 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 TRADITIONAL XXX FUNDS TAXED?
Any dividends on or growth of the investments held in your Traditional XXX are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Traditional XXX is revoked (this is
described in Part Three of this Disclosure Statement).
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TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO A TRADITIONAL XXX?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Traditional
XXX. The main exceptions are
- payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
- installment payments for a period of 10 years or more,
- required distributions (generally the rules require distributions starting at
age 70 1/2 or for certain employees starting at retirement, if later),
- payments of employee after-tax contributions, and
- hardship withdrawals from a 401(k) plan or a 403(b) arrangement.
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 Traditional XXX. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Traditional XXX within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes
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on the amount rolled over until you subsequently make withdrawals from your
Traditional XXX.
The maximum amount you may roll over is the amount of employer contributions and
earnings distributed. You may not roll over any after-tax employee contributions
you made to the employer retirement plan. If you are over age 70 1/2 and are
required to take minimum distributions under the tax laws, you may not roll over
any amount required to be distributed to you under the minimum distribution
rules. Also, if you are receiving periodic payments over your or your and your
designated beneficiary's life expectancy or for a period of at least 10 years,
you may not roll over these payments. A rollover to a Traditional XXX must be
completed within 60 days after the distribution from the employer retirement
plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF YOUR
DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover. Your
plan or 403(b) sponsor is required to provide you with information about direct
and regular 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
adviser or the IRS if you have a question about rollovers.
ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO A TRADITIONAL XXX, CAN I
SUBSEQUENTLY ROLL OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN?
Yes. Part or all of an eligible distribution received from a qualified plan may
be transferred from the Traditional XXX holding it to another qualified plan.
However, the Traditional XXX must have no assets other than those which were
previously distributed to you from the qualified plan. Specifically, the
Traditional XXX cannot contain any annual contributions by you (or your spouse).
Also, the new qualified plan must accept rollovers. Similar rules apply to
Traditional IRAs established with rollovers from 403(b) arrangements.
CAN I MAKE A ROLLOVER FROM MY TRADITIONAL XXX TO ANOTHER TRADITIONAL XXX?
You may make a rollover from one Traditional XXX to another Traditional 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 Traditional XXX. After
making such a regular rollover from one Traditional XXX to another, you must
wait a full year (365 days) before you can make another such rollover. (However,
you can instruct a Traditional XXX trustee to transfer amounts directly to
another Traditional XXX trustee; such a direct transfer does not count as a
rollover.)
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY ANNUAL CONTRIBUTIONS IN
ONE XXX?
If you wish to make both a normal annual contribution and a rollover
contribution, you may wish to open two separate Traditional IRAs by completing
two Adoption Agreements and two sets of forms. You should consult a tax adviser
before making your annual contribution to the Traditional XXX you established
with rollover contributions (or make a rollover contribution to the Traditional
XXX to which you make your annual contributions). This is because combining your
annual contributions and rollover contributions originating from an employer
plan distribution would prohibit any future rollover out of the Traditional XXX
into another qualified plan. If despite this, you still wish to combine a
rollover contribution and the XXX holding your annual contributions, you should
establish the account as an Annual Contributions XXX on the Adoption Agreement
(not a Rollover XXX or Direct Rollover XXX) and make the contributions to that
account. Each account must meet the Fund's $10,000 minimum initial investment,
which must be satisfied primarily by transferring assets from another XXX.
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HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
WHAT ABOUT CONVERTING MY TRADITIONAL XXX TO A XXXX XXX?
The rules for converting a Traditional XXX to a Xxxx XXX, or making a rollover
from a Traditional XXX to a Xxxx XXX, are described in Part Two.
----------------------------------------
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY TRADITIONAL XXX?
You may withdraw from your Traditional XXX at any time. However, withdrawals
before age 59 1/2 may be subject to a 10% penalty tax in addition to regular
income taxes.
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn the total amount held in your Traditional XXX by the
April 1 following the year in which you reach 70 1/2 you must make minimum
withdrawals in order to avoid penalty taxes. The rule allowing certain employees
to postpone distributions from an employer qualified plan until actual
retirement (even if this is after age 70 1/2 does not apply to Traditional IRAs.
The minimum withdrawal amount is determined by dividing the balance in your
Traditional XXX (or IRAs) by your life expectancy or the combined life
expectancy of you and your designated beneficiary. The minimum withdrawal rules
are complex. Consult your tax adviser 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 TRADITIONAL XXX 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. Amounts withdrawn may
be subject to income tax withholding by the trustee unless you elect not to have
withholding. See Part Three below for additional information on withholding.
Lump sum withdrawals from a Traditional XXX are not eligible for averaging
treatment currently available to certain lump sum distributions from qualified
employer retirement plans.
Since the purpose of a Traditional XXX is to accumulate funds for retirement,
your receipt or use of any portion of your Traditional XXX before you attain age
59 1/2 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.
The 10% penalty tax for early withdrawal will not apply if:
- The distribution was a result of your death or disability.
- The purpose of the withdrawal is to pay certain higher education expenses for
yourself or your spouse, child, or grandchild. Qualifying expenses include
tuition, fees, books, supplies and equipment required for attendance at a
post-secondary educational institution. Room and board expenses may qualify
if the student is attending at least half-time.
- The withdrawal is used to pay eligible first-time homebuyer expenses. These
are the costs of purchasing, building or rebuilding a principal residence
(including customary settlement, financing or closing costs). The purchaser
may be you, your spouse, or a child, grandchild, parent or grandparent of you
or your spouse. An individual is considered a "first-time homebuyer" if the
individual did not have (or, if married, neither spouse had) 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
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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
Traditional XXX in a lump-sum, the 10% penalty tax will apply to the lump sum
and to the amounts previously paid to you before age 59 1/2.
- The distribution does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 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.
- Starting in the year 2000, the distribution is made pursuant to an IRS levy
to pay overdue taxes.
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 Traditional XXX, then each distribution will be treated as partly a
return of your nondeductible contributions (not taxable) and partly a
distribution of deductible contributions and earnings (taxable). The nontaxable
amount is the portion of the amount withdrawn which bears the same ratio as your
total nondeductible Traditional XXX contributions bear to the total balance of
all your Traditional IRAs (including rollover IRAs and SEPs, but not including
Xxxx IRAs).
For example, assume that you made the following Traditional XXX contributions:
Year Deductible Nondeductible
---- ---------- -------------
1997 $2,000
1998 $2,000
1999 $1,000 $1,000
2000 $1,000
------ ------
$5,000 $2,000
In addition assume that your Traditional XXX has total investment earnings
through 2000 of $1,000. During the year you withdraw $500. Your total account
balance as of 12-31-00 is $7,500 as shown below.
Deductible Contributions $5,000
Nondeductible
Contributions $2,000
Earnings On XXX $1,000
Less Withdrawal $ 500
----------------------------------------
Total Account Balance
as of 12/31/00 $7,500
To determine the nontaxable portion of your withdrawal, the total 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
withdrawal ($2,000). The denominator is the total account bal-
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ance as of 12-31-00 ($7,500) plus the withdrawal ($500) or $8,000. The
calculation is:
Total Remaining
Nondeductible $2,000 X $500
Contributions $8,000
----------------------------------------
Total Account Balance = $ 125
Thus, $125 of the $500 withdrawal will not be included in your taxable income.
The remaining $375 will be taxable for 2000. In addition, for future
calculations the remaining nondeductible contribution total will be $2,000 minus
$125, or $1,875.
A loss in your Traditional XXX investment may be deductible. You should consult
your tax adviser for further details on the appropriate calculation for this
deduction if applicable.
IS THERE A PENALTY TAX ON CERTAIN LARGE WITHDRAWALS OR ACCUMULATIONS IN MY XXX?
Earlier tax laws imposed a "success" penalty equal to 15% of withdrawals from
all retirement accounts (including IRAs, 401(k) or other employer retirement
plans, 403(b) arrangements and others) in a year exceeding a specified amount
(initially $150,000 per year). Also, there was a 15% estate tax penalty on
excess accumulations remaining in IRAs and other tax-favored arrangements upon
your death. These 15% penalty taxes have been repealed.
Important: Please see Part Three which contains important information applicable
to all State Street Bank and Trust Company IRAs.
PART TWO: DESCRIPTION OF XXXX IRAS
----------------------------------------
SPECIAL NOTE
This section of the Disclosure Statement describes the rules generally
applicable to Xxxx IRAs.
Xxxx IRAs were available for the first time in 1998. 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.
Traditional IRAs, which have existed since 1975, are still available.
Contributions to a Traditional XXX may be tax-deductible. Earnings and gains on
amounts while held in a Traditional XXX are tax-deferred. Withdrawals are
subject to federal income tax (except for prior after-tax contributions which
may be recovered without additional federal income tax).
This section does not describe Traditional IRAs. If you wish to review
information about Traditional IRAs, please see Part One of this Disclosure
Statement.
