STATE FARM FUNDS
INDIVIDUAL RETIREMENT ACCOUNT PLAN
CUSTODIAL ACCOUNT AGREEMENT
INTRODUCTION
The Participant and Commerce Bank, Bloomington, Illinois (hereinafter
referred to as "Custodian"), by signing the Application have created this
Custodial Account Agreement (hereinafter referred to as the "Agreement"). The
Application is hereby made a part of this Agreement.
This Agreement has been established in accordance with the State Farm Funds
Individual Retirement Account Plan (hereinafter referred to as the "Plan"). In
the event of any conflict between the provisions of the Plan and those of this
Agreement, the latter shall prevail.
Participation in the Plan is limited to individuals who qualify to purchase
shares in the State Farm Funds, i.e. Agents and Employees of the State Farm
Insurance Companies and their family members. In the event the Participant
becomes ineligible to purchase shares in the State Farm Funds, no additional
contributions may be made to the Custodial Account established under this
Agreement until the Participant again becomes eligible to purchase such
shares.
The Custodial Account is intended to qualify as an "individual retirement
account" within the meaning of section 408 of the Internal Revenue Code of
1986, as amended or any successor statute. The Participant has made an initial
contribution (or authorized a compensation deduction) to the Custodial Account
as indicated on the Application. The Participant and Custodian agree that the
terms and conditions of the Custodial Account are as set forth in this
Agreement.
ARTICLE I DEFINITIONS
1.1 Participant means the individual who has signed the Application and
makes contributions in the manner prescribed herein.
1.2 Custodian means Commerce Bank, Bloomington, Illinois, and any
successor thereto as herein provided.
1.3 State Farm Fund or State Farm Funds means the Investment Company or
Companies specified in the Application, in which assets of the Plan may be
invested; provided that no Investment Company will be deemed available for
investment hereunder (i) prior to the date the prospectus for such Investment
Company discloses such availability, or (ii) with respect to any Participant
who resides in any state with respect to which shares of the Investment
Company are not available for sale.
1.4 Shares means shares of common stock of the State Farm Funds.
1.5 Plan means the State Farm Funds Individual Retirement Account Plan and
any amendments thereof.
1.6 Plan Sponsor means State Farm Interim Fund, Inc.
ARTICLE II ESTABLISHMENT OF PARTICIPANT'S CUSTODIAL ACCOUNT
2.1 The Custodian shall establish and maintain a Custodial Account for the
sole benefit of Participant and his/her Beneficiaries. The Custodial Account
shall be kept in a manner which will permit an accurate determination of the
contributions and any other transactions made by the Participant. The
Participant shall promptly notify the Custodian in writing of any change in
Participant's name or address.
ARTICLE III CONTRIBUTIONS
3.1 ACCEPTANCE OF CONTRIBUTIONS. The Custodian may accept contributions by
check or compensation deduction as deposits to the Custodial Account from or
on behalf of Participant, except as limited by paragraphs 3.2 and 3.3 of this
Article and paragraph 3.1 of the Plan.
3.2 AMOUNTS OF CONTRIBUTIONS. Except in the case of a Rollover
Contribution, the Custodian will not accept contributions from or on behalf of
the Participant in excess of $2,000 for any taxable year of the Participant.
Contributions for a given taxable year may be made during such year or not
later than the time prescribed by law for filing Participant's Federal income
tax return for such taxable year (not including extensions of time for
filing). All contributions (except Rollover Contributions as described in
Section V of the Plan) must be made by check or compensation deduction and are
subject to the minimum investment requirements established by the State Farm
Funds. Contributions shall be invested pursuant to written instructions on a
form provided (or permitted) by the Custodian specifying the State Farm Fund
in which they are to be invested. If the Participant becomes ineligible to
purchase Shares of the State Farm Funds in accordance with eligibility rules
established from time to time by the State Farm Funds, the Custodian shall not
accept contributions to the Custodial Account during the period of such
ineligibility.