This Disclosure Statement also does not describe IRAs established in connection
with a SIMPLE XXX program or a Simplified Employee Pension (SEP) plan maintained
by your employer. Xxxx IRAs may not be used in connection with a SIMPLE XXX
program or a SEP plan.
----------------------------------------
YOUR XXXX XXX
Your Xxxx XXX gives you several tax benefits. While contributions to a Xxxx XXX
are not deductible, dividends on and growth of the assets held in your Xxxx XXX
are not subject to federal income tax. Withdrawals by you from your Xxxx XXX are
excluded from your income for federal income tax purposes if certain
requirements (described below) are met. State income tax treatment of your Xxxx
XXX may differ from federal treatment; ask your state tax department or your
personal tax adviser 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.
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----------------------------------------
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR A XXXX XXX?
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 Xxxx XXX purposes.
In contrast to a Traditional XXX, 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?
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.
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).
Your Xxxx XXX limit is reduced by any contributions for the same year to a
Traditional XXX. For example, assuming you have at least $2,000 in compensation
or earned income, if you contribute $500 to your Traditional XXX for a year,
your maximum Xxxx XXX contribution for that year will be $1,500. (Note: the Xxxx
XXX contribution limit is not reduced by contributions made to either a SEP XXX
or a SIMPLE XXX; salary reduction contributions by you are considered employer
contributions for this purpose.)
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 Traditional XXX maintained by you or your spouse.
For taxpayers with high income levels, the contribution limits may be reduced
(see next page).
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 Traditional IRAs. Contributions to a Traditional XXX may
be deductible on your federal income tax return depending on whether or not you
are an active participant in an employer-sponsored plan and on your income
level.
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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, 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 TRADITIONAL XXX?
This will depend upon your individual situation. A Xxxx XXX may be better if you
are an active participant in an employer-sponsored plan and your adjusted gross
income is too high to make a deductible XXX contribution (but not too high to
make a Xxxx XXX contribution). Also, the benefits of a Xxxx XXX vs. a
Traditional XXX may depend upon a number of other factors including: your
current income tax bracket vs. your expected income tax bracket when you make
withdrawals from your XXX, whether you expect to be able to make nontaxable
withdrawals from your Xxxx XXX, how long you expect to leave your contributions
in the XXX, how much you expect the XXX to earn in the meantime, and possible
future tax law changes.
Consult a qualified tax or financial adviser 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
ADJUSTED GROSS INCOME (AGI) LEVEL
----------------------------------------------
IF YOU ARE
IF YOU ARE MARRIED
SINGLE FILING THEN YOU
TAXPAYER JOINTLY MAY MAKE
-------------------------------------
Up to Up to Full
$95,000 $150,000 Contribution
-------------------------------------
More than More than Reduced
$95,000 $150,000 Contribution
but less than but less than (see
$110,000 $160,000 explanation
below)
-------------------------------------
$100,000 $160,000 Zero (no
and up and up contribution)
----------------------------------------------
Note: If you are a married taxpayer filing separately, your maximum Xxxx XXX
contribution limit phases out over the first $10,000 of adjusted gross income.
If your AGI is $10,000 or more you may not contribute to a Xxxx XXX for the
year.
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. With AGI in the
reduced contribution range, 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
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jointly. You would calculate your Xxxx XXX contribution limit this way:
1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555 - $150,000) = $7,555
2. Divide this by $10,000:
$7,555 = 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 Traditional XXX. If you fall in the reduced
contribution range, the reduction formula applies to the Xxxx XXX contribution
limit left after subtracting your contribution for the year to a Traditional
XXX.
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 Traditional XXX, your AGI is not reduced by the amount of the
deduction. Second, if you are converting a Traditional XXX 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.
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 Traditional XXX for
the same year and may be further reduced if you have high AGI. Any amount
contributed to the Xxxx XXX above the maximum is considered an "excess
contribution."
An excess contribution is subject to excise tax of 6% for each year it remains
in the Xxxx XXX.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty. To do so, you
must withdraw the excess and any earnings on the excess before the due date
(including extensions) for filing your federal income tax return for the year
for which you made the excess contribution. 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 includible 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
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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 TRADITIONAL XXX
CAN I CONVERT AN EXISTING TRADITIONAL XXX INTO A XXXX XXX?
Yes, you can convert an existing Traditional XXX into a Xxxx XXX if you meet the
eligibility requirements described below. Conversion may be accomplished in any
of three ways: First, you can withdraw the amount you want to convert from your
Traditional XXX and roll it over to a Xxxx XXX within 60 days. Second, you can
establish a Xxxx XXX and then direct the trustee of your Traditional XXX to
transfer the amount in your Traditional XXX you wish to convert to the new Xxxx
XXX. Third, if you want to convert an existing Traditional XXX with State Street
Bank as trustee to a Xxxx XXX, you may give us directions to convert; we will
convert your existing account when the paperwork to establish your new Xxxx XXX
is complete.
You are eligible to convert a Traditional XXX to a Xxxx XXX if, for the year of
the conversion, your AGI is $100,000 or less. The same limit applies to married
and single taxpayers, and the limit is not indexed to cost-of-living increases.
Married taxpayers are eligible to convert a Traditional XXX to a Xxxx XXX only
if they file a joint income tax return; married taxpayers filing separately are
not eligible to convert. However, if you file separately and have lived apart
from your spouse for the entire taxable year, you are considered not married,
and the fact that you are filing separately will not prevent you from
converting.
If you accomplish a conversion by withdrawing from your Traditional XXX and
rolling over to a Xxxx XXX within 60 days, the requirements in the preceding
sentence apply to the year of the withdrawal (even though the rollover
contribution occurs in the following calendar year).
Caution; If you have reached age 70 1/2 by the year when you convert another
non-Xxxx XXX you own to a Xxxx XXX, be careful not to convert any amount that
would be a required minimum distribution under the applicable age 70 1/2 rules.
Under current IRS regulations, required minimum distributions may not be
converted.
WHAT HAPPENS IF I CHANGE MY MIND ABOUT CONVERTING?
You can undo a conversion by notifying the trustee or custodian of each XXX (the
trustee of the first XXX--the Traditional XXX you converted--and the trustee of
the second XXX--the Xxxx XXX that received the conversion). The amount you want
to unconvert by transferring back to the first trustee is treated as if it had
not been converted. This is called "recharacterization."
If you want to recharacterize a converted amount, you must do so before the due
date (including any extensions you receive) for your federal income tax return
for the year of the conversion. Any net income on the amount recharacterized
must accompany it back to the Traditional XXX.
Under current IRS rules, you can recharacterize for any reason. For example, you
would recharacterize if you converted early in a year and then turned out to be
ineligible because your income was over the $100,000 limit. Also, if you convert
and then recharacterize during a year, you can then convert to a Xxxx XXX a
second time if you wish. Under the current IRS rules, there is no limit on the
number of times you can convert, recharacterize and then convert again during a
year, and no restrictions on the reasons for doing so. However, if you convert
an amount more than twice in a year, any additional conversion transactions will
be disregarded when determining the
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amount of income taxes you have to pay because of the conversion (see next
column).
For example, suppose you converted a Traditional XXX with $100,000 in it to a
Xxxx XXX early in 1998. You will owe income taxes on $100,000 (assuming the
Traditional XXX held all taxable amounts). The market value of your Xxxx XXX
declines to $80,000, so you recharacterize it back to a Traditional XXX, and
then convert the Traditional XXX a second time to a Xxxx XXX. You will have to
pay income taxes on $80,000 for the second conversion, rather than on $100,000.
The value of the Xxxx XXX declines further and, in late 1998 the Xxxx XXX is
worth $60,000, so you recharacterize back to a Traditional XXX and then convert
it to a Xxxx XXX a third time. This last conversion is disregarded for income
tax purposes, and you will still have to pay income taxes on $80,000 under this
example.
Beginning January 1, 2000, however, only one conversion will be allowed in any
taxable year. Please consult your tax professional for assistance.
Note: Conversions from a Traditional XXX to a Xxxx XXX that failed because you
did not meet the eligibility requirements (more than $100,000 of AGI or married
but not filing jointly) and which you then recharacterize do not count when
applying these rules. Similarly, any conversions before November 1, 1998 do not
count when applying these rules. (Caution: As you can see, these rules are very
complex; be sure to consult a competent tax professional for assistance. Also,
the limits on the number of conversions that will be recognized for income tax
purposes apply for 1998 and 1999. The IRS may adopt different rules thereafter,
or may change the foregoing rules to provide different limits on the number of
conversions permitted or the acceptable reasons for recharacterizing--check with
your tax adviser for the latest developments.)
Under current IRS rules, recharacterization is not restricted to amounts you
converted from a Traditional XXX to a Xxxx XXX. You can, for example, make an
annual contribution to a Traditional XXX and recharacterize it as a contribution
to a Xxxx XXX, or vice versa. You must make the election to recharacterize by
the due date for your tax return for the year and follow the procedures
summarized above.