3.3 ROLLOVER CONTRIBUTIONS. The Custodian may accept Rollover
Contributions as a deposit to the Custodial Account, as described in Section V
of the Plan. The Participant shall execute such forms as the Custodian may
require describing the source of the Rollover Contribution. The Custodian may
not accept certain Rollover Contributions as described in paragraph 5.3 of the
Plan.
ARTICLE IV NONFORFEITABLE
4.1 The interest of the Participant in the balance in the Custodial
Account shall at all times be nonforfeitable, but shall be subject to the
fees, expenses and charges described in Article VII.
ARTICLE V INVESTMENT OF ASSETS OF CUSTODIAL ACCOUNT
5.1 INVESTMENT OF CONTRIBUTIONS. The Custodian shall invest all
contributions in Shares of the State Farm Funds as directed by Participant on
a form provided or permitted by the Custodian. If such directions are not
received by Custodian; or are received but are, in the opinion of the
Custodian, unclear; or if the accompanying contribution exceeds $2,000 and is
not identified as a Rollover Contribution; or if the Participant is ineligible
to purchase Shares; the Custodian may hold or return all of the contribution
uninvested without liability for loss of income or appreciation and without
liability for interest pending receipt of proper instructions or
clarification.
5.2 CHANGE OF INVESTMENT. A Participant (or a Beneficiary of a deceased
Participant) may change the State Farm Fund in which his/her account is
invested by filing with the Custodian directions on such form as is provided
or permitted by the Custodian at such times as the Participant (or a
Beneficiary of a deceased Participant) shall deem appropriate. No such change
of investment shall be effective until received by the Custodian and, once
effective, shall remain in effect until properly changed.
5.3 DIVIDENDS AND DISTRIBUTIONS. All income dividends and capital gain
distributions received in respect of Shares held in the Custodial Account
shall be reinvested in Shares of the State Farm Funds from which they were
received and such Shares shall be credited to the Custodial Account. Such
reinvestment shall be made on the date specified by the State Farm Funds for
reinvestment of the distributions. If any distributions may be received at the
election of the shareowner in additional Shares or in cash, the Custodian
shall elect to receive such distributions in additional Shares.
5.4 REGISTRATION AND OWNERSHIP OF SHARES. Shares acquired by the Custodian
shall be registered in the name of the Custodian or its nominee. The Custodian
shall deliver, or cause to be delivered, to Participant all prospectuses,
confirmations, notices, reports or other material as may be required under
applicable securities laws. The Custodian shall not vote any such Shares
except in accordance with written instructions received from Participant.
5.5 MISCELLANEOUS
(a) The Custodian does not undertake to render any investment advice
to the Participant. The responsibility of the Custodian to invest in Shares is
not an endorsement of any State Farm Fund.
(b) Anything to the contrary notwithstanding, no part of the assets of
the Custodial Account shall be invested in life insurance contracts; nor may
the assets of the Custodial Account be invested in collectibles as defined in
Section 408(m) of the Internal Revenue Code; nor may the assets of the
Custodial Account be commingled with other property except in a common trust
fund or common investment fund (within the meaning of section 408(a) (5) of
the Internal Revenue Code).
ARTICLE VI PAYMENT OF BENEFITS
6.1 DISTRIBUTIONS. The entire interest of the Participant in the Custodial
Account must be, or commence to be, distributed no later than April 1 of the
calendar year following the calendar year in which the Participant attains age
70 1/2. Not later than such time, the Participant may elect, in a form and at
such time as may be acceptable to the Custodian, to have his/her interest in
the Custodial Account distributed in the manner provided in Section IV of the
Plan. If the Participant fails or is unable to elect one of the methods of
distribution described in Section IV of the Plan on or before April 1 of the
calendar year following the calendar year in which Participant attains age
70 1/2, then the Custodian shall make such distribution of benefits pursuant to
subparagraph 4.2(i) of the Plan.
6.2 PAYMENT ON DISABILITY. If the Participant becomes disabled (as defined
in section 72(m)(7) of the Internal Revenue Code or any successor provision),
the Custodian shall distribute the Participant's interest in the Custodial
Account in the manner provided in paragraph 4.8 of the Plan.
6.3 PAYMENT ON DEATH. If Participant dies before distribution of his/her
interest has begun, or if Participant dies after distribution has commenced
but before the entire interest has been distributed, the Custodian shall
distribute the remaining interest in the Custodial Account in the manner
provided in paragraph 4.6 of the Plan.
6.4 PREMATURE DISTRIBUTION. Premature distributions from the Custodial
Account may be subject to a penalty under section 72(t) of the Internal
Revenue Code; the Custodian assumes no responsibility for the tax treatment of
any distribution from the Custodial Account; such responsibility is solely
that of the Participant ordering the distribution.
6.5 EXCESS CONTRIBUTIONS. Anything herein to the contrary notwithstanding,
if the Custodian should at any time receive written notice from the
Participant that any contribution made by or on behalf of the Participant was
an Excess Contribution (as described in section 408(d)(4) of the Internal
Revenue Code) and Participant directs that such Excess Contribution should be
distributed to him/her, the Custodian shall distribute to the Participant from
the Custodial Account the amount of such Excess Contribution and, if withdrawn
pursuant to section 408(d)(4) of the Internal Revenue Code, the net income
attributable thereto in Shares or cash, in the sole discretion of the
Custodian.
6.6 LOSS OF EXEMPTION. On written notice from the Participant or the
Internal Revenue Service to the Custodian that for any taxable year the
Participant's account has lost its exemption, including loss of exemption as
provided in section 408(e)(2) of the Internal Revenue Code, the Custodian
shall, on or before the close of the ninety-day period beginning with the date
of the receipt of such notice, distribute to such Participant the
Participant's entire interest in the Custodial Account in Shares or cash in
the sole discretion of the Custodian. The Custodian is authorized, however, to
reserve funds as described in paragraph 10.1.
6.7 CONFIRMATIONS. The Custodian will confirm to the Participant the
redemption of Shares made pursuant to any distribution from the Custodial
Account.
ARTICLE VII CUSTODIAN FEES AND EXPENSES OF THE ACCOUNT
7.1 ANNUAL MAINTENANCE FEE. With the consent in writing of the Plan
Sponsor, the Custodian may impose an Annual Maintenance Fee from time to time
on at least forty-five (45) days' notice in writing to the Participant.
7.2 PAYMENT OF FEES AND EXPENSES. Any income, gift, estate, inheritance
taxes and other taxes of any kind whatsoever that may be levied upon or
assessed against or in respect of the Custodial Account, the Annual
Maintenance Fee, and all administrative expenses incurred by the Custodian in
the performance of its duties, including fees for legal services rendered to
the Custodian, shall be paid from the assets of the Custodial Account. The
Custodian may, at its option, collect any amounts so charged from the amount
of any contribution or distribution from the Custodial Account or by sale or
liquidation of the Shares credited to the Custodial Account and, if the assets
of the Custodial Account are insufficient to satisfy such charges, the
Participant shall pay any deficit therein to the Custodian.
ARTICLE VIII REPORTING AND DISCLOSURE
8.1 INFORMATION. The Participant agrees to provide information to the
Custodian at such time and in such manner and containing such information as
may be necessary for the Custodian to prepare any reports required by the
Internal Revenue Service.
8.2 REPORTS. The Custodian agrees to submit reports to the Internal
Revenue Service and the Participant at such time and in such manner and
containing such information as is prescribed by the Internal Revenue Service.
ARTICLE IX ADDITIONAL PROVISIONS REGARDING THE CUSTODIAN
9.1 CUSTODIAL ACCOUNT STATEMENTS. The Custodian shall keep accurate and
detailed records of all transactions it is required to perform hereunder.
Within sixty (60) days after the close of each calendar year (or after the
Custodian's resignation or removal pursuant to Article X hereof), the
Custodian shall deliver to the Participant a written statement of the
transactions effected by the Custodian during such year (or period ending with
such resignation or removal) and the fair market value of the assets of the
Custodial Account as of the close of such year. Upon expiration of the sixty
(60) day period following the date on which the foregoing statement is
delivered by the Custodian, the Custodian shall (to the extent permitted by
applicable law) be forever released and discharged from all liability and
accountability to anyone with respect to its acts in transactions shown on or
reflected by such statement, except with respect to any such acts or
transactions as to which the Participant has filed written objections with the
Custodian within the sixty (60) day period. Nothing herein contained shall be
deemed to preclude the Custodian from its right to have its accounts
judicially settled by a court of competent jurisdiction.