WHAT ARE THE TAX RESULTS FROM CONVERTING?
The taxable amount in your Traditional XXX you convert to a Xxxx XXX will be
considered taxable income on your federal income tax return for the year of the
conversion. All amounts in a Traditional XXX are taxable except for your prior
non-deductible contributions to the Traditional XXX.
If you made 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. If you wanted to
treat all the income as 1998 income (not spread over four years), you could have
elected to do so on Form 8606 filed with your 1998 federal income tax return.
If you convert a Traditional XXX (or a SEP XXX or SIMPLE XXX -- see below) to a
Xxxx XXX, under IRS rules income tax withholding will apply unless you elect not
to have withholding. The Adoption Agreement or the Universal XXX Transfer of
Assets Form has more information about withholding. However, withholding income
taxes from the amount converted (instead of paying applicable income taxes from
another source) may adversely affect the anticipated financial benefits of
converting. Consult your financial adviser for more information.
CAN I CONVERT A SEP XXX OR SIMPLE XXX ACCOUNT TO A XXXX XXX?
If you have a SEP XXX as part of an employer simplified employee pension (SEP)
program, or a SIMPLE XXX as part of an employer SIMPLE XXX program, you can
convert the XXX to a Xxxx XXX. However, with a SIMPLE XXX account, this can be
done only after the SIMPLE XXX account has been in existence for at least two
years. You must meet the eligibility rules summarized above to convert.
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SHOULD I CONVERT MY TRADITIONAL XXX TO A XXXX XXX?
Only you can answer this question, in consultation with your tax or financial
advisers. 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
Traditional XXX and then to convert the Traditional XXX to Xxxx XXX. Consult
your tax or financial adviser 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 trustee to
transfer amounts directly to another Xxxx XXX trustee; 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).
----------------------------------------
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 Traditional 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
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least one of the following conditions must be satisfied:
- You are age 59 1/2 or older when you make the withdrawal.
- The withdrawal is made by your beneficiary after you die.
- You are disabled (as defined in IRS rules) when you make the withdrawal.
- You are using the withdrawal to cover eligible first time homebuyer expenses.
These are the costs of purchasing, building or rebuilding a principal
residence (including customary settlement, financing or closing costs). The
purchaser may be you, your spouse or a child, grandchild, parent or
grandparent of you or your spouse. An individual is considered a "first-time
homebuyer" if the individual did not have (or, if married, neither spouse
had) 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 purposes of the 5-year rule, all your Xxxx IRAs are considered. As soon as
the 5-year rule is satisfied for any Xxxx XXX, it is considered satisfied for
all your Xxxx IRAs. For a Xxxx XXX that you started with annual contribution,
the 5 year period starts with the year for which you make the initial annual
contribution. For a Xxxx XXX that you set up with amounts rolled over or
converted from a non-Xxxx XXX, the 5 year period begins with the year in which
the conversion or rollover was made.
HOW ARE WITHDRAWALS FROM MY XXXX XXX TAXED IF THE TAX-FREE REQUIREMENTS ARE NOT
MET?
If the qualified withdrawal requirements are not met, the tax treatment of a
withdrawal depends on the character of the amounts withdrawn. To determine this,
all your Xxxx IRAs (if you have more than one) are treated as one, including any
Xxxx XXX you may have established with another Xxxx XXX trustee. Amounts
withdrawn are considered to come out in the following order:
- First, all annual contributions
- Second, all conversion amounts (on a first-in, first-out basis)
- Third, earnings (including dividends and gains)
A withdrawal treated as your own prior annual contribution amounts to your Xxxx
XXX will not be considered taxable income in the year you receive it, nor will
the 10% penalty apply. A withdrawal consisting of previously taxed conversion
amounts also is not considered taxable income in the year of the withdrawal, and
is also not subject to the 10% premature withdrawal penalty. To the extent that
the nonqualified withdrawal consists of dividends or gains while your
contributions were held in your Xxxx XXX, the withdrawal is includible in your
gross income in the taxable year you receive it, and may be subject to the 10%
withdrawal penalty.
As mentioned, for purposes of determining what portion of any withdrawal is
includible in income, all of your Xxxx XXX accounts are considered as one single
account. Therefore, withdrawals from Xxxx XXX accounts are not considered to be
from earnings or interest until an amount equal to all prior annual
contributions and, if applicable, all conversion amounts, 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
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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 $ 7,000
-----------------------------------------------
Total $20,000 $17,000
At the end of 10 years, this person has $37,000 in both Xxxx XXX accounts, of
which $20,000 represents his contributions (aggregated) and $17,000 represents
his earnings (aggregated). This individual, who is 40, withdraws the entire
$17,000 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 $17,000 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, $3,000 would not be taxable (the remaining aggregate contributions)
and $12,000 would be treated as taxable income for the year of the withdrawal,
subject to normal income taxes and the 10% premature withdrawal penalty (unless
an exception applies).
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 capital gains tax treatment.
Amounts withdrawn may be subject to income tax withholding by the trustee unless
you elect not to have withholding. See Part Three below for additional
information on withholding.
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, 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 de-
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pendents. 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.
- Starting in the year 2000 a distribution is made pursuant to an IRS levy to
pay overdue taxes.
There is one additional time when the 10% penalty tax may apply. If you convert
an amount from a non-Xxxx XXX to a Xxxx XXX, and then make a withdrawal that is
treated as coming from that converted amount within five years after the
conversion, the 10% penalty applies (unless there is an exception). This rule is
the one exception to the usual Xxxx XXX rule that, once the five year
requirement is satisfied for one of your Xxxx IRAs, it is satisfied for all your
Xxxx IRAs.
SEE THE TABLE AT THE END OF THIS PART FOR A SUMMARY OF THE RULES ON WHEN
WITHDRAWALS FROM YOUR XXXX XXX WILL BE SUBJECT TO INCOME TAXES OR THE 10%
PENALTY TAX.
HOW ARE THE TAX RULES AFFECTED IF I CONVERTED A NON-XXXX XXX TO A XXXX XXX IN
1998?
If you converted a non-Xxxx XXX to a Xxxx XXX in 1998 and are spreading the
taxable income over the years 1998-2001, and if you make a withdrawal during
that period, special rules apply. Consult your tax adviser.
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.
Two Important Points: First, the trustee will report withdrawals from your Xxxx
XXX to the IRS on Form 1099-R as required and will complete Form 1099-R based on
your Xxxx XXX account with the trustee. However, since all Xxxx IRAs are
considered together when determining the tax treatment of withdrawals, and since
you may have other Xxxx IRAs with other trustees (about which we have no
information) you have sole responsibility for correctly reporting withdrawals on
your tax return. It is essential that you keep proper records and report the
income taxes properly if you have multiple Xxxx IRAs. Second, the discussion of
the tax rules for Xxxx IRAs in this Disclosure Statement is based upon the best
available information. However, there may be changes in pending IRS proposed
regulations or further legislation on the requirements for and tax treatment of
Xxxx XXX accounts. Therefore, you should consult your tax adviser for the latest
developments or for advice about how maintaining a Xxxx XXX will affect your
personal tax or financial situation.
Note: In order to facilitate proper recordkeeping and tax reporting for your
Xxxx XXX, the service company maintaining certain account records may require
you to set up separate Xxxx IRAs to hold annual contributions and conversion
amounts. In addition, the service company may require separate Xxxx IRAs for
conversion amounts from different calendar years. Any such requirement will be
noted in the Adoption Agreement for your Xxxx XXX or in the instructions for
opening your Xxxx XXX.
Also, please see Part Three on page 25, which contains important information
applicable to all State Street Bank and Trust Company IRAs.
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SUMMARY OF TAX RULES FOR WITHDRAWALS
The following table summarizes when income taxes or the 10% premature withdrawal
penalty tax will apply to a withdrawal from your Xxxx XXX. Remember, income
taxes or penalties apply or not depending on the type of contribution withdrawn.
This is determined under the IRS rules described above, considering all of your
Xxxx IRAs together (including any you may maintain with another trustee or
custodian). Therefore, if you have multiple Xxxx IRAs, the tax treatment of a
withdrawal will not necessarily follow from the type of contributions held in
the particular Xxxx XXX account you withdrew from. Also, the income and penalty
tax rules for Xxxx XXX withdrawals are extremely complex; the following table is
only a summary and may not cover every possible situation. Consult the IRS or
your personal tax adviser if you have a question about your individual
situation.
QUALIFIED NOT A QUALIFIED WITHDRAWAL
WITHDRAWAL
---------------------------------------------------------------------------------------
TYPE OF (THE REQUIREMENTS EXCEPTION TO 10% EXCEPTION TO
CONTRIBUTION FOR A QUALIFIED TAX APPLIES 10% TAX DOES
WITHDRAWN WITHDRAWAL ARE (EXCEPTIONS ARE NOT APPLY
OUTLINED ABOVE) LISTED ABOVE)
---------------------------------------------------------------------------------------
- Annual Contribu- . . . . . . . . .No income or penalty tax on withdrawal. . . . .
tion Amounts
---------------------------------------------------------------------------------------
- 1998 Conversion
Amounts
Income taxes on No income or No income or No income tax on
amount converted penalty tax on penalty tax on withdrawal. Penalty
previously paid withdrawal. withdrawal. tax applies if the
(in other words, withdrawal occurs
either you paid within 5 years of
any income taxes conversion and if
due on your 1998 the withdrawal is
tax return, or you treated as
spread the income consisting of taxa-
taxes due over ble amounts
1998-2001, but included in the
have paid them all original con-
by the time of the version.
withdrawal)
Income taxes on N/A Income tax applies Income and penalty
amount converted to withdrawal to tax apply to with-
were spread over the extent of drawal.
1998-2001 and not remaining taxable
fully paid by the amount. No penalty
time of withdrawal tax.
---------------------------------------------------------------------------------------
- 1999 and Later No income or No income or No income tax on
Conversion Amounts penalty tax on penalty tax on withdrawal. Penalty
withdrawal. withdrawal. tax applies to
taxable amounts
included in the
conversion if the
withdrawal occurs
within 5 years of
conversion.
---------------------------------------------------------------------------------------
- Earnings, Gains or No income or Income tax applies. Income and penalty
Growth of Account penalty tax on No penalty tax. tax apply.
withdrawal.
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The table summarizes the tax rules that may apply if you withdraw from your Xxxx
XXX. What happens if you die and your beneficiary wants to make withdrawals from
the account? The following is a summary of the rules.
- First, if you converted from a Traditional XXX to a Xxxx XXX in 1998,
spreading the income taxes due over the 1998-2001 period, and you die before
2001, the deferred income taxes must be recognized and paid with your final
income tax return for the year of death. As an exception to this rule, if
your surviving spouse is the sole beneficiary of all your Xxxx IRAs, the
spouse can elect to continue spreading the income over the remainder of the
1998-2001 period.
- Second, if your beneficiary is not your surviving spouse, withdrawals by the
beneficiary will be subject to income taxes depending on the type of
contribution withdrawn as summarized in the table. However, in determining
what type of contribution the beneficiary is withdrawing, any Xxxx IRAs the
beneficiaries owns in his or her own right are not considered (this is an
exception to the normal rule that all Xxxx IRAs are considered together). A
beneficiary will not be subject to the 10% premature withdrawal penalty
because withdrawals following the original owner's death are an exception to
the 10% penalty tax.
- Third, if your surviving spouse is the beneficiary, the spouse can elect
either to receive withdrawals as beneficiary, or to treat your Xxxx XXX as
the spouse's Xxxx XXX. If the spouse receives withdrawals as a beneficiary,
the rules in the preceding paragraph generally apply to the spouse just as to
any other beneficiary. If the spouse treats the Xxxx XXX as the spouse's own,
there are a couple of special rules. First, the spouse will be treated as
having had a Xxxx XXX for five years (one of the requirements for tax-free
withdrawals) if either your Xxxx XXX or any of the spouse's Xxxx IRAs has
been in effect for at least five years. Second, withdrawals will be subject
to the 10% penalty tax unless an exception applies. Since the spouse has
elected to treat your Xxxx XXX as the spouse's own Xxxx XXX, the exception
for payments following your death will not apply.
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PART THREE: RULES FOR ALL IRAS (TRADITIONAL AND XXXX)
----------------------------------------
GENERAL INFORMATION
XXX REQUIREMENTS
All IRAs must meet certain requirements. Contributions generally must be made in
cash. The XXX trustee or custodian must be a bank or other person who has been
approved by the Secretary of the Treasury. Your contributions may not be
invested in life insurance or collectibles or be commingled with other property
except in a common trust or investment fund. Your interest in the account must
be nonforfeitable at all times. You may obtain further information on IRAs from
any district office of the Internal Revenue Service.
MAY I REVOKE MY XXX?
You may revoke a newly established Traditional or Xxxx XXX at any time within
seven days after the date on which you receive this Disclosure Statement. A
Traditional or Xxxx XXX established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.
To revoke your Traditional or Xxxx XXX, mail or deliver a written notice of
revocation to the Trustee 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 Traditional or Xxxx XXX
within the seven-day period, you are entitled to a return of the entire amount
you originally contributed into your Traditional or Xxxx XXX, without adjustment
for such items as sales charges, administrative expenses or fluctuations in
market value.
----------------------------------------
INVESTMENTS
HOW ARE MY XXX CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your Traditional
or Xxxx XXX. Investments must be in one or more of the Fund(s) available from
time to time as listed in the Adoption Agreement for your Traditional or Xxxx
XXX or in an investment selection form provided with your Adoption Agreement or
from the Fund Distributor or Service Company. You direct the investment of your
XXX by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your Traditional or Xxxx
XXX, you are responsible for any losses; neither the Trustee, 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
Traditional or Xxxx XXX will generally be at the applicable public offering
price or net asset value for shares of the Fund(s) involved next established
after the Distributor or the Service Company (whichever may apply) receives
proper investment instructions from you; consult the current prospectus for the
Fund(s) involved for additional information.
Before making any investment, read carefully the current prospectus for any Fund
you are considering as an investment for your Traditional XXX or Xxxx XXX. The
prospectus will contain information about the Fund's investment objectives and
policies, as well as any minimum initial investment or minimum balance
requirements and any sales, redemption or other charges.
Because you control the selection of investments for your Traditional or Xxxx
XXX and because mutual fund shares fluctuate in value, the growth in value of
your Traditional or Xxxx XXX cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY XXX ASSETS?
The tax-exempt status of your Traditional or Xxxx XXX will be revoked if you
engage in any of the prohibited transactions listed in Section 4975 of the tax
code. Upon such revocation, your Traditional or Xxxx XXX is treated as
distributing its assets to you. The taxable portion of the amount in your XXX
will be subject to income tax (unless, in the case of a Xxxx XXX, the
requirements for a tax-free withdrawal are satisfied). Also, you
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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. There may also be
prohibited transaction penalty taxes.
Any investment in a collectible (for example, rare stamps) by your Traditional
or Xxxx XXX is treated as a withdrawal; the only exception involves certain
types of government-sponsored coins or certain types of precious metal bullion.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in your
Traditional or Xxxx XXX. Some examples of prohibited transactions are:
- Direct or indirect sale or exchange of property between you and your
Traditional or Xxxx XXX.
- Transfer of any property from your Traditional or Xxxx XXX to yourself or
from yourself to your Traditional or Xxxx XXX.
Your Traditional or Xxxx XXX could lose its tax exempt status if you use all or
part of your interest in your Traditional or Xxxx XXX as security for a loan or
borrow any money from your Traditional or Xxxx XXX. Any portion of your
Traditional or Xxxx XXX used as security for a loan will be treated as a
distribution in the year in which the money is borrowed. This amount may be
taxable and you may also be subject to the 10% premature withdrawal penalty on
the taxable amount.
----------------------------------------
FEES AND EXPENSES
TRUSTEE'S FEES
There are no account installation, annual maintenance, termination, rollover, or
transfer fees.
- The Trustee may charge you for its reasonable expenses for other services.
OTHER CHARGES
- There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Traditional XXX or Xxxx XXX is
invested. Before investing, be sure to read carefully the current prospectus
of any Fund you are considering as an investment for your Traditional XXX or
Xxxx XXX for a description of applicable charges.
----------------------------------------
TAX MATTERS
WHAT XXX REPORTS DO YOU RECEIVE?
The Plan Administrative Agent, PFPC, 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 trustee or custodian is not considered a withdrawal
(except for such a transfer that effects a conversion of a Traditional XXX to a
Xxxx XXX, or a recharacterization of a Xxxx XXX back to a Traditional XXX).
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29
PFPC will report to the IRS the year-end value of your account and the amount of
any rollover (including conversions of a Traditional XXX to a Xxxx XXX) or a
regular annual contribution made during a calendar year, as well as the tax year
for which a contribution is made. Unless PFPC 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
Traditional XXX. If your beneficiary fails to make required minimum withdrawals
from your Traditional or Xxxx XXX after your death, your beneficiary may be
subject to an excise tax and be required to file Form 5329.
For Traditional 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
Traditional 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
Traditional IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.
WHICH WITHDRAWALS ARE SUBJECT TO WITHHOLDING?
XXXX XXX
Federal income tax may be withheld at a flat rate of 10% of any taxable
withdrawal from your Xxxx XXX, unless you elect not to have tax withheld.
Withdrawals from a Xxxx XXX are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or XXX.
TRADITIONAL XXX
Federal income tax will be withheld at a flat rate of 10% from any withdrawal
from your Traditional XXX, unless you elect not to have tax withheld.