9.2 MISCELLANEOUS
The Custodian shall not be liable and assumes no responsibility for
the collection of contributions provided for under the Plan, the deductibility
of any contributions, the purpose or propriety of any distribution made
pursuant to Article VI hereof, or any other action taken at a Participant's
direction, nor shall the Custodian have any duty or responsibility to
determine whether information furnished by a Participant is correct. To the
extent permitted by Federal law, nothing contained in the Plan, either
expressly or by implication, shall be deemed to impose any powers, duties or
responsibilities on the Custodian other than those set forth in this
Agreement.
The Custodian shall be indemnified and saved harmless by the
Participant from any and all liability whatsoever which may arise in
connection with this Agreement, except the obligation of the Custodian to
perform in accordance with the Agreement and with the applicable Federal law.
The Custodian shall be under no duty to take any action other than as
herein specified with respect to the Custodial Account unless the Participant
shall furnish the Custodian with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian. The
Custodian shall be under no duties to defend or engage in any suit with
respect to the Custodial Account unless the Custodian shall have first agreed
in writing to do so and shall have been fully indemnified to the satisfaction
of the Custodian. The Custodian shall be protected in acting upon any written
order or direction from a Participant or any other notice, request, consent,
certificate or any other instrument 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.
Before making any distribution in the case of the death of the
Participant, the Custodian shall be furnished with such certified death
certificates, inheritance tax releases, indemnity agreements and other
documents as may be required by the Custodian. Before making any distribution
in the case of the disability of a Participant, the Custodian shall be
furnished with proof of disability.
The Custodian shall be an agent for the Participant to receive and
invest contributions as directed by the Participant, hold and distribute such
investments, and keep adequate records and report thereon, all in accordance
with this Agreement. The parties do not intend to confer any fiduciary duties
on the Custodian, and none shall be implied. The Custodian may perform any of
its duties through other persons designated by the Custodian from time to
time, and the Custodian intends initially to delegate all such duties to State
Farm Investment Management Corp. No such delegation or future change therein
shall be considered as an amendment to this Agreement.
ARTICLE X RESIGNATION OF OR REMOVAL OF CUSTODIAN
10.1 The Custodian may resign at any time upon at least thirty (30) days'
notice in writing to the Participant and to the Plan Sponsor, and Custodian
and Participant agree that the Plan Sponsor may remove the Custodian at any
time upon at least thirty (30) days' notice in writing to the Custodian and
Participant. Upon such resignation or removal, the Plan Sponsor shall appoint
a Successor Custodian. Upon receipt by the Custodian of a written acceptance
of such appointment by a Successor Custodian, the Custodian shall transfer to
such Successor the assets of the Custodial Account and all records pertaining
thereto. The Custodian is authorized, however, to reserve such a portion of
such assets as it may deem advisable for payment of all its fees,
compensation, costs and expenses or for payment of any other liabilities
constituting a charge on or against the assets of the Custodial Account or on
or against the Custodian, with any balance of such reserve remaining after the
payment of all such items to be paid over to the Successor Custodian. The
Successor Custodian shall hold the assets paid over to it under the terms of
this Agreement.
10.2 The Custodian shall not be liable for the acts or omissions of any
Successor Custodian.
10.3 The Custodian and every Successor Custodian appointed to serve under
this Agreement, must be a bank as defined in section 408(n) of the Internal
Revenue Code or such other person who demonstrates to the satisfaction of the
Secretary of the Treasury or his delegate that the manner in which such other
person will administer the Custodial Account will be consistent with the
requirements of section 408 of the Internal Revenue Code.
10.4 After the Custodian has transferred the Custodial Account assets
(including any reserve balance as contemplated above) to the Successor
Custodian, the Custodian shall be relieved of all further liability with
respect to this Agreement, the Custodial Account and the assets thereof.