Withdrawals from a Traditional XXX are not subject to the mandatory 20% income
tax withholding that applies to most distributions from qualified plans or
403(b) accounts that are not directly rolled over to another plan or XXX.
ACCOUNT TERMINATION
You may terminate your Traditional XXX or Xxxx XXX at any time after its
establishment by sending a completed withdrawal form (or other withdrawal
instructions in a form acceptable to the Trustee), or a transfer authorization
form, to:
LONGLEAF PARTNERS FUNDS
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Your Traditional XXX or 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 Traditional XXX or Xxxx XXX balance is received
and accepted by the Trustee or, if later, the termination date specified in
the withdrawal form.
- The date the Traditional XXX or Xxxx XXX ceases to qualify under the tax
code. This will be deemed a termination.
- The transfer of the Traditional XXX or Xxxx XXX to another trustee/custodian.
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30
- The rollover of the amounts in the Traditional XXX or Xxxx XXX to another
trustee/custodian.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your XXX upon termination of the account will be
treated as a withdrawal, and thus the rules relating to Traditional XXX or Xxxx
XXX withdrawals will apply. For example, if the XXX is terminated before you
reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
XXX DOCUMENTS
TRADITIONAL XXX
The terms contained in Articles I to VII of Part One of the State Street Bank
and Trust Company Universal Individual Retirement Trust Account document have
been promulgated by the IRS in Form 5305 for use in establishing a Traditional
XXX Trust Account that meets the requirements of Code Section 408(a) for a valid
Traditional XXX. This IRS approval relates only to the form of Articles I to VII
and is not an approval of the merits of the Traditional XXX or of any investment
permitted by the Traditional XXX.
XXXX XXX
The terms contained in Articles I to VII of Part Two of the State Street Bank
and Trust Company Universal Individual Retirement Account Trust Agreement have
been promulgated by the IRS in Form 5305-R for use in establishing a Xxxx XXX
Trust 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.
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
Traditional XXX or a Xxxx XXX, will be acceptable to the IRS. However, if the
IRS makes a ruling, or if Congress enacts legislation, regarding the use of
different documentation, State Street Bank will forward to you new documentation
for your Traditional XXX or a Xxxx XXX (as appropriate) for you to read and, if
necessary, an appropriate new Adoption Agreement to sign. By adopting a
Traditional XXX or a Xxxx XXX using these materials, you acknowledge this
possibility and agree to this procedure if necessary. In all cases, to the
extent permitted State Street Bank will treat your XXX as being opened on the
date your account was opened using the Adoption Agreement in this Kit.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number.
Longleaf Partners Funds
P. O. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
28
00
XXXXX XXXXXX XXXX AND
TRUST COMPANY UNIVERSAL
INDIVIDUAL RETIREMENT
ACCOUNT TRUST
AGREEMENT
PART ONE: PROVISIONS
APPLICABLE TO
TRADITIONAL IRAS
The following provisions of Articles I to VII are in the form promulgated by the
Internal Revenue Service in Form 5305 (Rev. January 1998) for use in
establishing an individual retirement trust account.
ARTICLE I.
The Trustee may accept additional cash contributions on behalf of the Grantor
for a tax year of the Grantor. 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 Grantor's interest in the balance in the trust account is nonforfeitable.
ARTICLE III.
1. No part of the trust funds may be invested in life insurance contracts, nor
may the assets of the trust 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 trust funds may be invested in collectibles (within the
meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold, silver and platinum coins,
coins issued under the laws of any state, and certain bullion.
ARTICLE IV.
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Grantor's interest in the trust 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 Grantor 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 Grantor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Grantor's entire interest in the trust account must be, or begin to be,
distributed by the Grantor's required beginning date, the April 1 following
the calendar year end in which the Grantor reaches age 70 1/2. By that date,
the Grantor may elect, in a manner acceptable to the Trustee, to have the
balance in the trust 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 Grantor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of the
Grantor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the Grantor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may
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not be longer than the joint life and last survivor expectancy of the
Grantor and his or her designated beneficiary.
4. If the Grantor 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 Grantor 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 Grantor dies before distribution of his or her interest has begun,
the entire remaining interest will, at the election of the Grantor or, if
the Grantor has not so elected, at the election of the beneficiary or ben-
eficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Grantor'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 Grantor's death. If,
however, the beneficiary is the Grantor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which the Grantor would have reached 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
Grantor's required beginning date, even though payments may actually have
been made before that date.
(d) If the Grantor 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 Grantor's entire interest in the trust account as of the
close of business on December 31 of the preceding year by the life
expectancy of the Grantor (or the joint life and last survivor expectancy
of the Grantor and the Grantor'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
Grantor and designated beneficiary as of their birthdays in the year the
Grantor 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 Grantor agrees to provide the Trustee with information necessary for the
Trustee to prepare any reports required under section 408(i) and Regulations
sections 1.408-5 and 1.408-6.
2. The Trustee agrees to submit reports to the Internal Revenue Service and the
Grantor 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.
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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 Retirement Account
Application.
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-R (January 1998) for use in establishing a
Xxxx Individual Retirement Trust Account.
ARTICLE I
1. If this Xxxx XXX is not designated as a Xxxx Conversion XXX, then, except
in the case of a rollover contribution described in section 408A(e), the
Trustee will accept only cash contributions and only up to a maximum amount
of $2,000 for any tax year of the Grantor.
2. If this Xxxx XXX is designated as a Xxxx Conversion XXX, no contributions
other than XXX Conversion Contributions made during the same tax year will
be accepted.
ARTICLE IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Grantor, the $2,000
annual contribution is phased out between AGI of $95,000 and $110,000; for a
married Grantor who files jointly, between AGI of $150,000 and $160,000; and for
a married Grantor who files separately, between $0 and $10,000. In case of a
conversion, the Trustee will not accept XXX Conversion Contributions in a tax
year if the Grantor's AGI for that tax year exceeds $100,000 or if the Grantor
is married and files a separate return. Adjusted gross income is defined in
section 408A(c)(3) and does not include XXX Conversion Contributions.
ARTICLE II
The Grantor's interest in the balance in the trust account is nonforfeitable.
ARTICLE III
1. No part of the trust funds may be invested in life insurance contracts, nor
may the assets of the trust 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 trust 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 Grantor dies before his or her entire interest is distributed to him
or her and the Grantor's surviving spouse is not the sole beneficiary, the
entire remaining interest will, at the election of the Grantor or, if the
Grantor 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 Grantor'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
Grantor'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 Grantor's entire interest in the
trust account as of the close of business on December 31 of the preceding
year by the life expectancy of the designated beneficiary using the
attained age of the designated beneficiary as of the beneficiary's birthday
in the year distributions are required to commence and subtract 1 for each
subsequent year.
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3. If the Grantor's spouse is the sole beneficiary on the Grantor's date of
death, such spouse will then be treated as the Grantor.
ARTICLE V
1. The Grantor agrees to provide the Trustee with information necessary for
the Trustee 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 Trustee agrees to submit reports to the Internal Revenue Service and
the Grantor 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 TRADITIONAL
IRAS AND XXXX IRAS
ARTICLE VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Trust 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 Trust Agreement and the Retirement Account
Application signed by the Grantor. The Account may be a Traditional
Individual Retirement Account or a Xxxx Individual Retirement Account, as
specified by the Grantor. See Section 24 below.
"Trustee" 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 Grantor'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 the Plan Administrative Agent, which is PFPC, Inc.
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 Longleaf Partners Funds Trust.
2. The Grantor may revoke the Trust Account established hereunder by mailing
or delivering a written notice of revocation to the Trustee within seven
days after the Grantor receives the Disclosure Statement related to the
Trust Account. Mailed notice is treated as given to the Trustee on date of
the postmark (or on the date of Post Office certification or registration
in the case of notice sent by certified or
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registered mail). Upon timely revocation, the Grantor's initial
contribution will be returned, without adjustment for administrative
expenses, commissions or sales charges, fluctuations in market value or
other changes.
The Grantor may certify in the Retirement Account Application that the
Grantor received the Disclosure Statement related to the Trust Account at
least seven days before the Grantor signed the Retirement Account
Application to establish the Trust Account, and the Trustee may rely upon
such certification.
3. All contributions to the Trust Account shall be invested and reinvested in
full and fractional shares of one or more Funds. All such shares shall be
issued and accounted for as book entry shares, and no physical shares or
share certificate will be issued. Such investments shall be made in such
proportions and/or in such amounts as Grantor from time to time in the
Retirement Account Application 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 Grantor 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 Grantor as required or,
if received, are unclear or incomplete in the opinion of the Service
Company, the contribution will be returned to the Grantor, or will be held
uninvested (or invested in a money market fund if available) pending
clarification or completion by the Grantor, in either case without
liability for interest or for loss of income or appreciation. If any other
directions or other orders by the Grantor with respect to the sale or
purchase of shares of one or more Funds for the Trust 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 Grantor.