ARTICLE XI TERMINATION OF CUSTODIAL ACCOUNT
11.1 TERMINATION BY CUSTODIAN. The Custodian may elect to terminate the
Custodial Account if, within sixty (60) days after its resignation or removal
pursuant to Article X, the Plan Sponsor has not appointed a Successor
Custodian which has accepted such appointment. Termination of the Custodial
Account shall be effected by distributing to Participant all assets of the
Custodial Account in a lump-sum payment in cash or Shares, at the sole
discretion of Custodian, subject to Custodian's right to reserve funds as
described in paragraph 10.1.
11.2 TERMINATION BY PARTICIPANT. The Participant may elect to terminate the
Custodial Account at any time, provided such election is made concurrently
with Participant's election to terminate the Plan pursuant to paragraph 9.2 of
the Plan. Participant shall give written notice of his/her election to
terminate the Custodial Account to the Custodian by registered or certified
mail. After receipt of such notice,the Custodian shall terminate the Custodial
Account and distribute all assets in the Custodial Account pursuant to
directions furnished by Participant and agreed to by Custodian. If Participant
fails or is unable to furnish such directions, the Custodian shall distribute
to Participant all assets of the Custodial Account in a lump-sum payment in
cash or Shares, at the sole discretion of Custodian, subject to Custodian's
right to reserve funds as described in paragraph 10.1.
11.3 TERMINATION OF AGREEMENT. Upon distribution of all assets of the
Custodial Account in accordance with the provisions of paragraphs 11.1 or
11.2, this Agreement shall terminate and have no further force and effect. The
Custodian shall be relieved from all further liability with respect to this
Agreement, the Custodial Account and all assets thereof so distributed.
ARTICLE XII AMENDMENT
12.1 Subject to the provisions of paragraphs 12.2, 12.3, and 12.4, the
Participant and Custodian agree that the Plan Sponsor may, at any time,
unilaterally amend this Agreement in any respect (including retroactive
amendments). Any such Amendment shall be effective on a stated date which
shall be at least sixty (60) days after giving written notice of the Amendment
(including its exact terms) to Participant and Custodian. The Participant and
Custodian shall be deemed to have consented to such Amendment unless, within
thirty (30) days after the notice to Participant and Custodian is mailed,
either (i) Participant elects to terminate the Custodial Account as provided
under Article XI, or (ii) Custodian elects to resign as provided in Article X.
12.2 No amendment shall be made at any time under which any part of the
Custodial Account may be diverted to purposes other than for the exclusive
benefit of Participant and his/her Beneficiaries.
12.3 No amendment shall be made retroactively in a manner so as to deprive
any Participant of any benefit to which he/she was entitled under this
Agreement by reason of contributions made before the Amendment, unless such
Amendment is necessary to conform the Plan or Agreement to, or satisfy the
requirements of, the Internal Revenue Code or other applicable law.
12.4 No amendment shall place any greater burden on the Custodian without
its written consent.
12.5 This Article XII shall not be construed to restrict the freedom of the
Custodian to impose an Annual Maintenance Fee in the manner provided in
Article VII, and no such change shall be deemed an Amendment of this
Agreement.
ARTICLE XIII MISCELLANEOUS
13.1 Not withstanding any other paragraphs of this Agreement, paragraphs
3.1, 3.2, 3.3 and 5.5(b) and this sentence shall be controlling. Furthermore,
any provision of this Agreement shall be wholly invalid if it is inconsistent,
in whole or in part, with section 408(a) of the Internal Revenue Code and the
regulations thereunder.
13.2 Any notice, report or material required to be delivered by the
Custodian to the Participant shall be deemed delivered and effective on the
date mailed by the Custodian to the Participant at the Participant's last
address of record filed by the Participant with the Custodian.
13.3 This Agreement and Beneficiary Designations, and all property rights,
including rights to distributions after the death of the Participant, under
the Plan, shall be construed in accordance with the laws of the State of
Illinois, other than its laws with respect to the choice of laws.