All investment directions by Grantor 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 Grantor'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 Grantor may at any time
direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the Grantor's Account for shares and fractional shares
of one or more other Funds. The Grantor 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 Grantor'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 Grantor's
investment directions to the transfer agent for the Fund(s).
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Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Grantor'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 Grantor's Trust Account. Any
account maintained in connection herewith shall be in the name of the
Trustee for the benefit of the Grantor. All assets of the Trust Account
shall be registered in the name of the Trustee or of a suitable nominee.
The books and records of the Trustee shall show that all such investments
are part of the Trust Account.
The Trustee shall maintain or cause to be maintained adequate records
reflecting transactions of the Trust Account. In the discretion of the
Trustee, records maintained by the Service Company with respect to the
Account hereunder will be deemed to satisfy the Trustee's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the
Trustee with any information the Trustee requires to carry out the
Trustee's recordkeeping responsibilities.
7. Neither the Trustee nor any other party providing services to the Trust
Account will have any responsibility for rendering advice with respect to
the investment and reinvestment of Grantor's Trust Account, nor shall such
parties be liable for any loss or diminution in value which results from
Grantor's exercise of investment control over his Trust Account. Grantor
shall have and exercise exclusive responsibility for and control over the
investment of the assets of his Trust Account, and neither Trustee 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 Trust Account.
8. The Grantor may in writing appoint an investment adviser with respect to
the Trust Account on a form acceptable to the Trustee and the Service
Company. The investment adviser's appointment will be in effect until
written notice to the contrary is received by the Trustee and the Service
Company. While an investment adviser's appointment is in effect, the
investment adviser 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 Grantor.
The Grantor's appointment of any investment adviser will also be deemed to
be instructions to the Trustee and the Service Company to pay such
investment adviser's fees to the investment adviser from the Trust Account
hereunder without additional authorization by the Grantor or the Trustee.
9. (a) Distribution of the assets of the Trust Account shall be made at such
time and in such form as Grantor (or the Beneficiary if Grantor is
deceased) shall elect by written order to the Trustee. Grantor
acknowledges that any distribution of a taxable amount from the Trust
Account (except for distribution on account of Grantor's disability or
death, return of an "excess contribution" referred to in Code Section
4973, or a "rollover" from this Trust Account) made earlier than age
59 1/2 may subject Grantor to an "additional tax on early distributions"
under Code Section 72(t) unless an exception to such additional tax is
applicable. For that purpose, Grantor will be considered disabled if
Grantor can prove, as provided in Code Section 72(m)(7), that Grantor is
unable to engage in any substantial
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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
Grantor (or the Beneficiary) by appropriate distribution instructions to
the Trustee to insure that any applicable distribution requirements of
Code Section 401(a)(9) and Article IV above are met. If the Grantor (or
Beneficiary) does not direct the Trustee to make distributions from the
Trust Account by the time that such distributions are required to commence
in accordance with such distribution requirements, the Trustee (and
Service Company) shall assume that the Grantor (or Beneficiary) is meeting
the minimum distribution requirements from another individual retirement
arrangement maintained by the Grantor (or Beneficiary) and the Trustee and
Service Company shall be fully protected in so doing. The Grantor (or the
Grantor'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 Grantor and/or the
Grantor's surviving spouse, as applicable, will not be recalculated; any
such election may be in such form as the Grantor (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 Grantor and surviving spouse and
instructions for withdrawals to the Trustee in accordance with such
method). Notwithstanding any other provision 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.
(b) The Grantor acknowledges (i) that any withdrawal from the Trust Account
will be reported by the Trustee in accordance with applicable IRS
requirements (currently, on Form 1099-R), (ii) that the information
reported by the Trustee will be based on the amounts in the Trust Account
and will not reflect any other individual retirement accounts the Grantor
may own and that, consequently, the tax treatment of the withdrawal may be
different than if the Grantor had no other individual retirement accounts,
and (iii) that, accordingly, it is the responsibility of the Grantor to
maintain appropriate records so that the Grantor (or other person ordering
the distribution) can correctly compute all taxes due. Neither the Trustee
nor any other party providing services to the Trust Account assumes any
responsibility for the tax treatment of any distribution from the Trust
Account; such responsibility rests solely with the person ordering the
distribution.
10. The Trustee assumes (and shall have) no responsibility to make any
distribution except upon the written order of Grantor (or Beneficiary if
Grantor is deceased) containing such information as the Trustee may
reasonably request. Also, before making any distribution or honoring any
assignment of the Trust Account, Trustee 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 Trustee, but Trustee 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 Trustee 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 Trustee's records, and such distribution shall to the extent
thereof completely discharge the Trustee's liability for such payment.
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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 Trustee for use in connection with the Trust Account, signed by the
designating person, and filed with the Trustee. 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 Trust 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 Trust
Account not disposed of by the designation form. The form last accepted
by the Trustee before such distribution is to commence, provided it was
received by the Trustee (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 Trust
Account, thereupon shall revoke all such forms previously filed by that
person. The term "designating person" means Grantor during his/her
lifetime; after Grantor's death, it also means Grantor's spouse, but only
if the spouse elects to treat the Trust Account as the spouse's own Trust
Account in accordance with applicable provisions of the Code.
(b) When and after distributions from the Trust Account to Grantor's
Beneficiary commence, all rights and obligations assigned to Grantor
hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of Grantor.
(c) Notwithstanding Section 3 of Article IV of Part Two above, if the Grantor's
spouse is the sole Beneficiary on the Grantor's date of death, the spouse
will not be treated as the Grantor if the spouse elects not to be so
treated. In such event, the Trust Account will be distributed in accordance
with the other provisions of such Article IV, except that distributions to
the Grantor's spouse are not required to commence until December 31 of the
year in which the Grantor would have turned age 70 1/2.
12. (a) The Grantor agrees to provide information to the Trustee at such time
and in such manner as may be necessary for the Trustee 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 Trustee or the Service Company will submit reports to the Internal
Revenue Service and the Grantor at such time and manner and containing such
information as is prescribed by the Internal Revenue Service.
(c) The Grantor, Trustee and Service Company shall furnish to each other such
information relevant to the Trust 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
Trust Account.
(d) The Grantor shall file any reports to the Internal Revenue Service which
are required of him by law (including Form 5329), and neither the Trustee
nor Service Company shall have any duty to advise Grantor concerning or
monitor Grantor's compliance with such requirement.
13. (a) Grantor retains the right to amend this Trust 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 Trustee by registered or certified mail, unless Trustee waives
notice as to such amendment. If the Trustee does not wish to continue
serving as such under this Trust Account document as so amended, it may
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resign in accordance with Section 17 below.
(b) Grantor delegates to the Trustee the Grantor's right so to amend, provided
(i) the Trustee does not change the investments available under this Trust
Agreement and (ii) the Trustee amends in the same manner all agreements
comparable to this one, having the same Trustee, 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 Trustee in order to conform this Trust 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 Trustee.
Such an amendment by the Trustee shall be communicated in writing to
Grantor, and Grantor shall be deemed to have consented thereto unless,
within 30 days after such communication to Grantor is mailed, Grantor
either (i) gives Trustee a written order for a complete distribution or
transfer of the Trust Account, or (ii) removes the Trustee and appoints a
successor under Section 17 below.
Pending the adoption of any amendment necessary or desirable to conform
this Trust Account document to the requirements of any amendment to any
applicable provision of the Internal Revenue Code or regulations or rulings
thereunder, the Trustee and the Service Company may operate the Grantor's
Trust Account in accordance with such requirements to the extent that the
Trustee 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 Trustee without
its prior written consent.
(d) This Section 13 shall not be construed to restrict the Trustee'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) Trustee shall terminate the Trust Account if this Agreement is
terminated or if, within 30 days (or such longer time as Trustee may
agree) after resignation or removal of Trustee under Section 17, Grantor
or Sponsor, as the case may be, has not appointed a successor which has
accepted such appointment. Termination of the Trust Account shall be
effected by distributing all assets thereof in a single payment in cash or
in kind to Grantor, subject to Trustee's right to reserve funds as
provided in Section 17.
(b) Upon termination of the Trust Account, this trust 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 Trust Account and this
document), and Trustee shall be relieved from all further liability
hereunder or with respect to the Trust Account and all assets thereof so
distributed.
15. (a) In its discretion, the Trustee may appoint one or more contractors or
service providers to carry out any of its functions and may compensate
them from the Trust Account for expenses attendant to those functions. In
the event of such appointment, all rights and privileges of the Trustee
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 Grantor and for dealing with or for-
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warding the same to the transfer agent for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Trustee or
Service Company (or any other party providing services to the Trust
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 Trust 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 Grantor and Grantor's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or after the
Trustee's resignation or removal), the Trustee or Service Company shall
file with Grantor a written report or reports reflecting the transactions
effected by it during such period and the assets of the Trust Account at
its close. Upon the expiration of 60 days after such a report is sent to
Grantor (or Beneficiary), the Trustee 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 Grantor shall
have filed written objections with the Trustee or Service Company within
such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to Grantor 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 Trust 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 Grantor.
(f) Grantor shall always fully indemnify Service Company, Distributor, the
Fund(s), Sponsor and Trustee 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
Trustee'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 Trustee 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 Grantor, and unless fully indemnified for so doing to that
party's satisfaction.
(g) The Trustee 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 Trustee and Service Company may each conclusively rely upon and shall
be protected in acting upon any written order from Grantor or Beneficiary,
or any investment adviser 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, Trustee will carry out the requirements of any
apparently valid court order relating to the Trust Account and will incur
no liability or responsibility for so doing.
16. (a) The Trustee, in consideration of its services under this Agreement,
shall
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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 Trustee may
substitute a different fee schedule at any time upon 30 days' written
notice to Grantor. The Trustee 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 Grantor.
(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 Trust Account, that may be
levied or assessed in respect to such assets, and all other administrative
expenses incurred by the Trustee in the performance of its duties
(including fees for legal services rendered to it in connection with the
Trust Account) shall be charged to the Trust Account. If the Trustee is
required to pay any such amount, the Grantor (or Beneficiary) shall
promptly upon notice thereof reimburse the Trustee.
(c) All such fees and taxes and other administrative expenses charged to the
Trust 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 Trust Account (without liability for any loss
incurred thereby). Notwithstanding the foregoing, the Trustee or Service
Company may make demand upon the Grantor 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 Trustee, Grantor or Sponsor,
as the case may be, may remove it from its office hereunder. Such notice,
to be effective, shall designate a successor trustee and shall be
accompanied by the successor's written acceptance. The Trustee also may at
any time resign upon 30 days' prior written notice to Sponsor, whereupon
the Sponsor shall notify the Grantor (or Beneficiary) and shall appoint a
successor to the Trustee. In connection with its resignation hereunder,
the Trustee may, but is not required to, designate a successor trustee by
written notice to the Sponsor or Grantor (or Beneficiary), and the Sponsor
or Grantor (or Beneficiary) will be deemed to have consented to such
successor unless the Sponsor or Grantor (or Beneficiary) designates a
different successor trustee and provides written notice thereof together
with such a different successor's written acceptance by such date as the
Trustee specifies in its original notice to the Sponsor or Grantor (or
Beneficiary) (provided that the Sponsor or Grantor (or Beneficiary) will
have a minimum of 30 days to designate a different successor).
(b) The successor trustee 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 Trustee of written acceptance by its successor
of such successor's appointment, Trustee shall transfer and pay over to
such successor the assets of the Trust Account and all records (or copies
thereof) of Trustee pertaining thereto, provided that the successor trustee
agrees not to dispose of any such records without the Trustee's consent.
Trustee 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
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Trust Account or on or against the Trustee, with any balance of such
reserve remaining after the payment of all such items to be paid over to
the successor trustee.
(c) Any Trustee 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 Trustee 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 Trustee's records.
20. Grantor or Grantor's Beneficiary shall not have the right or power to
anticipate any part of the Trust Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Trust Account shall not be
liable for the debts of Grantor or Grantor'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 Trust Account to be used for or diverted to
purposes other than for the exclusive benefit of the Grantor or his/her
Beneficiary except to the extent required by law.
21. When accepted by the Trustee, 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 Trustee are located. Any action involving the
Trustee brought by any other party must be brought in a state or federal
court in such state.
If in the Retirement Account Application, Grantor designates that the
Trust Account is a Traditional XXX, this Agreement is intended to qualify
under Code Section 408(a) as an individual retirement Trust Account and to
entitle Grantor to the retirement savings deduction under Code Section 219
if available. If in the Retirement Account Application Grantor designates
that the Trust Account is a Xxxx XXX, this Agreement is intended to
qualify under Code Section 408A as a Xxxx individual retirement Trust
Account and to entitle Grantor to the tax-free withdrawal of amounts from
the Trust 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 Trustee shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Grantor is
referred to Grantor's attorney for any such assurances.
22. Grantor should seek advice from Grantor's attorney regarding the legal
consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Trust Account, and
ordering Trustee to make distributions from the Account. Grantor
acknowledges that Trustee 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 Trust 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 Trustee,
Service Company or another party, any such notice, instructions or other
communications may be given by telephonic, computer, other electronic or
40
43
other means, and the requirement for written notice will be deemed
satisfied.
24. The legal documents governing the Trust Account are as follows:
(a) If in the Retirement Account Application the Grantor designated the Trust
Account as a Traditional XXX under Code Section 408(a), the provisions of
Part One and Part Three of this Agreement and the provisions of the
Retirement Account Application are the legal documents governing the
Grantor's Trust Account.
(b) If in the Retirement Account Application the Grantor designated the Trust
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 Retirement
Account Application are the legal documents governing the Grantor's Trust
Account.
(c) In the Retirement Account Application the Grantor must designate the
Trustee Account as either a Xxxx XXX or a Traditional XXX, and a separate
account will be established for such XXX. One Trust Account may not serve
as a Xxxx XXX and a Traditional XXX (through the use of subaccounts or
otherwise).
(d) The Grantor acknowledges that the Service Company may require the
establishment of different Xxxx XXX accounts to hold annual contributions
under Code Section 408A(c)(2) and to hold conversion amounts under Code
Section 408A(c)(3)(B). The Service Company may also require the
establishment of different Xxxx XXX accounts to hold amounts converted in
different calendar years. If the Service Company does not require such
separate account treatment, the Grantor may make annual contributions and
conversion contributions to the same account.
25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305. It is
anticipated that, if and when the Internal Revenue Service promulgates
changes to Form 5305, the Trustee 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-R. It is
anticipated that, if and when the Internal Revenue Service promulgates
changes to Form 5305-R, the Trustee will amend this Agreement
correspondingly.
The Internal Revenue Service has endorsed the use of documentation
permitting a Grantor to establish either a Traditional XXX or Xxxx XXX
(but not both using a single Retirement Account Application), 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 Traditional XXX or a Xxxx XXX (as the case may be),
the Trustee will furnish the Grantor with replacement documents and the
Grantor will if necessary sign such replacement documents. Grantor
acknowledges and agrees to such procedures and to cooperate with Trustee
to preserve the intended tax treatment of the Account.
26. If the Grantor maintains an Individual Retirement Account under Code
section 408(a), Grantor may convert or transfer such other XXX to a Xxxx
XXX under Code section 408A using the terms of this Agreement and the
Retirement Account Application by completing and executing the Retirement
Account Application and giving suitable directions to the Trustee and the
trustee or custodian of such other XXX. Alternatively, the Grantor may
convert or transfer such other XXX to a Xxxx XXX by use of a reply card or
by telephonic, computer or electronic
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44
means in accordance with procedures adopted by the Trustee or Service
Company intended to meet the requirements of Code section 408A, and the
Grantor will be deemed to have executed the Retirement Account Application
and adopted the provisions of this Agreement and the Retirement Account
Application in accordance with such procedures.
In accordance with the requirements of Code Section 408A(d)(6) and
regulations thereunder, the Grantor may recharacterize a contribution to a
Traditional XXX as a contribution to a Xxxx XXX, or may recharacterize a
contribution to a Xxxx XXX as a contribution to a Traditional XXX. The
Grantor agrees to observe any limitations imposed by the Service Company
on the number of such transactions in any year (or any such limitations or
other restrictions that may be imposed by the Service Company or the IRS).
27. The Grantor 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 Grantor represents under penalties of perjury that his or her Social
Security number (or other Taxpayer Identification Number) as stated in the
Retirement Account Application is correct.
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45
Longleaf Partners Funds
x/x XXXX
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
(000) 000-0000
46
(LOGO) LONGLEAF PARTNERS FUNDS
Complete this form and return to:
PFPC Attn: Longleaf Partners Funds, X.X. Xxx 0000, Xxxxxxxxxx, XX 00000-0000.
(000) 000-0000
XXX TRANSFER & CONVERSION FORM
1. CURRENT TRUSTEE
--------------------------------------------------------------------------------
Name of Present Trustee/Trustee Telephone No.
--------------------------------------------------------------------------------
Account Number Mutual Fund (if applicable)
--------------------------------------------------------------------------------
Street or P.O. Box
--------------------------------------------------------------------------------
City, State, Zip Code
2. AMOUNT
___ I have established a new XXX account with Longleaf Partners Funds.
___ I have an existing XXX account with Longleaf Partners Funds.
Please include your existing fund and account #
---------------------------------------------------
Please transfer the assets (cash only) indicated below to State Street Bank and
Trust Company as successor trustee.
___ All Assets
___ A portion of assets totaling $ _______ only
3. INITIATE TRANSFER
Please transfer the amount indicated above:
___ At maturity date of / /
___ Immediately (I am aware of any penalties)
4. WITHHOLDING (for Xxxx Conversions only)
I ___ DO NOT want withholding taken from my conversion.
I ___ DO want withholding taken from my conversion.
Please withhold ___% or $_______ from my conversion.
(Unless otherwise indicated tax will be withheld at a rate of 10%)
5. ACCOUNT TYPE (Check One)
The amounts transferred will be a:
MINIMUM PER FUND
----------------
___ Transfer from a Regular XXX $10,000
___ Rollover from Qualified Employer Plan 10,000
___ Convert a Regular XXX to a Xxxx XXX 10,000
___ Transfer from a Xxxx Conversion XXX 10,000
Year of Initial Conversion. _________________
___ Transfer from Xxxx Contribution XXX 10,000
Year of Initial Contribution. _______________
___ SEP XXX 10,000
6. FUNDS (See minimums in Section 5)
PARTNERS FUND............. $ %
------------------ -------------
INTERNATIONAL FUND........ $ %
------------------ -------------
REALTY FUND............... $ %
------------------ -------------
SMALL-CAP FUND............ $ %
------------------ -------------
(Closed to New Investors)
7. ACCOUNT OWNER
( )
--------------------------------------------------------------------------------
Owner's Name Daytime Phone No.
--------------------------------------------------------------------------------
Street or P.O. Box
--------------------------------------------------------------------------------
City, State, Zip Code
8. SIGNATURE
I certify that I have established an XXX Account with Longleaf Partners Funds
meeting the requirements of the Internal Revenue Code and certify that the XXX
assets being transferred meet those same requirements.
--------------------------------------------------------------------------------
Owner's Signature Date
9. SIGNATURE GUARANTEE (if required by current trustee)
GUARANTOR'S STAMP
--------------------------------------------------------------------------------
Name of Institution
--------------------------------------------------------------------------------
Signature of Authorized Officer Date
--------------------------------------------------------------------------------
TO: THE ABOVE NAMED TRUSTEE:
(TO BE COMPLETED BY PFPC)
State Street Bank accepts its appointment as trustee for the above account.
Please forward a check, as directed above, payable to:
Longleaf Partners Funds, FBO ______________________________________
Reference No. _________ (please include this number on your check)
State Street Bank & Trust Company
------------------------------------------------------
Authorized Signature
Please mail to: LONGLEAF PARTNERS FUNDS
XX Xxx 0000
Xxxxxxxxxx, XX 00000-0000
--------------------------------------------------------------------------------
47
(LOGO) LONGLEAF PARTNERS FUNDS
Send completed application along with your check payable to Longleaf Partners
Funds, or transfer instructions to:
PFPC, Attn: Longleaf Partners Funds, X.X. Xxx 0000, Xxxxxxxxxx, XX 00000-0000.
(000) 000-0000
RETIREMENT ACCOUNT APPLICATION
1. APPLICANT
--------------------------------------------------------------------------------
Owner's Name (First, Initial, Last)
--------------------------------------------------------------------------------
Social Security Number Date of Birth (mo/day/yr)
2. MAILING ADDRESS
--------------------------------------------------------------------------------
Street or P. O. Box
--------------------------------------------------------------------------------
City, State, Zip Code
( )
--------------------------------------------------------------------------------
Day Time Telephone No.
3. ACCOUNT TYPE (CHECK ONE)
MINIMUM PER FUND
----------------
___ Transfer from a Regular XXX $10,000
___ Rollover from Qualified Employer Plan 10,000
___ Convert Regular XXX to Xxxx XXX 10,000
___ Transfer from a Xxxx Conversion XXX 10,000
Year of Initial Conversion. ____________________
___ Transfer from a Xxxx Contribution XXX 10,000
Year of Initial Contribution. __________________
___ SEP XXX 10,000
4. FUND: (Above minimums are for EACH Fund)
PARTNERS FUND.............. $ %
------------------ ----------
INTERNATIONAL FUND......... $ %
------------------ ----------
REALTY FUND................ $ %
------------------ ----------
SMALL-CAP FUND............. $ %
------------------ ----------
(Closed to New Investors)
TOTAL INVESTMENT........... $ 100%
------------------ ----------
5. BENEFICIARIES
I designate the individual(s) named below as the beneficiaries of this XXX. I
understand that I may change or add beneficiaries at any time by written notice.
If I am not survived by any beneficiary, my beneficiary shall be my estate.
PRIMARY BENEFICIARY (1)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Social Security No. Date of Birth
--------------------------------------------------------------------------------
Relationship % of assets
PRIMARY BENEFICIARY (2)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Social Security No. Date of Birth
--------------------------------------------------------------------------------
Relationship % of assets
SECONDARY BENEFICIARY (1)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Social Security No. Date of Birth
--------------------------------------------------------------------------------
Relationship % of assets
SECONDARY BENEFICIARY (2)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Social Security No. Date of Birth
--------------------------------------------------------------------------------
Relationship % of assets
--------------------------------------------------------------------------------
48
6. SPOUSAL CONSENT TO BENEFICIARY DESIGNATION
(This section should be reviewed if the account holder is married, is a resident
of a community property or marital property state, and designates a beneficiary
other than the spouse. It is the account holder's responsibility to determine if
this section applies. The account holder may need to consult with legal counsel.
Neither the Trustee nor the Sponsor is liable for any consequences resulting
from a failure of the account holder to provide proper spousal consent.)
I am the spouse of the above named account holder. I acknowledge that I have
received a full and reasonable disclosure of my spouse's property and financial
obligations. Due to any possible consequences of giving up my community property
interest in this XXX, I have been advised to see a tax professional or legal
advisor.
I hereby consent to the beneficiary designation(s) indicated above. I assume
full responsibility for any adverse consequence that may result. No tax or legal
advice was given to me by the Trustee or Sponsor.
--------------------------------------------------------------------------------
Signature of Spouse Date
--------------------------------------------------------------------------------
Signature of Witness (other than account holder) Date
7. INSTRUCTIONS
I. Designate the amounts to be invested in each
Fund.
II. The investment minimum of $10,000 per fund account must be
satisfied by transferring or converting assets from another
XXX.
III. Please send this application and the transfer form or a
check to the address on the front of this form.
8. DUPLICATE SHAREHOLDER STATEMENTS
Complete only if you would like the person named below to receive copies of your
account statements.
--------------------------------------------------------------------------------
Name (First, Initial, Last)
--------------------------------------------------------------------------------
Company Name
--------------------------------------------------------------------------------
Street or P.O. Box Number
--------------------------------------------------------------------------------
City, State, Zip Code
9. TELEPHONE EXCHANGE ($100,000 Maximum)
Exchanges can be made only between Longleaf accounts that have the same
registration. You may decline this option by checking the box below.
--- I do NOT want telephone exchange privileges.
10. SIGNATURE
BY SIGNING BELOW I:
(1) establish an Individual Retirement Account pursuant to the Internal Revenue
Code of 1986, as amended, and in accordance with all the terms of the Trust
Agreement on Form 5305 or 5305-R; (2) certify that all contributions to the XXX
meet the requirements of the code governing such contributions; (3) appoint
State Street Bank and Trust, or its successor as trustee on the account; (4)
agree that I have received, read, accept, and specifically incorporate herein
the Trust Agreement on Form 5305 or 5305-R and the XXX Disclosure Statement; (5)
agree to promptly give instructions to the trustee necessary to enable the
trustee to carry out its duties under the Trust Agreement; and (6) agree that I
have received and read the prospectus for the investment(s) selected and
understand its terms, as amended from time to time, are incorporated in this
application by reference and that this account will be subject to the Trust
Agreement as amended from time to time.
I acknowledge that any amount converted from a Regular XXX to a Xxxx XXX will be
treated as taxable income for federal income tax purposes. If a rollover from a
Xxxx XXX, I certify that information given is correct.
I authorize the Fund to act upon instructions believed to be genuine and in
accordance with the procedures described in the prospectus for this account and
any account into which exchanges are made. I agree that neither the Funds, the
Plan Administrative Agent, nor State Street Bank and Trust will be liable for
any loss, cost, or expense for acting on instructions, provided such entities
employ reasonable procedures to confirm that such instructions are genuine.
I CERTIFY THAT THE TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS APPLICATION IS
CORRECT.
--------------------------------------------------------------------------------
Signature of Applicant Date
TRUSTEE ACCEPTANCE. State Street Bank and Trust Company will accept appointment
as Trustee of the Grantor's Account. However, this Agreement is not binding upon
the Trustee until the Grantor has received a statement confirming the initial
transaction for the Account. Receipt by the Grantor of a confirmation of the
purchase of the Fund shares indicated above will serve as notification of State
Street Bank's acceptance of appointment as Trustee of the Account.
State Street Bank and Trust Company
--------------------------------------------------------------------------------
Signature of Trustee
PROSPECT I.D. NUMBER (For Internal Use Only)
